Monday 5 November 2012

SkullSpace 2.0: The new frontier

Hey everybody,

This is the story of SkullSpace's landlord troubles, the mistakes we made, and how we resolved them to create SkullSpace 2.0. Spoiler: it isn't created yet, but you can help by donating! Now, on with the story...

Operation: SkullSpace 1.0

So, let's start with the backstory. We signed a one-year lease a long time ago - June of 2011, give or take. SkullSpace alone signed the lease, and AssentWorks came along as a sublease. They were (and still are!) close friends, and had very similar goals, so we were happy to share space with them.

At the time, we didn't really know what we were getting into, but we knew we were going to make it work. Why? Because SkullSpace was already full of awesome people and only getting better. It was a one-year lease, which was comfortable for us - if the worst happened, we could cut our losses and run.

I realize I'm almost two years late, but I uploaded some pictures from way back then to show you what the space looked like when we moved in, as well as some pictures of our very first renovations. Quite a change from how it looked at our Grand Opening, eh?

Lease status: renewed

A year later, it came time to sign a new lease. This time, the lease had both SkullSpace and AssentWorks on it. Both of us had grown as organizations, and the new lease reflected that. The rent was a little more, but we could afford it. It was still dirt cheap, and utilities were included! The only downside was that the building was poorly maintained. Getting things fixed - like windows that like to fall out and smash on the ground three stories below - took months, when they actually fixed stuff. There were also constant issues with the elevator, plumbing, lights, and everything else. But it was cheap!

In the year-and-a-half since we moved in, I learned everything from building walls to fixing toilets to making a hackerspace into a home. Mike Loney took the reigns and made the renovations happen. I learned so much, and it was fantastic; I wouldn't trade that experience for anything!

"You guys cost us how much!?"

Now, fast forward to last month: October 2012. The landlord - that is, the people who own the building - saw the electrical bill. Apparently they'd been paying it without looking, and they freaked out. It turns out, maintaining an old leaky building with no insulation and largely electrical heat (and cooling) isn't cheap! And despite our lease explicitly saying that electrical was included, they wanted us to pay it. In our opinion, no dice.

This is where it gets interesting. Our lease had a stipulation in it saying that, with six-months of warning, they could terminate the agreement and leave us on the street. We knew that risk and were prepared to move if it was ever invoked. As a hackerspace, we're agile. We can survive! Heck, our friends at Protospace were homeless for awhile, and I'm sure they aren't the first!

That being said, we share the space with our friends at AssentWorks, and they had a big grant coming down the pipe. For them, the choice was obvious: make the landlords happy to avoid being kicked out. For them, losing space unannounced would cost a whole lot more than the electrical bill they were being asked to pay!

Divide and conquer

Now, the landlords - in a smart but also asshole move - used this dissonance to their advantage: they talked to AssentWorks directly, basically leaving their own property management firm and SkullSpace out of the negotiations, and AssentWorks chose to pay the bill and sign a new lease as the sole entity inhabiting the floor, but with the option to sublet to us. A reasonable choice, of course - I would have done the same if I was in their shoes.

That left SkullSpace and AssentWorks in an interesting predicament. If SkullSpace stayed, we'd be expected to pay half of a bill that we can't afford. If we left, we left AssentWorks holding the hot potato, which isn't fair. So, we talked to AssentWorks about options - can we pay you back over time? Can we pay part of the bill? etc.

In the end, AssentWorks gave us three options: one, we stay, pay half the bill, pay rent and utilities three months in advance. Impossible. Two, we leave in 2 months (end of December), and pay the rent in advance, and pay our half of the electrical bill. Three, we leave in a month - end of November - and pay nothing, not even our November rent. That last deal was extremely fair - it was AssentWorks recognizing that they expected more of us than we could afford, and giving out the option to cut and run. I can't thank them enough for that one!

Just to re-iterate: our position was always that we don't pay any of the electrical bill, and that AssentWorks shouldn't have either. Our lease explicitly stated that it was paid for, and if the landlords screwed up then that's their problem. Of course, that's not how business really works.

We (the SkullSpace Board of Directors) sat down at the table with AssentWorks a few times to hammer out these options, and later to discuss them. After bringing the amazing Ian Trump on board (that's his company site, since I don't have a better link), we managed to hammer out a deal that was mutually satisfactory: We stay for three months - until the end of January - paying a portion of our half of the electrical bill, and pay our utilities for those three months. At the end of January, we'd cut and run. The SkullSpace Board and AssentWorks both supported this plan.

"Your plan's bad and you should feel bad"

Last Tuesday (October 30, 2012), we brought that plan to the membership. And, the membership said no. They want to leave at the end of November. Ooookay!

This is the magic of a hackerspace: the Board can propose one thing, and be totally shot down. It was awesome! Justin - our former Operations Manager - had done a bunch of groundwork on finding a new space. Although it wasn't financially feasible yet - and as of now it still may not be - he sold it really well. His plan was that we give AssentWorks our notice that we're leaving at the end of November and sign this new lease. RIGHT NOW, basically. It was scary, to me, that there was so much support for a plan that I had just heard. But, it is what it is.

It wasn't until Mak - our former Vice President - pointed out that leaving the space in a month and getting the expensive space that Justin was looking for aren't both required. We can give our notice and move to either the space Justin proposed or another space, just as easily. Or even spend time homeless and saving money if we need to. Smart!

So, the membership overwhelmingly supported terminating our lease at the end of November, and finding a new space. The Justin Plan is still a viable option, and is becoming more viable every day. We started an Indiegogo campaign to help fund the move and to make our new space - wherever it happens to be - into a home.

Whatever we get and wherever we end up, it will be awesome, because we have awesome people. And that's what a hackerspace is about: the people. SkullSpace 2.0: Coming soon, to Winnipeg.

And, that's where we are now. Still exploring options, looking around, and figuring out WTF we can do to make this work.

Lessons learned

This is the most important part, in my opinion. Particularly for others who are reading this. How did we get into this tight spot, and why.

We, in my opinion, made at least two fundamental mistakes. And they're mistakes that I see other hackerspaces making all the time, and that I call them for.

First, we depended on an unsustainable rent. We had a massive amount of space - 4000 sq.ft. - for peanuts - $750/month all-in. The problem is, we depended on that. We had an emergency fund saved up, but in the end we couldn't afford the proper rent for the space, so we lost it. A lot of hackerspaces depend on having cheap rents - below market price - to sustain themselves. Not smart!

And second, we were tied too closely to AssentWorks. Getting into a position where another entity can cause you hardship - either on purpose or by accident - is dangerous. Especially as a hackerspace, since I believe strongly in openness, and I let everybody see my cards. When it comes to a situation where we have to do a business negotiation, I feel like they know everything about me and I know nothing about them, which isn't fair.

As I said before - and it's important - AssentWorks was actually really good to us. They made a business decision - and I believe it was a wrong one, although I would have done the same - to pay the landlord money that they didn't owe him. But they gave us an out, and let us cut and run, without owing them anything. I'm extremely grateful for that! A more cruel organization could have made this very difficult for us.

So, lessons learned: don't rely on others to make an unsustainable model work. Make sure you can afford market rates for real estate. BAM! Done. :)

And, one last time, please donate! Help make SkullSpace 2.0 happen!