My first House Manager almost destroyed my coliving business

Coliving Horror Stories - “How to Delegate Your Coliving” Edition

This post starts a mini-series I’ve titled Horror Stories in Coliving that show what can go wrong when operating a coliving. Perhaps you can learn something and avoid such situations.

I started Startup Embassy in 2012 with $200 in the bank, and I was on the verge of total financial collapse. It was a survival game. I did nothing but focus on running my business solely to make ends meet. 

But after some time, I realized that it wasn’t sustainable to only focus on money. I now had a community that required rules and processes. After ironing those out, a couple of years later, I had a known brand, Startup Embassy, a steady flow of customers, and growth opportunities.

But everything relied on me.

I ran the entire business, with my hands in each area, from bookings and community management to cleaning, cooking, events, and even making beds.

A Difficult Decision Family or Career

And then, in 2014, my wife, who was living almost 6000 miles away with our son in Madrid, told me that she was pregnant. You may ask how that happened, and I’ll tell you that I had sent a plastic jar a few months earlier, but that’s another story about the struggles of entrepreneurship away from home.

I hadn’t visited home in the last eight months, but this event certainly required my presence. The problem was, how the heck could I safeguard my business from collapse? Everything depended on me! There was no way I could delegate my entire to-do list but leaving my wife alone to give birth was also out of the question. That thought did cross my mind and made me feel miserable.

No, I had to find a way to delegate. 

It turned out that there was a guy, one of our long-term guests, that I thought would potentially be able to run the space himself. This person ( Let’s call him Nick) had lived with us for over a year. 

You know how it goes; most guests, especially those who have extended stays in your space, end up being good friends. Nick was a hardworking entrepreneur (We only accept tech entrepreneurs at Startup Embassy.) and was both honest and friendly. He was the type of guy you want to hug after getting acquainted in just the first 5 minutes—friendly, white open smile. Everyone in the house loved him; who wouldn’t?

Living in Silicon Valley is brutal on the wallet, and after a year with us, Nick was almost broke, but his dream was to continue to live in Palo Alto and scale his company. If he didn’t find a steady stream of revenue, he would need to quit and leave. I thought this made a perfect combination; he needed the money, wanted to stay in Palo Alto, was a long-term member of our community, and knew how to run the house. I desperately needed someone to delegate my business to—no one better than Nick!

 

The “Nick” Solution

I spoke with him, and he agreed to take the role of what I called the “House Manager.” I trained him for about a week on my specific processes and built new ones that removed me from being a bottleneck.

We agreed on a basic salary. At the time, the business wasn’t making much; Nick needed enough to pay for his rent and necessary living expenses so he could focus on his own company. So, I offered him enough to buy food every month and pay his transport expenses. I included my room in the deal, which was private but, admittedly, wouldn’t pass the minimum standards of decent living.

My coliving room
This was my "room"

I thought it was a win-win situation as we both got exactly what we needed. I packed my things and left for Spain. I had initially planned to leave for around four months before returning to take control of my business.

 

I arrived home one month prior to the big event and did what I hadn’t been able to do for the previous three years: be a husband and father. Then, my lovely daughter Laura was born. 

While Nick was taking care of Startup Embassy, I had a second chance to engage in fatherhood: when Óscar was born, my first startup took me to Palo Alto. 

To ensure my wife would be loved and cared for, we decided to live separately so she would  have family support, and I could be in the best possible place for my business: Silicon Valley.

Running your company away from home and family is torturous. You never get used to it. At last, I was able to pick my child from school, spend whole days together, and basically, be a father. And Nick was a surprisingly great House Manager for Startup Embassy. 

Of course, time was running out, and I knew that I must return at some point. To keep myself up to speed, I spent my time improving our processes; booking, email templates, website, our brand, core values, rules inside the house…

I scheduled regular calls with Nick; my role was that of a supervisor. It was a daily call for the first few months, and I would mentor him with day-to-day situations that he faced. After some time, the calls would be less frequent as Nick was managing the space well. 

I admit that the emotional attachment to my family was magnetic. Day by day, I sensed a growing force that, like gravity, made me only want to spend time watching my kids grow. I was afraid to return to Palo Alto, as it would mean leaving my family again. It didn’t help when my son one day said, “Dad, one day you left for so long that I forgot I had a dad.”

When The Shit Hit the Fan

Towards the end, my calls with Nick took place once per week. And they were short because, according to him, everything was going well. That gave me an excuse to continue enjoying time with my family a little bit more. I could focus on them, and Nick could have more time and income to run his company.

In the back of my mind, I knew returning to Palo Alto was inevitable. And it’s not that I didn’t want to, I wanted to focus on the business, but I thought, “just give me a little more time to be with them.” 

And then, shit hit the fan. 

It was around the seventh month when all of a sudden (at least for me), Nick called me, and with a nervous voice, told me that “he’s sick of the job, and he’s quitting.”

– “What do you mean quitting? What’s wrong?” I asked.

– “I’m done, Carlos. I’m too stressed; this work is too much. I don’t even have time to run my startup. And you pay me shit, it’s not worth it,” he replied.

– “…but Nick, this is the first time I hear of this. You always told me that everything was fine! “

– “Carlos, you said that you were leaving for three or four months, and it’s already been seven!”

– “Well, yes, that’s true, but Nick, I thought that as everything was going so well and that you needed a way to pay for your living in Palo Alto and I needed to spend time with family, that this was a win-win situation for us both!”

-He dropped the bomb: “I’m leaving on Wednesday.”

– “What do you mean Wednesday!?” I muttered. “That’s in 5 days! I won’t be able to find a substitute!”

– “Look, Carlos, I don’t care. I’m leaving next Wednesday”.

That was like Dante’s Inferno opening beneath my feet. In one split second, I realized that I had neglected my business and possibly my relationship with Nick.

I found out in following conversations with him that he had grown increasingly stressed running the house. To be fair, I had felt the same; if you run the space for more than six months, all by yourself, literally 24/7, you get burned out, big time. And this was not his business, so why should he care? 

The business had grown substantially (due to his work, of course), and revenue had increased accordingly. One of his main concerns was that his salary had not changed, he was seeing the money pouring in, and he was not getting his fair share.

I understood his concerns, but I wondered why on Earth did he wait until the last moment to bring these up with me? I would have understood and would have renegotiated a fair salary.

At the time, I blamed him for dropping that bomb on me, but today, I see it differently. It was my responsibility to have full awareness of how my business was going and how my team (a friend) was feeling. He was managing 90% of my business for me, and even if he was getting something out from that, I didn’t reward him accordingly. Big, big mistake that almost cost me a friendship.

Born With a Star in My Ass

I honestly can’t remember why, but for some reason, I couldn’t travel myself to take control of the business. I’m not sure if it was a VISA issue or something like that, but with such short notice, travel was impossible.

I went berserk trying to find someone I trusted that would be willing to take over a hacker house!

I consider myself a lucky guy because, for some reason, my worst problems always get somehow magically solved. So many times, I have learned to trust my luck. My mother always says that “I was born with a star in my ass” (that’s a literal translation from Spanish). The solution came in the form of Fernando. 

I had met him a few months back at a startup event in Madrid where he was volunteering. I observed him during the event. What caught my attention was the way he treated attendants. He was proactive, making sure everyone met the right person. 

There was something in his well-educated manners and in the way he interacted with people. He was nurturing them; it was clear he cared.

I made sure I met him a few weeks later over coffee to get properly acquainted. I always try to surround myself with people like Fernando. During our first meeting, I also discovered he was incredibly intelligent. 

So, when I had the urge to find my second House Manager, I immediately thought about Fernando. I literally called him and said, “Fernando, would you fly to San Francisco and run Startup Embassy next week?” Like any crazy entrepreneur, he was not scared of stepping way outside his comfort zone and said yes.

It took him two days longer to get to Palo Alto, which means that the house was without management for two full days. That was a complete disaster. I begged Nick to stay just two more days until Fernando arrived, but he was so pissed off that he left me on my own. That was one of the most stressful times I faced running the house.

Again, I was lucky that one long-term guest took care of the house until Fernando arrived. When he did, Nick had already left two days before. I managed to train him over conference calls and got him up to speed quickly. It turned out that Nick had left a fucking mess behind. The place was filthy. Community, thank God, was running great. But Nick had neglected everything else. He had been sick of the job for so many months that he basically just took care of bookings and not much more.

Nick did a great job the first three to four months, but the house management started to go down the hill as he became increasingly stressed. When he left, the situation was so bad that we discovered that a rat colony had overcome our coliving. Rats!! 

When Fernando told me that, I almost fainted. How did nobody speak up?! I’ll tell you the rat story later on, but today I just want to focus on what the delegation lesson Nick taught me.

Fernando resulted in a wonderful House Manager. It took him time to get to full speed; no wonder, he knew nothing about the business when he arrived. The mistakes he made were based on a lack of knowledge, and that was because, at the time, I was unable to communicate properly everything I knew about how to run the space. 

This led me to optimize how I train my team quickly. But overall, once Fernando got comfortable with the role, he was the perfect House Manager. Today, he’s still a close friend.

As for Nick, I sat with him to talk when I went back two months later. We both had things to say to the other, but we managed to forgive each other.

The Nick Way- offering a community member-discounted or free rent in exchange for taking on House Manager duties for your coliving.

Mama Carlos

What  I Learned (And What You Should Know)

I should not have left for so long. I should have been more pragmatic and realized from the beginning that a three-month absence was not realistic. The moment I knew that it would be many more months, I should have been honest with Nick, and we could have renegotiated an extension.

I also should have been much more involved in the day-to-day operations implementing daily tasks, interacting with my guests, and gathering more data to improve Startup Embassy’s coliving management.

It was wrong to have Nick as my only point of contact. If you only have one link, and that link is based on trust, the moment that trust breaks one side, your crucial communication line to your business is also broken.

And, honestly,  I should have been much more sympathetic with Nick. It was unfair to assume that the deal we had established early on would be fair when the business conditions changed and our revenue grew, especially when Nick was the main reason that happened. It was also unfair to leave him long-running a business that I knew was challenging for your emotional health. Ultimately, I didn’t pick up on the small signals he gave that he was unhappy and should have been more aware.

But despite all this, I learned that I could run my business from a distance. If Laura’s birth had not forced me to delegate Startup Embassy, I would have never made that decision on my own. I thought that it was not possible—that the business depended entirely on me. And it did not.

Delegating my business revealed a new stage where I understood that we could scale. I still did not have a vision for Startup Embassy, but I focused on rebuilding all my processes to accommodate the House Manager’s role while I looked for it.

I was obsessed with running different spaces from a distance and guaranteeing quality of service without losing community identity. That’s when I began researching how to use technology to measure the health of a coliving. Looking backward, it was painful, but I learned a lot, and I’m grateful all this happened.

And luckily, Nick is still a good friend.

Mama Carlos Says: 

(And many times) It’s not easy to run a coliving. Managing a space is strenuous and takes a mental toll on anyone. If you want to avoid the pain I went through, remember:

  1. You should be your own House Manager for your coliving least six months, preferably a year. That way, you will feel sympathetic with your team’s situation. In my experience, it takes around five to six months until you feel the pain.
  2. Remember that it’s not your team’s business, so don’t ask them to suffer for your dream.
  3. At some point, you will want to scale your business, and that means delegating. The first step towards delegation is hiring a House Manager, and you will be tempted to hire a “Nick,” that is, someone from your community to whom you will offer a bed for work. Don’t do it, and if you have to, make sure it’s a temporary solution. Nicks don’t make good House Managers in the long run; their goals are not aligned with yours, and that makes them a ticking time bomb.
  4. If you want to scale properly, you need to professionalize the hiring and training of your House Managers. You need to develop a workflow: how will you source them? What is your training process?
  5. Allow your team to participate in your success: Situations change, so deals should as well. It’s unfair for your team to be expected to stay in the same place as your business grows, especially if their work is assisting said growth.
  6. This advice is good for any business, but it’s worth mentioning: don’t let your coliving be bottlenecked by a single point of contact. If that point of contact fails, it’ll jeopardize your business.
  7. Pick up the small signals that tell you something is wrong. Be aware that people’s communication styles differ, and sometimes, you must be the one to check-in.
  8. Using technology will help you to scale your coliving.
  9. Shit will hit the fan, whether you like it or not. If you have a healthy community, they will save your ass.

If you follow my advice there’s good news; it is possible to run your coliving from a distance. It requires a different mindset, and you will need to restructure the way you operate, but scaling is possible.

 

 …but please, even if tempted, don’t go the Nick way.

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Smart coliving: Technology and coliving - Coliving from the Trenches
8 months ago

[…] Then, you’ll want to start applying these tips to have the space run like a perfect Swiss clock. At one point, you’ll face delegating part of the work to a House Manager. […]

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5 months ago

[…] horror story is a result of delegating my business for the first time. Did you read about when my wife had our second child? I was forced into delegating Startup Embassy […]

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5 months ago

[…] tell you some stories. I’ve already written about the infamous Startup Castle in Silicon Valley, how my first House Manager almost screwed my business, and even about that time I had rats in my […]

Stephane Bounmy
5 months ago

Carlos, did the house manager for years and totally felt what you wrote ! I also did the nick way and it didn’t workout. There should be a house manager bootcamp/academy 🙂 – when you say technology can help you scale have you though about blockchain for autonomous coliving ?

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