LiquidSpace founder Mark Gilbreath's worst financial mistake could save the planet
While WeWork ($WEWORK) struggles under the load of its massive real estate and personnel overhead, Mark Gilbreath and LiquidSpace ($LIQUIDSPACE) are quietly growing a platform that enables office managers, landlords, and workers alike to list and find everything from a hot desk to an office lease, all without spending a single dollar on real estate.
That's because Mark Gilbreath has been down Adam Neumann's path before, and it wasn't pretty. LiquidSpace's name comes from that pre-2008 financial crisis experiment when he built a shared workspace tower in Boise with the goal of one day creating a network of shared office space. Thankfully — in retrospect — that didn't work out, but the LiquidSpace name and platform remain, and Gilbreath and Co.'s solution is beginning to look like a stroke of pure genius.
Today, Mark runs a leaner, simpler LiquidSpace: all platform, little to no overhead. The company lists thousands of available workspaces on its website, but it doesn't pay the rent on any of them. He employs fewer than 35 people. WeWork just laid off 2,400.
We sat down with Mark to get his and LiquidSpace's story.
You're CEO, but you call yourself "skipper" - where does that come from?
We playfully use - or abuse - that metaphor. I like sailing, but it also reflects the liquid, mobile nature of what we do. Our team is even called "the crew".
You've lived in Tokyo, Palo Alto, the mountains, pretty much everywhere.
Yes - the first few very special people I hired were in different places, and that didn't matter to me. That reflects the "Results Only Work Environment", or ROWE HR policy. We don't care about vacation time, rather on results. Just get your shit done. If you want to go work in Sydney, Australia for the next couple of months, if you're getting your shit done, then do it. There's no such thing as "vacation time" at LiquidSpace.
You've lived in Tokyo, in the city, and now you live in the mountains of Idaho.
I was born in Monterey, California, the son of a Navy officer, so we moved every 3-4 years. We lived in Whidby Island, Annapolis, Virginia Beach, St. Mary's County, and then back to Annapolis for the last three years of my high school time. I went to the University of Virginia and studied computer architecture and headed out to Silicon Valley. There, I worked as a design engineer designing ASIC chips and then spent 8 years working for Altera. I moved into sales and then general management. While at Altera, I spent two years in Tokyo as President of Altera Japan. Then I moved back to the Bay Area in 1998 and the internet was happening,
Downtown Palo Alto was literally throbbing. This may sound romantic, but at the time I said to my wife, 'One day I will tell my children that I was part of this.'
So I started ToolWire with two friends, became the CEO, and we were building a company that was rental-izing software, serving design engineers to help them get around massive software license fees.
And then the implosion happened in 2001. I left ToolWire in 2003, which was pretty intense, and I was a new father, so before I started looking for what was next, so I took my family to the mountains for a month of skiing.
We went to Sun Valley, Idaho for a month.
And we didn't leave. We put our Palo Alto home on the market, and we stayed.
So where does LiquidSpace come into all of this?
I was doing some consulting when a former colleague of mine, who had retired in Boise, wanted to get into real estate. So we did some spec work there and launched some self-storage facilities in Boise. 'They say self-storage facilities are ATM machines', he said, so we got into it.
Getting into self-storage was sort of the inspiration for LiquidSpace. It's a flexible business model: people choose the size of the space they need based on the stuff they have for different periods of time.
So I began thinking, "Wow - if this sort of thing had been available when I was CEO of ToolWire and I didn't have to sign a 5-year lease for more space than we ever needed, that would have been game-changing."
So we tried it. We got a piece of land in Boise and built the first LEED-certified office building to be a flexible office building. We were going to create all these co-working spaces, different layouts, monthly agreements instead of long-term leases, and we called it LiquidSpace.
You'd have a membership, and we were going to build a network of these buildings called VengaWorks.
This sounds familiar...
This was 2008. And remember what happened in 2008?
We got occupancy on the building using debt and personal guarantees in November 2008, 6 weeks after Lehman Brothers collapsed.
This was the year before WeWork launched. We planned to open three in the Bay Area, which would have been a better area. But the market went to shit, and the market became hugely challenging. One of my equity partners got squirrelly, and we had to sell the building. We even had tenants like Hitatchi and Motorola - it was a model for shared office space.
But we learned something: with all the available office space, we realized we didn't need to build more buildings.
So we went back to the drawing board, and we looked at what worked and what didn't. We put two things together: companies had a lot of extra office space, and the iPhone had just come out. People were mobile. They were using apps.
So we wireframed up an app using some lightweight CAD software, created a prototype, and started talking to some real estate entities to validate the concept.
When does Reid Hoffman come into all of this?
I tapped into an old relationship I had who was at Greylock working for Reid Hoffman.
Reid Hoffman was the first person I pitched for LiquidSpace. Normally one would make 50-60 pitches before anyone would say yes. I had a PowerPoint deck — we hadn't built the thing yet — flew out to Mountain View for a 30-minute meeting with Reid, and we had our first investor.
He introduced us to Mike Maples at Floodgate and they become our seed investors.
What did you learn from all of this?
Well, the first version of LiquidSpace as Vengaworks involved building spaces and running them. And then I thought about signing leases. But then I'd still paying leases. But where I got to, and why I think I'm on the right side of history, is LiquidSpace. And that's because I built the buildings. I paid the leases.
Everyone is represented on this platform: Regus, WeWork, Knotel, Industrious — all of the major names. But we also have private companies - businesses that have leased space who have extra desks that they want to monetize.
And now we have business owners who have awoken to the flexible-office economy. Big building owners like Tischman and Boston Properties are recognizing that the end-user is looking for flexibility.
So what's next?
I'll leave you with our internal mission statement: "More happy people, working in fewer buildings, the planet smiles."
You choose where you're gonna rock it — where you're gonna work best without adding any buildings. There need to be a million little changes with how we exist on this planet, this is the kind of change that's needed if we want to have a happy, sustainable planet.