Be vertical: The future of coliving. The Ground Floor of a Future Multi-Billion Dollar Industry
It’s 2021, and after 8+ years, there’s finally a word to define my passion: Coliving. In my growing years, it was “hacker house,” a term that would raise people’s eyebrows and is a pejorative to some due to the unsavory actions of a few opportunistic operators.
But I’m glad I can now convey what I do with just one word. There was an inflection point in 2019 when coliving started to be a thing, and big players in the real estate and investment world began to show real interest. I’ve had meetings with said players and would sometimes leave worried about what I discovered: some just don’t get coliving.
No matter the size your coliving, there’s one thing that defines it: community. If I have to define what a coliving is, it’s this: “an intentional community that lives under the same roof.” If you have a real interest in coliving, stop here and make sure you understand what those nine words mean; otherwise, you won’t get it. It’s like starting a garden; if the soil is bad, your plants will end up dead, and you’ll waste so much time.
I could extend the definition to add personal growth to the experience. This particularly makes sense if the coliving is verticalized (as it should), and in each case, personal growth will be defined by the niche you are targeting. For example, if you target startup founders as we do at Startup Embassy, personal growth means evolving as an entrepreneur.
What an intentional community means is the mystique generated from your careful cultivation. Your main work is to select members and market your coliving so that it attracts more of the same. Nobody will care how big their room is if they’ve been dying to be accepted into your community. Nobody will mind if they will have a TV, great design, or whatever perks you think they will be excited about. It’s the damn freaking people they care about! Sure, all the rest will be put into consideration once they have found their tribe. The people are the magic here.
I honestly can’t stress this enough.
The Two Big Players
When an industry takes shape, it makes sense that the big players will soon take notice. We definitely need them. The problem lies in their understanding of the new paradigm. In our case, those players are Real Estate professionals that come from an established industry, and mature industries bring heavy, reliable standards that might prove cumbersome when applied to Coliving.
-“Coliving is a real estate business.”
-“Well, yes, but…mind you…”.
Coliving is a real estate business. But be careful; if you design your project without taking the community as a core part of it from the ground up, you will fail. Of those players with real potential to start a large-scale coliving project, I’ve classified them into two categories: those who say that community is essential and those who actually believe it. The first group is doomed. Let them flounder; in 5 years, they’ll be fucked.
The second group believes in the importance of a strong culture and community. The problem they face is that they’ve never been coliving operators and lack experience. They know everything about real estate development, finance, regulations, etc., but when it comes to community design and management, they’re completely lost—and they know it.
Let’s focus on this second group. I’ll give you my experienced opinion, and with it, bring my crystal ball to predict the future.
Coliving’s Future and Target Profiles
Okay, big player, so what’s your pain?
Let me guess. You’re one of the first to recognize coliving as a nascent industry and want to get in on the ground floor. You’re developing an early prototype; perhaps you’ve even gone so far as to invest in your first property in a tier 2 city.
Right…but this is a prototype; your intention is to grow a network of coliving spaces all around the country, even the world. To do that, you must clearly identify your potential market. And let me guess again, that market is Millennial Digital Nomads.
Well, I’m sorry, but that’s not a target.
I understand to justify your large-scale project’s magnitude, you need to verify there will be a large market. And you’ve done countless deck presentations with numerous slides identifying Millennials’ needs and new consumption habits:
- They like to travel.
- They don’t like to own property.
- They are social.
- They work online and are de-localized.
But again, they’re NOT a healthy target to guarantee ROI. You can’t assume in your ignorance that they’re all the same and that they’ll want to live together because, hey, they are Millennials. Remember, a generation may be born in the same bracket, but inside, there is a multitude of race, gender, and social-economic disparities that create tension between groups even of the same age.
So, what is a healthy target? In my case, with Startup Embassy, it’s entrepreneurs, Startup founders willing to innovate and change the world. Are they Millennials? Most of them, but not all.
Do you know what makes them tick? They are the underdogs. They are weirdos. They feel lonely because they have an intense urge from deep in their DNA to forge a better future for everyone. And this is what sets them apart. They are desperate for knowledge, and to meet like-minded people help them learn, build and succeed. Any community is built on mutual support, but a target profile of people stressed, lonely, and seeking aid is the perfect match for coliving.
That’s a damn good target, and you’ll know it when you filter them, allow them to stay in your space, and observe them at 10 pm, two hours from first arriving. Already, they’re in a hot discussion with someone they’ve just met on why their sales funnel has a 50% drop rate.
Another target? I don’t know. Cooks?
Imagine managing a coliving with anyone dreaming to have a Michelin star, and they’re able to live and learn with others for the price of rent. It could be cyclists, or DJs, or surfers. Think about what Florence meant in the Renaissance. It attracted creatives from all over the world to learn from the best.
In the end, there’s just one thing: passion.
And you’ll tell me that the market is not large enough, and I hear you. However, I come from a world steeped in startups, and I would point you to what Paul Graham wrote: “Do things that don’t scale,” and I would add, “then they will scale.”
Because targeting passion will guarantee that you have a robust like-minded community that will have your logo tattooed and then build your real estate empire on top of it—not the other way around.
Mama Carlos says
If you’re not convinced, let me look at my crystal ball and tell you my prediction: it’s a virgin market now. Almost anything you build will work right now.
No matter how many “excuse” slides your pitch deck has to justify the market need, the reality is that coliving is on a precipice, and it’s accelerating. After COVID, people crave community—the unique tribal community Coliving offers— more than ever.
In five years’ time or ten, the market will saturate. If by that time you haven’t built a brand that targets a specific vertical and managed to build a strong community, your value proposition will be diluted so much that you will become a commodity. You will only be able to compete by lowering your pricing, drowning in an ocean of guest’s indifference, and then you’re doomed.
In no way do I hold the torch of absolute coliving knowledge, but after eight years, I do have enough experience and have had time to analyze the social dynamics that take place in a coliving. I’ve been thinking for years about what works and why, and I’m excited to share this knowledge with you in my blog. Please subscribe!