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