Suspending operations of the first coworking community in MENA

You might remember from my earlier post that I started the first coworking community space in Egypt and the MENA region (with exception of Israel), Elegua, back in August 2009.

Ever since, we have been struggling to break-even, all the more given the unfamiliarity of the market with the concept and with many semi-alternatives such as Starbucks-style coffee shops with moderate Internet connections/quality.

Initially, our agreement was – I was doing it with an Egyptian friend of mine and a partner – that I will take care of the business side and he will be in charge of the logistical and day-to-day management of the company. It took few weeks for me to realize that, however professional and hard-working my friend was, he was not committing the time or brain work required to the company, especially considering the initial stage of our startup and the fact that we did not seek any venture capital, but decided to boostrap. We were both employed full time and Elegua was to be our side project, which we wanted to grow.

Our first stumbling block was to find a comfortable and affordable space in the central Cairo, or close to where many foreigners were living – our target were mostly young, class A/B foreigners, students, young entrepreneurs, techies, geeks. Anyone with a laptop, a need for high-speed Internet connection, comfortable and relaxing working environment and willingness to network with like-minded individuals was qualified. All the more so as there was no real competition, besides the coffee shops with slow and unreliable Internet connections and few Internet cafes (in downtown Cairo there are quite few of them but they all look ramshackle and none allows flexibility of using your own laptop/WiFi).

We did not conduct a proper market research. Instead, we relied on my gut feeling and my partner’s knowledge of Egyptian market and our collective perception that a co-working space would not even need to be sold out. It would be so intuitively appealing that everyone would go for it.

What were the results 7 months later?

Modest revenues (not close to break-even). Many people loved the idea, but not many were ready to brave the Cairo traffic in order to reach the place.We kept on hiring and firing few employees as none were qualified enough- due to lack of time we opted for friends and connections of friends: high turnover. Elegua fan page on Facebook has 200+ fans which failed to convert.

In brief, a failure, but a failure with lots of valuable lessons for me, and surely for my partner.

The main factors in our failure were (my view):

1. Choice of partner/co-founder (my partner was more ready to commit in words/ideas but not in actions as it became eventually clear)
2. Time/effort commitment (both I and my partner treated Elegua as a side project and did not allocate enough time and effort for its growth)
3. The place (the choice of the place was crucial for such a business – though it was central but still not enough to attract the potentially interested)
4. Missing market data (we did not realize at the time how popular, reliable and affordable the Internet USB sticks became – many preferred to sit at any chosen place and plug-in a USB stick rather then to displace themselves to a coworking space)

Maybe we were to much in a hurry and could have been a bit more patient and perseverant. But maybe not.  The time will show. In any case, I felt this was the right time for such a decision and as much as it was my original idea and closing it, even temporarily is not a joyous occasion, we decided to take this route.

I am moving on with my other project – more about that later – and will perhaps eventually reopen Elegua but with different offerings, another partner – in Egypt any company has to be 51% owned by an Egyptian, and I am not Egyptian – and in a different part of the city!