Britain's first blockchain-enabled co-working space isn't blockchain-enabled

Primalbase is a company that raised money through an initial coin offering (ICO) last summer and is now fulfilling its promise to token-holders. That is an unusual thing for us to be writing here on Alphaville, but we are happy to give credit where it’s due.

As readers may be aware, however, we’re not so happy to dole it out where it ain’t.

We were sent a press release earlier this week with the following headline:

UK’s first blockchain-enabled shared workspace launches in London to turn renting into an investment

We were curious to see what a blockchain-enabled workspace might look and feel like. Were our movements to be tracked on a tamper-proof ledger? Were we to be granted access via a smart-contract-enabled electronic key? Would our identities be checked against the biometric data we had stored on a chain of blocks? It was all rather exciting.

So to find out, we went along to Primalbase’s new digs in London on Thursday, when its token-holders — from whom the company raised $7.5m last June in less than 24 hours — were being given a tour.

Although the space is not finished — it will open on October 4th — it looks very nice! It occupies the entire 32nd floor of the CityPoint tower, near Moorgate, and has panoramic views of London. Here’s a shot we took:

But to our dismay, we couldn’t find much evidence of it being “blockchain-enabled”. It looked and felt and was pretty much like any other shared office space, except men in orange hats were busy constructing stuff, and there weren’t any desks or coffee machines or free beer in it yet. But there didn’t seem to be much high-tech stuff to come either. The techiest thing seemed to be the following, as explained to us by CEO Ralph Manheim, who was giving us the tour:

Here will be a huge whiteboard, which happens to be red. This is the future! We want to encourage people to solve blockchain problems and to bring developers together.

The redboard, apparently, will be written on in white. The future is bright; the future is red and white.

Primalbase, which has already opened “blockchain-enabled” offices in Amsterdam and Berlin, appears to be much the same as any other co-working space, except for the fact that it has 1,000 token-holders who now have a lifetime membership.

These lifetime members paid 3 bitcoins each per Primalbase token (PMB), which if they had bought on the day of the ICO would have cost them about $7,500. For those who were already hodling crypto, it would have been a lot less — bitcoin had almost in tripled in value since the start of the year alone. (Oh, the salad days of 2017!)

This lifetime membership allows token-holders to use not only the London office, but also the other two that are already up-and-running, as well as two more that are currently being built in Brooklyn and Singapore, and any more that open in the future. Furthermore, lifetime membership is underselling it — the tokens have no expiry date, nor are they restricted to the buyer, so holders can donate them to others in their will.

As we’ve seen, the most anyone paid for a Primalbase token in the ICO was $7,500 — about £5,800. WeWork hot-desk spaces start at £200 a month, which means that it would take 29 months — 2-1/2 years — to make the money back if we’re assuming similar rates to the market leader (though Primalbase did not want to disclose its own rates). And if token-holders decide they don’t want to use the space any more, they can sell their PMB to someone else, potentially for more than they bought it for (hence turning “renting into an investment”, as per the press release).

So, as long as the company doesn’t go bust before then — which is not gonna happen, says Mannheim — this seems like a prettttty good deal. Had we heard about this at the time of the ICO, we would have probably doubted it would actually happen, because… it seems a little crazy!

It’s reminiscent of when American Airlines sold unlimited lifetime flights, or “AAirpasses”, back in the early 1980s for $250,000, only to realise that — as whopping an amount as that might have been then — they were losing millions of dollars a year from the scheme.

We asked Primalbase how this could be a sustainable business model. They explained that there were two other revenue streams alongside the money that came from the ICO. One is events: the company puts on blockchain conferences, workshops and meet-ups and says it makes decent money doing so. (We asked what would happen when the blockchain bubble bursts — apparently that has not happened yet — and they said they would pivot to other emerging technology. Simples.)

The other revenue stream seemed to be kind of crucial though. From the press release:

Companies may also be able to rent permanent office space in the traditional way if they are part of the emerging technology community and contribute to Primalbase’s community.

So in other words, Primalbase has regular tenants who effectively subsidise the token-holders. There will be spaces for 60 token-holders, who will hot-desk, as well as 16 offices, which can accommodate roughly another 75 people, so it will be almost evenly split between the two groups (although the private tenants get their own rooms). We asked whether this might cause some resentment among the paying tenants, but were told, by Mannheim:

No, because it’s really one community… The tenants love the token-holders because they can actually product-test. It’s like a marketing ground. The USP (unique selling point) is that you have a captive audience of people who are all working in tech.

Not sure how unique that USP is, but fine. According to Mannhein, who seemed like a genuine guy who believed in Primalbase’s utopian vision, it will all be one happy family and the tenants will be pleased to pay more than they would otherwise so that they can market their products to the token-holders. Here he is, in the aforementioned orange garb that we all had to wear:

The token-holders, who were being fed a free Pret A Manger lunch, all seemed pretty happy too.

Georgi Georgiev, a 30-something Bulgarian, who is a partner in a crypto trading firm, told us:

Essentially you’re just buying a membership of a co-working space and so you already can already figure out what the value is… If you want to sell it, you can — you’re selling your membership. It just happens to be a token.

Georgi is right. It does just happen to be a token. Sure, that token runs on a blockchain, but when it’s exchanged, it’s on a regular old website. And bookings for the co-working space are also made on a standard online system (though they say this will move onto a blockchain-based system in future. Watch this space).

The press release tells us:

The project is demonstrative of how such an innovative technology as blockchain can be used in a traditional industry of commercial real estate, and how it can streamline the processes, bringing more transparency and efficiency, and trigger building a strong tech community.

But we don’t quite see which processes are being streamlined, or where the transparency and efficiency come in.

For now, Primalbase is just another co-working space, with a bunch of people getting a good deal on their membership. Like WeWork, it might be hip and cool — in some circles — but it is less a fresh-and-new tech company and more a plain old commercial property firm, with the blockchain seemingly more about marketing than technicolour dream ledgers.

Related links:
The WeWork Garden of Eden – FT Alphaville
Blockchain insiders tell us why we don’t need blockchain – FT Alphaville
The struggles of Second Home – FT Alphaville

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