Space Race
Filling the Room
Companies that lease office space in Silicon Valley usually get
just that: space. Turning that space into a functioning headquarters
is another story entirely. With tasks such as setting up phone and
data systems, making structural modifications, putting in office
furniture and equipment, and installing a security system, the process
can take one to three months.
A high-speed Net connection is essential for nearly every startup,
but perversely it is often the toughest piece of infrastructure
to get installed. Telecom vendors in Silicon Valley are so backlogged
that they typically take six weeks to fill a T-1 order. That's why
most real estate brokers and office setup experts insist that companies
arrange to have a Net connection installed as soon as they have
signed a lease.
After securing an Internet connection, companies often must tackle
their internal data lines, too. Newer offices in Silicon Valley
may come wired with CAT5 Ethernet cables, but installing cables
in older buildings in places such as San Francisco can be a huge
expense: Wiring a small, 15- to 20-person 3,000-square-foot office
can cost $25,000, according to Linda Kellogg of Start-Up Resources,
an office search and setup specialist in San Jose, Calif.
Although there is no shortage of options for office furniture, sorting
through various providers, furniture types, and prices means that
entrepreneurs can spend more time thinking about desks than, well,
growing their business. Traditional office furniture suppliers aren't
always a good bet, because they take six weeks to deliver orders.
Ecommerce vendors such as OFSS.com offer lower prices and shorter
deliver times to appeal to smaller companies, but even then, delivery
can take two to three weeks. Reverse auction sites are a promising
new option that allows startups to specify their furniture and supply
needs to groups of vendors, which then bid to fill the order.
Most startups don't want to be bothered with these tasks. That's
why office setup specialists such as Startups.com, in Palo Alto,
Calif., and Start-Up Resources have found a niche helping companies
locate office space, plan repairs and modifications, hire service
providers, and purchase furniture.
Start-Up Resources has been helping companies such as auto supply
and insurance seller Carstation.com since 1996 and has built preferred-customer
relationships with a network of service providers. For example,
Start-Up Resources clients can get inside wiring completed in a
week. Lately, insider relationships have become even more important
to startups trying to stand out among the crowd of needy companies.
"Four years ago a startup with $2 million was pretty impressive.
Now it's nothing," says Kellogg. "If a company only has
$2 million, it will be tough for them to get credit. Vendors don't
even look at that."
Still, Kellogg doesn't let her moneyed clients blow their budgets
on office setup. For example, she usually looks for inexpensive
used furniture by scanning business-moving announcements or buys
mismatched chairs from discount stores. She also finds good deals
from places such as Office Depot, which offers Web ordering and
next-day delivery. Her goal is to get startups up and running quickly
and cheaply so they stay focused on building a business.
"If a company wants cubes, which cost $1,200 per person, I
ask them, 'What if you're one month away from second-round financing
and can't meet payroll?'" says Kellogg. "That's what startups
need to think about."
Kellogg's advice and expertise, of course, come with their own price
— $110 an hour, to be exact. Start-Up Resources also does not
offer a la carte services: Companies must sign up for a complete
office search and setup package that includes everything from looking
for space to outfitting the office and setting up payroll and human
resources systems. The cycle carries a price tag ranging between
$10,000 and $15,000. It seems that even cutting costs in Silicon
Valley will cost you. — SD
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