Creative States of Ukraine — ins and outs of Ilia Kenigstein’s new coworking (photoreport)
A new co-working was opened on March 20 in Senator business center. It is a project of Ilia Kenigstein, founder of the Creative Quarter. He left the company in 2018 amid a dispute between shareholders, and is now developing a new business. AIN.UA sent their reporter to the first ‘creative state’ to get a firsthand account of all ins and outs.
The project’s official name is Creative States and its first location is just the beginning of a larger initiative. Ilia Kenigstein points out to an example of WeWork. In his new company, he wants not only to provide the residents with a space to work in but to go as far as to provide a spectrum of additional services.
According to him, this approach is the future of entrepreneurship. The entrepreneur came up with the name and the idea back in 2014, however, he was not able to put it to life immediately.
It is my dream — I had thought about this format before I even began my previous project. Initially, I wanted to create not only a business space for residents, but a bright and large hub. It had to have all the necessary facilities for people to have fun and flourish. In other words, I wanted everyone to live their lives and feel themselves needed. We did not make it happen initially, but if we persevere, I am confident we will make it happen eventually.
People are informally calling the project ‘Creative States of Ukraine.’ The area of the first location, on the 14th floor of ‘Senator’ business center, is about 2,100 sq.m. Capacity is up to 400 residents. Interior is done in Art Deco and recreates scenes from the 40s and 50s New York.
The main wall of the lounge area is adorned with a mural, the hall is furnished with leather and fabric upholstered sofas, coffee tables, and oversized armchairs. The distinctive feature of the space is the bar counter. Another eye-catcher is a retro Jukebox. Windows are overlooking Pechersk and other local areas.
All that has been developed by an in-house team of designers. It was decided not to engage third-party studios. Firstly, says Kengistein, it allowed to save funds, secondly, not all contractors have sufficient expertise.
Details matter in this co-working. For instance, one of the conference rooms has a modular table — it allows converting the room into a small lecture hall and eliminates the need for a movable wall. It helps to save costs and optimize space.
The same approach applies to the fittings: conference rooms are equipped with Logitech conference cams. They capture all participants and automatically zoom in speakers as well as provide sound and allow to share the screen on a TV. In the future, it is planned to equip the rooms with Google Home smart speakers and set up custom integrations. For instance, residents would be able to schedule meetings or call an office manager through voice commands.
How It Works
Majority of residents will be accommodated in mini offices. There are 55 mini offices in coworking and they occupy most of the space. Offices are kind of makeshift: there are quite large spaces that can be remodeled, there are rooms for small teams (1-10 persons) and even one-man office. In addition, there are 6 conference rooms: three big halls and three smaller rooms.
It is expected that 50-60 persons will visit the project individually, without corporate agreement. However, the space will be closed for random passers-by — you can get access only on a monthly basis, there will be no daily or weekly access. Creative States is pursuing the idea of a community that is closed from the outside but open from the inside.
The workspace is already 70% sold, and there are no plans to make it 100%. According to Kenigstein, they strive to give companies space for development — if needed, companies can occupy new spaces or move to bigger offices. The most flexible format is provided by the so-called suite offices with spaces that can be restructured and with walls that can be branded.
A special area is a co-selling or shared space for sales managers. It can accommodate up to 25 specialists and is separated from the lounge with a movable wall. This workspace features active noise canceling. It works just like noise-canceling headphones, but for an entire room: speakers produce a specific white noise. Human ear gets used to it within 15 seconds, and it allows to reduce the noise coming into\from the room by 50%. The cost of this solution is unknown, but we are talking about ‘reasonable cost’, says Kenigstein.
He emphasizes that sound insulation is actually a weak spot of modern Ukrainian coworking workspaces — that is why they made extra efforts in order to soundproof conference rooms, offices and a co-selling area at Creative States.
They’ve also invested in network infrastructure: workspaces come with Cisco solutions worth tens of thousands of dollars. There are as many as twenty stations available. Each station can accommodate 400 to 600 users with several devices each. In addition, Wi-Fi routers will perform two functions: they will also indicate an approximate location of residents in the coworking.
Resident companies have not yet been announced publicly — all we know is that they include both tech startups and companies, as well as traditional businesses.
They, in turn, undertake to comply with the internal code of conduct. The purpose of the document is to rid the space of toxic and problematic participants. For instance, internal headhunting is strictly prohibited.
We are a great choice for companies with up to 100 employees. Larger teams shape their own culture and require their own space, while coworking is a great option for growing businesses.
Another principle of the project is the absence of hard selling. Residents are not required to sign long-term agreements. According to Kenigstein, companies should have an option to move in, expand or leave promptly. In turn, Creative States view themselves as a services provider and do not intend to cross that line — there won’t be any acceleration programs or similar commotion in the coworking.
However, residents will not be left solely to themselves. On Fridays, the coworking will have ‘Happy hours’ after 6 p.m. during which residents will be able to enjoy a drink and relax to ambient music. On Wednesdays, they are planning to invite famous speakers to speak on subjects, as Kenigstein puts it ‘ranging from Scrum implementation case studies to backyard barbecues.’
Events will be held in the morning before the workday begins, and residents will be able to have breakfast while listening to a lecture. The key is no pomposity or stateliness, says the head of the project. Even to celebrate their opening they are going to replace ‘ribbon cutting’ with a party.
Creative States are not planning to limit themselves with a single ‘state’. Creators of the project are planning to open two more spaces by the end of 2019. Due to competition, not much information has been disclosed so far. The second coworking is going to copycat the concept of the first one — about 2,000 sq.m., business center, downtown Kyiv.
The third location is going to be a far cry. As Ilia Kenigstein explained it, the area is going to reach up to 6,000 sq.m. with the capacity to accommodate up to 1,000 people. This is going to be a separately standing building with its own adjacent territory. Furthermore, the team is planning to expand the project activities beyond the coworking business based on the third coworking. It is not clear what the team is going to do, but it is going to be related to learning or education space for kids. According to Kenigstein, the demand for this service is easy to forecast — children of most residents are 2 to 6 years old.
The maiden workspace of Creative States has already made a step towards reaching out to children. There’s a separate conference room for kids in coworking with a lower table and armchairs. One wall of the room is adorned with paintings while the other is writable. There’s even a separate toilet for kids, and ladies’ room is equipped with a changing table. As Ilia Kenigstein puts it “It is unfortunate that the table is installed only there. Changing tables should be in men’s toilet as well, but the society is yet to understand this.”
Another initiative is still in the making — they want to launch a hire a nanny service in Creative States. A dedicated person would spend a day with a child while parents would be able to work.
Creative States position themselves as a coworking of upper tier, but not a premium segment. Price per workstation — starting $300 (hot desks) and starting $390 (offices). There are more expensive offers on the market, but the States are confident that such positioning is adequate for the project.
In addition, the firs residents got some extra perks: some got a great deal for singing long-term agreement (for half a year), some were allowed to move into an office for 10 persons with only 8 employees — this way the companies literally got room for growth. Moreover, Creative States do not share the idea of ‘extra charges’, when on top of a fixed rent residents pay for additional services, like access to a printer or scanner.
As far as investments are concerned, creating space from scratch is a matter of approximately $500-600 per square meter. According to Kenigstein, this indicator is below market average due to previous experience of the team, relatively low organizational expenses and in-house design development. He did not respond to the question about the amount invested directly, but explained the following:
In order to launch a similar coworking space one will need to have at least $1 million. The amount includes not only the necessary repairs, but also installation of equipment, salaries, marketing costs, etc.
According to preliminary calculations, it will take 4 years to recoup the investments made in the project. In his conversation with AIN.UA reporter Ilia Kenigstein preferred not to disclose the identity of the project’s investor. According to him, they have developed strong partnership relations. Day-to-day business is primarily run by Kenigstein.
The entrepreneur emphasizes that this time he has an ironclad protection against the risk of losing his influence and share in the project: all agreements and terms have been scrutinized and underwent multiple legal and personal review. He says:
You should never neglect agreements. If you cannot reach a general consensus — don’t rush it, put it on hold and resume work when all issues are taken care of.
According to OpenDataBot, legal name of the project is Kreatyvnyi Shtat Senator (Creative State Senator) LLC with shares in the hands of two holders. 60% belong to К.А.N LLC with ultimate beneficiary via Austrian firm Deverte Holding GmbH is Aleksandr Spektor, the owner of Senator business center.
Another 40% belongs to Kreatyvna Krayina (Creative Country) LLC, which is solely owned by Ilia Kenigstein.
The Future of Coworking Spaces
Ilia Kenigstein is not worried about business prospects. In his forecasts he relies on statistics. According to the most modest calculations, Ukraine has around 150k IT specialists with roughly half of that number living in Kyiv and vicinity. This is a market with 70-80k potential clients — it has room for a few dozen new large locations.
It is possible to ‘nip off’ 10k people from the market already at this stage. 20k is more difficult, but still possible. We are not talking here about behemoth companies, like the largest outsourcers.
He is also confident that 8-10 years from now virtually all businesses would transition to coworkings. Offices would only be viable for behemoths that are capable of building own campuses and facilities.
Needs of others would be met by the new format. In addition to being simple, it would make things easier for businesses: a bank or an IT company would not have to have an expertise in designing spaces, arranging for office equipment and catering. And whereas now a coworking at best occupies a single floor of a business center, in the nearest future it would be able to devour an entire building.