Author: johnmetcalf

25k for 12 bedrooms. I’d love to open a coliving space in this building. But is it worth it at a near zero profit margin?

Here is the link: http://www.120-10th.com/

I’m happy that “coliving” is gaining speed. To me coliving should provide:

– lower prices, and/or flexibility, so greater access
– smaller spaces but more community

Building a model around existing spaces in SF is difficult because demand and rent are so high. Campus Houses was the master tenant for ~30 large houses in Bay Area–I lived in one for a month–and the community was amazing, but unfortunately the overhead was too high to make the model work and they closed down, giving up all the houses.

I built a simple model for the space at 120 10th St., link at the bottom.

I suggest in the model that each bedroom would cost a renter 3k per month. Here is a building nearby that charges similar for their studios, it’s for students and interns only http://www.panoramiclivingsf.com

Included in the price would be the standard coliving amenities:

– month-to-month leases
– fully furnished rooms and community areas
– wifi/cable
– weekly room cleanings
– free drinks and snacks
– community network and events

Unfortunately, even at this price (2500 sounds more reasonable to me), the math does not result in a very profitable business. At best it floats around break even.

**So I’m asking myself, is it worth it at breakeven?

Pros:
– The space might be a nice center piece / proof of concept for building a coliving company
– It provides 12 flexible beds in SF
Cons:
– It doesn’t generate cash
– Airbnbing the space or acting as a small 300/night hotel would likely make more money, or a group of friends could just rent it together

Spreadsheet: https://docs.google.com/spreadsheets/d/1gl1Bg5rLP3MMd34cUsg4QLmprMkSxvaTKRbG048u53w/edit#gid=296268891

As a start I’ll define what coliving is to me:

• Smaller than normal living space
• No kitchen, instead this is available in a shared area. A cafeteria or canteen also seems like a great thing to have and another to generate revenue.
• Month-to-month lease
• Furnished
• Defaults to community. Unlike moving into a typical apartment building, in coliving spaces it is assumed that you will get to know all your neighbors. In fact that’s the point.
• Membership based, you have to apply
• If a typical studio or 1 bedroom in the same area is $2,000/month, you might expect to pay $1500 for the coliving space. Yes it’s much smaller, but it’s also less expensive and comes with potential friends.
• Great for folks moving to a new city
• I think each unit should have it’s own bathroom
• Free weekly room cleaning
• Laundry services or just available washer and dryer
• The community has a way to chat. This could be it’s own app or just a Slack channel.
• All utilities included and the wifi is stellar.

I’m personally not a fan of spaces that talk too much about their “unique community” or about folks taking too much ownership in the space. This doesn’t scale, you can’t build a brand around it. I want the coliving space to be a service.

Lyft tried their fist bumps and large fuzzy pink mustaches, but eventually these features have diminished because they are not scalable. What is scalable and liked by the majority is quality and consistency. This is why I think Welive and Common will become billion dollar businesses, while most of the others on my list will stay lifestyle businesses.

To me the Ace Hotel is a great example of what the space could feel like.

Where are coliving spaces going to flourish? In North America it’s the usual suspects: Austin, Boston, DC, NYC, Portland, San Francisco, Seattle, Vancouver. The cities where wealthier millennials are flocking.

Soft landing, and that’s it. I move to a new city and stay in the space for 3 months, then I make a couple friends and we all move out to get our own 3 bedroom. Is there always going to be a stream of newcomers to take the empty beds? Or, how to you design the same so that people stick around for longer. Common offers discounts if you sign a longer lease.

Do we really need to use the word coliving? Aren’t these just small apartments? Yes and yes. It’s important to use the word because it differentiates these spaces from others and carries with it all the bullet points above. I do think it will be important for early spaces to brand the word, otherwise people might recall images of college coop housing, which can be quite fun and nice, but is different from what’s being developed here.

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So what makes coliving attractive?

Community and friendships. Access to a high quality living space and a high quality city at a lower price point. Many folks are happen to trade apartment size for convenience and access. Note that this lower overall price point for the end user does not mean that the coliving company and the real estate developer generate less income. In fact prices per square foot are and should be higher.

What else?

Two of my favorite topics are the future of work and the future of living.

In 2008, three other freelancers and I started Conjunctured, the first coworking space in Austin.

There are different models to coworking. Our model was: charge $250 per month, share desks, be friends. For myself and others it also was a source of great consulting work, though the space itself was never significantly profitable. Conjunctured was open for eight years?—?I was involved only for the first two?—?and I’m proud that it was a catalyst in the Austin startup scene.

For the last few years I’ve watched WeWork grow. While I have not officed with them, it seems they have done the best job of commercializing coworking. To me, WeWork succeeded because they saw the larger trend: coworking is serviced offices for millennials—Regus being the status quo here.

WeWork is CB2 and free beer. While Regus is cubicles and bad carpet, though I hear they are improving.

Here are their CEOs side-by-side. Could they be any more opposite?

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Coliving. My prediction is that WeWork can succeed again with WeLive, because WeLive is a remake of serviced apartments. They are month-to-month serviced apartments that urban millennials want to live in.

Again, small spaces, free beer, nice furniture and community vs bland hotel feel and bad carpet.

Below is a list of coliving companies in the US markets I know best. Besides WeLive, the second most notable to me is Common in NYC.

Some traits I think are important:

• Spaces are in buildings, not houses
• Own them if you can
• Build a community, but also build a brand
• No strange names, no URLs that aren’t .com
• Leverage an existing community

I would love to see a successful competitor from SF. I was quite sad whenCampus Coliving closed its doors last year, but I think there is room to try again and improve. (See Tom Currier’s new startup Sleepbus.)

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Noteable coliving companies

San Francisco Bay Area coliving location

• *opendoor.io
• coliving.club
• hacknsleep.com
• purehouse.org
• embassynetwork.com

Los Angeles coliving locations

• podshare.co (?)

East Coast coliving locations

• *welive.com (NYC, DC)
• *hicommon.com (NYC)
• krash.io (Boston, New York, and Washington, DC)
• thecospace.com (NYC)
• commonspace.io (Syracuse, NY)

* added an asterisk if the company seems to be further along in growth

There is also another set of spaces/communities that are emerging. Nomadic communities who have houses around the world that one can travel to for a short period of time. Two notable companies doing this:

• roam.co
• beunsettled.co

People who are good at “big data” right now are benefiting like those who were good at HTML in the ’90s. It’s a fairly easy skill to pick up, but because it sounds hard many folks are not taking the time to learn the tools.

I dislike these kinds of information asymmetries. However I do like like that this illustrates why it is important to work in the spaces that seem difficult: because there you will find less competition.

As America’s first Chief Technology Officer, Aneesh Chopra talks about what America is doing from within the White House to encourage innovation and entrepreneurship.

http://ecorner.stanford.edu/authorMaterialInfo.html?mid=2756

At 16:00 Aneesh talks about America’s broken immigration system. Though it’s just an aside in his talk, I’m impressed he addresses the issue head on, lists associated problems accurately and follows with potential solutions that are being discussed.

They are good solutions too, including giving a green card to those who complete a masters or phd (in specific fields) at a US school and the startup visa program (raise money, hire Americans, get a visa).

He also said Obama called a discussion on the topic recently. Because Aneesh seems to be at least saying the right things about immigration (and from the rest of his talk so far seems like a very bright guy) that might also mean that the president and the other people in that discussion might actually be considering the things Aneesh is talking about—which would be great.

More on immigration reform at 48:20 and thanks to Mathias for reminding me of these podcasts.

@23:00 Aneesh talks about Value-Based Healthcare (as opposed to Volume Based, explained around 20:30) and how (open) data can/will/should, for example, help doctors decide who they should see that day based on need and not on potential for income. Imagine data aiding with that decision making. He’s saying the government is offering incentives or bonuses for keeping people healthy, thus encouraging this “value-based” care as opposed to “volume-based.”

Addressing healthcare (or energy or education for that matter) with a startup is so awesome and I love that Aneesh is on a roadshow to talk about it and promote it. This type of thing is why I love what Aza and crew are doing with http://massivehealth.com.

38:30: Great examples of people/startups working on these things using government data, etc