Celebrating rad working communities all over the globe! In this edition of community shoutout we chat to Max Kwok, Operations, Finance & Community Manager at York Butter Factory, the coworking space and community for Melbourne’s early-stage technology entrepreneurs.

How did York Butter Factory get started?

The story starts from Adventure Capital — we started off as a venture fund approximately 7 years ago and we mainly invest into B2B (business to business) technology startups. The problem was that 7 years ago, no one was talking about startups, noone was talking about entrepreneurship — technology almost wasn’t a thing. The founders couldn’t find any companies that they could invest in, so they thought, “if there’s nothing we can invest in, why don’t we create a space that can curate companies that we can potentially invest in?” That’s how YBF was started. 

YBF began with one main goal which was to curate these companies that we could potentially work with and then invest in in the end. Having said so, we don’t invest in all of the companies in the space, but this space gives us the opportunity to work really closely with them, to understand what they need, what they want, and how we can support their ecosystem. 

The coworking space itself works just like a coworking space — people like to call us an accelerator or incubator, but we usually try not to relate ourselves to that because we try not to spoon-feed the founders of the companies. We provide them with support from the networking and introduction ends, so it’s really the power of community, rather than the power of a mentor. We try to outsource the mentorship.

We’ve been lucky enough to be around for 6 years now, so I guess we’re doing a good job!

What’s the space like?

You’re standing in a 160 year old building which used to be a butter factory — hence why we called it the York Butter Factory! Since then it has been many things, including a morgue, a disco and a liquor store! 

We have two floors — this floor and downstairs. Upstairs is slightly more vibrant so it’s more suited to people who like to be in a slightly noisier environment. We have an ad-hoc event area that people like to have meetings in or work in during the day, and in the evenings we host lots of events — we host approximately 256 events a year, predominantly meetups. We just move all the tables away and it becomes a meetup area. 

In our kitchen area we have a full-blown coffee machine which we teach all of our members how to use because we realised that a lot of people were walking out for coffee. We want people to stay in the space so that they interact with other people organically, so we thought that the best way to do that would be to get a coffee machine in the space, so that while you’re making a coffee, you can have a conversation with someone else, which makes the whole process slightly more organic. 

The running joke is that if your startup fails, you can always become a barista!

Downstairs, we turned the fridge from the liquor store before us into a meeting room! We have five meeting rooms in total — two upstairs and three downstairs.

Downstairs is a lot quieter — we realised that a lot of developers prefer to be downstairs so we try separating the floors. We do change it time to time — usually once a year — moving some people upstairs and some downstairs, to keep the environment vibrant. 

We don’t have the best facilities in town, but we pride ourselves on having the network that startups can leverage.

How many residents do you have?

We have approximately 22 companies with 1 to 12 people. On a daily basis we probably have foot traffic of about 70 to 80 people. We had a few members leave last week, but for good reasons! Their team grew too big and they needed to move out and grow their own culture. 

We realised that post 8 people, it’s quite toxic to leech culture from somewhere else. Founders need to think about how they want their company to look and work so when they grow, since we don’t have private offices yet, we suggest that they think of finding somewhere else where they can cultivate their own work culture. 

We do plan to expand into a bigger facility with private offices, so maybe that way we can afford to support and keep those larger teams. We are expanding in Sydney soon too, in a space called Hoist with really similar motivation. 

How do you find and choose your residents?

We have been lucky enough that we have been around for such a long time, so people usually come to us. Besides that, it’s really through community building. 

We spend a lot of time outside of the space trying to build communities — for example, FinTech is a big thing now and ANZ and a few other banks want to be involved, so one of my colleagues started FinTech Victoria which is a community to curate everything related to FinTech. So we leverage the network that we have to run events that attract people interested in a specific topic and we just talk to them about what you need to do to get into that area, or what’s popular now around that topic. We do those types of engagements, run events, find the best speakers and provide value. We do the same for retail, hospitality, health tech and a range of other topics which has helped us with getting people in the door. 

We have been really lucky that we were one of the first coworking spaces in Melbourne, which has driven us a lot of traffic, so its just luck really!

How do memberships work here?

We curate our residents — our community managers spend some time with them before they join, to really understand if they are a good fit: are they in technology to start with? Are they a B2B company? Then cultural fit — are they nice to people? We encourage them to come in for a trial before they actually join as a member to see if they are the right fit. That way we can build the right community.

In terms of membership, we have full time, part time and after-hours. Full time is $660 a month, part time is $110 a month for once a week which increases as you go, and after hours is designed for people working here full time who want to work on a side project and can work after 6pm for $265 a month. 

Every year we try to help one or two startups, so we give them free space to work on their idea. For example, we have a company called Pantree, they won a hackathon two years ago and came to us and said they were still really passionate about the idea, wanted to take it further and quit their jobs to do it. We put on our venture capitalist hat and said don’t be stupid — you shouldn’t quit your job, you need the money! So we said we’d give them free space, you build your idea until you’re ready, and we’ll talk more then. They did that for two years — Lee, the founder, was working 9–5 at his corporate job, get his dinner and then work here from 6–12 on the idea with his co-founder. They did that for two years and we eventually invested in them and they just came back from an accelerator programme in Berlin! 

So we try to do that once or twice a year. Because our main business is still a venture fund, it’s important to incubate those good companies instead of sticking purely to coworking space.

You talked briefly about vetting for culture — what makes a good community member here?

We call a good member a champion. There’s a life-cycle of how a member will change, and when they become a champion, we can see that they are a great member. A champion is someone who is willing to take some time out of their own day to support other members of the space, organically. This happens quite a lot and when it happens, it makes us really happy.

We didn’t know that this would happen, until people said “I would like to support other people in the space, and I would like to be supported as well — can I start this sub-community in your space.” That to us is a win. The community is working organically without our community managers putting in so much effort but they’ve done a good enough job of bringing people together, without having to be in the middle. 

That to us is a good community member, but it changes a lot. If you asked me last year, I would probably have given you a different answer. 

I think that the next evolution will probably be community members who are willing to take this beyond the space — that would be great and that’s what we are working towards.

Who are the people who should get in touch with you if they want to work from York Butter Factory?

Mainly early stage B2B technology companies. We would love to support businesses other than B2B tech companies, but we simply know that we can’t give them maximum value. 

We rarely have companies that come in at later stages because of the size limitation that we have. A lot of people join us at 2–3 people, and slowly grow to more. Statistically we have a lot of people who start as just themselves, and slowly expand to 3–5. Over my years working here, there has only been one team that joined us as a team of 6, but it’s usually smaller than that.

What really inspires us to do more, is when you see a startup who failed, then come back in the next week ready to do it again. That’s when you know you’ve done a good job. That’s awesome. Succeeding is great, but what we really want to see is people who fail come back.

The startup industry can be a tough game sometimes, what do you do to support the community and provide resources?

Networking is probably one of the biggest things— networks not only from corporates but from a resourcing standpoint. One of the biggest things our startups want is talent, it’s one of the hardest things to get, so we build communities with the student network as well. We work really closely with students, be that clubs or the students directly, and tell them that there is a market here that you can apply your skillsets into, and this is what you need to look into. So we work with student presidents to push their education further, and for those who are interested, they come back and ask if there are any internships or graduate roles they can do, and I can feed that back to these companies who need the talent. 

From a resourcing standpoint, we also have Ecosystem Partners. We work with these companies to work out what they need in terms of infrastructure — for example, Amazon Web Services. This is something that every single software company needs, so we have a partnership with them which offers $15,000 a year worth of free storage to our residents. We do the same thing with other partners like Dropbox, Hubspot and things that we know that our residents need. They will usually tell us what they need, and then we reach out to the partner companies and see if there’s anything they can do to support these startups.

We build connections with partners in professional services too like accounting, financial modelling and HR so that they can tap into these networks when they need to.

We do have some mentors around, so that if some of the companies need design mentors, or security mentors for example, we can make those introductions as well. We try to steer away from direct mentorship, because we don’t believe we have the capability to provide that.

Can you tell us about the corporate connections you have?

You will see a lot of corporate logos around, and that’s because we work with corporates quite closely. Due to the nature of B2B startups, most of their clientele are corporates but they don’t know how to work with them, and at the same time, corporates don’t know how to work with startups. We bridge the gap, working with corporates to understand their problems and then we bring those problems back to the startups and ask who can fix it.

Some corporates want to be near to the startups so they work from here from time to time. If the startups need any networking help or they need any sort of partnership assistance, we can facilitate that as well. Which is why we try really hard to curate only relevant companies so that it becomes a community. 

This gives us the opportunity to focus on one thing and it’s great that other coworking spaces in Melbourne have their own niches too. We try to work closely with them so that if for example a B2C company comes in, we know that we can’t support them, so we refer them somewhere else. We believe this is better for the ecosystem.

What would your advice be to around approaching these bigger companies to support the startups in coworking spaces?

When I was in Singapore visiting coworking spaces, this is one of the main topics we talked about, especially in rural countries like India or Brunei, or places with small population sizes. 

One of the common things that we agreed on is that you tend to see a lot of coworking spaces trying to enforce what is popular into the community. For example, if your area is not great in FinTech, then don’t enforce FinTech. A lot of governments, when they see FinTech becoming a big thing around the world, think they should do that in their country too, but that doesn’t work if your community is just not FinTech orientated. 

What we really tried to do is understand what the skillsets, talent and characteristics are that we have at this point and think about how we can support that. For example, retail is something we saw last year that no one was tackling, but we knew that Australia and Melbourne in particular is quite retail and hospitality driven — it’s such a strong market but no one was doing anything with it. So we got onto it. That helps a lot and helped me to work with the government and get them to say yes almost immediately because they knew that was something they wanted to support. 

Really try to understand what your town has to offer, and do something around that, rather than enforcing what is popular or what is talked about.

When you took this idea to the government, what things were you offering?

We started with meetups. My approach with starting communities is always understanding what the underlying problem is. 

With retail for example, a lot of retailers don’t know how to use technology or a lot of startups are building technology that retailers don’t need. Retail is quite a unique market, where us as a consumer only see what is at the front, which is why you tend to see a lot of solutions built around AR/VR and in-store experiences, but the problems actually arise at the back end: supply chain, inventory management, HR — these are the things that no one sees but cause a lot of problems. 

We try to invite speakers who know the industry quite well, but don’t know how to find solutions, to talk about their problems. Then we invite technologists or people who want to build solutions, to come and listen to those problems so that they can build the solutions. That has been our approach with meetups. 

How else does your community come together?

The coffee machine is probably the common meeting ground every morning! Besides that, we try to run a few other events. On Wednesday mornings, we have “Are You OJ?” which is a spin off of “Are You OK” but with orange juice, where once a week we come together as a community, have some bagels and orange juice and talk about what happened in the last week, how people’s experiences were and how they dealt with it. We found that one of the biggest challenges within the technology ecosystem is mental health and the only way to solve it is to get other founders involved and talking about it. We get everyone together and talk about our problems. 

Depending on the dynamic of the space and who we have in the space, we curate other events. At one point we had quite a few developers in the space, who needed a common ground to come and share ideas and skillsets, so we ran Developer Catchup Tuesday. Every Tuesday, all the developers in the space came together to talk about their challenges, what they learnt, what they can’t solve or how they did solve something.

All of these are quite organic and community-driven. It will come from someone in the space saying “hey Max, what do you think of this idea? Are you willing to support it,” and we say yep, let’s do it! So we try to encourage community-driven events rather than the community manager just saying hey, we’re doing this thing now.

And if we do have beers around on a Friday, we’ll pass them around the space and chat. If we don’t have beer we’ll just sit here and chat anyway!

Do you find that the depth of connection within your community varies as the size varies?

Yes — that’s why we talk about the dynamic of the space. We tell the community manager to be really aware of that, really try and understand who is in the space that day and how you then provide value. That changes a lot — it can change every month when members change, so we really try to be active in understanding who is in the space at the time and how that affects what we do. That’s why we find it really hard to structure months in advance what kind of events we want to run, because that’s so dependent on who is in the space at the time. 

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Thanks so much to Max for taking the time out to share the York Butter Factory story with us! If you’re a B2B startup looking for a new home, or just want to follow the journey or show them some love, be sure to follow YBF on Twitter, Facebook and Instagram

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