We've been mulling this over for a while, but we now recommend to startups we fund that they not work out of coworking spaces. A startup needs its own territory, however crappy.
The most successful startups seem to have a very concentrated flavor of themselves. That effect is diluted if a company is working out of someone else's space.
If you try to imagine early Google or early Facebook working out of a coworking space, you just can't do it. They wouldn't have stood for it.
Another problem with working out of someone else's space is that you won't seem as impressive to investors. Investors often like to visit startups in situ. You don't seem as real if you don't have your own space.
Workspaces seem to fall on a continuum, and it's hard to say precisely where the cutoff is. The test is whether the space feels like your own. But there are a lot of borderline cases. E.g. it's ok for several startups to share an office.
we now recommend to startups we fund that they not work out of coworking spaces.
But is this simply a reflection of the maturity of the companies you fund rather than a hard-and-fast rule for all startups? And by maturity I don't mean age or team size but simply that they have taken the 'training wheels off' and now ready push forward and grow a real business?
I see co-working spaces as great for independents and great for small co-founder teams who are still finding their MVP.
If you are still finding the sweet-spot, pivoting and not yet growing a team then to me the benefits of working in a social environment (which is what co-working is) are huge.
EDIT: post-publish, I'm minded that YC in particular funds companies v early and so actually I'm more surprised you are not down for your startups to work out of spaces that promote ideation. For a more 'conservative' angel/vc I'd be more understanding of the perspective.
I would take another step: Your colleagues don´t even have to be working in one space at all. My current startup involves 10 people - none of them working next door to me. Still, we could all meet in person within a day. We communicate via Mail and IM.
Sure, it lacks some of the old school all-night hacking in a small office. But now we are more flexible on work patterns and everyone is more productive.
I got the idea from the (highly successfull) startup Automattic. Have a look at their office: http://automattic.com/map/
I'm bummed that you've began blanketly discouraging your companies from working at coworking spaces, instead of encouraging them to find the right coworking space (& community) based on their needs.
I also find it interesting that you'd qualify multiple startups as sharing an office as acceptable, but other shared arrangements as not. I've actually experienced the opposite effect, where having a more diverse (as in, not just startups and their own echo chamber) membership leading to the discovery of new insight and opportunities that wouldn't have happened if multiple industries weren't being given an opportunity to work side by side.
If you're talking about shared office spaces, then I agree.
A coworking space, however, shouldn't simply be renting cheap space. They should be working hard to foster a community of members to grow and contribute to that space, and share benefits of everyone's contributions. I have to imagine that this comes with a lot of similar benefits that getting involved with YC seems to provide. Shared space is just the battlefield for those interactions. I might be making unfair presumptions, but from an outsider's prospective, YC seems to provide a similar context/battlefield with its investments.
I'm the co-founder of a coworking community space in Philadelphia called Indy Hall. What I think is important about coworking spaces is that they provide an opportunity for people to get to know each other on a personal basis before the working relationship takes hold. This leads to stronger potential co-founder matches, and overall, a higher probability of people that need to find each other finding each other.
In terms of ownership, we work hard to encourage our members to take ownership of the space that they inhabit. All of the best things about working at Indy Hall are things that our members decided should be there, and we helped make possible.
Coworking simply isn't about space, though it's easy to mistake it as such. Coworking is about context, and an important context in terms of organic innovation and the spread of ideas.
Steven Johnson's recent book, "Where Good Ideas Come From", explores places - not necessarily spaces, but places - where throughout history innovation has happened. He cites places like salons in London and cafes in Paris, and the roles those places played in true renaissance periods. The common thread was that those places tended to be populated by people with half-baked ideas, and they provided a context where it was possible for those half baked ideas (Steven calls them "slow hunches") to bump into each other. It's that serendipity that is often mistaken for a "genius" or eureka moment. It's that serendipity that leads to the magic you think you can only hope for.
At a real coworking space (not just a shared office, of which there are many who are mislabeled as coworking), interactions are designed to facilitate those possibilites, and accelerate that serendipity.
The difference between multiple startups sharing an office and a coworking space is that in the former case there's no third party whose space they're in. It's their space.
I'm sure there are advantages to coworking spaces. I just think the disadvantages outweigh them, at least for YC-funded startups. They're already part of a community of startups, so they don't need to seek one in the place where they work.
The most successful startups seem to have a very concentrated flavor of themselves. That effect is diluted if a company is working out of someone else's space. If you try to imagine early Google or early Facebook working out of a coworking space, you just can't do it. They wouldn't have stood for it.
Another problem with working out of someone else's space is that you won't seem as impressive to investors. Investors often like to visit startups in situ. You don't seem as real if you don't have your own space.
Workspaces seem to fall on a continuum, and it's hard to say precisely where the cutoff is. The test is whether the space feels like your own. But there are a lot of borderline cases. E.g. it's ok for several startups to share an office.