Minnesota Now with Cathy Wurzer

Twin Cities coworking space survives and thrives, the pandemic — looking to expand

A colorful workspace
The Coven workspace in St. Paul.
Courtesy photo

Roughly three years after the COVID-19 pandemic upended U.S. workplaces, more than a third of workers with jobs that can be done remotely are still working from home all of the time. That's according to a new Pew Research Center survey.

Many people use co-working spaces — a concept that came long before the pandemic, but have taken off for those who work from home.

A Twin Cities coworking space, The Coven, was founded in 2017 by four women who met while working in marketing. The space centers on the experiences of women, nonbinary and trans people.

The Coven is starting to franchise its community-based coworking model — and our MPR News Senior Economics Contributor Chris Farrell went to check it out. He shared what he learned with MPR News host Cathy Wurzer.

Use the audio player above to listen to the full conversation.

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Audio transcript

CATHY WURZER: Roughly three years after the COVID-19 pandemic upended US workplaces, more than a third of workers with jobs that can be done remotely are still working from home all of the time. That's according to a new Pew Research Center survey. Many people use co-working spaces, a concept that came along before the pandemic but has certainly taken off for those who work from home.

Twin Cities has a co-working space called the Coven, which was founded in 2017 by four women who met while working in marketing. The space centers on the experiences of women, non-binary, and trans people. The Coven is starting to franchise its community-based co-working model, and our Senior Economics Contributor, Chris Farrell, went to check it out. He's here right now. Hey, good to have you here.

CHRIS FARRELL: It's great to be here, Cathy.

CATHY WURZER: So how did the idea behind the Coven come about?

CHRIS FARRELL: So the four co-founders, you know, they're they doing work in equity, diversity, and inclusion in the advertising and marketing businesses, Cathy, and they got lots of praise but no real investment or commitment. So they started talking among themselves about creating a space that's welcoming to all.

And so I recently met with founders Alex Steinman and Bethany Iverson at the Saint Paul Coven. And here's Bethany describing how they tapped into their market research expertise to help turn their insight into a business.

BETHANY IVERSON: So we got hundreds of women together over the course of the summer of 2017. We affectionately called them "witching hours," which is more fun than focus groups, and just turned them into listening sessions, where we would ask questions about their experiences in the workplace. We would kind of pay attention to what it felt like to gather these incredible women and non-binary folks in the same room and see, how does the energy unfold, how does this feel different from our typical workdays?

CATHY WURZER: All right, so I'm always wanting to know where the money comes from to fund a startup.

CHRIS FARRELL: Well, as you know, like many women-owned, minority businesses, traditional funding routes close to them. You know, VC? Forget it. Relying on family and friends wasn't an option. So they turned to crowdfunding, raised 350,000, and The Coven in Minneapolis opened in 2017, and the Saint Paul location in January of 2020.

CATHY WURZER: So the timing of this expansion wasn't exactly fantastic, right? I mean, they did survive the pandemic, though.

CHRIS FARRELL: They did. And here's the surprise. The membership actually grew by 400%, and they were profitable in the first year in their Saint Paul location. So here's Alex on the experience.

ALEX STEINMAN: We need other people who have skin in the game, who have knowledge of that community, who have deep connections to the people and resources in their neighborhoods. And so it made sense for us to explore what a community ownership model looked like. And so franchising kind of opened up that opportunity for us. And we had a lot of really amazing mentors and advisors along the way who've helped us kind of shape that and build it with our values in mind.

CATHY WURZER: OK, we didn't talk about franchising. But that's an interesting concept. I'm a little-- should I be surprised at that?

CHRIS FARRELL: I was. It's one of the reasons why I set up the interview. I mean, how are you going to franchise this co-sharing space? But as Alex-- as you just heard her talking about, you know, people who have skin in the game, people who have knowledge about their community.

And so they can't themselves go into a different community and have that deep base of knowledge that they do here in the Twin Cities. So you work with other people who have skin in the game. That's the term that they use. But it's the same idea. It's the same-- you want to be deeply involved in the community. You want these entrepreneurial opportunities.

CATHY WURZER: OK, how might the franchise model work in this case?

CHRIS FARRELL: Well, one of the things that's interesting is because they have a track record, they can tap traditional sources of investment money. They're raising 2.5 million to fund the franchise expansion. They've already closed on 1.5 million with a number of investors. And the remaining sum will be raised from a crowdfunding platform.

And the initial-- just some of the terms-- the initial franchise fee is $50,000. There's a monthly franchise fee of 10% of gross revenue. But here's Alex talking about what it is they're bringing their expertise to this franchise model.

ALEX STEINMAN: We know we do three things really well. We do marketing and advertising because of our backgrounds. We mentor entrepreneurs. It's a part of our learning and development tools that we've built here for our members and are excited to deploy those to our community owners and franchisees. And then we design inclusive spaces. So we have these kind of unique things that we've put together, and it made franchising make sense.

CATHY WURZER: OK. Any markets they're going to focus on for expansion?

CHRIS FARRELL: Well, the first franchise is going to open on East Lake Street with Dan and Angie Anderson. They're the owners of Dogwood Coffee.

CATHY WURZER: Ah, yeah.

CHRIS FARRELL: Yeah, but the focus mostly is what they're calling the underdog markets-- you know, places like Pittsburgh, Cincinnati, Milwaukee, and Indianapolis. Here's Bethany.

BETHANY IVERSON: Flyover country would be sort of shorthand also to describe these places. And what we see in markets like this is a ton of pent-up demand. So there's people who want access to the resources and tools that a place like The Coven provides. They don't have anywhere to kind of go right now that's either a workspace where they can learn and grow with others or develop professionally. So they're looking for that.

We see an opportunity to go there because we know that real estate prices are typically lower and more affordable. Operating costs just across the board are more manageable.

CATHY WURZER: So this is pretty darned ambitious.

CHRIS FARRELL: It is. And isn't that cool? I mean, look, they're dreaming big, which I really admire, Cathy. And they want to expand not only nationally, but they talked about expanding eventually globally. So here's Bethany on the opportunities.

BETHANY IVERSON: Now we're in maybe what we would call, like, the Wild West phase of the future of work. We at The Coven are architects of the future of work. We are frontline architects of the future of work.

And so we look at all of the unfolding right now as opportunity to learn and grow and understand, how do we create a more humane and equitable future of work that is centered on all people feeling like they have a sense of belonging, all people feeling visible in the work that they're doing? And so for us, the ache of the last few years around the uncertainty and the-- I think the disruption in so many different facets has turned into this really cool opportunity to create something new.

CATHY WURZER: Wow, interesting story. Chris Farrell, thank you.

CHRIS FARRELL: Thanks a lot.

CATHY WURZER: Chris is NPR's Senior Economics Contributor.

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