Web-based startup eases pain of finding office space

BOULDER — In the eyes of David Mandell, finding an office is one of the last things a startup should worry about.

Mandell should know. He cofounded Me.dium Inc., the company that evolved into OneRiot Inc., one of the most influential startups to come out of Boulder in the past decade. He also has helped to mentor a number of other fledgling startups.

Experience has shown Mandell that finding space is a pain point shared by nearly all startups, especially after they’ve outgrown the coffee shop or coworking space but aren’t ready to be locked down by a lease.

At best, finding space is a time-consuming headache, Mandell said. It also requires business owners make accurate estimates of their space needs well before they know what kind of growth curve they’re on.

“A startup thinks in terms of 30, 60, or 90 days,” Mandell said. “Three months from now, things are going to be completely different, one way or another.”

“Everyone I worked with saw this exact same pain point,” Mandell said. “They’re all trying to solve the pain we’re trying to address. The last thing you should be doing is spending 25 to 30 percent of your time figuring out where you put your business.”

That’s why Mandell,Kelly Taylor and Jason Lewis cofounded PivotDesk Inc., a Boulder-based startup developing a web-based platform that seeks to make finding office space easier.

PivotDesk works by matching businesses and also attempts to simplify deals.

Companies with space to rent out register at pivotdesk.com, list the number of people they can accommodate and their price. If a company searching for space on PivotDesk likes what it sees, it can apply for the space.

That does not sound that innovative, as real estate brokers have been using online listing sites — and startups have been using Craigslist — for more than a decade.

What’s different are the relationships between “hosts and guests,” in Mandell’s words.

Instead of the complex process of negotiating a multiyear lease, PivotDesk relies on monthly license agreements based on the number of employees using the space. Hosts set ground rules but don’t commit to making tenant improvements. Guests aren’t paying for space they aren’t using or committed to paying out over the long run.

PivotDesk’s software handles billing transactions and offers tools to help companies manage their relationship. It doesn’t charge anything upfront, but instead takes a 50 percent cut of the first month’s license fee and 10 percent each month after that.

In Mandell’s eyes, commercial real estate is dysfunctional for startups, landlords and brokers. Dealing with companies that are on the move, rapidly expanding or shrinking and unable to negotiate big-money deals isn’t ideal for landlords or brokers either. It isn’t really worth it for them to court startups with six employees or make a better system.

“From a traditional real-estate perspective, this is a market they don’t serve,” Mandell said.

PivotDesk is aiming for the types of companies that usually consider subleasing, but Mandell is quick to point out that companies using PivotDesk do not establish the legal relationship landlords, lessees and subtenants do.

PivotDesk is focusing on building up listings in the Boulder and Denver area as it tries to refine its platform and business model. Lijit Networks Inc. and Trada Inc. are among the companies listing space.

Investors see promise in PivotDesk. The company was part of the TechStars Boulder class of 2012, and Mandell announced during his TechStars presentation that Boulder-based venture-capital firm Foundry Group has committed to lead PivotDesk’s seed round.

The company and investors still are working out details such as valuation and terms, but Mandell expects that will be ironed out soon.

“We’re very happy with what’s going on,” Mandell said of the negotiations.

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