After three months of being open with a beta version at the Atlanta Tech Village we’ve tweaked ATV pricing over a dozen times and incorporated feedback from prospects and customers. In addition, the master plan for the Village is almost done, so we now have a good feel for the optimal layout, and what the corresponding rates need to be to make things successful.
Here are the economics of the Atlanta Tech Village as well as the second round of ideas on the economics. After a couple more months under our belt, we have a several more updates on the economic model:
- Renovation, including construction, furniture, and other associated fees is likely to be $500,000 to $1,000,000 more expensive than expected
- Demand for private rooms is higher than expected, so a two person room is now $1,000/month for the first two people and then $200/person/month after that, making a room for three people the same price as three reserved desks in the coworking area ($1,200/month)
- Stocked Coke refrigerators, ample snacks, and catered lunches every Friday are now standard for all members, resulting in a direct expense of $50+ per person per month, which we believe is worth it to create the best place possible and to engineer serendipity (the Free Food Friday lunches, as we call them, have proved to be amazing at bringing people together — in fact, it’s the largest weekly tech/startup/entrepreneurship event in the Southeast with 70+ people on a weekly basis). Overall, with 400+ members, this will add $240,000/year in direct expenses that weren’t contemplated before, which is a 20%+ increase in overall costs.
Taking our current pricing, and the draft of the master plan, we have the following revenue potential for each floor:
- 1st floor – 50 desks @ $350/month blended average due to being mostly hot desks ($210,000/year) plus conference center and coffee shop ($75,000/year)
- 2nd floor – 28 private rooms @ $1,100/month blended average ($369,000/year) plus 20 desks @ $450/month blended average due to being mostly reserved desks ($135,000/year)
- 3rd floor – 20,000 rental square feet @ $22/foot traditional space for tech companies ($440,000/year)
- 4th floor – 10 private suites @ $3,500/month ($420,000/year) plus six private rooms @ $1,000/month blended average ($72,000/year)
- 5th floor – 10 private suites @ $3,500/month ($420,000/year) plus six private rooms @ $1,000/month blended average ($72,000/year)
So, overall potential direct revenue from tenants, assuming no churn and 100% utilization (which isn’t going to happen due to lag time with turnover), is $2,213,000 ($210,000 + $75,000 + $369,000 + $135,000 + $440,000 + $420,000 + $72,000 + $420,000 + $72,000). The new pricing for unreserved desks, reserved desks, private rooms, and private suites reflect the economics of the business. We’re super excited about ATV and are committed to making it the best tech and entrepreneurship center in the Southeast.
What else? What are some other thoughts on the pricing at the Atlanta Tech Village?
David Cummings on Startups 
I toured your facility last week as a guest of Josh Sweeney. I know him through a mentoring program we are both involved in up at UGA (MBA students who also have start-up companies). I was very impressed with the space and the driving inspiration and motivation behind it. Congratulations and thank you for your leadership and investment in ATL.
Some recent consulting experiences with companies launching businesses in sites like yours, Four Athens and ATDC prompted me to think about whether it is enough to just build an environment (work-space, Red Bull, conference room, free lunch gatherings). Will this alone lessen the failure rates typically experienced by start-ups. Or should there be some mandatory pro-active engagement by experienced start-up veterans like yourself or other experts as a condition for being in the environment – you know, the tough love that those who have experienced a failure wished they had had but didn’t know/want to ask for because ego or plane ignorance got in the way. I’ve seen far too many examples in these entrepreneurial sites where good resources (ideas, capital, people, etc…) are frittered away by naive, undisciplined execution. We know that offering training is not enough – “I’m too busy to attend” or “I don’t need that training (when in fact they do)”. Nor is offering them access to highly experienced mentors. I have found that most start-up owners don’t value mentors until they’ve experienced a failure or two or three.
So how do we take all we know and prevent that first failure? Is creating a good start-up environment enough? I expand on these thoughts in my latest blog.
I’d be interested to get your perspective.
Mike
Allegro Consulting
Atlanta GA
Thank you for your transparency with this David. It’s been very inspiring to keep track of the growth of the ATV, and I’ve been curious about the business side of what it’s meant to build this ecosystem and make sure it’s sustainable in its own right. I definitely think the snacks, drinks, and free lunches are a great idea and easily worth the extra $50 per month. Our company provides a similar environment, and it’s been very important for our culture and day-to-day happiness. Just make sure to keep the snacks stocked and mix up what you have!
Thank you for your transparency with this David. It’s been very inspiring to keep track of the growth of the ATV, and I’ve been curious about the business side of what it’s meant to build this ecosystem and make sure it’s sustainable in its own right. I definitely think the snacks, drinks, and free lunches are a great idea and easily worth the extra $50 per month. Our company provides a similar environment, and it’s been very important for our culture and day-to-day happiness. Just make sure to keep the snacks stocked and mix up what you have!