Product Thinking + Roommate Living = Common
Common is not about affordable housing; not really. Sure, it’s cheaper than living on your own, but that’s always been true of living with a roommate (see chart at bottom). At $1500 and up for a bedroom in Crown Heights (an average of $1900, or what the Real Deal calls, “midtown prices in Crown Heights”), there’s nothing cheap about it. It’s not really about creating a dorm experience where millennials postpone adulthood, either; when Fast Company refers to their first property as a “19-room apartment building”, they’re completely overlooking the fact that the actual living units are standard 3–5 bedroom apartments with spacious bedrooms (by NY standards), their own kitchens, living rooms, and bathrooms — the same shared common space in every roommate living situation with 3–5 roommates.
So what does distinguish Common? Two things:
1. A point of view on urban living that people — particularly single people — want to be part of a community.
Most basically, Common follows the path blazed by WeWork, and unselfconsciously infuses a culture of community into everything they do, from their language (e.g. “members” not tenants; “homes” not buildings), to flipping the traditional real estate model of first see the space, then decide to rent on its head: with Common you first decide to join the community, then you select the particular room. As Brad put it, the key trait Common seeks in its members is, “people who want to know their neighbors.” What the culture and the ways it manifests does so brilliantly is ensure that Common’s community self-selects as this psychographic, allowing them to avoid being put in the awkward — and legally thorny — position of having to screen people based on how “cool” or socially desirable they are. Someone who chooses to join a residential community before knowing which unit they will live in is literally putting the community before the real estate.
2. Applying a “product” sensibility to the single-living-with-roommates living experience.
City dwellers — including myself in my single days — have for decades been choosing to live in roommate situations not only to save money, but also because they want to meet people and be less isolated. Common is just taking this to its logical next step by creating an offering specifically targeted at these people’s needs.
It’s pretty remarkable when you think about it, that despite a clear, linear, secular trend over the last 40 years towards young adults living with roommates — slowed only in speed, not direction, by the financial crisis of 2008 sending them back to their parents houses—and despite the spate of shows highlighting this in popular culture from Friends to New Girl, no one had ever tried to address how very different the experience of unrelated adults living together is from that of couples or families renting the same units.
Brad and his team have carefully considered every aspect of their members’ residential lives, from “onboarding” (aka move-in), to the day-to-day experience of managing the upkeep of apartment sharing with multiple roommates.
They take worst parts of this type of living and eliminate them: keeping the common areas and the kitchen clean (your roommate never does the dishes!); being responsible for the rent for the other bedrooms if your roommate leaves (you’re in the middle of your lease, and now you have to find someone to replace her or get stuck paying her rent); negotiating how four unrelated people who will go their separate ways at the end of the year furnish a single living room and kitchen (your roommate who just moved to Boston took the couch and the bookshelf with her and now you’re watching Netflix from the floor next to a pile of books because you don’t have time to make the trek to Ikea during store hours); and screening the rest of your roommates so that you feel comfortable relaxing with them in your home (you’re now living with a sociopath you found on Craigslist because you were too busy to give roommate interviewing the time it deserved).
At the same time they take the best parts of roommate living, and enhance them: making friends in a big, lonely city, not only with your roommates but also with their friends and social circles; planning events or going out together in a way that is so much more convenient when you live together; and being able to afford a much larger and nicer space by pooling resources (a 2br does not cost 2x as much as a 1br, a 3br is not 50% more than a 2br, etc; the graph below shows how the cost per person drops with each bedroom added).
So now that we have demonstrated not only that there is a huge market (the housing and utility spend of nearly 30% of all young adults), but also that this market’s needs differ from other demographics, the opportunity feels so obvious that it’s amazing no one has tried to solve it before. There have been communes and other co-living ventures that prescribe a way that people should live, but when it comes to the broader rental market, it’s pretty hard to think of another innovation for roommate living applied at scale beyond constructing apartments that have equal sized bedrooms (ie no master bedroom for the parents and smaller rooms for the kids). There are still a few holdout women’s hotels from an earlier time — these really are adult dorms, complete with a dining hall in some cases — and the idea of providing a community in larger residential complexes is hardly revolutionary as shown by developments like Harbors at Haverstraw where my in-laws live, but still roommates have gone overlooked until quite recently. The phenomenon of needing a digital entrepreneur to rethink a giant industry is akin to the way it took an Elon Musk to rethink the automotive product experience from scratch with OTA software updates, proximity-sensing door handles, and direct-to-consumer sales.
So why is there so much skepticism? I think it’s partly because Common’s product — apartment living in New York City — places the company right in the maelstrom of the intersecting topics of the surge in rents in the most desirable parts of the coastal cities (“have rents gotten so bad that people have to live this way?”) and the spreading resentment of the urban “technology worker class” (“this is another example of how these kids never want to grow up”). Both of my illustrative parentheticals above are actually misunderstandings, but when the media coverage veers towards towards people’s biases to judge new lifestyles as dubious at best and pernicious at worst, it seems like such misunderstanding is inevitable (it’s one thing when the way the kids are using their phones seems foreign; it’s another when the way they are constructing their living arrangements seems foreign). Even I, before Brad’s talk, had only formed an image of them from their media coverage and not realized how utterly non-sensational their living arrangements were, despite their having written a blog post on this very topic.
So will Common succeed? I don’t have a crystal ball or access to any non-public information, and there is always execution risk, but I suspect the answer is yes. The insights Brad has picked up into this segment of the housing market through his experience founding General Assembly are formidable, his attention to detail and to his customers’ feedback on the product so far are impressive, and like the best entrepreneurs he takes a long-term, deep, “social structure” look at the behaviors of consumers and suppliers in the market in which he operates. They appear to have a good sense for who they need to partner with both to drive demand for their apartments, and presumably to offer additional services that their members will inevitably request. The real estate market is beyond huge and provides alternatives to VC financing to manage equity dilution, and the number and range of acquirers is practically limitless.