The full post is worth reading, but two quotes stood out to me:

…It’s an issue of how you define capital and return.

My hypothesis is that we need a whole new regime for quantifying the value of businesses that have goals other than strictly financial profit. We need hard numbers – real metrics – to demonstrate the value of initiatives that create value for society beyond the payment of staff and the generation of profits for shareholders.

But the “R” [in ROI] – the return – isn’t simply financial profit: it’s economic utility, real benefits being enjoyed by society.

This leads me to something else that I always find hard to articulate: the ROI of IndyHall, or even coworking in general.

We’ve been running IndyHall for nearly 3 years as a business for a reason, and a profitable one at that. But the metrics for ROI aren’t salient, since most of the investment has been in human, knowledge, and time capital, and the return doesn’t show up on our balance sheet. As such, Geoff and I don’t take a draw, at least not in terms of cash…because that’s not what’s we’ve invested. If there was a balance sheet for the social capital we’ve invested and seen in return, though, and we had metrics for it, we’d be able to far better express and share what we’ve accomplished.

And to be completely honest, I’m a little bothered by the category that we’ve been put into. We seem to be pushed aside in favor of the critically “for profit” models in terms of sustainability.

The irony in this? Between the list of Profit and Not-For Profit coworking ventures, we’re among the few to be turning ANY profit, even if its not a lot.

Before I go any further, please note: Drew and Todd, I’m not mad at you. I still like you guys. You just greased some already turning gears.

Non Profit isn’t a State of Mind

We’ve never claimed to be not-for-profit. We’re very much for profit. But our initial focus, outside of community building, was on break even.

Early on, Geoff and I discussed the benefits of going either way. We decided, together, that operating IndyHall as a for-profit business was absolutely critical.

There’s nothing in the world stopping a coworking community from operating within a profitable coworking space. But I think THAT is where the line is drawn.

This isn’t Chicken and Egg, People.

For the sake of this example, there are two types of coworking: communities, and spaces.

• You can operate a coworking community without a for-profit coworking space. Jelly is a fine example of that.

• You can operate a coworking space without a coworking community. You can provide all kinds of nice services and amenities. You can hope and pray and wish. And people will show up. In an ideal situation, they’ll even nest.

But this has been done before and, in my mind, isn’t particularly compelling.

That’s my opinion, but it’s also the opinion of many, as illustrated by the transition away from traditional incubator setups into the Y-Combinator (also see Colorado based TechStars, and Philly local DreamIT Ventures) model where you’re still evaluated as a participant of the space, but along with the space and small business services, you find yourself surrounded by like minded entrepreneurs at similar points in their business experience as one another. And just like “working alone sucks”, “starting a business alone sucks, too”.

You can jam services down people’s throats to attract them like moths to a lightbulb. Who DOESN’T want a swanky office. People will come for the shiny stuff, but you’re going to need some substance to keep them there. That substance? Culture.

So, it’s not Chicken and Egg?

Oh, right. I was making a point. My point was, if you establish a business before establishing the community, you’re pretty much guaranteed to end up imposing on the single most important asset of ANY coworking community.

The culture.

If you’ve created the business without the prior influence of the community of it’s users, you will inevitably be forced to make decisions for the business that are contrary to the members interests. THAT is business.

And culture, imposed upon a community, inevitably crumbles that community. Culture, carefully cultivated and built on top of, is sustainable.

I’m not saying you don’t need business. You do. You absolutely, positively do. If you’re thinking about starting a coworking space and don’t have any business experience, get a business adviser. NOW. I got lucky and got Geoff DiMasi as a partner.

Remember, I’m not saying that a community is the core. I’m saying the culture is. That’s a really big difference from the messages I’ve sent in the past. I’m going to be revisiting this a lot. In part, this is due to some realizations that ‘community’ as a term is getting dumbed down by overuse and overemphasis. Thanks, Kathy Sierra, for joining twitter and sharing this thought at just the right time.

Every coworking space has it’s own culture. Recently, Tara Hunt of Citizen Space (also one of the “not-for-profit” coworking spaces, as appointed by Not An MBA), remarked about how despite the 14+ person waiting list for Citizen Space, when she tried sending the people on the waiting list to any of the other spaces in the vicinity (and rumor has it that San Francisco has a BUNCH very diverse of coworking spaces and communities), the people on their waiting list said, “No, thanks. We don’t just want coworking. We want Citizen Space coworking. We’ll wait.”, or something to that effect.

I recently made my first visit to Citizen Space.

Yes, it’s beautiful.

Yes, it’s in a convenient location.

Most of all, for me, it felt like home. And that had nothing to do with the physical location, which was 3000 miles away from my REAL home. The culture was familiar.

Is Citizen Space for everybody? Of course not. That’s why San Francisco has a number of other coworking options. Is IndyHall for everybody? No way. And that’s why I eagerly await another variant of Philadelphia coworking. Please. Somebody step up. Do it you’re way. I’ll even help. Pick my brain. Anything you want, except a check. Cuz I don’t want you to be answering to me when you’re making plays with my money.

And, of course, I’m not in any kind of financial position to be investing. At least until someone figures out how to convert Whuffie to US Dollars. If you do figure that out, email me please.

Money Changes Everything

When you’ve got large sums of money and salaries on the line, your decision making skills are changed. It’s inevitable. It’s the most common issue I’ve seen with the relatively small contact I’ve had with startup founders.

Product managers do not make good CEOs. I mean, they can be one or the other, but it’s not a good idea for the product manger to BE the CEO. The results are obvious: product roadmap decisions driven by the guy dangling the checking account balance in front of you are not going to be the same as decisions made for the end goal.

What I am trying to get across is order of operations.

One foot before the other. Crawl before you walk. Walk before you run. Put on your pants before your shoes.

Build an unstoppable community to take part in the development of your business.

So Coworking is Profitable?

I’ve never ever gone on record saying coworking can’t be profitable. It can. I hope that someone (and it doesn’t need to be us) proves that it can be CRAZY profitable, just to prove the cynics wrong.

I just hope that doesnt attract the wrong people to the community.

I HAVE gone on record saying that our end-game isn’t to be rich from coworking. The true values are corollary, for the members and the owners. That does NOT mean, however, that they are intangible.

I HAVE gone on record saying that by making profit your number one priority, you’re going to have to work a whole lot harder to adapt your profitability to fit the needs of your community. It’s doable, but it’s challenging.

And I don’t know about you, but I prefer to work smarter and retain my quality of life than work more than I already have for an unknown, anticipated, calculated gain.

Philly’s own Josh Kopelman said at the recent kickoff of DreamIT Ventures first season,

“I’d rather back an entrepreneur who can adapt to change than an entrepreneur who claims he has all of the answers. Because, inevitably, every business plan starts out wrong.

Agile as a Business

Geoff has pointed out our decision to run this as a business is to be able to keep it open, iterate, and improve. We take this process for granted as we both come from agile software development backgrounds. The methodologies of Agile are second nature to us.

Having a strong and committed culture, our (paying) members help drive those iterations forward because it doesn’t just benefit IndyHall (the business).

It benefits IndyHall (the community).

Confident it was impossible that I had coined the term myself, and curious about any kind of real context, I decided to ask google for a definition.

The first result, a newsletter from the Center for Community Economic Development at the University of Wisconsin, caught my eye. The result summary contained enough information to match what I’d considered myself, so I dug deeper.

The term civic entrepreneur combines two important American traditions: entrepreneurship–the spirit of enterprise–and civic virtue–the spirit of community.¹

The article goes on to establish five important qualities in civic entrepreneurship.

1. Realistic understanding of contemporary economic realities and willingness to embrace those realities on a local level, building a foundation for larger future growth.
2. Results-driven attitude towards change. Focus on why things can happen, rather than why they cannot. Focus on mobilizing resources to an end game.
3. Collaborative leadership style, rather than leading with formal authority they lead with credibility. Strong ties between economic development and community development. Strong bridging between these two arenas.
4. Long-tail self interest. The individual leader’s end game is long term, short term and narrower goals are heavily focused directly on community involvement. “Give give give, till your face falls off”. Sound familiar?
5. Creating, and enabling, new leaders. Playing different roles within different teams. Heavy focus on teamwork and encouraging collaborative growth.

A lot of this rings so, so true to everything I’ve been immersed in for the last year and a half. But I’ve noticed something else.

A lot of “civic entrepreneurship” qualities read a whole lot like what’s evolved into this moving target people are calling “social media”. This piece, for me, is a great and humbling reminder that even new and exploratory concepts aren’t new, simply evolutions.

I laugh, often, when I (or anyone else, for that matter) are referred to as “social media experts”. How can you be an expert in something that most people struggle to define in the first place? It’s too new for there to be real experts.

Are you an expert simply by being an early adopter? I think that’s a difficult, and dangerous, thing to quantify given the connotations of “expert”.

Social Media leadership? Certainly. I know a lot of brilliant social media leaders. Social Media Innovaters? Absolutely.

Now. I’m not sure if you could call yourself a Civic Entrepreneurship expert, even though the arena is well defined, and well established. Proof? The points in the article cited above were written nearly 10 years ago.

I have to wonder how many participants of the social media space have read the newsletter. Or were they too busy suckling their RSS feeds looking for the latest trend to mimic.

Although, I have to think that there’s something intrinsically humbling, probably tied to quality number 4 above, that most “civic entrepreneurs” wouldn’t go so far as to call themselves an expert.

There’s a difference between calling yourself an expert, and being identified as one.

Be realistic. Be persistent. Share responsibilities. Be humble. Know your roots. Care.

At SXSW, during the coworking core conversation, Geoff made a point that blew my mind with it’s obviousness. That exact same point is relevant to this conversation as well:

These aren’t secrets to successful coworking. These aren’t secrets to successful business.

These are the secrets to being a good human being.

¹Reference: Civic Entrepreneurs: Economic Professional as Collaborative Leader

This afternoon I attended my first City Council hearing. Frankly, it was my first time inside City Hall. Today’s hearing was related to a topic that is known to be near and dear to my heart: the city support of the so-called “creative economy”.

I found out about this event, as most people did, last minute. And my desire to attend was minimal, chiefly because I have a strong distaste for the types of meetings that end up being mostly masturbatory: if I don’t leave a meeting with some sort of actionable item besides having another meeting, I’m usually pretty unhappy with the use of my time.

However, I was drawn to this event because a number of my peers, notably some that I have a pretty large amount of respect for, had been invited to present on panels to the hearing board. That group included Blake Jennelle, Philly Startup Leaders founder, and Matt Fisher, President of Night Kitchen Interactive and long time member of PANMA. I knew that these particular leaders shared my views of the local scene, shared opinions about the strengths and needs of our community, and were extremely capable of vocalizing these messages succinctly and effectively. If nothing else, I would have an educational experience in how a city council hearing is conducted, and support my friends. The only guaranteed loss was being indoors on such a beautiful spring afternoon.

As I was walking into City Hall, I decided that it would be interesting to live-twitter my experience. Not only for record keeping purposes…but sort of an experiment to share my at-the-moment opinions (as heat-of-the-moment as they were) with my followers.

So it began. I quickly learned that there was a video feed (which I’m working on finding an archive of), and others were watching from afar. And before I knew it…my twittering turned my timeline into a back channel for the Philadelphia City Council Public Hearing on the Creative Economy.

I’d be very surprised if this was actually the first time a government event had a backchannel…but what was interesting to me was that it ended up proving incredibly valuable. For a number of reasons.

First, as my original thought was, for record keeping. If you look over my tweets in chronological order, the hot-topics were tracked in twitter forever. Sweet.

Second, was me opening my brain. Not that I wouldn’t have done that anyway, but instead of passing notes or whispering in my neighbor’s ear, and being disruptive…I got to put my disruptive behavior to good use.

Third, and most interestingly, it engaged a number of people who could not be in the room do to prior commitments, or lack of notice. I’m lucky that I don’t have a boss I have to ask if I can take the afternoon off to go do something. Most people aren’t. Did all 1500+ people that follow me care about the contents of the hearing? Of course not. But a number of them certainly did. And some of them cared enough to chime in on the conversation. And thus, the backchannel was born.

Whats most interesting about the people who cared, is that not all of them were even in, or from, Philadelphia. One of the really important parts to remember about all of the creative economy and city branding initiatives that we’re involved in is that they are, at the very least, two-fold. There’s the need for better awareness inside our city limits, but just as valuable, are the external perceptions of our city, its economy, its workforce, and it’s general contributions to the rest of the world. So when people started listening, and better yet, chiming in from places like New York City, Kansas, Austin, and LA…the message was being spread MUCH further than the city council ever could have anticipated. And the best part about this message? It’s showing the rest of the world, not only that we’re doing something…but we’re looking to them to reciprocate in many of the potential relationships we’re creating.

Its worth noting that I only have a limited scope to this online backchannel…my own tweets and the tweets of the people I follow. If someone said something and I wasn’t following them, I missed it. If someone responded to one of the people I was following, I likely missed that as well. So the message may very well have gotten even further than I’m aware. And that’s freaking rad.

There are a lot more thoughts I have about the contents of the event. Some of it was intensely, intensely positive. Some of it was intensely, intensely frustrating. I’ll save those thoughts for another post as my mind starts weaving things together. Most notably, though was some really really glowing support for the things I care the most about: Indyhall, of course, but also P’unk Ave and their Junto, Geoff DiMasi in general, and iSepta (a new app thats sprung up out of some really awesome organic collaboration between some IndyHall members). IndyHall, P’unk Ave, Geoff, and I were mentioned by no less 3 separate panelists. If the city didn’t know about us yet…they sure do now.

In the mean time, today was the day I realized the value of live, citizen journalism.

Today was a pretty important day.