PivotDesk Expands to Help NYC, SF Startups Solve Real Estate Needs

4/22/13Follow @MichaelXBD

When building a company, entrepreneurs have enough challenges, like perfecting their product and finding customers. Playing the guessing game about how much office space they need shouldn’t have to be one of them.

That’s what David Mandell, co-founder and CEO of PivotDesk, thinks. The Boulder, CO.-based company and TechStars Boulder 2012 alum has created an online marketplace that helps early stage startups find the right location while helping larger startups fill their extra space.

Startups that have hit their growth stage often have to find offices larger than they need, Mandell said. That means paying for space that could sit empty for months or years, especially if they’ve signed the long-term lease most landlords require.

Meanwhile, startups just getting off the ground outgrow coffee shops but aren’t ready for a big rent bill or long-term commitment. PivotDesk connects the companies through its website and helps them put together monthly deals based on the number of employees the smaller company is locating at their new space.

PivotDesk lets the “hosts” set the fees and takes a 10 percent cut for its services.

PivotDesk has gained traction in Boulder and Denver since launching in 2012, with well over 200 companies using its services, Mandell said. It has raised more than $3 million from investors, including the Foundry Group, and angel investors, including David Cohen. Last week, PivotDesk launched in New York and San Francisco.

The new cities are huge markets with a lot of companies that are ideal candidates for PivotDesk, and if the company is going to make good on its potential, it has to succeed there, Mandell said.

“It was pretty important we get out there as quickly as we could,” he said.

Mandell is happy with the very early results in the two cities, but he declined to say how many users he had there.

PivotDesk now has 12 full-time employees and is working hard to build up its presence in all its markets, Mandell said. It has been at work for a while, quietly finding companies that have space available in both new markets.

“We’re only valuable if we have inventory for people to choose from,” Mandell said.

Mandell believes one of PivotDesk’s strengths is it does more than provide listings. It also plays matchmaker, giving hosts and guests the information they need to see if they’ll be a good fit, because no one wants an incompatible roommate.

“That’s one of the biggest barriers for using PivotDesk, because it’s not a common thing to share an office with another company,” Mandell said.

PivotDesk also helps the companies establish the ground rules up front and handles billing, potentially sparing some awkward conversations. Ideally, the companies add something to each other’s cultures.

“This is not really about real estate, it’s about mutually beneficial relationships,” Mandell said. Users are trusted to act “like adults, not attorneys.”

Users in Boulder and Denver appear to be happy.

“No one has cancelled yet because the relationship didn’t work,” Mandell said. He also has seen PivotDesk companies that are hosts in one city use PivotDesk to find space in another.

Mandell said PivotDesk plans on expanding to more cities, and last week the company launched another initiative that will help it plot its next move.

The Spaced Out Cities Initiative is PivotDesk’s attempt to connect with entrepreneurs in emerging communities such as Austin, TX, and Omaha, NE. Entrepreneurs are invited to contact PivotDesk, and communities with the highest level of interest will be candidates for PivotDesk’s next market.

PivotDesk’s early markets were obvious. Boulder is the company’s hometown, and Mandell is plugged in with investors, companies in their growth stage, and startups just getting going. Denver is about 40 minutes away and is increasingly attractive to startups. Mandell has connections to New York City’s growing startup scene through TechStars, and San Francisco was a no-brainer.

But “Where next?” is a trickier question, one that Spaced Out Cities might help answer.

“It’s hard for us to decide where to go next. We don’t want to go into a market that’s not ready for us,” Mandell said. “We’re reaching out to [other communities] to say, ‘Hey guys, do you need us?’”

PivotDesk recently became its own customer. The company had been based in the TechStars office, but it outgrew the space and found a new office in downtown Boulder.

“We had to sign a three-year lease, and we plan to use that space three years from now, but it’s definitely not what we need now,” Mandell said. PivotDesk already has found guests through PivotDesk.

Michael Davidson is the editor of Xconomy Boulder/Denver. He covers startups, venture capital, clean tech, energy, aerospace, telecoms, and whatever else happens above 5,280 feet. Contact him at mdavidson@xconomy.com. Follow @MichaelXBD

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