Now that the cost of servers and bandwidth has plummeted, office space tends to be the biggest expense following payroll for a lot of web startups. Here are some quick tips on what to do.
When you are just getting going, simple get some desks, ideally at a friend’s startup. New York City also has some great deals in the NYU Poly incubators. Whatever you do, it should be month-by-month with zero lockin.
As you get larger, it’s best to sublease on relatively short subleases (12 - 24 months). You don’t know how fast you will grow and you can get much better rates (generally) on subleases. Don’t make the leases too short, you don’t want to constantly be moving as it is super disruptive.
Push off getting a primary lease as long as possible. You’d be surprised how many people you can fit into a space when you really try!
When you finally have to get a primary lease, try to negotiate an out after some time (e.g. after 5 years).
Look for buildings that are likely to have expansion space for you if you grow (buildings with other startups are good because they have natural turnover).
Don’t ever sign anything but a short-term lease without talking to your board members. This will easily be your single biggest fixed expense and you want to make sure everyone is on board.
You might also want to consider Chris Dixon’s fun list of things a startup needs in picking a location for an office.
