For decades, Frank has been building flexible workspace companies under the Alliance brand and its predecessor companies, focusing on new ways of working that genuinely meet the needs of today’s entrepreneurs by combining three fundamental components: people, place, and technology. His areas of expertise include integrating flexible workspace models to assist with corporate real estate repositioning, investment banking, finance, workplace technology, and business leadership.
With weekly podcasts releasing, “The CEO Story” takes a deep dive into the success (and sometimes pitfalls) of being your own boss! We encourage each and every individual to candidly share their stories to help other entrepreneurs understand the highs and lows that come with the journey.
Kc Chohan [00:00:00] Welcome to the CEO story brought to you by Kc Chohan, founder of Together CFO, where every week we’re interviewing the top CEOs in various industries, sharing their journey and extracting the top things that made them successful.
Kc Chohan [00:00:17] Good morning, listeners, and welcome to another episode of the CEO story. Today, we have Frank Cottle, who is the founder and CEO of Alliance Virtual Offices. Frank, thank you so much for taking the time to join us today.
Frank Cottle [00:00:32] Oh, my pleasure.
Kc Chohan [00:00:33] Frank, you were in the virtual space a long, long time before it ever became popular. Can you tell us a little bit about Alliance Virtual Offices and what you guys do and then we’ll rewind and share the journey along the way?
Frank Cottle [00:00:50] Well, Alliance Virtual is a company that helps people to establish offices around the world. We have about thirteen hundred facilities that we use in 54 countries and we supply virtual officing environments to everybody from government down to solopreneurs.
Frank Cottle [00:01:16] So it’s a very broadly based membership or customer base. A virtual office provides a company with all the clerical, secretarial, administrative support they require, a physical commercial address, Live Receptionist and telephony — everything they need on an as-required basis rather than a fixed term.
Frank Cottle [00:01:40] And we do that by combining people, place and technology into a single bundled product. So it’s a very comprehensive service including a lot of technology and a lot of service support.
Kc Chohan [00:01:56] Fantastic. Sounds like that would be in very high demand right now and especially with the gig economy and people going the solopreneur way.
Frank Cottle [00:02:07] No, it definitely is. People, I think, are recognizing that they need less physical space and more virtual space; that they need to be everywhere all at once instead of somewhere permanently. And certainly large corporates are looking at that.
Frank Cottle [00:02:26] And they’re also trying to shed a lot of liability debt from their leasehold interests off their balance sheet right now. And this is one way they can do so, because we run on 12 month service agreements as opposed to long term leases. And that gets a lot of free debt off the balance sheet, and that means the ability to borrow more or raise more capital each month.
Kc Chohan [00:02:56] Sounds like a win-win all around. Can you tell us a little bit about the start of your career and how you ended up running and starting this business? But let’s rewind a little bit.
Kc Chohan [00:03:08] I know that you had a successful stint with Deloitte and you were also a broker of some ships and yachts. Can we rewind a little bit and just share your journey along the way?
Frank Cottle [00:03:20] Well, you can probably tell on the video that I’m not the youngest person you’ve ever interviewed. So I started my career in 1969.
Frank Cottle [00:03:28] I actually started as a commercial diver doing contract work for one of our U.S. federal agencies during the Vietnam years. So I was what they call the contractor. I did that for a couple of years and then got married in ’71 and my wife decided that wasn’t a lifestyle that was good for a long term marriage. And so I changed gears and started racing and brokering large sailing yachts around the world. So I spent 10 years doing that. And then in ’79, ’80, I started the predecessor to this particular company. We started originally as a property company. I come from an old ranching and farming family here in California, and so we started land banking — we would build small buildings on the perimeter of a large master plan for commercial development. And in doing so, we would build a high quality, small building right on the edge. But with greater entitlement, eight to 10 times entitlement. So I built a 50,000 foot building but had four to five hundred thousand feet of entitlement rights to build.
Frank Cottle [00:04:47] And that was always an exciting time.
Frank Cottle [00:04:50] And that’s where we learned to run flexible workspace facilities, and that’s where we really entered the industry in 1980.
Frank Cottle [00:04:57] So it’s been 40, 41 years for me now doing this. And we’ve transitioned from a property company to an operating company. And today we’re really more of a software as a service technology company.
Kc Chohan [00:05:13] So how did the pivoting evolve? And when did you know it was a good time to pivot the business several times?
Frank Cottle [00:05:24] Well, I think opportunistically we looked at each business model we had created and tried to find a valuation point where we thought the value of that model had been maximized relative to the amount of capital we could easily access and basically just took our profits.
Frank Cottle [00:05:44] And so we did that with our property portfolio, which was fairly extensive across California, Arizona, and Texas. We did that again with our operating company right at the height of the dot com boom and between April and August of 2000. And then we restarted the company as a technology company based on some concepts that we were looking at during the dot com era, and decided that we would prefer to run as a tech company than a property company. So it’s just a matter of being a good student of the industry, which is something that I really think is important in all business.
Frank Cottle [00:06:21] And then you should, by applying yourself, be able to understand, when to pop in and when to pop out.
Kc Chohan [00:06:36] Makes a lot of sense. And along the way, building a team and having a core staff and a leadership team along that whole cycle of 40 plus years. How did you go about doing that? And can you share some of the ups and downs along the way?
Frank Cottle [00:06:57] Sure. Each type of business was a little different, so required different skill sets in the teams. The first required great skill sets around real estate development and finance. On the second group, which was an operating company, we required really good skills around the lease negotiations, management of large blocks of personnel on a distributed basis. We had one hundred and ninety five offices averaging about 40,000 square feet each. Ran all over the United States. So that was a lot of personnel. And so that was a very critical component. And then the current company format, we’re again very distributed — our C level team is — but most of the skills are around finance and technology and again, product development. So we’re very involved in developing our own products and staying at the forefront of the industry. So different types of teams. And I’m fortunate to say that this last team, which we started in 2002 or 2003, we’ve never lost a C level executive, never changed a single one of them. Everybody has started in their early 20s, mid 20s, and they’re still on board almost 20 years later.
Kc Chohan [00:08:19] So what are some of the secrets that you’ve used to one, attract the talent and two, more importantly, maintain and keep the talent?
Frank Cottle [00:08:30] I think you just have to pick the right people to begin with.
Frank Cottle [00:08:34] People that you can understand, and you know, they have the skill set so that you don’t outgrow them and hopefully, they don’t outgrow you, as long as the company is growing nicely. So really understanding the skill sets that you need and also the compatibility.
Frank Cottle [00:08:54] Our team is very much like a big family now. Everybody knows everything about everybody.
Frank Cottle [00:09:01] So there’s good, bad and ugly in that sometimes. But there really are loyalties to each other on the team, not just to the company.
Frank Cottle [00:09:11] And I think that that’s an important structure. We have two core philosophies in the company that are important to us. The first is members first. So we look at our clients and our inventory network as being members of our organization and every time we make a major decision, the first question we ask is, is this the best thing for the members? Is this what’s best for them? If it is, let’s do it. If it’s not, let’s reexamine it and make sure that every decision is made that way. And the second philosophy that we really live by is family first. So inside of the company, everybody really looks out to build the company, to protect everyone else and everyone else’s family. And we really kind of live that philosophy. And so it’s given us a lot of strength and a lot of peace in the company, honestly. It’s a very, very pleasant environment.
Kc Chohan [00:10:11] I like that a lot. And then to nurture a culture like that, as the CEO and founder of the business, what are some of the tips that you can share with people that they can implement in their own businesses?
Frank Cottle [00:10:26] Probably just be a really good listener. Really be a very, very good listener.
Frank Cottle [00:10:32] And recognize that you don’t always have the best ideas. Just because you’re leading doesn’t mean that everybody has to do what you say or what you think your ideas are. You should listen, become that best student of your industry and share ideas and then make sure that you come to communal decisions that are progressive, that are not compromised, where you build on the ideas as opposed to compromising them and diluting them.
Kc Chohan [00:11:02] I like that a lot. And then in terms of the future, let’s talk about where you see the future of this business. Do you see it pivoting in again in terms of virtual offices?
Kc Chohan [00:11:15] If you had to predict the next three to five years out, how do you see that going?
Frank Cottle [00:11:20] Well, the remote working and virtual office environment is obviously growing. Every headline you see today talks about remote work. But look, people are not going to continue working from their homes only on a long term basis. We know this is a temporary structure, so we create the bridge between people that are working remotely in their homes and larger corporate environments where everybody takes the commuter shuttle into the corporate headquarters in the central business district of a major city. There’s a middle ground and that middle ground are business centers, coworking centers, incubators, accelerators — all different types of operating formats, which are quite popular. And they were popular before the current pandemic. And they’ll be even more popular afterwards because people have gotten used to working outside of the major corporate environment. I mean, just imagine the CFO of any Fortune 1000 company today walking through the corporate headquarters.
Frank Cottle [00:12:30] It’s empty. It’s empty and the company’s working just fine. You think they’re ever going to go back? No.
Frank Cottle [00:12:39] So distributed work, hybrid plans on hours and scheduling, work at home one day, work at a local business or community center another day, work at the corporate headquarters another day.
Frank Cottle [00:12:52] Work at your client’s office another day. All the mobility that we’ve created through technology that we’ve been forced to use right now and get good at.
Frank Cottle [00:13:02] That’s what’s going to keep the change rolling forward. It will be seeing virtual reality officing coming up by 2023. We’re already experimenting with holographic lenses for meetings and things of that nature. That’s all coming along within the next three to five years. So there’ll be a lot of changes in the way we look at the technology.
Frank Cottle [00:13:24] And the way we meet overall.
Kc Chohan [00:13:29] So you wear like a VR headset and sit at a table and you’ll be in a meeting?
Frank Cottle [00:13:34] It’ll look a lot more like the glasses that you and I are wearing.
Frank Cottle [00:13:37] There won’t be a big clunky VR headset. That whole technology, smart glass technologies are really coming along.
Frank Cottle [00:13:46] And you’ll see a lot of prototype stuff that’s out now. That is ultra-light, ultra-convenient. And you’ll probably just wear it permanently. You’ll just wear it. You won’t just put it on for the meeting, you won’t just put it on to be inside of your desktop because your desktop will be all around you, a totally immersive environment.
Kc Chohan [00:14:11] I had read that Apple was developing some glasses technology. Interesting.
Frank Cottle [00:14:16] Every major tech company is working on some aspect of this.
Frank Cottle [00:14:21] And the other thing that’s interesting is, the large gaming companies are now coming into play. And you say what? How does that make sense? Well, they’re the very best at rendering environments, creating artificial environments or virtual environments. And the technologies they use to do that and the skill sets they use to do that, they are creating — and we’re working with a couple of them right now — creating actual full virtual officing environments where the whole building is inside of your technology. You can go from room to room, meet with this person and that person. And nobody is in this virtual building physically, of course, but it looks and feels like a normal work community. So that’s the sort of thing that we think will be coming along, because we’re seeing people are working on it. Three, four, five years, we’ll see applications like that. And that will cause a complete repurposing of commercial real estate.
Frank Cottle [00:15:24] Instead of living my life in a cube, on a floor in a sea of cubes in a corporate headquarters building somewhere, doing whatever I’m doing, I can be anywhere if I put on my headset or my smart glasses and work in that environment and have a beautiful office, with beautiful surroundings all around it.
Frank Cottle [00:15:45] Just like today, you can have a virtual background; in this meeting, the wall you see behind me is actually on my right-hand side in my office.
Frank Cottle [00:15:57] So it’s very easy to manipulate images and all of that.
Frank Cottle [00:16:02] And that’s going to be one big part of the way forward.
Kc Chohan [00:16:06] Fantastic.
Kc Chohan [00:16:07] I’m very excited for that kind of evolution in technology, and I totally agree with you in terms of big companies actually being more onboard and being forced to see the benefits of remote working during this pandemic, and to see that not only does it work well, it actually benefits a lot of businesses by reducing the overhead of the business.
Frank Cottle [00:16:30] It really does. And most of the large companies are right on the cusp of doing something like this anyway. Probably not as radical, but you know, we had a very strong economy the last several years until a pandemic came along. And in order to win the battle for talent, all the large companies, particularly large tech companies, they had to have a flexible workplace program in place in order to attract people. You don’t have to come in every day. You can work from your house one day or there is this nice coworking center just down the block, get an office there instead, the work-life balance that people were starting to demand as being more important than just salary and just climbing the proverbial corporate ladder had put tremendous pressures on large corporations. And so they already had one foot through the door of full flexible work programs and they got kicked in the butt with a pandemic and went flying through the door, if you will. And now it’s — I hate the term ‘new normal’ because every day is normal as it moves forward, we always have a new normal — but we were forced to make some changes and now those changes are habit. You know, any time you do something for a certain period of time in a different way, that becomes your new habit. So people are not going back to the office in the way they were beforehand.
Kc Chohan [00:18:04] Yeah. And I think again, rightly so.
Kc Chohan [00:18:07] It does make a lot of sense for a lot of businesses to have that flexibility. And I think you put it quite nicely earlier where it doesn’t always have to be 100 percent remote. It can be a mixture.
Frank Cottle [00:18:20] It will be. It absolutely will be. Honestly, for most people, their home is not the best place to work. They don’t have a private office set up in their home. They may not have enough bandwidth in their home for the work that they need to do. If you’re a video programmer, my gosh, the amount of bandwidth you consume is almost impossible to get to the household. So there’s a lot of things that say it’s not right. The kids, other family members, noise and distractions and not being face to face with your colleagues. So people want a mixed environment, but wouldn’t it be nice to work Fridays from home?
Frank Cottle [00:19:02] You know, wouldn’t that be nice?
Kc Chohan [00:19:03] Yeah, it is. And Mondays.
Frank Cottle [00:19:06] And Mondays too. Yeah. OK. I can do that. You can do that.
Frank Cottle [00:19:10] And what we found in our own company, we went remote, completely remote, early on, in this pandemic. We have global operations and as soon as there was mutterings over in China, well, we didn’t listen to the news.
Frank Cottle [00:19:27] We called our Chinese offices. We said, what’s going on? You know, what’s going on?
Frank Cottle [00:19:31] What’s really happening, this is what’s really happening, and I really think this is going to be serious. We’ve lived through the bird flu, the swine flu, the N1H1, SARS, MERS, we’ve been through a lot of pandemics that we’ve seen as a company and how they affect different places. So we watched carefully in December and January and then, in mid-January we were calling our offices in Europe, they were telling us the same thing. So we went remote, completely, 100 percent of the company in mid-late January.
Kc Chohan [00:20:08] Oh, wow. So you were very early…
Frank Cottle [00:20:09] Everybody. Yeah, we’re a tech company. We know how to do this. We already have remote setups. We are a virtual company. That meant moving three call centers, there were a lot of bits and pieces. But we actually had our tech team in every different area go out to everyone’s home, reinstall, full officing setup, multiple screens, servers, etc. and we did it all in about 48 to 72 hours.
Kc Chohan [00:20:44] That’s amazing. And I think that’s a good point for the listeners out there to be able to be flexible and pivot on a two pence piece if needed. If the company made that decision and to be able to execute it so quickly, regardless of whether it was pandemic related or just general business-related.
Kc Chohan [00:21:04] But you could make a decision and then roll that out with success across the board, shows how prepared you were.
Frank Cottle [00:21:13] Well, I think it goes back to those core philosophies. We didn’t want to have disruption in our services to our members, and we wanted to do everything possible, on our own in advance to protect our staff, which, that’s our family first protection theory.
Frank Cottle [00:21:31] And so if it cost us some money to do those things, but we accomplish those things and stay true to our philosophies, then we believe that we were doing the right thing.
Frank Cottle [00:21:41] And you mentioned flexibility, and it’s funny, at a point in time a few years ago, any company that was going to start out needed two things: they needed a great product and access to capital so they could scale.
Frank Cottle [00:21:59] Today, the entire world has learned that it needs a great product that has a good value proposition, still needs access to capital of course, but it has to be flexible. They have to be able to react flexibly and react quickly.
Frank Cottle [00:22:14] So the agile office, the agile corporation, has taken on a whole new dynamic and meaning, as opposed to being something you’d read in a Harvard Business Review that sounded good, you know? Well, yeah, we’re an agile company. Well, you’ve had to prove it lately, how agile you were.
Frank Cottle [00:22:32] And some companies are struggling hugely because of it, their whole systems need to be looked at, not just their employment system, but their distribution, their manufacturing, their access of products and materials.
Frank Cottle [00:22:46] All of that needs to be agile or flexible as opposed to just thinking, oh, we can send everybody home. That’s cool. That’s not being flexible. That’s just one component of it.
Kc Chohan [00:22:57] Got it. That makes a lot of sense. Frank, thank you so much. As we look to wrap up, I’d like to end with one question. And this is:
Kc Chohan [00:23:05] If you had to attribute, or split up your success over three different factors which are drive, skill and luck. How would you proportion that?
Frank Cottle [00:23:18] Well, I come from a little farming family, and the old farmers always say better to be lucky than smart. I think you make a lot of your own luck by being prepared for things. I’ve used the term being the best student of your industry by really studying your industry and really studying what’s going on in the world around you, as opposed to just being head down and focused on that drive, as you say it. That will get you, you know, you are just as likely to drive into a wall as you are to reach your destination, if that’s all you’re doing. So I’d say, be the best student of your industry and plan on a little luck that you’ll make yourself because you’ve been paying attention.
Kc Chohan [00:24:02] Good. Okay. Thank you so much, Frank, for sharing with us. You’ve been fantastic. And we’ll put a link below so people can connect with you at Alliance Virtual Offices.
Frank Cottle [00:24:13] Great. Take care Kc.
Kc Chohan [00:24:14] Thank you so much.