161. Jamie Hodari on Management Agreements, Partnering with Hotels and Enterprise Demand

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161. Jamie Hodari on Management Agreements, Partnering with Hotels and Enterprise demand

00:00:01 Welcome to the everything coworking podcast, where you learn what you need to know about how the world wants to work. And now your host coworking space owner and trend expert. Jamie Russo, Welcome to the everything coworking podcast. This is Jamie Russo. I'm so glad you're joining me today. I have a very special guest. All of my guests are very special.

00:00:37 Today's guest is a little more well known than most of my guests. So I look forward to sharing our conversation. Before we dive in this episode is brought to you by my masterclass three behind the scenes secrets to opening a coworking space. If you are working on starting a coworking space, I want to share three decisions that successful operators make when they're designing their coworking space.

00:01:02 This masterclass is totally free and it's about an hour. If you'd like to join me, please register@wwwdoteverythingcoworking.com forward slash masterclass. So today's guest is Jamie<inaudible>. He is the co founder and CEO of industrious, and I've met Jamie a few times. He's been at GWA conferences, had seen his co founder are always extremely giving of their time and perspective is co-founder Justin,

00:01:33 um, participated in a live session that we did in New York at the player's club a couple years ago for the GWA. Um, and I got to know a little bit about their story then, but it was really special to talk to Jamie today, get his perspective on, you know, where we are in the industry, what their portfolio looks like,

00:01:53 how they're looking at the market, what's next for them. They've committed to some, um, adding diversity to their board. He shares a little bit about that. He has some innovative projects underway. One of them is a partnership with wife hotels in Brooklyn. So he shares a little bit about that Genesis and how that's going. We talk about, um,

00:02:15 pricing power on what some people are calling pro coworking or coworking 3.0, um, some opportunities that he sees in the marketplace, his perspective on the decision making timeline for corporate employers, giving budgets to their employees to choose coworking spaces. And then he shares a little bit about, um, what work is up to you and work is the, uh, work,

00:02:43 uh, Oh, I lost the acronym, the council on workplace readiness that is specifically, uh, developed for coworking spaces. Um, Jamie initiated that effort and has invited service providers, real estate firms, and lots of the larger coworking places to get together and give some guidance to the industry, particularly around safety, through COVID. And he talks a little bit in that vein about the challenge of being a CEO during a global pandemic.

00:03:16 So he's very approachable, um, shares, you know, his background and his story. So I hope you enjoy our conversation. So I have with me today, a very special guest who, um, had to walk into his house from the backyard. He was trying to hang out in the backyard because he doesn't have air conditioning right now. So we'll,

00:03:37 we'll ask him about that. But Jamie Heydari is joining me today. He is the co founder and CEO of industrious and working on some very interesting, innovative projects. Jamie, I'm looking forward to chatting with you about your experience as a CEO during this pandemic, talking about kind of, you know, industry chat and learning a little bit more about you.

00:04:00 Thank you for sitting in your house and sweating well, while we chat. Thanks for having me. So you're in Brooklyn. Yup. Yup. And you've stayed there. You have not defected yet to a suburban, an undisclosed suburban location. It's funny you ask that. I, we rented an Airbnb for the summer, like basically in the Poconos or on the border of the Catskills and the Poconos.

00:04:27 And I, um, my wife, I'm like not one of these guys is like, Oh, my wife wanted to kill me, but my wife genuinely wanted to kill me because I didn't read the listing because it's an Airbnb. You look at the photos, you look at the price, like what is in the listing. It turns out that the listing for this house very clearly laid out that it is a George Washington reenactment house.

00:04:51 So it's a recreation of an 18th century cabin and there's swords and muskets. And like there's a fake Tavern in the basement. And then all these portraits of the owner dressed as George Washington that they like left up rather than taking down when they Airbnbed it. And so we, we we've been going back and forth between Brooklyn and there. And for the first couple of weeks,

00:05:12 we were like, this is so creepy. It felt like in a horror movie where the eyes of the painting, like follow you. And at this point, like the Airbnb ends in a few weeks and we're going to be, we're going to Ms. George Washington house. But, but this week I'm in, I'm in Brooklyn. Like I said, we were going back and forth.

00:05:28 Right. So I love it. That your wife interested you to book my husband and dog big mistake right here. My husband booked last week in Tahoe, we were, so I have an eight year old and we were doing the, okay, I'm going to entertain her for one week. You take the next week. Cause we can't both take endless time off from work.

00:05:46 So he's like, well, you should come. And I look at the listing, it has no wifi with none at all. There's no George Washington and no swords and muskets, but no wifi. I was like, well, that's not going to work. So what I learned exactly well, but the other thing is you probably got the last Airbnb available in the Poconos because I know we chatted beforehand.

00:06:09 I'm in the Bay area and my husband, I did the whole like, okay, we can't fly somewhere. We got to rent something for, not for the whole summer, but we were just looking for, um, you know, a little getaway. And it was like, we were the last people who had that idea and it was not Oh yeah,

00:06:26 yeah, yeah. For sure. There's very little left. I will say, you know, sort of, I think germane to this conversation. I I've been going into the office a couple of days a week and working from home a few days a week. So people who are truly working home full time, they can go to Boise. They go four hours away.

00:06:44 But because I've been like, um, I've been, I've been going in then, then it's we still been going up periodically, but I'm, I'm really liking that setup. And I know it could seem like, yeah, you're biased and you have a professional obligation to say you like that setup. But I think, I think if you can, you know,

00:07:04 obviously one of advantages of coworking or at least coworking with kind of private offices is you have a private office of your own, you know, four 95, 98% of American workers. That's not true. And if I had to work in a big open floor plan, you know, tutored people in a big benching situation where you just try to space a little bit apart and you wear a mask all day,

00:07:26 then I would probably not be into, into going in. But, but when you have your own private office, I mean, it's fancy. It's like, I don't know. There's a reason people talk about like the corner office and the, but I do think if you have your own private office, we see that with our customers a lot then to a couple days a week,

00:07:43 be able to get out of working in the living room. It's it's really nice. Yeah. I think that's sort of the, the industry conversation I've been having is I felt like last week was the first week when I started seeing like the wall street journal and the guardian, like finally doing like this expos on how working from home is not that great,

00:08:03 but they they're sort of making it, you know, one extreme to another. They're not talking much about that middle ground. And I think you're totally right for most of us. Right. I have, I do live in the suburbs. We do have a home office, but we have one of them, my husband said, I'll do so we have the schedule,

00:08:22 you know, on Sunday nights I'm like, okay, put your phone calls down. And we negotiate a place who gets the office for the calls. Yeah. So, so I think you're, yeah, it's an interesting time. And that's well let's so let's back up and talk a little bit about you. Cause I want to dive into that, that question kind of when we're going to start to see that play out.

00:08:43 But so you and I started to chat a little bit before I hit record. So I was in Chicago when you started your first location. And I know I've talked to Justin about this, but I can't remember your full story. And I looked at your LinkedIn, you have quite a pedigree that we don't always see in coworking. So tell us your story and how you and Justin came to be in coworking.

00:09:09 So we launched that location in 2013. So we were kind of, you know, raising the money and getting ready in 2012. Um, the context was Justin and I were next door neighbors growing up in Bloomfield Hills, Michigan, like suburb of Detroit and truly next door neighbors like my sister's bedroom and his bedroom. It was almost like all awkward and how the windows like look directly into each other.

00:09:36 And we always thought they would date and they didn't. So he's not my brother in law, but he is my best friend and neighbor from growing up. Um, you know, but our lives that take us in different in, in, in, in different directions, he, he spent most of his career in real estate. I was a corporate lawyer.

00:09:52 I originally was a journalist actually for the times of India in India. Um, and then I, I kind of had a, I worked at a hedge fund and then I had this kind of like crisis of conscience. And so at the time we launched industrious, I was actually running an education nonprofit in East Africa, but I was missing the for profit world.

00:10:13 Like I really liked working at a hedge fund. I just felt like, is this really what I should be spending my life doing? But I missed the for profit world. So we launched industrious as a side project. Neither of us are from Chicago. We didn't have any connections to Chicago other than being Midwesterners. And I was living halfway around the world,

00:10:32 um, at the time. And then industry just really started to take off there really quickly. Meaning within the first couple of months we were both like, Whoa, you know, this is kind of double what we thought, you know, what we had put in the projections. And so within, probably for nine months to a year, I ran the organization.

00:10:50 I was running at the time, which is it's called Kepler. And I was running industrious simultaneously. And if some point it became like completely unsustainable because the site also was like a fast growing. And so I, I left Kepler and moved to sort of, you know, full time at industrious about one year in once we were actually kind of launching our next six location.

00:11:15 And Jay was Justin not in Chicago either. No, he, we were both, well, I was going back and forth between Kigali Rwanda and New York and Justin was living in New York, like pretty much full time. Okay. Yeah. So you, so how did you pick Chicago is a location? Um, we, uh, I think we felt like pretty early on that,

00:11:41 um, that the ability to buy your kind of workplace or by your employee experience as a service, rather than doing it yourself was very, was going to be very universally received or well-received, or kind of utilized over time. And so, you know, that's not such a strong thesis to start a business with, but in general we felt like there was a white space for a more premium,

00:12:05 more elegant product in the market. But second that this was not a techie San Francisco, you know, Soho, Brooklyn kind of thing, that this was going to be a great fit for accounting firms and law firms and consultants and, you know, marketing firms and everything in between. And so as a result, we were looking for a city that like didn't really have a particular bent that was like famous for being,

00:12:32 you know, a very balanced economy, like totally. So that if it went well, we could kind of say, yeah, we could go to investors anywhere. It's not that this did well in Soma. So therefore you can't extrapolate anything from it, but if this does well here, then it should do well in Dallas and other places. And that turned out to have been in hindsight,

00:12:53 I think a good strategy. Yeah. I remember. So I opened an ER very beginning of 2012 and I think 1871 in Chicago had just opened, but there wasn't much. And you came in and kind of nailed all the things I had gotten wrong. I was in the West loop. It's like stunning view, but it was the, you know,

00:13:14 we just talked about the private office. And I think particularly in Chicago, like, you know, there are market differences to demand and I think Chicago is an office town. And so I spent my first, you know, like two years building more offices built you right. More chest, definitely more offices, but I loved, you know, to your point,

00:13:35 I loved the mix of, you know, we just had a little bit of everything in our space too. And then I, my family moved to Palo Alto. So I, until very recently also had a space in Palo Alto. And those two markets to your point are just night and day, all startups I'll, you know, guys can, it hit,

00:13:53 they're hitting their milestones for investors, but yeah. Um, okay, so you have over a hundred locations today, is that right? Yup. Yeah, yeah, yeah. Across like 55 cities. Yeah. So what does your portfolio look like? Suburban versus CBD? So the portfolio is like to start at the city level, 70 per 30% gateway cities,

00:14:20 you know, LA San Francisco, New York, and then 70% non gateway city, which, which is a mix of, you know, down like large cities like Dallas and then all the way down to, you know, Madison, Wisconsin, or somewhere like that. Um, within Metro areas, you know, if are, if it's a Madison you're only gonna have one location it's in the CVP.

00:14:40 If it's a Chicago, Atlanta, where you have five, six, seven, you're nine locations, then for cities like that, it's about one third, suburban two, one third, suburban one-third mixed use walkable neighborhood. And then one third true CBD. Obviously we're still growing very quickly. So that might be a moving target over time, but we feel like pretty happy with how that's played out.

00:15:07 So we'll probably try to stick somewhat to that blend. Yeah. I was going to say another, you probably didn't predict over a hundred locations when you started in 2013 and then you may have had some inkling for, you know, you know, reasons that you played your portfolio out like you did, but I think, you know, we're seeing that shift work work well in your favor.

00:15:29 Yeah. And then You also started kind of pushing hard for the management agreement approach. How is, how is that playing out, you know, sort of the leased spaces versus the management agreements in the, in the pandemic. So we started really pushing in late 2017, early 2018. Ian is kind of a failure. Like I think, you know,

00:15:54 to convince the landlord that they should be putting up the capital and they should be bearing the risk. That's a tough sell. I mean, real estate is just such a conservative industry. You have a lot of constituents, you have lenders. And then over time we chipped away, we chipped away and it really started to take off until by the end of 2018,

00:16:11 you know, there was, we had lots of management contracts in the pipeline and we basically haven't signed a lease since probably Q1 of 2018. All we do is managing contracts, but of course we already had 50 units and we bought a couple of companies that were, so let's say we have 50 leased units. And then everything since then has managed during the pandemic.

00:16:32 It is different. I mean, there are advantages and disadvantages of each, but overall for me, it's given me a lot of conviction that the managed model was the right move. Like it's just so much easier when you're on the same side of the table as the landlord and you make 15 or 20% less. Okay. You, you make the, you know,

00:16:49 versus being in this existential conversation because you're, you're at odds with each other as a leaseholder and you can't coordinate. Um, the thing I would love to do is just convert our legacy leased portfolio to management contracts. Um, if you want any indication of where my heart is. So do you have, you know, do you think, I guess a,

00:17:13 I won't ask about your specific landlords, but do you think in the market in general, do you think we've, we were hitting the tipping point for landlords being more entrepreneur. Okay. Totally. Totally. Totally. I mean, first off we have so many, you know, we have 77 more in the pipeline. Like at this point we have managing contracts with 20 of the top 25 landlords.

00:17:35 So it's phony if they were to say, Oh, that's not really our thing. Yeah. I mean, I'd hate to say this, but like to competitors, but like, because they've done it with us, they can, they, they certainly can't claim like, Oh, that's totally outside the bounds for us. I think Q four of last year was the tipping point.

00:17:51 Something about the sort of botched we work IPO or whatever it is. And to me, the clearest data point of that was Seabury put out a report of, of Q4 activity in the coworking industry. You know? So let's say it's January of this year, um, when the report comes out and they were talking about square footage of new lease has done,

00:18:12 and they don't report on our management contracts cause they aren't leases. So they don't get picked up by like normal. And we were like, Holy crap, we signed more square feet of managing contracts in Q4 than the entire rest of the industry sign of leases. And that to me was a sign of like, okay, the lease based model, landlords,

00:18:33 neither party wants to be doing lots more of them. And so, and now what I've heard through the grapevine is that most providers, if they are trying to grow and you know, it's a pandemic, so maybe a lot of people don't want to grow, but it, where they are trying to grow are certainly trying as hard as they can do it via management contract.

00:18:50 So I think that shift has happened, you know, not a moment too soon. Yeah. So do you think sort of the capital issue lender issue is, is kind of getting out of the way? I mean, well, management agreements happen outside of kind of the top, you know, 10% of landlords because of that challenge. Do you think lenders are starting to loosen up their view on flexibility?

00:19:17 My sense is, and of course that like, you know, the landlord is the intermediary. We don't really get to, we've talked to a lot of landlords. I mean, lenders to try to soften them up. But in the end, we're not in the room during the conversation, the lender, it sounds like if the workplace as a service or the sort of variable income portion of the building is less than 20%,

00:19:37 that you're fine. And to me, as a result, it's not really a big landlord, small landlord thing. It's kind of a big, you know, if you're a, you're a 50,000 square foot building, it can be hard to size the variable income portion appropriately. So I do think it skews towards midsize and larger buildings because with a small,

00:19:59 and we've done a couple where we're the whole building, but I do not envy that landlord having to sit in a conversation with their lender about the entire building being variable. So I think that's going to be a rarity. So, um, I'm curious, I, there is an somebody posted on, uh, well, it's actually a globe street, um,

00:20:25 article somebody posted on LinkedIn kind of talking about their thesis that landlords will start to attract like their traditional customers just through flexible leases. So sort of saying like, like calling it like coworking 3.0, like you're not going to go work in a coworking space, but what you're going to do is go back to your same space, but it's going to be under a different structure and there's going to be more flexibility and more,

00:20:54 more plug and play. Maybe it's, you know, the spec suite Stripe type of model. So, you know, aside from the kind of hotel model you just did, which we'll talk about in a minute, do you think that has the same, um, sort of pricing multiple as a more service model that, that industrious typically does? This is the portion of the podcast.

00:21:18 If you don't mind where I will rant for 30 seconds about what our industry is like have at it. You know, I, uh, I see that in a lot of analysts reports, it's the flex industry what's going to happen with flex who's, you know, who's going to give flexible leases. And to me that's a commodity, that's just a feature of the product.

00:21:41 It's like saying, you know what, cell phone someone's going to buy this cell phone. Cause it's not attached to the wall. Like, yes, it's not attached to it. That's part of what makes it a cell phone, which is true of an LG phone or a Samsung phone, or, you know, uh, you know, Apple like it's,

00:21:56 it's, um, it, that's not the value prop in itself. And so, yeah, I think there is a commodity portion of the market where the value prop is flexibility. And I do think over time, if I'm Blackstone or Brookfield or whoever, I could just offer that myself, I don't really need a third party to manage simply giving people two year leases instead of 10 year leases.

00:22:22 On the other hand, I don't think that's what this industry is. I think this is an outsourcing industry. I think if you're going to do this right, you are going to companies and saying, I can deliver a better day at work to your employees than when you do it yourself. And when you think about out what that takes that until you're at 500,

00:22:41 600 people, you're going to get a better workplace outcome. If you have a private space that's dedicated to the company, but you know, that's basically going to be desks and a couple of conference rooms. And if you want to give them lounges and coffee bars and sensory deprivation focus rooms, or when they have to write that for our investment memo and casual conference rooms and formal conference rooms,

00:23:05 then you are going to have to take some portion of the space and have it be dedicated private and some portion and have it be shared. And then you have to build a very logistically complicated complex that 50 companies share that like in real time, they're moving in and out of private and shared spaces and have a service layer that sits on top of that.

00:23:25 And it's not credible that any landlord is going to a deliver that and be able to go to Johnson and Johnson and say, we're the experts at what, at what makes for happy, productive employees. So I do think whatever the globe street art article was arguing, if they're arguing that the very, very, very base layer commodity kind of spec suite version of the market will eventually just be run directly by landlords.

00:23:54 I think that's true, but I think in general, that's not where the core of the market is. I guess I'd finished by saying, if you think about most outsourcing industries, that's where they start, you know, manufacturing outsourcing in the seventies and eighties was like, I need a couple of hours of factory time, but now if you look at Foxconn or Flextronics,

00:24:12 they have like their global supply chain outsourcing providers or with logistics like ups or FedEx, like they bind by its very nature. The really complicated, really sophisticated, like elevated. I can do this for you and I can do it better than when you do it yourself products, I think tend to win over the, like, I'm going to give you a bit of flexibility.

00:24:38 Yeah. Agreed. I, yes. I made a comment to the post that is in line with your, your rant. Okay. So let's talk about your partnership with wife hotels, which I was having a hard time picturing until you posted this morning or it was maybe it was not this morning. I saw it this morning on LinkedIn, um, a photo of one of the rooms and it's,

00:25:00 it's beautiful. And I think that hotel, you know, it's really lends itself. It's a boutique hotel, but yet, so talk about, you know, that opportunity, what that, how that plays out and where does it fit in, in that sort of service versus commodity offering layer? So, so the impetus for this or that, you know,

00:25:23 kind of, we, we see a lot of, you know, to even the, what I was saying earlier in the conversation about working for the office a couple of days a week, working from home a few days a week, um, you know, there is, it's just very clear, there's this kind of, there's this endeavor to, to,

00:25:41 to allow employees to work from anywhere, not only to work from home, but to have choices of where to work and in particular possible within a city, certainly a city like New York or, you know, like the majority of white collar workers commute by public transportation to have local, no commute options. Yeah. And you know, we looked into a lot of different ways to effectuate that in neighborhoods where we don't currently operate.

00:26:06 So we have a lot in New York locations, but take where the wife hotel is Williamsburg. It's a, it's a really beautiful residential kind of mixed use neighborhood with a little bit of office, but it's mostly a residential neighborhood and it's, you kinda can't get into Manhattan other than via the subway from, from there. So you have lots of people that things are going into place to work.

00:26:26 Originally. The, our thought was, well, let's just take over some accounting firms, all offices and convert that into a shared workplace with Reverend could have their own private office. But when you look around, the reality is 99% of American offices at this point are big open for planned spaces. So there are actually, and so in a really weird way,

00:26:49 the idea of taking over a hotel or a couple of floors of hotel and turning each of the individual rooms into a private office for one or two people sounds quirkier than if you took over an existing office. And yet in actuality, it's a better fit for what people want. So the white hotel was perfect because to your point, it's a brick and timber hotel.

00:27:09 It feels like a really gorgeous office with a moderate amount of repositioning. Versus if it had like, you know, like Florida, we wallpaper, right. You know, an old walnuts, we are going to start doing a lot more of this. Cause they turn out to be more successful than we thought. So now we're having to be like, okay,

00:27:28 well, how could you convert a West Inn or something where it's a little bit more, it's going to be more clear, like in the white, you wouldn't even know you're working in a converted hotel. Most hotels. I don't think our product team is hard at work, trying to figure out whether you could effectively convert a normal hotel room into an office and have it be a really wonderful work experience.

00:27:50 And in terms of sort of like, where does your service layer fall into that? Is that, does the hotel take that on? How do you manage that? We're part wondering what the hotel, I mean, another funny way in which a hotel is closer to what we do right now, there's the, there's the reality that are common areas for the most part are closed in our location.

00:28:10 So people are just working in their private offices. So that's obviously the other one is as a result, our service layer is very like, it's like room service. You know, you, you, in, in most industrious is across the country. You can go in the common area if you're wearing a mask and you pick up your coffee and you know,

00:28:27 but it's relatively regulated. There's restrictions on what you touch, what you can. So a lot of it is the community manager bringing a cart with martinis around or bringing around XYZ. Yeah. It kind of mirrors the hotel room service experience. So, um, so that way it's a, it's a nice fit. It's not actually that different from what you'd be experiencing in a normal office right now.

00:28:51 Yeah. So it kind of fits into this. I'm not coming in to socialize, but there's a service layer. I think it's super interesting to think about what this looks like past COVID right. Like somebody was like, you know, some hotels have pools and they have, you know, things that I wouldn't necessarily participate in right now, but you know,

00:29:09 the, the amenity sort of aspect of it and, you know, certainly get the lounge area. You could have community spaces. So it's, I mean, it's, it's it's yeah, go ahead. I think w well, I think, I think this particular point is something that, like, if I think about stuff that I've been wrong on,

00:29:28 you know, over the last few years of industry where the rest of the team was like, do Jamie your get with the program you're wrong. The number one example for me was when we started doing industrious is in malls, our business intelligence, our unit operations team, our customer experience team are like, they all were gung ho. They were just like for the average person that I would so much rather work in a mixed use environment,

00:29:55 you know, in, in the example of a motel, a pool or an example of a mall with a food court and different restaurants and different indoor outdoor spaces to go to then on the 37th floor of a giant office tower, like, unless you're really just trying to impress your clients and they're going to, you know, nine times out of 10,

00:30:15 we're gonna prefer that. And for me, it just felt like, especially because so many of our customers, our enterprise customers, it didn't feel credible to me that fortune 500 and want to work in a mall. I was wrong. Yeah. I got them buying it. Yeah. I was So wrong. Our, our, our first industrious and the ball was the highest performing industrious of that entire year.

00:30:35 And so that suggests to me that, you know, that point about, well, hotels have all these different amenities that might not be useful now, but post COVID could be, I don't know if you know, it's going to become a thing in perpetuity that portions of hotels get converted in private offices. But I do think the broader theme of working in non traditional spaces,

00:30:53 working in spaces that feel more like it's of a piece with the other spaces in your life, your favorite bar, or your favorite restaurant versus some sequestered sort of isolated thing that is that's 34 is above street level. And is kind of like, you go go up at 8:00 AM or 9:00 AM you come back down at six? And Workday's done that. I think that,

00:31:14 um, the magically is very much where I feel like the world of work is headed. Yeah. And so, I mean, that segues a little bit into the, you know, sort of the corporate employee and that tipping point, I feel like we've all been sort of waiting for that to happen. And now here it is. But what I'm curious about is are you seeing,

00:31:36 you know, I said earlier, like, I feel like we just started to see the paper start to print. Like it's not all sunshine and rainbows for people to be at home, which I'm in your camp of like, let me out get my husband now. I want to go back to normal. Um, do you know, have we gotten to the point,

00:31:55 or when do you think it will be when the companies say we need to pay for this, you know, we need to pay for people to have these options. Like, I feel like they're sort of in this dichotomy of everybody's at the office or everybody's at home and they haven't gotten to the what's the middle ground, you know, can they go to the local mall and work?

00:32:13 Yeah. Yeah. It's interesting. So two kind of like points of reference or kind of data points on this. I think the first is, um, I've seen, we work in the press say that the vast injure, their sales since covert have been the large enterprises and that's been surprising because what we found is we thought that would happen. And what we found is in terms of like,

00:32:36 when did the tipping point come that people were like, I can't, I cannot be in my living room seven days a week for another four months. I think that from what we saw that started like six weeks ago, let's say eight weeks ago, but it was, it was mid sized businesses where the CEO was the decision maker who was close to the ground and was like,

00:32:56 Oh, hell no, I'm not working remote anymore. Whereas a big business is, I think it takes longer for employee sentiment to trickle up. It takes longer for them to realize that. And so I feel like in the last four weeks you started to have a lot more voices saying, Hey, we're starting to hear from our employees. This is becoming unsustainable.

00:33:13 Whereas in the SMB segment, you know, we, we'd already made, you know, 500 different companies that already, you know, kind of moved into industrial since covenant started. But let's say that was like 80% small businesses, 28% enterprise on the enterprise front. What I see right now. And, um, and I think this is pretty definitive cause it,

00:33:37 cause it's, it's, uh, it's consistent across a really wide range of company types is I think lots of companies are now starting to say, okay, we need a solution. I've heard very few companies say everyone's working from home until there's a vaccine full stop, unless they're really cash constraint. And it's just like, we're going to use this crisis to like slash our real estate costs.

00:33:58 And sorry, if it, you know, is on the backs of our employee experience, but let's setting that aside, most companies are in the middle of, okay, how do I lock some kind of, sometimes in the office sometimes from home safe work, from anywhere program. But I think they're still, they're not, not tons of them are in decision making mode.

00:34:18 Like you talk to the CFOs, the heads of workplace. And like, they're just as confused as the rest of us. They're in like, Holy crap, what comes next mode? And so there are some companies that are particularly quick. They're like, okay, here's the plan in, you know, we have 7,000 employees for this type of employee.

00:34:34 This is what's gonna happen if your sales person has external, but in most, most like that's a really complicated play on that probably takes two to three months of internal, just like alignment of the various stakeholders to put into place. I think most companies are like, they've still got another six to eight weeks to finalize what the plan even is, but they're all marching towards the plan.

00:34:57 There's very few that are like, you know, if you're a big, sophisticated business that are not in the middle of like waiting through the muck and figuring out what the plan is. Yeah. I had a theory for awhile that anybody with kids was not willing to say that working from home was a big problem because of the school issue. Yeah. Yeah.

00:35:18 Yeah. I don't know if it's been officially announced, you know, California, like nobody's going back to school. And so if you're a parent and you're like, well, I can't leave. I mean, you know, everybody will start to figure out how to work that out, but I was like, everybody's just lying to their boss because they can't have the office open and be forced to go the office with the kids at Al so people are lying.

00:35:40 So no, I think your, your decision making, you know, timeframe makes a lot of sense. And then I think bigger companies, maybe even more just risk averse around, you know, the safety piece and so, you know, smaller business kind of willing to make those decisions and let employees choose for themselves. So, so yeah, so you,

00:36:00 you, I think you're probably right. Maybe full we'll see how we'll see how everything goes. California is not in great shape. I think new York's doing better than, than we are. So, um, and you probably see that across your portfolio too. I would imagine just the diversity of how you're kind of managing things locally That has been so eyeopening.

00:36:24 Um, you know, I guess I would start at the micro level on that point about just the diversity of how to manage everything is this moment has definitely illuminated for companies that different employees are different, which is, sounds like a dumb phrase, but a lot of companies are like, all salespeople are X. You know, this policy is, and just recognizing there are people with no childcare options,

00:36:49 then two kids who are not gonna be able to in school in the fall there's people who are single and live in a studio apartment. And all they want to do is get out of the apartment and they would come five days. They would come seven days a week. They could, and there's everything in between. And so that's that at, I think has been really helpful to have large businesses become,

00:37:09 like, get a more textured approach to distinctions and employee needs. And I think that's true employed employee it's true company company. And it's also been true for us just at a regional level. The way that this is playing out in Texas is so different than in California, which is in turn so different than in New York. And I think, you know,

00:37:33 probably a lot of the listeners of this podcast are coworking people in some way or another. And so we know that when you put hundreds of people in a space that's different than what most Americans lived experiences at this point, maybe it was true back in the day where the people went to church and bowling club. And there was more ways in which you interacted with people that maybe weren't like you politically,

00:37:58 or weren't in the same industry as you or whatever. But I think coworking is one of the last bastions left where people consistently have to interact with people they disagree with. Maybe they've called their Facebook feed at this point where all their Facebook friends have the same politics with them or they're, you know, they only follow the people on Twitter, but then they walk into their coworking space.

00:38:18 And like, you know, in Georgia, Texas, we have people who want to bring a gun to the office. We have to set up the Guttmacher and then people were like, Oh, hell no, I'm not going to the office. If someone else has. And COVID is like, you know, has really like, um, expose some of those fractures.

00:38:34 So we've had to, we had to manage very differently, primarily depending on how conservative the city is, like politically, because so much is ending up, correlated with that. But for, for other reasons as well. So I'm curious about your experience as a CEO during this time, you seem, you seem like you're in a pretty good place. We had a podcast scheduled in the middle of March at some point,

00:38:59 and I remember seeing it on my calendar and I was like, he doesn't want to talk to me today. It's like, I didn't even ask. I was like, let's just reschedule. And you were like, all right. I mean, I I'm happy to chat. And I thought, well, one you're not on a plane. And so you actually can talk.

00:39:16 And then two, I was like, well, you know, you've been really outward facing. Um, but I'd be curious, you know, you've, I suspect you haven't seen anything like this in, in your leadership history. So yeah. Talk about that a little, I think, um, I think, you know, it's, uh, it's,

00:39:37 uh, we are in an okay place. So I do think it is helpful that industrious is like at, just at a corporate level isn't existentially threatened just in terms of, we kind of know where we bottomed out in performance, you know, how much cash we have in the bank. We know like, so it doesn't mean it's not for sure the most stressful,

00:39:57 complicated period of my career and of the company's history, but there is, you know, I, I know there are lots of companies that are sitting here saying, are we gonna exist in two or three months? And that's the level of terrifying that I feel very lucky to have gotten to avoid. And probably as a result, you know, I'm a little bit hesitant to like,

00:40:19 complain about my experience as a CEO through this, knowing that there are entrepreneurs who, you know, that I got a little lucky here. Um, and, and that, um, there are people who've had to deal with stuff that is going to scar them for the rest of their career in a way that maybe, maybe I've bought on the other hand.

00:40:37 I do think it's been very tough. I think it's been very clarifying. I bet every listener, if you run a business or, you know, are part of a management business, it's just very clear that just like people are using this moment in their own lives to be introspective and think about what their priorities are. And they're having, they're realizing there's certain friends that they call every three days and they're sad if they don't talk to them and certain friends who they were seeing a lot for contextual reasons that they haven't called in four months.

00:41:02 And you know, it kind of, it reveals certain things about your family, your life, your, I think it reveals certain things about a business and kinda forces you to think a lot about what matters to your business and then also for you as a leader. And I think what's come out of this or what's the thing that I, that has felt the most pronounced to me is how much I underestimated,

00:41:27 just how deeply intertwined someone's employer is with all of these of their life, to the point earlier about people not going to church as much as before or bowling league, I think for better or worse people. A lot of they make a lot of meaning in their life, through their job, through their colleagues. Um, and so when black lives matter really took center stage,

00:41:51 I kind of assumed people would want to talk to friends. They don't want to talk to family. Like they're not looking to sit and sort through this complicated societal issue with their coworkers. And like, boy, was I wrong on that? Every one of our, we had to do therapy sessions, we had to do group conversations. We had like,

00:42:08 and I think the same has been true with, with the pandemic and people who have relatives who are sick or yeah, I think more than I ever could have imagined people are turning to industry. It's not our customers as much, but to some degree, but certainly our employees turning to the company to saying like, we're all in this together to navigate this moment.

00:42:26 And I think as a leader, that's pretty, that's scary because you, you know, it's just an additional level of pressure. And it's, you know, one thing that I think someone told me once about companies I think is very true. It's like, you talk about it. Like it's a family, you know, we're, we're all a family here and it can feel like that's an answer,

00:42:47 but it's really more like a sports team. Like you are in it together. You are, you know, like you'll go to the ends of the earth for your teammates. And then you wake up sometimes in the off season when people get traded and you're on a new team and you have to, you know, it's like our board should fire me whenever or they wanted to fire me.

00:43:06 And so that intertwinement, I think, um, I, I don't want to go go on for too long, but I think this is obviously something it's applicable to all businesses right now. It is a little scary cause people can, you know, see companies do layoffs people. Um, and, and, and, and that, that is probably an additional layer of like,

00:43:25 Whoa, like, you know, industrious is such a central figure in the lives of our employees, um, above and beyond what I ever imagined going into COVID. And I think I knew that to some degree, I don't know, Well, to some extent you're, you know, you're sort of a purpose driven workplace right there. So people buy into your vision and what you exist for differently than if they work yeah.

00:43:52 For an ad from right. You know, who knows. And so I could see that being different and you just added, um, an African American and a female to your board. Can you share a little bit about that commitment? We, um, so we've, I would say we still have a long way to go, but I do think,

00:44:12 um, as a business we've, we've had a pretty robust, broader commitment to, to diversity on our, on our actual teams, you know, among our employees. And, you know, we, we, every year we set goals like core core goals for the business, the seven or eight things that everyone aligns around that matter most. And among those seven or eight things has always been a target for the diversity of the team diversity and hiring.

00:44:44 So I think that there's always been this thorn in my side, that that's been true at the company level. And it's really effective, you know, when we started being like, we need to, you know, let's say we had 30 employees, 40 employees, and it was like, okay, we have to start having to be deliberate in our hiring practices.

00:45:03 Um, you know, 27% of people in management positions and industries are women. It's now like 70%. Um, you know, when we started the company was like 20% people of color. It's now a bit over 40%. And so I'm such a believer in if you name it and you set out to achieve it, and you just are thoughtful about hiring and practices.

00:45:30 I have no patience for companies that are like, we try, but it's a pipeline problem. And, you know, I think for us, the last bastion is the C suite of the company and the board and the C suite. The issue is we haven't made a C suite hire in a long time. We're making one right now. Um, and,

00:45:47 and on the board, I never got to pick our board. It's just, you know, our largest investors. Right. And so this year, Very diverse we'll pick on them. Yeah. Yeah. Well, this year was like the first time where we just said, look, we're going to bring in independent board members. We're like, we,

00:46:02 the company needs to have more say in the makeup of its board and everyone was on board with it. And I think we were pretty explicit about what, what our hopes were. And we got two amazing, amazing board members that are going to be helpful just as guides and mentors and sort of, you know, overseers of the business in addition to anything,

00:46:24 you know, more broadly about bringing in more diverse voices in the room. Yeah. No, I love that. I love that commitment. And I also, I think it's so important. I get, you know, the yard signs are one thing, but it's like, so what's happening after that, you know, especially where I live, you know,

00:46:42 I live in a place with a lot of influential people and I w you know, what's going on in your boardroom? Did you know, I was picking out my husband, did you guys have a conversation about this? Did you, did the board bring it up? Like, you know, who's responsibility, is it, and it, oftentimes it's not happening.

00:47:00 And so it needs to, so, yeah, so that's, that's great. So the other thing I don't want to, um, go over our time here, curious about, so you guys helped to form the workplace operator readiness council work. Um, can you talk about kind of the goals and what's happening today with that organization? Yeah, the,

00:47:24 the, I think, uh, I think so there's two things. One is, I do think our industry is historically, I think among small providers has been really good at information sharing. And, um, and like, I think the degree of comradery among independent providers is great and among the most heartening or best I've seen of any industry on the other hand,

00:47:51 among larger providers, it's, there's the least transparency and information sharing I've ever seen. You know, it makes sense. Yeah. Hotels are really competitive and yet everyone recognizes, it's kind of helpful to know what rev par is. That's okay. Data sharing on the back end. I know we keep talking about how do we yeah. How do we get there?

00:48:14 Yeah. So little data in our industry. Yeah. And then, and then I think you, you know, that was compounded for me by when COVID starts spreading. And you saw all these calls for cooperation and governments cooperating and global information sharing and, and how little of it actually happened for me, those two things in combination, like, I've always felt like God,

00:48:35 I wish I wish there was a little more transparency among large operators and second, well now definitely we should be coordinating rather than acting, you know, kind of out of concert with each other, those two things together, we're like, screw it. And it was very handmade. It was like to be honest, it was like I set aside three days and I just made phone calls to every operator in Singapore and Hong Kong and Israel and Germany,

00:49:05 and then to all the big real estate services firms and, you know, landlords and architecture firms. And I basically just tried to kind of like network into the CEO or the highest up person I knew and just said, we should be doing this in coordination. And it was like, you know, that's one really nice. I mean, this is an insane thing to say.

00:49:24 Nice thing about COVID, but one silver lining in general that I'm sure any listener is seeing in a lot of ways in other industries to who has COVID, has it, has made it easier to do big things quickly. Like we, we have some big partnerships we're announcing that I know would have taken 18 months, you know, when you're in the eighth And in the hotel example,

00:49:50 somebody like moving furniture out and put it. Yeah, Yeah, yeah, yeah, yeah, yeah. The work, the fact that work took three days of phone calls to put together. I bet you, it either would never have happened, but for COVID, or it would have taken a year of chipping away and getting internal approvals. And yeah,

00:50:10 I hope that post vaccine, that nimbleness and willingness to like, not have to like triple check every possible Alliance or partnership to make sure it doesn't run a foul of a nut. You know, I hope that that lives on post COVID agreed. So What is the, what's kind of the, the vision what's on the docket for that group? So the original,

00:50:35 it was very much safety oriented. We got to put out a playbook specifically for these are midsize and smaller operators that, um, you know, that's, that's pretty practical, you know, here's, we're not gonna tell you what to do, but here's the 20 questions you need to be asking, like on staffing here's seven options and then kind of lays out like,

00:50:55 you know, just co in Singapore is, does this mind space, does it kind of give some concrete examples of the various options? Um, and we kind of left it at that. It's not, it's not prescriptive. It's very choice-based cause I think that's what people want. And it felt like the real estate services firms that were putting out these guides,

00:51:12 they're like, you need to do X, Y, or Z. They were only going to be honored in the breach. No one was actually going to do it. And they weren't that helpful. That document is done. We've revised it a bit, but I think it's in pretty good shape. Um, so at this point, I think the big decision for the council is,

00:51:29 does it start to become an ongoing counseling other industries have, you know, up to and including hiring a spokesperson and kind of having someone to speak on behalf of the sort of large global players in the industry, or do we let it kind of, you know, once a quarter we check in, we share some information, we pitch about things that are frustrating us and let it be,

00:51:53 let it kind of be that in that alone. We're right at that crossroads. And I think are in the middle of deciding where to take it. Yeah. I mean, I think the industry in general is, is a bit of a, an inflection point. I mean, I look forward to 2021 when we're sort of sitting more happily in a big demand swing,

00:52:14 you know, to your point, those decision making processes finally playing out. So perfect. Well, Justin, our time is coming to sorry, Jay. I just called you Justin, Jamie and we have the same. Yeah. I see that all the time. The two J's I, you know, I look forward to the, uh, the,

00:52:33 how I built this on the two of you. At some point I love, I always love listening to those conversations about, you know, partnerships because it's like a marriage it's, so it can be so amazing or, or, you know, or not amazing. Um, and you two seem to be, I never thought of it that way, but I,

00:52:51 I would love to get to a point where we, um, where we mirror or to how I built this episode. And then I think, I think getting to do, getting to build a business with, I mean, he's an only child, so I would say he's as close to like more like family, like a brother, um, it's it has its ups and downs.

00:53:11 Um, and I know the data on co on co founders, you know, fracturing over time is, is pretty scary, but we're seven years in and it, to me, it feels stronger than ever. So I think we're just like one of those, you know, like those married couples that got lucky and they're kind of, you know, they're 80 years old and they're holding hands and it doesn't mean they haven't had fights whatever locked away,

00:53:33 but like get deep into improves over time. That's definitely how I feel about my working relationship with Justin. Yeah. And now you've just been through a major crisis together. That's true. Awesome. Well, thank you so much for your time today and hopefully you can go back outside to your backyard and cool off now. Thank you, Jamie. Alright,

00:53:59 bye. Thanks a lot.

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