The idea of shared or flexible office space is fraught at this particular moment, in the aftermath of both COVID-19 and in the wake of revelations about WeWork and its founder Adam Neumann, but it’s impossible to deny the strength of the idea underlying it. So it’s not surprising to see others succeed with that idea, even in the face of the pandemic and skepticism.
I had the pleasure to speak with Jamie Hodari, the CEO of Industrious, a provider of flexible workspaces, about his company’s path to success even through a pandemic. As other similar companies are shrinking operations, Industrious is looking towards international expansion and aggressive growth with new partners and locations. Jamie’s been a proponent of the “work from anywhere" movement, buying into the idea that companies and employees should be able to choose the necessary work environment for their preferences and seeking to meet those requirements with Industrious.
Industrious location in Arlington, VA
Mary Juetten: Name of company and where are you based?
Jamie Hodari: I run Industrious. We’re the highest-rated workplace provider in the country, and though we’re headquartered in NYC, it’s a very distributed team. Not only do we have more than 100 locations in 50-plus cities, but much of our corporate staff is spread around the country as well. We’re opening our first international location in Singapore next year.
Juetten: When did you start?
Hodari: We started in 2013. My cofounder, Justin Stewart, was my best friend and next door neighbor growing up in Michigan. He was running the U.S. arm of a Chinese real estate firm, and I was running a higher-ed organization based in East Africa, so both of us were working out of shared offices when we were in the States. We hated how low-quality they were.
We both dreamed of a workplace that took advantage of sharing economy dynamics but offered something professional and elegant enough that you could be proud to work there. So one day we just stopped complaining and decided to start our own. It was only meant to be a side project, but we had so much demand, so quickly, that by a year later we were operating in seven different cities and quit our jobs to grow Industrious full time.
Juetten: What problem are you solving?
Hodari: You know how there are days where you feel on top of the world at work, and you’re proud of pretty much everything you do? And then other days you can’t seem to do anything worthwhile? It’s not random. There’s an art and science to great workplaces that make for much more consistently productive, engaging days at work.
The problem we’re solving is that 1% of Americans get access to great workplaces — you basically have to work at Google, or Facebook, or a few other organizations to get them. And then everyone else works in an undifferentiated open floor plan pit with a couple conference rooms. We enable companies to buy a great workplace experience for their employees as a product rather than building out and operating it themselves. It means you get to move around to different space types throughout the day that are optimized for the type of work you’re doing, as well as have access to spaces throughout a city and across the country.
Juetten: Who are your customers and how do you find them?
Hodari: This is going to sound salesy, but it’s true: our customer is anyone who cares about delivering a great employee experience, wants to see their employee engagement scores go up, their employee attrition go down, and wants to do it in a way that’s simpler and more efficient than the legacy way of delivering a workplace (lease the space, build it out, hire an office manager, and give it your best shot).
What that translates to is two primary customer sets: first, small and medium businesses where the CEO can walk into an Industrious and say “yes — this is exactly what I want for my team” and second, large enterprises that have more complex national and global needs, with Heads of Workplace or CFOs making these sorts of decisions.
To your question about where we find them, though the marketing and sales approach is quite different depending on the customer set (word of mouth and digital for smaller customers, referrals and direct inquiries for larger ones) the end value prop is identical. It’s a better day at work for the people on the ground, whether they work for a 2 person business or a 100,000 person conglomerate.
Juetten: How did past projects and/or experience help with this new project?
Hodari: One element of my background has had an outsized impact relative to everything else, and it’s not necessarily what you’d think. In certain ways, everything’s been helpful: being a journalist trained me to ask the right questions and read what people really mean, while being a lawyer taught me to look at problems from every angle, and working at a hedge fund taught me to look at businesses from the investor’s side of the table. But what’s been most impactful, transformative even, was working in education.
People are terrible at measuring productivity in white collar roles. Education, on the other hand, is much better at tracking learning, and over time experimenting with what drives student success. Here’s a simple example: every company right now is wrestling with remote work. Does it work, doesn’t it, what do you lose when employees go remote?
In education, there’s decades of research on graduation rates, student achievement, test performance, etc for remote learning, in-person learning, and hybrid learning. So stealing a bit from what’s worked and what hasn’t in education (spoiler alert: hybrid learning environments that are a mix of remote and in-person far outperform purely remote) has been invaluable in developing a workplace product that outperforms legacy ways of running an office.
Juetten: Who is on your team?
Hodari: Industrious has around 400 employees based all over the country. A lot of the team directly serves our customers, and I think even those who sit more behind the scenes feel connected to and very aware of the day-to-day experience of our customers. After all, everyone has opinions about what they like and don’t like in an office.
Juetten: Startups are an adventure — what's your favorite startup story?
Hodari: When Justin and I started Industrious, we went to a quiet hotel in Puerto Rico for a long weekend to get away from it all while we finalized our business plan and pitch deck. I’m not sure how this happened but other than our room, the entire hotel was rented out for a wedding. So while we were trying to conduct marathon business meetings in the lobby, people were hooking up left and right, and asking us over and over how we knew Barry and Michelle. We didn’t, but we met a lot of nice people and things turned out alright! Maybe seeing all those happy faces and the value of human connection secretly turned out to be a great setting for crafting a business that begins and ends with people.
Juetten: How do you measure success and what is your favorite success story?
Hodari: A lot of growing businesses measure their success in part based on how many customers they’re adding every month, and the cost of adding those customers (Customer Acquisition Cost (CAC)).
The real measure of success is how happy those customers are, and if you’re retaining them. COVID notwithstanding, Industrious has had close to zero net churn for seven straight years, and in fact many quarters our churn is actually negative (more customers choose to grow with us than shrink or leave, so at the end of a given period we don’t have any seats to replace with new customers).
One story to put a qualitative overlay on that: we had a customer that was frustrated with a few elements of their workplace experience and wanted to leave. Their community manager really listened, addressed their concerns, and over time they became enamored with the product and with how much it impacted their day to day work life. How enamored? When they got married last year they held their wedding ceremony at their Industrious. I was skeptical of the idea of a wedding at an (admittedly very nice) office, but it actually turned out beautifully!
Juetten: Any tips to add for early-stage founders?
Hodari: Make your company a fun place to work. Like, you don’t have to be the coolest person on earth and you don’t have to be everyone’s best friend, but think of yourself as someone hosting a great dinner party or a great wedding. There’s a reason people watch The Office or Brooklyn Nine-Nine or dozens of other workplace comedies. The idea of a workplace full of warmth, close relationships, spontaneity, and laughter is a promise dangled in front of most Americans but rarely delivered on.
Again, this isn’t about you. Few people are going to want to hang out with the CEO on weekends - but if you start to see on Instagram that your employees are going on weekend camping trips together, or are in each other's weddings, you’ll know you’re doing something right.
Juetten: And of course, any IP horror stories to share (they can be anonymous)?
Hodari: I have a very weird one. When Justin and I were starting Industrious a lawyer told us that the name of the holding company that sat on top of the Industrious operating business could be called whatever we wanted, since it wasn’t really an operating entity. At the time we were obsessed with Liam Neeson so we called the company I’m a Man with a Very Particular Set of Skills. Skills That Make Me a Nightmare to People Like You, LLC (it’s a line from the movie Taken). A friend convinced us to change the name to something more anodyne and in the end that company name appeared in all sorts of official documents and it would have been so embarrassing if we had to write out that entire name in SEC filings or tax returns and stuff. We’ve since changed the structure of the company, so the ghost of IAMWAVPSOSSTMMANTPLY, LLC is gone, but it’s a reminder that everything you do represents your company in some form or another, and it’s important not to stray too far from the “intellectual” in intellectual property.
Juetten: What's the long-term vision for your company?
Hodari: Ten or fifteen years from now, the dominant mode for a company to solve their workplace needs will be to buy it as a service. Just like manufacturing, logistics, fulfillment, data storage, and any number of other things that companies used to do themselves but eventually found they got superior outcomes simply buying from an expert. Industrious should be one of the three to four global companies when the dust settles, and the one that the companies who care most about their employees’ experience always pick.
Thanks to Jamie for sharing his story with me; it’s fascinating to hear about the success of Industrious during a year when most offices and co-working spaces have shuttered out of necessity. Also, the education side is very interesting because measurement and KPIs were hot topics for me as a consultant back when my now 26-year-old daughter was an infant. And on the remote topic, I have been working at my kitchen table and home office and am jealous of companies that I have seen using Industrious over Zoom! #onwards.
