“We Want to Be the Patagonia of Co-working” // Interview with László Varga, co-founder of Heden & SpaceWorks

Laszlo Varga_Heden_SpaceWorks

Laszlo Varga, an architect and former Silicon Valley executive who developed office spaces for Google, wanted to “reinvent the architectural and urban design office for the future”. He teamed up with a friend and a business partner Manuel Bastos to launch a co-working company to “cultivate inspiring spaces” for urbanites in Portugal.  

Hospitality Insights talked to the co-founder of Heden & SpaceWorks László Varga about finding opportunities in crisis, building sustainable businesses and competing on quality.  

 

Pivoting in a changing world  

We approach workspaces through four major buckets: strategic advisory, digital space experiences; data-driven space planning, architectural interior design and urban design services. As far as we are concerned, these are all on equal footing effectively. The idea always was that we look at co-working effectively as part of the hospitality industry as much as a commercial real estate business. 

We closed a first investment round for the brick-and-mortar part of Heden in the middle of the pandemic. At the same time, our proprietary digital offering that integrated and automated backend and frontend services for workplaces was evaluated to be worthy of spinning out of the company into a separate venture, SpaceWorks, to deliver workspaces and workspace related digital offerings for other companies.  

We have kind of set an exclusivity agreement between SpaceWorks and Heden - we are only doing pure and hardcore co-working spaces for Heden, but in some shape or form some of the projects that we are doing for SpaceWorks have aspects of co-working to them. It's a much more hybrid world now. 

 

Phygital reality 

The biggest change that came out of the pandemic is the flexibility that people suddenly discovered in their work life which is inherently linked to digitisation. Building the apps is one thing but how do you actually run through the entire experience and ultimately the entire value chain and what’s the user journey for the person from the website to the app to the actual service and space that they are experiencing?  

So the biggest opportunity as hospitality professionals is to re-evaluate and very carefully look at what we do with the real and physical world and its digital twin. These two worlds are going to continue to merge even more - the big picture is the better integration of the physical and digital worlds. 


Building a sustainable business 

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We believe that our strong sustainability focus paired with the quality of not just the design but also the service and company structure will always have a market. 

We are part of the first renewable energy cooperative in Portugal called Coopérnico which supplies all our spaces with renewable energy. We focus on green design and construction. For example, our desks are made of bamboo, which not only helps us reduce our carbon footprint but contributes to the daily comfort of our users. It's not just lip service - we go the extra mile. 

We generate maps to locate our spaces and very carefully look at how many people can get to our spaces by public transport, bicycles and on foot. Picking central locations with good connectivity to make a CO2 footprint as reasonable as possible within that context helps in the process to build a local community. 

 

Careful who you get into bed with 

We've also been very conscious about our financing - both intentionally using crowd lending mechanisms and carefully selecting which investors we accept money from. 

Not trying to be on some kind of moral high horse about it, but if you look at where, for example, Selina’s investment is coming from - the collapsed and now-defunct Middle Eastern Abraaj Group, whose founder and ex CEO is currently facing extradition to the US on what some believe to be the largest corporate fraud and money laundering in history - I think we are a little bit more conscious about where our money is actually coming from and how it's being invested.  

In the current climate where reputable funds look very carefully at the broader sustainability and social impacts of their investments, there is an argument to be made that too much investment can lead to questionable use or even misallocation of resources and that moral and ethical principles underpinning a business can translate into tangible long-term value. 

 

Finding competitive edge 

I think everyone finds their target audience and their niche. We've always had the attitude that we are competing on quality and not quantity. 

There has been a lot of hype about a lot of companies for a long time and sometimes when you scratch the surface, maybe it's not as shiny as it appears. We are not trying to be WeWork, we very consciously and carefully try to make sure that every one of our units is a financially solid, viable and sustainable business. We are not burning through investor cash to acquire footprint. 

We take a long view: our prices per desk are higher than most of the co-working spaces in Lisbon, and people are willing to pay, because of the quality and everything that comes with it. As long as you provide good quality at a reasonable price relative to the competitors, which I think is what we're doing, you will always have a good chance of succeeding but obviously, it's all written in the stars. 

We are in no huge rush to expand, we do it step by step. We decided to start with coworking first to build up a critical mass of clients, to then be able to do co-living with a different scale and with a different level of momentum. Lisbon has always been a mixed-use city, it is not something that people have to reinvent now. There's a lot of building typology and building geometry that lends itself to those types of setups quite easily. It's this synergy that we are betting on. Lisbon hasn't been as overhyped for as many decades as some of the tier-one cities and it's just making its way into that top league from an investment and a lifestyle perspective. 

 
Design matters 

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Heden Lisbon. Image courtesy of Heden.

We have basically been increasingly urbanising as a species for the last 10,000 years. And there was a pandemic 100 years ago which arguably was the precursor to why in the 1920s and 1930s modernism as a movement in architecture has emerged. The likes of Le Corbusier and Frank Lloyd Wright redesigned the cities after the mass flight out of the cities into suburban areas and invented a more open and transparent design language.  

I expect Covid to have a similar effect on urban design as 100 years ago. The exodus out of the cities last year was almost a knee-jerk reaction. Urban and suburban can very happily coexist.  

I was part of the whole design era when things started to become much more customised and elaborate and complex. Now I think there will be an element of going back to basics.  

Even before the pandemic our opinion always was that it is not worth putting people into densely packed spaces. And at the time a lot of people were saying that it’s crazy, that we are wasting so much space and not making the most of it, that we can be extracting more value out of this and make more profit.  

But we are not chasing the short-term profit. Micro-interactions with space and the building are important to rethink and reframe - these small things make a big difference. We wanted to make sure that people had a very comfortable experience which today turned into a safe, healthy, and comfortable experience.  

 

The Patagonia of co-working 

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Heden Lisbon. Image Courtesy of Heden

What I always admired about Patagonia as a brand and their marketing is that they took their own very specific direction and position. And they stood up for some principles - what money they accepted to grow the company, what kind of causes they supported very vocally and very wholeheartedly, sometimes to a degree that really isn’t expected of brands and corporations. They speak up on politics and social issues. That’s a very high platonic idea. Obviously, I am not Yvon Chouinard - he is a very unique and charismatic character.  Someone like Jeff Bezos is less of an inspiration to me than the founder of Patagonia who brings the level of authenticity to what he does.

So it brings me back to the sustainability principles. We very consciously spent a lot of time in the beginning, and we continue to spend a lot of time with my co-founder Manuel debating these issues. Are we contributing to gentrification? Are we making Lisbon a better place as a city for people who live here and not just people who are coming from the outside? I think these are very important valid questions. When I say that we want to be Patagonia of co-working, I mean that we are very self-conscious in the best sense of the word and self-aware of who we are, what we do, what context we are operating in and how can we at least move the needle forward or even better, make some real change about the industry.  


László Varga will be speaking at the IHIF Adjacent Spaces event in Berlin on the 2nd of September in a session ‘Whenever, Wherever: The New Era of Hybrid Working’. Register now to join the international hospitality investment community.