In the recruiting wars, a cool office is critical. Not just for scrappy startups, but big businesses with regional HQs, as well. So while WeWork signs questionable 20-year leases to provide desks for twenty-something engineers, Industrious is taking a more classy and conservative approach to coworking space.
Think 30 to 60-year-olds typing to Otis Redding, not post-frat bros blasting Tupac, says Industrious CEO Jamie Hodari. Customers get private office space for 1 to 150 people in the building, plus communal lounges, conference rooms and relaxation spots they share with other tenants.
Today, Industrious is fueling that vision with a $25 million follow-on led by Riverwood Capital that brings its Series B from Outlook and Maple Woodward to $62 million. That cash will go to opening more locations beyond its hubs in places like NYC, LA, Columbus and St. Louis. It’s also acquired the digital flexible workplace platform PivotDesk to make it easier for companies to match seats to headcount.
“WeWork is a wonderful environment for twenty-somethings, and was clearly built with male engineers in mind,” says Hodari. But, “Industrious is a better fit for customers that are a bit older and looking for a slightly more premium product that feels welcoming, inclusive, and comfortable whether you’re a nursing mother in your late thirties or if you’re a 65-year-old lawyer nearing retirement.” Industrious customers already include Spotify and Lyft, but also more entrenched corporations like Hyatt.
Focusing on larger companies protects Industrious from some of the risks facing WeWork. Bigger enterprises mean fewer deals to fill a building, lowering sales costs. Since the clients are more established, they’re less likely to suddenly run out of money and vacate. Industrious is also thereby more insulated from a startup bubble burst, or recession that pushes fledgling companies back into bedrooms and basements.
Hodari started the company with childhood neighbor Justin Stewart after realizing it wasn’t just Facebook and Google employees who wanted a beautiful place to work. Hodari had run Kepler universities in East Africa while Stewart ran U.S. operations for a Chinese real-estate firm. Hodari admits they were “woefully unqualified to launch Industrious,” but succeeded by concentrating on customer service and inclusivity.
Now Industrious has thousands of customers around the country and earns a 30 percent margin. It buys shorter leases to limit its liability, and sometimes just operates buildings that someone else owns. Hodari says Industrious is cash-flow positive so the raise is “all for capital expenditures rather than to cover a burn rate.”
Still, any business with big fixed costs like Industrious is vulnerable to behavior shifts, so it better hope the coworking trend doesn’t blow over.
As scalable software eats everything allowing winners to go viral, star coders and product visionaries have even greater impact on a business than employees of old. That means recruiting and retaining them can be make-or-break for a company, yet many employers see their “people turned green under fluorescent lights in a cubicle farm,” Hodari jokes.
That’s why it’s not just retail, but every hirer who must understand it’s about “location, location, location.”