Speaker 1: Two years ago, August Urbish met up with a friend
Speaker 1: at a bar. She told him, I can't tell you why,
Speaker 1: but you should tell your roommates that you're moving out
Speaker 1: at the end of the year. She uh confidentially told
Speaker 1: me that I should be a part of this new
Speaker 1: thing that we Work is doing, like a new living situation.
Speaker 1: We Work. You probably recognize that name if you're in
Speaker 1: the tech industry. It's one of the most highly valued
Speaker 1: startups in the world, and at least his office space
Speaker 1: by the desk two startups and bigger companies that need
Speaker 1: a place to work. It's a phenomenon that's become known
Speaker 1: as coworking. We Work, at the time was quietly recruiting
Speaker 1: guys like August to try out their newest thing, a
Speaker 1: co living space kind of like a dorm for adults.
Speaker 1: It's called we Live. She assured me that I was
Speaker 1: going to love it. August was thirty two at the time,
Speaker 1: working at an art gallery in Chelsea, living in this
Speaker 1: apartment and a really up and coming neighborhood of Brooklyn
Speaker 1: called Crown Heights. He was finally feeling like he knew
Speaker 1: the neighborhood and he loved his big apartment in its backyard.
Speaker 1: He had a good thing going, which makes his next
Speaker 1: decision perplexing. So side unseen, I signed up for it.
Speaker 1: I moved in March of two thousand and sixteen, and
Speaker 1: it was supposed to be a sort of a shorter
Speaker 1: term thing. I think it was supposed to be about
Speaker 1: six months. And at the time, I don't think anybody
Speaker 1: knew what was going on inside or outside of the building.
Speaker 1: Like all I knew when I was moving in here
Speaker 1: was here's your room. If you have visitors, they have
Speaker 1: to sign nd as. They can't talk about it, they
Speaker 1: can't take pictures, like there's very very hush hush. I
Speaker 1: couldn't talk about it outside of this thing because I
Speaker 1: think they were still trying to figure out what they
Speaker 1: had here. This secretive project was supposed to be a
Speaker 1: major part of we works future. According to leaked documents
Speaker 1: from we Work, executives had told investors that there would
Speaker 1: be thirty four we Live locations by the end of
Speaker 1: which would bring in two seventy billion dollars in annual revenue,
Speaker 1: but in reality growth has come much more slowly. We
Speaker 1: Live still only has two buildings, the one that August
Speaker 1: lives in in Manhattan and another one in Washington, d C.
Speaker 1: Hi am Aki Ito, and I'm Ellen Hewitt, and this
Speaker 1: week on Decrypted, we're taking you deep into the strange
Speaker 1: world of corporate co living. We Work has raised billions
Speaker 1: of dollars on this dream of making everything part of
Speaker 1: what they call the quote unquote we lifestyle. One of
Speaker 1: their corporate slogans is even Better Together, and that vision
Speaker 1: has been an enormous success when it comes to at
Speaker 1: least building a community for work. This is a company
Speaker 1: that's now valued at twenty billion dollars, but we Work
Speaker 1: scambled to extend its success to the home. Life is
Speaker 1: proving much harder. So I recently spent five nights at
Speaker 1: a we Live apartment in New York to try to
Speaker 1: figure out why and what this setback means for one
Speaker 1: of Silicon Valley's biggest hot shots. Stay with us. We
Speaker 1: Work was founded in by a CEO who used to
Speaker 1: live in an Israeli kibootz, and like we said, it's
Speaker 1: valued at twenty billion dollars. That makes it among the
Speaker 1: world's ten most valuable startups. And this is, by the way,
Speaker 1: the same company that just made news for buying the
Speaker 1: Lord and Taylor Building in New York City. Yeah, which
Speaker 1: was a massive eight fifty million dollar deal. You know,
Speaker 1: it's really amazing that a seven year old startup actually
Speaker 1: has this kind of cash all for providing office space.
Speaker 1: And we Live is we works next big bed. We
Speaker 1: Worked didn't officially announced we Live until April, six months
Speaker 1: after August first got that mysterious pitch from his friend.
Speaker 1: We Worked just launched We Live, taking its concept from
Speaker 1: the office to the living room and dorm living for
Speaker 1: grown ups. And you said, it's working. It's very well,
Speaker 1: and I've been really curious about it. It's the side
Speaker 1: part of the business that got a lot of press
Speaker 1: when it first opened, but as far as I know,
Speaker 1: no reporter has even spent a night there. And so
Speaker 1: he sent you in. Well, we Live doesn't advertise this,
Speaker 1: but for the past year it has quietly been letting
Speaker 1: the public book some of the two hundred units that
Speaker 1: We Live New York like a hotel night by night
Speaker 1: for hotel prices. So that was my opportunity. In my case,
Speaker 1: it was about two dollars a night before tax for
Speaker 1: a studio plus room. I booked five nights and I
Speaker 1: packed my bags. You know, Ellen, being a reporter, you're
Speaker 1: not exactly we were extreme customer. No, But in most
Speaker 1: other ways I am I'm seven, I'm a full fledged millennial,
Speaker 1: and most of all, I already do co living. I
Speaker 1: live in a big Victorian in San Francisco with nine roommates.
Speaker 1: If anyone was gonna like we Live, it was going
Speaker 1: to be someone like me. Okay, so take us there,
Speaker 1: it's your first day We Live. What was it like
Speaker 1: a huge community kitchen? The New York We Live is
Speaker 1: this huge former office building on Wall Street. The building
Speaker 1: was wrecked by Hurricane Sandy, so we Work came in
Speaker 1: and said they wanted to lease it. The first six
Speaker 1: floors are office and retail space, but they remodeled floors
Speaker 1: seven through into all these parts of We Live, apartments
Speaker 1: ranging from studios to four bedrooms, plus a laundry room
Speaker 1: and exercise studio. This huge kitchen and these smaller kitchens
Speaker 1: and lounges. Hey, guys, this winning winning. So I stepped
Speaker 1: into the lobby, checked in at the front desk, and
Speaker 1: was given a key card to my room on the
Speaker 1: fifteen floor. The whole point of We Live is that
Speaker 1: the apartments aren't just furnished. They're kind of predecorated. The
Speaker 1: room had a bed, a TV, a couch, coffee table,
Speaker 1: and pots and pants and dishes in the little kitchenette.
Speaker 1: But it also had two patterned accent pillows on the couch,
Speaker 1: a shower curtain with this bold graphic design, and a
Speaker 1: framed illustrated cactus print on the wall. They even gave
Speaker 1: me a blue ceramic cup in the bathroom to brush
Speaker 1: my teeth with. Sounds very chic. Yeah, those were some
Speaker 1: nice touches, but there were some other details that struck
Speaker 1: me as kind of odd. The building is divided into neighborhoods,
Speaker 1: which are these sets of three floors that are connected
Speaker 1: by internal staircases rather than the main elevators. Some of
Speaker 1: the neighborhoods were alcohol theme. My floor and the two
Speaker 1: below it were tequila themed. For example, every time I
Speaker 1: stepped out of my door and walked with the elevators,
Speaker 1: I saw this framed poster that said tequila is my
Speaker 1: spirit animal. So this sounds like a frat house. This
Speaker 1: was my favorite part. On the eleventh floor. As soon
Speaker 1: as you step out of the elevators, you see this
Speaker 1: painted on the wall in huge letters. New York celebrates
Speaker 1: together fourteen year dry era ends today December five, n three, which,
Speaker 1: if you couldn't guess, is the day that prohibition is repealed.
Speaker 1: You get the idea. Okay, all right, So you arrive
Speaker 1: at We Live. You see the hipster decorations, you see
Speaker 1: the tequila posters. What's next? Well, I saw that there's
Speaker 1: a happy hour at the bar on the tenth floor
Speaker 1: every Monday through Thursday. It was a Thursday, so I
Speaker 1: decided to go check it out. Maybe fifteen people were there,
Speaker 1: and We Worked had provided pictures of Margarita's and herbed
Speaker 1: French fries and chicken nuggets. And that's actually where I
Speaker 1: met August, who we introduced at the start of the show.
Speaker 1: He was behind the bar flipping cocktail shakers and serving
Speaker 1: drinks and saying hi to everyone who came by. I
Speaker 1: actually thought he worked for We Work. August is one
Speaker 1: of the residents who's lived there the longest and by
Speaker 1: now is kind of like the mayor of the New
Speaker 1: York We Live. He's the guy that new residents are
Speaker 1: told to ask if they have any questions about living there.
Speaker 1: Part of that is because he's what they call an ambassador.
Speaker 1: One of fifteen or so people living and we live
Speaker 1: who get a rent discount in exchange for hosting events
Speaker 1: and generally being friendly like an r A in college. Yeah,
Speaker 1: but aside from the discount he gets, I got the
Speaker 1: sense he was doing it because he genuinely loves it there.
Speaker 1: When he moved in in March, he was originally planning
Speaker 1: on living there for only six months, but he ended
Speaker 1: up staying. It's it's it's much easier for me to
Speaker 1: for for someone who is a little socially awkward like
Speaker 1: myself to meet a new person here, and like it was,
Speaker 1: you know, it was kind of like the first real
Speaker 1: sense of of like an overall community that I had
Speaker 1: in you know, at that time, eight and a half
Speaker 1: years or so living in New York. So it was
Speaker 1: nice and that community changed his professional life too. About
Speaker 1: six months ago, he was in the eighth floor laundry
Speaker 1: room talking to a guy called Revie who also lives
Speaker 1: there and is an entrepreneur himself. I'm like, man, I've
Speaker 1: been really thinking about like doing this project, and he
Speaker 1: stopped me in the middle of what of explaining the project,
Speaker 1: He's like, no, do it, Why don't you do it? Like, well,
Speaker 1: because I've never done it before. Like you think I've
Speaker 1: ever done this before, Just do it. This building is
Speaker 1: filled with people that do things that they've never done
Speaker 1: before and their great successes. And he went on to
Speaker 1: actually do it. He quit his job working at a
Speaker 1: gallery and went on to create an app called laugh
Speaker 1: Track that lets people share and read jokes like the
Speaker 1: funniest parts of Twitter without Donald Trump's tweets. Two of
Speaker 1: the people he recruited to help him with his app
Speaker 1: are people he met at We Live. The two people
Speaker 1: that I'm working with the most live in the building.
Speaker 1: I met them here, Like the guy that's coding the
Speaker 1: app lives six doors down. For me, we're basically like
Speaker 1: making a baby. Now. It's great, okay, So clearly a
Speaker 1: very positive experience for August. Who else did you meet? Well,
Speaker 1: that guy Revive, who inspired August to become an entrepreneur.
Speaker 1: He's a thirty two year old Israeli guy throws parties
Speaker 1: in the two hot tubs on the seventh floor, Terrorists
Speaker 1: splits a five thousand dollar one bedroom apartment with two
Speaker 1: other guys. He just started hosting these salsa dancing classes
Speaker 1: where we Live provides Margarita's and tacos. You know, I
Speaker 1: just go there and I bring my music and I
Speaker 1: just teach each people of their ropes, like how to
Speaker 1: dance us out to move it. But you know, not
Speaker 1: everyone was a partier. I also met a guy called
Speaker 1: Andrew Cutter. So there are events going on and you're
Speaker 1: always invited to them, which is great for an introvert
Speaker 1: because you don't want to feel left out, but you're
Speaker 1: not actually going to go to anything. I met a
Speaker 1: fifty four year old filmmaker who says he likes how
Speaker 1: he doesn't need to own stuff to live there, and
Speaker 1: an exercise class I went to that weekend. There were
Speaker 1: some girls from Norway who were there for six months
Speaker 1: on a gap year between high school and college. I
Speaker 1: even spotted a couple of kids in the hallway. Okay,
Speaker 1: so over the course of your five days that we
Speaker 1: live and you met a lot of people I did,
Speaker 1: and it sounds like they genuinely really liked it there. Yeah,
Speaker 1: I think that's fair to say. There is some strong
Speaker 1: self selection that goes on. Yeah, I have an introvert,
Speaker 1: so this does sound like my worst night there. So
Speaker 1: for most of the people I talked to, especially those
Speaker 1: who had lived there and stayed there for a long time.
Speaker 1: They had really good experiences. But of course this isn't
Speaker 1: a nonprofit, right, this has to work as a business
Speaker 1: where we work. Just a few years ago, We Live
Speaker 1: was the thing that the company was betting on for growth. Yeah,
Speaker 1: we know this because a couple of years ago BuzzFeed
Speaker 1: published leaked materials We Work used to pitch investors in October.
Speaker 1: Back then, We Work predicted that by the end of
Speaker 1: there would be thirty four we Live locations, which we're
Speaker 1: going to account for two seventy million dollars in revenue.
Speaker 1: Of course, it's getting pretty close to the end of
Speaker 1: today and there are still only two locations, not thirty four,
Speaker 1: and there's a third building in Seattle that they're working
Speaker 1: on which is going to be finished in So I
Speaker 1: asked the head of We Live about this. His name
Speaker 1: is Jim Woods. We as a company have the opportunity
Speaker 1: here to really figure this out in a thoughtful way
Speaker 1: and scale this meaningfully. And I think that well, the
Speaker 1: approach that I've taken with their support, is to really
Speaker 1: be thoughtful in the deals that we pursue, the markets
Speaker 1: we pursue, and the way we are designing this product,
Speaker 1: and what that means is we've we're really taking a
Speaker 1: lot of time to think about the moves we're making
Speaker 1: and how we expand this to markets domestically and abroad. Okay,
Speaker 1: so that's interesting. Not exactly the move fast break things
Speaker 1: kind of thing that you hear from our internet companies.
Speaker 1: He said thoughtful and meaningful a few more times throughout
Speaker 1: our conversation, but I didn't really get a clear answer.
Speaker 1: So I wonder if one obvious potential reason for this
Speaker 1: slow growth could be that maybe there isn't as much
Speaker 1: of a market for this. The tequila signs make it
Speaker 1: sound like it's for kids straight out of school, but
Speaker 1: when a studio is more than three thousand dollars a month,
Speaker 1: most recent college grads probably can't afford it, so it's
Speaker 1: not totally clear who this is for. That's why I
Speaker 1: was really intrigued when I found out you can rent
Speaker 1: these rooms like a hotel. We live can charge way
Speaker 1: more for a hotel room night by night than it
Speaker 1: can for a month or longer resident, even with hotel tax.
Speaker 1: That's a way better profit margin. So that's got to
Speaker 1: be pretty tempting, and I think a place like we
Speaker 1: Live could be more appealing than a standard hotel to
Speaker 1: certain kinds of people. I spoke to Tricia Eastman, a
Speaker 1: traveler from l who was staying at we Live for
Speaker 1: a few days. I wanted to be, you know, kind
Speaker 1: of along with people that I felt were similar, and
Speaker 1: so when I got there, Um, I just felt like
Speaker 1: every person, like, including the front dust, they were like
Speaker 1: super cool, just like people that I would like go
Speaker 1: have a drink with. And so you know, it's not
Speaker 1: always the case when you stay at a hotel. Okay,
Speaker 1: So that sounds a little bit like the appeal of Airbnb.
Speaker 1: It is, although some of the residents there seemed to
Speaker 1: think that having more travelers would hurt its sense of community,
Speaker 1: also a fair point. And Jim, the we Live executive,
Speaker 1: told me they're also looking into a different kind of business,
Speaker 1: corporate and housing. Big companies that use we Work for
Speaker 1: office space are already using we Live to house some
Speaker 1: of their employees, and he said they expect that to
Speaker 1: be a quote meaningful part of their business. So here's
Speaker 1: the question to someone like you living in your nine
Speaker 1: person house, Ellen, who's doing that cool living thing on
Speaker 1: your own, do you think the community you get that
Speaker 1: we Live is worth its pricey rent, and is it
Speaker 1: that different from living in another apartment building with some
Speaker 1: of the nicer amenities, You know, based on what I
Speaker 1: saw when I was there, I'd say, yeah, We Live
Speaker 1: seems way more friendly than I think other New York
Speaker 1: apartment buildings would be. But critics of We Work say
Speaker 1: that it's twenty billion dollar valuation is way higher than
Speaker 1: it should be for what is essentially a real estate company,
Speaker 1: And they might have a point. Hot tub parties and
Speaker 1: happy hours only take you so far. And of course
Speaker 1: there's the difficulty of actually dealing with these huge, expensive
Speaker 1: physical assets. Right. It's really different from just coding an app. Right.
Speaker 1: When I talk to real estate experts, they all said,
Speaker 1: it's really hard to find the right kind of existing building,
Speaker 1: especially when you're looking to mold it into this very
Speaker 1: specific thing. It's a lot easier to build a new one,
Speaker 1: like we Work is doing in Seattle, but that takes
Speaker 1: a long time to pay off. Yeah, I guess we'll
Speaker 1: see how long it takes for we Work to actually
Speaker 1: build out this residential part of its business. But it
Speaker 1: does seem like for now it's not going to be
Speaker 1: the kind of serious money maker that it thought it
Speaker 1: would be right, and in the meantime, we work already
Speaker 1: identified the next big thing. It's hoping big companies like
Speaker 1: Amazon and IBM will pay to have we work run
Speaker 1: their buildings, kind of like office design consulting. Okay, so
Speaker 1: after spending five nights there yourself, would you think you know? Okay,
Speaker 1: I'm mixed. I already know that I enjoy living around
Speaker 1: other hence your current arrangement. Yeah, and I like coming
Speaker 1: home to a place that has lots of people around,
Speaker 1: So I get that part of the appeal. And I
Speaker 1: talked to plenty of people who really valued its flexibility
Speaker 1: because you can rent it month to month. I know
Speaker 1: we've made a lot of dorm jokes and dorm comparisons. Yes,
Speaker 1: we learned that tequila is your spirit animal, but residents
Speaker 1: kept telling me it's not like that, and I kind
Speaker 1: of get that too. It's more private. It's pretty quiet
Speaker 1: for the most part, way quieter than the dorms I
Speaker 1: remember on a Saturday night. Okay, So that's a positive.
Speaker 1: What was the negative? There was just something really weird
Speaker 1: about making we live your home. The little lounges outside
Speaker 1: the elevators, for example, They had these beautiful leather chairs
Speaker 1: and furry pillows and sleek design, but I never saw
Speaker 1: anyone sitting in them. And they were filled with books,
Speaker 1: but when you picked up the book, it almost always
Speaker 1: had this red, little one dollar sales sticker from the
Speaker 1: Strand bookstore. And sometimes they were totally random, like self
Speaker 1: help books about uterine fibrosis. And there was this very
Speaker 1: subtle but at least to me, kind of pervasive sense
Speaker 1: of we work everywhere. The black coffee bugs in my
Speaker 1: apartment said live Better Together, which is a company slogan,
Speaker 1: and the cleaners in the building all wear black T
Speaker 1: shirts that say do what you Love, which is another
Speaker 1: company slogan. Yeah, I think I get that, like they
Speaker 1: were trying to make it homey, but it still feels impersonal,
Speaker 1: kind of sterile, kind of corporate. Yeah. Take Andrew for example.
Speaker 1: He's the guy who talked about being an introvert earlier.
Speaker 1: He lived that we Live for fourteen months, but he
Speaker 1: told me he never really decorated or made it his own.
Speaker 1: I was never really clear on how much I could
Speaker 1: actually like put, you know, nails in the wall or whatever. Anyway,
Speaker 1: I had a bunch of artwork that I just never
Speaker 1: put up, you know. Uh. They give you comforters, they
Speaker 1: give you sheets, they give you pillows, they they give
Speaker 1: you everything you need to live there. It's interesting how
Speaker 1: little you're probably going to change the place, you know,
Speaker 1: because everything is already provided. Andrew just moved out of
Speaker 1: We Live a few weeks ago. He had been paying
Speaker 1: two thousand fifty dollars a month, but at his new
Speaker 1: place in Brooklyn that he's also sharing with three roommates,
Speaker 1: he's paying nine. He said he'll miss the free coffee
Speaker 1: in the lobby and the walks used to take at
Speaker 1: night by the East River, but he also said his
Speaker 1: new place already feels a lot more like home, even
Speaker 1: after only a weeks. And that's it for this week's
Speaker 1: episode of Decrypted. Thanks for listening. Do you have a
Speaker 1: story about co living, Send us an email at Decrypted
Speaker 1: at bloomberg dot net, or you can reach out to
Speaker 1: us on Twitter. I'm at Ellen Hewitt and I'm at
Speaker 1: aki Eta seven. If you haven't already, please subscribe to
Speaker 1: our show wherever you get your podcast, and while you're there,
Speaker 1: I hope you'll take a minute to leave us a
Speaker 1: rating and a review. This does so much to get
Speaker 1: us in front of more listeners. This episode was produced
Speaker 1: by Liz Smith and Magnus Hendrickson. We'll see you next week.