Many startup entrepreneurs worry that some big-name competitor is going to swoop right in, stealing all the attention (and market share) with its marketing dollars and brand recognition.
For Felena Hanson, founder of women’s co-working space Hera Hub, that actually happened — though she believes that competition from a now-famous rival has actually helped her business.
Almost a decade ago, Hanson was running her own marketing business and sitting in her home office (“talking to my cat,” she recalls) when a lightbulb went off: What if there could be a cool common work space for women entrepreneurs? She wrote up a business plan, liquidated her retirement savings, and went looking for a large commercial space. Watch her full startup story in the video profile above or read it here.
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Convincing landlords wasn’t easy, though, as no one had yet heard of the concept of co-working. “It was like, ‘what is inter-working space?’” Hanson says. Even after she opened her first space in San Diego in 2011, quickly followed by two more locations, “we were spending millions and millions of dollars on marketing.”
And then WeWork exploded in popularity. That startup, launched in 2010 by Adam Neumann and Miguel McKelvey in New York, quickly won the attention of venture capitalists and the hearts of tech bros and small businesses alike. It expanded — seemingly overnight — to hundreds of locations around the world. As of this past January, it has a $47 billion valuation.
Hanson harbors no ill will toward WeWork. Rather, the New York company’s meteoric rise has assisted Hera Hub’s success, she says. All those times she used to have to explain what “co-working” is? “ I don’t have that conversation any more,” she says. Also useful: Some people now want alternatives to WeWork. “They might see an ad for WeWork and start to Google coworking spaces in X, Y, Z city and see that there are other options out there,” she says.
Hanson named her company after Hera, the Greek goddess of women, and has always marketed her locations as “spa-inspired” coworking spaces for ambitious, entrepreneurial women. Even with that niche, more competitors have cropped up, too, such as the venture-backed The Wing, which made a splashy launch in New York in 2016. So be it, Hanson says. “My personal philosophy is, there’s plenty of business for everybody.”
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Today, Hera Hub has over 400 active members and has expanded outside of San Diego to Phoenix, Atlanta and Washington, D.C., as well as Sweden. Women who wish to use the co-working spaces pay about $400 a month for full-time access to shared workspace or private offices, plus member benefits such as networking events and educational workshops.
Hanson has chosen to grow through a licensing model, which is similar to franchising in that people who wish to open a Hera Hub in their local community pay a one-time licensing fee of $19,000 and monthly management fee of $600 for ongoing support and use of the brand. “The overall investment to open a location is about $100,000,” Hanson says. She and her staff of five employees are currently assessing interest from individuals who wish to open Hera Hubs in diverse locations that range from Las Vegas and Mobile, Alabama, to Lagos, Nigeria.
While a multibillion-dollar valuation isn’t happening anytime soon, Hera Hub is “a profitable business model,” Hanson says, noting that WeWork, for all its phenomenal growth, still hasn’t turned a profit. “I don’t aspire to build an overly leveraged venture-backed business.”
As for more competitors? “I welcome other folks into the market,” she says.
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