A new venture is coming to the Marina-Cow Hollow neighborhood in San Francisco from an early WeWork employee who believes he's created a new environment for today's working world.
Neon, opening this June in a 2,000-square-foot former North Face store at 1974 Union St., is a cross between a co-working space and a cafe, but CEO and founder Teddy Kramer says it should be thought of as neither.
The startup aims to deliver a casual, community-oriented “third place” experience that improves on the coffeeshop office without the subscription model and expensive commitment of co-working.
It arrives at a time when coffee shops themselves are ceding some of that territory (see suddenly chair-less, outlet-empty Starbucks) or redesigns in favor of expedience — and as city officials downtown are struggling mightily to make Mondays and Fridays at the office a thing again.
"We're really bullish on the belief that the neighborhood is the new downtown," Kramer said, something he's been attached to since his days as WeWork's 70th employee (he left the company in 2015) long before the pandemic.
By day, Neon will offer free coffee and office-like resources such as high-speed internet, workstations, private phone booths ("the No. 1 amenity in co-working," he says), printing and copying as well as last-mile drop-off and delivery for packages.
Customers pay for internet by the hour ($5) or a daily flat fee ($25), but passersby are free to, say, chill and read a book and sip coffee for no fee (bathrooms are for paying customers only, for now). It's thus a model that encourages churn, the hypothesis being that customers will use work stations for about three or four hours at a time before the next one takes that seat.
During the evening, Neon will host private events for corporate groups and others. The Union Street location also has a private 1,500-square-foot backyard which Kramer says he is putting "five figures of investment" into turning into an "oasis." The indoor-outdoor capacity is about 45, meaning the potential is for business of more than $2,000 per day or "very nice business for such a small space," the CEO says.
Hours are seven days per week, 8 a.m. to 8 p.m. on weekdays and 8 a.m. to 6 p.m. on weekends. The space is currently going through tenant improvements ahead of a soft-opening May 20 and official debut slated for June 1.
The traditional co-working model, involving high-end spaces with monthly memberships, security deposits and contracts, has been "going on for 20 years," Kramer said.
"What makes us supremely unique and different is our price point, the fact is that it's zero commitment," he explained. "We've become a world where, from media — Netflix — to transportation — Uber — we want everything on demand."
On the café side, don't expect a full menu: This is self-service and drip only, featuring Sightglass Coffee.
"We're not in the food and beverage industry," Kramer said. "We're in the partnership industry."
The demographics on Union Street skew heavily to younger people working in technology, but he sees potential to mobilize local senior citizen groups to hold events there or use the space as a resource for technology tutorials.
The cost to book the venue for events will run between $2,500 and $5,000 per night. Nonprofits or community groups will get the space "for free," he said.
"Our belief is that this is something that could rapidly grow within the city, but the only way it would succeed is by truly being accountable to the neighborhood," Kramer said.
He described "concierge" staff who will recommend local lunch spots rather than try to tread on that business.
To underscore the sincerity of that point, Kramer touts his recent experience in volunteer work benefitting small businesses. In 2020, he and onetime District 3 Supervisor candidate Danny Sauter along with other North Beach neighbors organized volunteer meal delivery for local restaurants and received official commendations from Mayor London Breed. He also founded "Small Business Boogie," a monthly small business crawl aimed at spurring spending and local relationships.
Kramer described his role at WeWork as growing its workspaces portfolio from five to 50 locations in major markets like Boston, Chicago and London. There he became convinced by the potential of a hybrid space bringing together the affordability of a coffee shop with the functionality of co-working.
The pandemic almost killed the Neon business in the cradle (he was "moments" from committing to a lease on Polk Street when the March 2020 shutdown hit) but its acceleration of the remote work has underscored the soundness of the original premise for himself and early investors.
Neon's startup funding (Kramer declined to disclose the amount) was sourced from friends and family, but the CEO expects outside fundraising and expansion are in the company's future. Ideal locations, some of which had been extensively scouted prior to the pandemic, are the neighborhood locations of midsize retail (an increasingly difficult fit in parts of the city) and especially former banks ("great locations and amazing guts").
The current tenancy at 1974 Union St. is between two and three years, with an option to be there "for another decade," Kramer said.
In March 2022 the property was sold for $4.2 million by California-based corporation Lamorinda Development & Investment to Kramer's current landlord, 1972 Union Property LLC, a Los Angles-based entity connected to lawyer Eric Gronroos.
