Office space, workspace and a startup called codi.

Its super cliché to refer to a startup as the Uber of this or the Airbnb of that. If you currently have or can create a shared workspace in your house or building, you can confirm appointments with people who’d like to use it on the codi platform. Although I pay them the compliment of developing something that looks like what Chesky would create for workspace, codi isn’t like Airbnb so much as they are both two-sided marketplaces that create cost and time savings by facilitating peer-to-peer transacting. By undermining middle-men delays and fees you create flexibility and efficiency. codi is a platform that happens to be in the shared workspace business.

Points I’d like to land within this piece:

  1. codi’s value proposition to the chickens and the eggs.
  2. Real world example: I will walk you through how clustering outlier employees with codi could be a good fit for an ad agency with 21 FTEs that is actively downsizing.
  3. Passive income economics: You can dedicate your entire space to the codi model or it can be supplemental to renting bedrooms and apartments in the same space. The opportunity makes property more modular, and gives investors the opportunity to optimize space and maximize earnings per square foot.
  4. How the codi unlocks the consumer value chain compared to WeWork (a middle man).
  5. Business development challenges and marketing and sales strategies

Timing, relevance and culture

I’d like to give you a real life case-study involving a friend of mine, who is President / CEO of a life sciences advertising agency currently going through the same shift taking place at millions of businesses right now: downsizing and evaluating options through the lens of Zoom, the relationship between offices and productivity, and the role of office culture in recruiting and retention.

Current lease situation:

Picture an agency-esque warehouse, containing 20,000 sq ft and 30 foot ceilings. The triple net is $9.14/sq ft:

  • Base rent: $113,800
  • Maintenance & Repairs: $40,800
  • Utilities: $29,000 (not including internet/cable/phone)

Their employee map:

Prior to the pandemic there was an unmet need for space among work-from-home types; self employed people, independent contractors, gig economy workers, etc. Millions overstayed their welcome at coffee shops when desperately needing a change of scenery.

“When you go to coffee shops, they can be very distracting. And there were no working options close by, and downtown coworking spaces are very expensive.”

— Christelle Rohaut, Founder & CEO

Going stir-crazy is a serious problem for millions of fidgety remote workers, both introverted and extroverted. Nothing is designed to create distractions and racing thoughts quite like solitary confinement, perfectly causing one to hemorrhage dopamine and struggle to focus and be happy as a consequence. Shared workspaces and flex space became a thing a started popping up, but were quite expensive as Rohaut states.

The aforementioned ad agency is currently spending:

  • $182,000 a year
  • $8,666 a year per employee
  • $722 a month per employee

The cons to the pandemic are obvious, but in requiring people work from home, Zoom inadvertently normalized and culturized it and gave owners and CEOs a reason, rather than an excuse, to downsize. Employees may not realize how soul crushing, embarrassing and disheartening it is for a business owner to tell employees they have to move into something less cool. codi is helping make the remote working trend cool, which does much of the emotional heavy lifting for business owners.

We looked at all the properties pictured below. Hundreds of thousands of residences like these, especially ones with zoning variances, already setup for office space, have Codi written all over them.

Further down, I’m going to use the actual floor plan of this property right here, to evaluate codi passive income opportunity and economics:


Lots of owners and CEOs still invoke WeWork as a descriptor of creative office space; dark wood juxtaposed to brick, cool vibes, flex space, etc. Credit where its due, WeWork became part of our parlance, like Uber and AirBnb have subject verb agreement. I just noticed codi is one letter shy of being an anagram for covid.

WeWork’s downfall underscores the issues with wholesaling leases. The beauty of platform based business like codi is that they can identify those who have spare capital in the marketplace, and keep the property and the leases off their books by providing a peer-to-peer marketplace where they facilitate the transaction for a cut. Scaling this way is demonstrable traction, whereas WeWork burned through Softbank funds to artificially scale. Scaling a two-sided marketplaces is conducive to creating network effects, hence, James Currier’s recent investment. Platforms don’t just provide a place for supply to make itself available, the network effects create additional supply by inspiring others to follow suite and do what they wouldn’t have otherwise, really expanding the market and creating an accelerated returns effect. There are currently 6 million hosts on Airbnb, but they evangelized and created the majority of that supply-side, homeowners renting out their space in response to the trend, with the tools and assistance of the trendsetter.

The plethora of YouTube passive income videos milestone

I can see people starting to think in terms of optimizing for codi when doing interior design, and I suspect we will soon see a plethora of “How to make money with codi” videos on Youtube.

codi can be an add-on for space initiatives, providing flexibility and cost savings.

Here is the proposed solution, the codi proximity plan:

codi clusters outlier employees, reducing their commute. A headquarters can still be leased, but with far less overhead.

For $299 a month, Codi offers access to all workspaces and unlimited daily bookings.

  • 16 scattered employees x codi’s $299 a month = $57,408 a year.
  • They can secure another space for $30k a year, totaling $87,408.

This costs less than a bigger office, on top of employees freedom and gives them commuting time back.

It is to be expected of many agencies to have a headquarters for client presentations, mandatory appearances, parties, ‘huddle rooms’ or ‘quiet rooms’ and get-togethers. To house the remaining 5 employees with space that can accommodate more when needed, 3,000 sq ft is ample space, really more than enough if open concept. It is true that in an office park, or a campus with a gym, elevators, cafeteria and other amenities, the triple net price per sq ft can run $20-$30. But a perfectly agency-esque brick front off a main street, around here, runs us about $10 a sq ft., $2,500 a month, $30,000 a year.

codi + headquarters = $87,408, compared to the $182k they’re currently spending, and is still less than the 3,500–6,000 sq ft buildings costing $100k a year after the build out, that will also impose a 30–45 minute commute on half the company. Fuck commuting

We physically understand commuting more than we do intellectually.

We invent technology to shave minutes and seconds. Time is a scarce resource. If you commute 30 minutes one way, in a year you’ll spend 240 hours in the car in a year. That’s 10 full 24 hour days in the car, or fifteen 16 hour days.

Recruiters with codi in their back pocket ought to be more effective than those offering positions with 30+ minute commutes. Or maybe where you’re located 30 minutes would be a godsend compared to the 90 minutes it takes you to drive, park and walk.

Long term leases don’t adjust alongside external pressures.

codi provides benefits we can assign value to, like freedom, flexibility, etc. If you lose an employee, or need to fire, hire, whatever — you can adjust accordingly. Committing to a lease creates unbelievable angst for owners. It is counterintuitive to agree to a 5 year lease when you have no idea what the future holds…

Pinterest recently spent $90MM to get out of their 490,000 sq ft lease.

With codi, you’re neither locked into a lease, nor are you even locked into the space!

codi is peer-to-peer, breaking down barriers, undermining middle-men.

codi’s focus is residential, much more predictable from a P&L perspective. WeWork’s value prop to big companies was that they allowed them to reduce their capital outlay, decrease their operational complexity, and outsource the risks of a physical plant… WeWork leased buildings, then subleased for a higher cost per sq ft enabled by the premium people pay for on-demand, flexible co-work space. We-Work were middle-men, essentially, that bit off way more leases than they could chew. But they hyped it up, Theranos-style, and continued to raise money. WeWork’s IPO paperwork mentioned the word technology 110 times… “We are a community company committed to maximum global impact. Our mission is to elevate the world’s consciousness.” “Technology is at the foundation of our global platform”, “purpose-built technology and operational expertise.” Calculated language for a lease wholesaling business. On the topic of real estate, Softbank has backed Compass and Opendoor, both growing purely by means of brute acquisition, who also abuse the term “technology”. In their own words: “Compass is an American licensed real estate broker that utilizes the Internet as a marketing medium with the use of real estate technology.” This is a wild description of a traditional real estate broker.

It wasn’t only investors who invested in WeWork, landlords of high-rise buildings offered free rent and buildout credits commensurate to the terms they thought they were confident they’d get, dazzled, perhaps, by their impressive backing. WeWork started experiencing cashflow problems. They asked landlords for rent forgiveness, reductions, and rewrites of their leases as they burned through funds to make payments on 20 million square feet. Their business model and backing is a temptation to put the cart before the horse, whereas the platform models can inherently keep expenses in proportion to profits gained, even if they enter into high-rise types of buildings.

Challenges for codi.

The supply side has to commit to codi. Its likely residential-style homeowners wont have issues with committing to the arrangement, but if codi has inventory belonging to building owners who are open to codi, but preferring long term leases, their patience can run out and retention can become a problem if the demand isn’t there just yet or they aren’t leasing as much as projected.

codi raised $7mm recently, the investor assumption being that they are going to be a ‘thing’. codi has to acquire that ‘it factor’ to really blow up the way Airbnb did, and cross the chasm from the enthusiastic early adopters to the early majority, who wants to do what everyone else is doing.

Enthusiasts and early adopters spend their lives discerning between mediocre and remarkable. They tell their friends, who then tell their friends. These are people who love to be first, because it means they’re smarter than their competition, taking advantage of an workspace trend, riding the wave. Its not enough to launch an innovative product or solution, the value and the data doesn’t mean anything without being paired with an information campaign framed by storytelling that elevates one’s status, and increases one’s perceived odds of getting rich, being smart, or being in a position to capture the attention of one’s peers.

Chicken and egg business development issues

Airbnb would not be here if it wasn’t for the gritty founder’s committment to business development. Many founders have something remarkable, but would rather go out of business than prospect; door knock, make cereal boxes, make 100 cold calls a day, send 100 cold emails a day, etc. Uber, Airbnb and Netflix aren’t just companies, they are memes, and ways to express oneself. They became so much more than their early business plans. It seems to me codi could potentially achieve this, but not without the committment to un-fun prospecting, as real estate is insular and historically immune to the charms of disruption.

“You may not be interested in the MLS, but the MLS is interested in you.”

-Garry Tan

If Airbnb was in the long term rental space, they would have had to penetrate the Realtor barrier surrounding leases. All of the rentals you see on Zillow are fed by the MLS, a depository of agreements between leases and Realtors. The National Association of Realtors is the second largest lobbying organization in the world, and has been horrifying antitrust officials since their inception in the 1940s. Co-star is another giant, multi-billion-dollar apparatus in the commercial lease space. If they don’t like what codi is doing, for any reason, I suspect they could make some calls and assemble state legislatures to pass a new law banning homeowners from leasing their residences in a commercial capacity within residential zones. Gary Vaynerchuk tells a story of lobbyists getting Texas to ban online wine sales, evaporating his profit overnight. I don’t think its hyperbolic to anticipate issues of this kind.

What give Airbnb a pass in this regard is that there is no money in a short term lease for a leasing agent, who typically gets 1/2 month rent for an annual lease, or 2.5% against the gross lease value for a multi-year lease. WeWork worked with Realtor leasing agents, there was no conflict there. It will only take one instance of a building owner deciding to rent direct to consumer for a local Realtor association to hear about it, and travel up the grapevine to big bad NAR.

Passive income economics / business opportunity for suppliers

Here is the typical investment computation for those in the rental business; residential, office or mixed use:

Using the above property:

  • Purchase price: $600,000
  • 25% down: $150,000
  • Rental income from actual rent roll: $42,000 a year (A 7% cap rate, $3,500 a month)
  • $42,000 rental income — $31,872 (12 months of mortgage payments)
  • = $10,128 / $150,000 down payment = a 7% return on that cash. Not bad.

codi calculus:

Keep in mind, codi can be supplemental. You may engineer your floor plan such you have a separate entrance to your apartments, and make the kitchen a shared space from 8am–6pm.

Some of you may feel as thought I’m taking too much liberty with this floor plan, but this is precisely how it was going to be used for this ad agency.

Could be space for 25 ‘seats’ on 1st and 2nd floors:

Separate apartment building:

There is over 4,600 sq ft, suitable for over 33 employees, albeit in close quarters. Although there is space for 33 seats, lets call it 20 seats. Of course, this requires the demand, but here is what their earnings potential estimates for 10 seats, 5 days a week:

If we extrapolate, if the demand was there, the monthly potential could be as much as $8,000 a month.

This property is right off a main road, has ample parking and is close to commuter routes. One can also arrange the interior architecture to keep apartments separate from workspace, and truly optimize the square footage. As an investor or owner, it makes a lot of sense:

  • Purchase price: $600,000
  • 25% down / $150,000
  • Monthly payment: $2,656 x 12 months = $31,872
  • $96,000 ($8k a month x 12 months) — $31,872 (12 mortgage payments) = $64,128 gross profit / $150,000 down payment = 42% rate of return on your cash before expenditures; utilities, repairs, etc. Of course, similar to Aribnb, the numbers are much different when you factor in vacancy.

From an investors perspective, this expands the portfolio. It seems to me some property fits the workspace mold better than others, that don’t fit the Airbnb mold at all. Search Zillow, draw a parameter around commuter roads, stay in close proximity to office parks, and target property with malleable floor plans and charm — properties with inherent mixed use features:

Again, I’ve been charitable with the assumptions around demand in this model. Hence:

Recommended biz-dev strategies to support supply and demand:

  • The ad agency is really the ideal customer, as they are more likely to incorporate their $299 monthly subscription into their overhead. MM&M, PharmaVoice and the like, publish revenue tables and Top 100 lists of agencies. Hoovers, DNB directories provide lists of agencies by revenue. If I were codi I would be calling and emailing the CEO, President and CFO and reaching out on LinkedIn, and potentially creating longer term options for companies with longer term needs.
  • Playing matchmaker. Realtors working with buyers in locations with low inventory will solicit the local homeowners. Similarly, if codi has the demand before the space, they can proactively reach out to homeowners and offer assistance in space planning.
  • Cold email campaigns and calls recruiters and HR.
  • Youtubers / influencers / Content marketing: The Meet Kevins and Graham Stevens of the Youtube world, who have an enormous sphere of influence across millions of active and aspiring rental property entrepreneurs.
  • Partnerships with leasing agents and Realtors. Get on the good side of Loopnet and CoStar, whose agent’s have no shortages of property they can’t move, and would be happy to broker a relationship between the landlord and Codi for a commission. Curbio, a pre-home sale improvement and renovation company grows entirely through its word of mouth Realtor referrals.
  • Export MLS lists of active and past R1 properties with commercial leases and mail them a postcard with a unique code. Put them through a sales funnel, the bottom being they convert their space.
  • Design a space planning / floor plan app, that allows homeowners to make sense of their space and coordinate with Codi specialists on how to prepare a space and optimize square feet.



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John Fulton

John Fulton

Proptech contemplative. Obsessed with marketplaces.