VEL

If SBUX was Mom and WeWork was Dad, and they had a child. Then, we would be that kid. 

We are VEL

The Past is Broken: We had workplace 1.0, then workplace 2.0. Now it’s time for workplace 3.0 - and VEL is here to make that transformation happen.

The Enemy: Labor

When work is forced, it becomes labor. We start forgetting why we love what we do. The flow state becomes unachievable. In short, we were forcing it.

The next generation of the workforce is here - and they're making freelancing a big part of that.

The Size And Scale Of The Freelance Workforce In 2020:

36% of the total US workforce [59 million Americans] freelanced in the past year and generated $1.2 trillion in annual earnings from freelancing. Nearly 40% of those freelancers were Millennials and Generation Z [23 million].

Freelancers themselves are positive about the future. 86% of all freelancers say the best days are ahead for freelancing, 90% among new freelancers. 71% say perceptions of freelancing as a career are becoming more positive, 74% among skilled freelancers.

Source: EDELMAN INTELLIGENCE/ UPWORK INC. © 2020

First, there were boomtowns. Now, there are Zoom towns.

Zoom Towns give workers a lot more flexibility when it comes to where they call home.

The coronavirus pandemic is leading to a new phenomenon: A migration to “gateway communities,” or small towns near major public lands and ski resorts as people’s jobs increasingly become remote-friendly. This is straining the towns’ resources and putting pressure on them to adapt.

There has been a drastic increase in remote work since March when the pandemic hit the U.S. Nearly 60% of employees are now working remotely full or part-time, according to a recent Gallup poll. Nearly two-thirds of employees who have been working remotely would like to continue to do so, according to that same poll. That would seemingly give workers a lot more flexibility when it comes to where they call home.

Source: Lily Smith for The Fast Company, October 2020

The realization of the 15-Minute Commute will be one of the most dramatic and long lasting legacies of the pandemic.

COVID-19 has profoundly changed our attitudes on how and where we want to work. Periods of lockdown have given a glimpse of a new way of working: One that does not involve long, daily commutes, offers a more satisfying work/life balance and saves us money. And one that is also better for the environment.

“Just when local cities and towns seemed to be dying, COVID-19 may have come along and saved them. The realization of the 15-minute commute will be one of the most dramatic and long-lasting legacies of the pandemic. What were previously sleepy dormitory towns are set to become vibrant centers for work and community life.” - Mark Dixon, Founder and Chief Executive of IWG

Source: IWG white paper, 2021

Working from home doesn't always work.  The solution for the future is a structured hybrid model.

The pandemic will not be “the death of the office,” as some have suggested, but working from home also won’t become entirely a thing of the past. Many workers wouldn’t want it that way because they enjoy the freedom and flexibility it gives them. The solution for the future is a structured hybrid model, acknowledging that working from home doesn’t work long-term for most jobs, while still giving workers flexibility.

Professor Tom Eisenmann of Harvard Business School told Time Magazine in March that since remote work is going to become a much bigger part of our lives, we need to solve the problem of maintaining a culture when people are “scattered all over the world.”

BY MIMI NGUYEN AUGUST 13, 2021 for Time Magazine

The Problem: Working out of a coffee shop is a terrible experience.

When you start your own business, or become a remote worker, your first instinct might be to find a good local coffee shop and settle in. For years now, this has become the norm around the United States. Coffee shops are basically forced to open up their wifi networks to their customers, since so many of their regulars use the shop as their makeshift office.

Posted on Jul 9, 2018 by Ryan Ring

It's a Fact: Most people work best when it’s quiet, despite what they think.

“We found that noisy sound conditions produced a significantly poorer performance in mental arithmetic, but there was no real difference between the two levels of performance,” says Perham. This suggests that he was right – it’s not the speech in background noise that affects us, it’s just the fact that there is any noise at all.

“The main take-home message really is that most people work best when it’s quiet, despite what they think.”

By Zaria Gorvett 18th November 2019

We Drove Over 7,000 miles Testing the Market

The published research that we had been reading was just not enough for us. The user testing was great, but we had to experience it. We had to visit our direct competitors in person. So...we hopped in a car and went on road trips. The map shows all the towns we visited, with the number of coffee shops that we went into in the large grey circles, and the number of coworking facilities shown by the smaller gray circles. What did we learn? Our direct competitors are not looking after freelancers and remote workers. There was plenty of room for VEL to disrupt and innovate.

Welcome to the new era of work. Meet VEL

We are enormously excited to share our space and experience blueprint. Before diving in, we want to iterate our positioning: We want to be hyper local and we want to be convenient. We want to be near our customer segments' homes and we want to eradicate the long commute. We want to be around 2,000 square feet; micro footprints around the nation. And, at the heart of our value proposition, at the core of our offering are these highly well-engineered workstations we call “Pods”.

Pods offer a real amazing sense of occasion for our customers to want to come inside. Not only do they create sanctified think-spaces, but also offer perfect lighting and excellent air quality. Customers can sit there for several hours and do great quality work.

Seating variety is one of the tenets of good productive work. People want to work in different places. We also want to be unmistakably a coffee shop. We have this very clean, sensual, beautiful centrifugal bar counter with a really tasty menu for our people.

And won't forget our obligation to be the perfect host! We are the ultimate caregiver. In fact, this characteristic is embedded in our brand archetype. So we build experience that will be homogenized and consistent across all our branches and stations.

We are premium, utopian, and modular. We appeal to our customer segment in a very vivid and emotive way. We are a passion brand.

And, of course we will have Penny, our autonomous robotic butler. Penny will be connected to our mobile app. Customers can order their food and drinks and our baristas will put the orders on Penny and 'it' will deliver. So, with that being said, the idea of technology is at our core.

Want to visit our space? Scan the QR Code!

Our Vision: To create a premium utopian /tech forward/ work cafe for the 21st century to usher the world's transition to a new flexible era of work.

Our Mission: To unleash the Strivers’ drive and facilitate their flow state. 

We feel, currently, the customer is not experiencing a fully intimate tech integrated journey in coffee shops. Their current experience is analogue. However, in our space, we want this to be fully immersive and integrated.

VEL is a /tech/ foot forward work cafe

Whether it's booking a space, a pod, a seat, ordering coffee, or using a feature we plan to introduce down the line, to personalize your space with our mobile app. Our vision is to build out user customization, personalization and seamless transactions through an easy-to-use digital platform.

Sensational Experience : It’s in our DNA

With that, we thought it'd be helpful to take you on our user journey. We have our customer, called Grace, and her twin brother, Alex.

Grace books her pod seamlessly on our app. She already has an account with credit card details, so she simply selects the date and books her pod.

Grace seamlessly booked her space and effortlessly went into her pod, set herself up and Penny, our autonomous robot, brought her order. Grace can get on with her Zoom meeting with her clients to engage in her high value work for 60 minutes.

Meanwhile, Alex is in another coffee shop in line waiting to order drinks suffering from ‘table anxiety.’

At VEL we are passionate about supporting our customer segment’s optimal work mode with careful consideration to provide solutions for a variety of working formats, ranging from deep thinking to high value client video meetings. We have, therefore, taken enormous measures to marry hardware and software to solve for the latest and greatest technology, such as:

• Private secure encrypted high speed large bandwith WiFi 6
• Smart universal wireless charging pads
• Integrated acoustic measures with space engineered padding embedded in ceilings and seating
• White noise circulators to muffle decibels to create an atmosphere that is balanced with ambience and productivity

Pricing Plans Designed to Meet Well Tested Needs

Sip in Style. Spectacular Coffee. Amazing Variety. Tasty Food

We Tested Hundreds of Freelancers: 79% Said they Work Out of Coffee Shops on a Regular Basis. 

The Market opportunity is Enormous

So how big is our market? Well, obviously, the coffee shop industry is enormous. But, we are taking a focused approach by targeting freelancers, and in particular, Millennials and Generation Z.

Why freelancers? Because, they're the group who really embrace the work cafe. There are 59 million freelancers in America. Based on research and testing, we found that 79% of freelancers go to a coffee shop anywhere from one to four times a week to do some work. And while they're there, they spend between $4 and $10 per visit.

Therefore, if we assume that these freelancers go to a coffee shop twice a week, and spend $5 per visit, we are looking at a $24 billion market. If we segment that market to just the Millennial and Gen Z freelancers, then we're looking at a $10 billion market.

And if we segment that further, to our Serviceable Available Market, which will be Millennial and Gen Z freelancers selling skilled services, we're looking at a $5 billion market.

How do we stack up against the competition?

So this two-by-two chart measures on the horizontal axis, the real cost, the annual cost out of freelancers’ pockets, against delight and experience on the vertical axes.

Commercial office space is quite expensive. Most offices in America are not delightful spaces, unless you work for place like Twitter, Uber, or Google...

The size of the bubble shows the vertical’s market share of freelancers. And it just so happens the coffee shop has the largest market share of freelancers.

In terms of price parity, we're very competitive. VEL versus a typical coffee shop is almost parity. However, our delight and value proposition is of much higher caliber compared to a typical coffee shop.

Our High Growth Route to Market

Route to market will be driven by a well allocated customer acquisition budget of $65,000 per location per year. You can see that in year one we expect to open three shops - or what we call stations - and then ramp up to 70 stations by year five. We will do this by deploying traditional marketing strategies like using social media, getting involved in the local area and regions, and getting the attention of local online influencers.

Additionally, we're also going to use a very targeted approach. We will offer all of our users a free two week trial, so everyone can get the full experience. We're going to be hyperlocal. We want to be located where our customers live. This geo strategy will thereby increase the yield of our acquisition strategy.

Traction Curve

The number of daily users is one of the key drivers in our financial model, so we have taken enormous steps to test and validate. The four traction curves above represent the number of users entering our stations each day. As more and more shops come to market, we expect the traction curve to steepen. The horizontal axis on the chart shows the number of months from when each shop opens and the vertical axis shows the number of daily users.

If we start with stations 1 and 2, shown by the light gray line, you will see that in month one we expect 50 people per day and in month two that will increase to roughly 62. Over time the users will grow, reaching the maximum number of 252 people per day by month 11. The two black lines represent the traction for stations 3 to 9 and stations 10 to 16. We expect traction to pick up a bit with 62 people coming in each day in month one and then reaching the maximum number of users by month seven. But for stations 17 to 70, after we learn from the first 16 shops and we are running on all cylinders, we expect a much steeper traction curve that will result in reaching the maximum number of people per day in month five.

2021 and 2022 Path of Growth

The real estate team at VEL has spent a great deal of time researching which location should host our launch. Our research continued with a boots on the ground approach to understand the intricacies of various cities, towns, and even neighborhoods. After months of research we decided that launching station 1 in The Matadora in Savannah, Georgia, was the right fit.

Savannah’s rich history contributes to the charm of the city but walkable neighborhoods and a strong population of Millennials and Gen Z is what caught our attention. While there is a strong year round tourist population, we are not targeting that segment and actually chose a location outside of Historic Downtown for that reason. However, there are over 10,000 students in the city who attend The Savannah College of Art and Design who may turn out to be ardent users.

Pulling up in front of The Matadora we knew instantly that it would be the home of VEL. A brand new mixed use building with retail on the first floor and 80 high end units above, VEL will complement The Matadora perfectly. The building is located in the Victorian Historic District and just a few blocks away from Forsyth Park.

Finally, there are other areas, like Jacksonville, Charleston, and Charlotte, where we have not only interest but leases in hand that we are reviewing. All of these areas have similar population and demographic characteristics but each has their own local flair.

VEL by the Numbers: Five Year Look at One Location

We plan to open station 1 in March of 2022. During our first month of operation, we expect 53 users to walk through our door. Over the following nine months, we predict traction to increase each month reaching 264 users in month ten and remaining at this level for all subsequent months. This number of users represents approximately 80% of our seat capacity. In 2022, while operating for ten months, we expect to generate revenue of $410,000 and increase to $1 million in revenue in 2024. By the end of 2026 (year five) we are forecasting revenues of approximately $1.3 million.

At the shop level, our profit margins start at 15% in year one and then increase to 46% in year two. By year five, we expect to achieve a 48% profit margin generating $625,000 in profits. These attractive margins are possible since we are only including expenses at the shop level, hence excluding the costs associated with our headquarters.

More Numbers: 5 Year Financial Dynamics of All Locations 

We project that we will continue to scale rapidly, reaching 70 shops by the end of 2026. Assuming each shop generates the same traction previously detailed for a single station, we expect the company to earn $650,000in revenue in 2022. With 27 shops in 2024, we should surpass $17 million in revenue and by the end of 2026 our revenues could total $78 million.

Follow the Money: 5 Year Revenue Dynamics

We have four main sources of revenue: Subscription Revenue (15%), Seating Revenue (30%), Coffee Revenue (41%), and Food & Beverage Revenue (excluding coffee, 14%).

Subscription Revenue: The majority of this revenue will come from individual subscriptions. We do expect teams to participate in our team subscription model but our expectation is that the individual will find the cost/benefit proposition very attractive.

Seating Revenue: VEL’s two types of privacy furniture for rent are pods and nesting chairs. We believe that our users will find both valuable but for different reasons and the cost to rent the furniture should be affordable for most of our customers.

Coffee, Food & Beverage Revenue: We project that almost three quarters of our total food and beverage revenue will come from coffee and coffee-related beverages. The remaining revenue will come from an assortment of juices, tea, and kombucha, along with some grab and go food items.

Creating Repeatable Homogenized Scalable Experience with a Large Consumer Base Creates Massive Value

Blue Bottle coffee started in a small pottery shed in Oakland, and grew from one shop to 29. In 2017, Nestle approached them and, at a $700 million valuation, purchased a 68% stake in the company.

What this tells us is that a multinational company like Nestle recognized the value of the customer base and chose to purchase a majority stake in the company, rather than attempt to recreate what Blue Bottle had done.