Ep. 14 Chris Kelly

00:50 CK: I'm excited to have Chris Kelly on the podcast today. Chris is the co-founder of Convene. And for those who don't know, Convene is a company that is growing very rapidly in some of the major cities in the United States. And it's a company that is reflecting what's happening with office space in the 21st Century. Chris is a very dynamic person. He's a terrific speaker and has a variety of interests that he shares with us on this podcast. So I'm very excited to have you listen to Chris Kelly.

01:25 CK: Well, welcome to The Real Market. I'm very excited today to have Chris Kelly, the co-founder and president of Convene. Convene is a really interesting business and it's something that I think those of us in the real estate business, as we look at how the world is changing, look to Convene as a model that's a lot different than WeWork. So, Chris, really pleased to have you on the podcast. Thanks for being here.

01:53 Chris Rising: Likewise. I'm honored to be here with you, Chris.

01:56 CK: Alright. Well, why don't you... I think those of us who are in major CBDs and know your projects in New York, and now Los Angeles, know a little bit about you, but can you give us a little bit about... And give us the story on what Convene is?

02:11 CR: Yeah. Happy to. And I think, the best way to really understand it is to start with the problem that we solve, which is that the workplaces and real estate, in the way we traditionally sold, in really a commodity mindset of selling space by the square foot, having companies develop it, and then operate it themselves, even for enterprises is starting to fall short of what their expectations are. And so we're helping, we're partnering with the world's largest landlords to help to evolve their products from really being like commodity towards experience. And the way to think about the platform that we deliver is most easily understood as... Think about a full-service hotel with all of the hospitality infrastructure, flexible spaces, amenities, services, etcetera. And then just replace the [03:05] ____ with offices and desks. And that's essentially how we are re-imagining office buildings.

03:09 CR: The core revenue-generating parts of our business is full-service meetings with groups of up to 500 people and workspaces that are well-suited for enterprise-minded clients, and the workspace offering blends the highest end of the coworking market with... And also takes over some of what is currently your pre-built sort of business. We're helping to build those as core elements of infrastructure for the building, and then while we're there and essentially operating a hospitality company in a commercial office building, we are helping landlords to create a sense of place. And so that means a lot of different things for different buildings. Sometimes it's managing fitness centers and operations, or the cafe light beverage, or community and events inside of a building. And then lastly, the last part of our platform is the technology which really connects people, places, and things in the building so that these shared resources and flexible spaces can be used. Really, oftentimes, it's easier to consume our spaces than it is to put your own internal conference or workspace.

04:34 CK: Well, I've seen it firsthand. I've seen it here in LA, but I think most people, when we start talking about this kind of management of spaces and creating identity for the building, immediately jump to WeWork. And I imagine you spend a lot of time having to answer why you aren't WeWork. Cab you talk a little bit about the differences, and especially are you taking on these huge leases that we just saw that became public on WeWork where there's a real potential for arbitrage mismatch because they're taking long-term leases at set rates and then reselling it? Tell us the difference between Convene and WeWork.

05:18 CR: There's three core differences between Convene and WeWork. One is that the approach that we take with landlords is a true partnership where we're not trying to intermediate or disintermediate the relationship that they have with their customer, as opposed to we are trying to help to evolve the product to be more in line with what people want today. And so the deals that we're signing with landlords, there is a fixed rent component, but it's usually under a bit of a hybrid structure that is more of a joint venture where we are giving them a baseline rent but then helping them to participate in good times, and then making sure that the business is still sustainable and viable in bad times. So that's the core... The number one thing is that we're a true partner to landlords.

06:12 CR: Number two thing is that we are and have always been an enterprise service provider. So Convene has hosted 76% of New York's Fortune 500 companies. And while we do have some kind of smaller and medium-size businesses as customers, particularly in our workplace business, generally speaking, we are a place for, I would say, enterprise-minded businesses. So the types of tenants that care about things like security, compliance, design, things of that nature. I mean, just the people that you see here are more of your true business professional. And then lastly is that, in our organization we're essentially a hospitality company. If you look at the org chart of Convene and if you feel the culture of Convene, it looks and feels more like a world class hotel operation than it does the look and feel of what would traditionally be associated with anything related to real estate.

07:18 CK: So what was the inspiration? My sense is you started Convene similar time to WeWork. But what was your inspiration? What made you go, "I see an opportunity here."

07:33 CR: Well, interestingly enough, WeWork has done a great job of stealing the headlines, but Convene actually came first. We opened in 2009. And the opportunity that we saw then was we saw a lot of companies, mostly Fortune 500 or Fortune 100 companies, that had these enormous overbuilt conference facilities. In the downturn, all these companies started realizing that these spaces were chronically underutilized and also very expensive to maintain and operate. So we started creating an outsourced network of conference facilities that really replaced the headquarter-style conference center. When we started doing that, we realized that we had essentially built the hotel infrastructure inside of an office building. And we started layering workplace and building services on top of our conference operations, where we already have service kitchens and a staff of 30-plus people. We just started to extend our services throughout the building in more places in the workplace.

08:48 CK: When you started the business, did you have a moment or two where you kinda hit your hand on your head and go, "Oh, I didn't think about that. We gotta do something." Did you have any kind of aha moments early on that were motivating for you guys to pivot in the business at all, or has it just been a smooth sailing ride and everything's been easy?

09:12 CR: We always knew everything we had to do perfectly, and I've always been able to see the future without any margin of error.

09:17 CK: Of course.

09:19 CR: Yeah, just like you. Right Chris? No I mean, the mantra in our company is 1% better every day, because we're always discovering something about our business that needs to be better. I would say there were a couple of pivotal moments on our growth trajectory. The first biggest one was understanding that our culture is our greatest asset and really serving our... My job being to serve our team as my core customer, and knowing that if I took care of my people, that they would take care of our clients. And so culture and value is really the foundation of our business. We made that a focus really early on. And then the next one was the importance of design, where we started... We were running all the services in the building, but then we understood how important design was to our success. And we started thinking about the design of physical space as having a relationship with hospitality, like the way that a great tech company would think about the relationship between hardware and software.

10:34 CK: Mm-hmm.

10:35 CR: And we realized that in order to deliver experience, we needed to triangulate three things. It was a deep understanding of our customer need, and then how design and service could help to support the experience. And then, more recently, the biggest aha moment that we had was understanding how important technology and a proprietary operating system was to our business. Because, really, what we do is we centralize flexible spaces and on-demand services inside of a building in a way that is very much an element of the shared economy. But everything that has ever worked in the shared economy was facilitated through technology that helps to connect people, places and things, and helps to reduce friction in transactions, and help the shared economy do what the shared economy does best, which is to improve convenience, reduce cost, and increase quality through more of a shared consumption model with greater occupancy and flow-through. The latest aha in the past 24 months was the importance of technology.

12:00 CR: And then more recently, we've also appreciated that our truly best in class office building is a community in itself and I would say the journey that we're on right now is understanding how we can be a catalyst to the community inside these buildings where we be connecting people with similar personal interests, similar professional ambitions, and figuring out how to create a type of local experience that redefines the place that at an office building has in people lives.

12:29 CK: Well, we obviously, at our company couldn't agree with you more on what you just said there. I think one of the things that we see is that as companies densify, as they get a smaller footprint in terms of space, you have more tenants in a building. And the buildings that can create community and can create synergy amongst the different tenants are the ones that we see leasing up at higher rates and faster. I certainly see that. And I think the other piece you talked to, technology, I think between broadband connectivity and technology, it's really gonna be over the next few years, if you as a landlord can't provide it, you won't even get on a shortlist for a tour. That it's that... The tenants are just so dependent on it.

13:15 CR: Yeah. What's really interesting on technology is, Peter Drucker, the founder of modern management said, "What gets measured gets managed." And I wanna think about that within the context of what technology will do to accelerate the adoption of flexible workspace and landlord-provided services and amenities for enterprise, which is what is connected gets measured, what is measured gets managed, and what is managed gets optimized. And so what's gonna happen is that at some point in the next five years, every building is gonna become a smart building, and every single square foot of that space is gonna be accounted for with realtime physical occupancy. Once CFOs can really see the true utilization of their space, they're gonna start consuming real estate differently, and I think that will serve to really accelerate the flywheel for the flexible workspace movement. And I also really see it being adopted by more mature enterprises, and not just start ups anymore.

14:31 CK: Well, we're certainly seeing it. I was on a panel in New York on Monday, Tuesday, with Michael Ruden, and the Ruden family's a large owner of real estate. And we were talking about a software that they have that's a building brain system that I find very interesting. But the point to it was it underlined, what he talked about, underlined exactly what you just said. As CFOs can start to understand who's in this space that they're paying for and when they're there, they can make better decisions on what they wanna do with their rent. It's been so long, "Hey, we'll sign a 10 or 15 year lease. Make sure, our building hours are 7:00 to 7:00," and there's some underlying assumption by senior management that everybody's there from 7:00 to 7:00. But when you can start to measure that, you realize that, hey, most people actually don't come in at 7:00, they come in at 9:00, and then they go out at noon and not every one of those people who left at noon comes back afterwards, then you start saying, "Wow, look at these desks, they're not being utilized." I think it's gonna be... The demands that tenants are gonna put on landlords to be able to help them with these things I think are really gonna drive the business. And I think your company is gonna be a leader in that because you understand it.

15:48 CK: But before... I do wanna get into how big the company is and all that, but I think it would be very interesting for our audience to get to know you a little bit better. You're a Villanova graduate. Congratulations on that championship. As a Duke guy, that was a little hard to swallow. You're starting to approach our number of championships there. But I think you have a very interesting background because when people look at you today, I think they see a combination tech/real estate guy who's really doing things, but real estate and tech really are where you're at today, but not where you started. So can you tell us a little bit about what you did when you graduated from Villanova and what you did until 2009 when you started Convene?

16:31 CR: Yeah. So I've had business ventures all my life. I was the kid slinging candy on the back of the school bus in elementary school, and I've always just done... I've always seen opportunity in places and enjoyed capitalizing on them and seeing things grow. I had a bunch of businesses when I was in college, nothing major, but more than enough to cover the bar tab and textbooks. And so I had a good fortune of saving up enough travel for two years on $40 a day after I graduated. I graduated in 2004. So that had me going through and living in developing countries all over the world. And so I was in Asia, Africa, Middle East, South America, Central America. And I really used that time to develop a perspective that left me always kind of questioning everything in the world. And especially when I came home, realizing that the way that things are done today are not necessarily the way they're done in other parts of the world and also will not be the way things are done in the future.

17:37 CR: And so I've really viewed the world through this different perspective that I was able to establish through my years in traveling and have used that really to my advantage to try to remove myself from being so close to the business that we're in to see how real estate is evolving within the broader context of the world and how the world is changing. And then the business that we're creating is about creating solutions ahead of the market so that when demand evolves, that we are there to catch it. That was a really informative experience for me, those years travelling. And then the way that I ended up at Convene was a roundabout way. I actually have a different business that is in private aviation called Evojets. We do jet charters all over the world. And that has it's own whole story and I'm very proud of what we've done there and what the team has done there.

18:40 CR: But I was in New York on vacation and I got a phone call from a friend of mine from college, Ryan Simonetti, who is my business partner and CEO of Convene. And he ran this idea past me of building essentially these conference facilities with hotel style amenities inside a commercial office buildings. And I fell in love with the idea when we toured a hotel in New York and he explained to me that all these conference and meetings was like a $50 billion dollar business in New York City. And then he showed me what the vision was for Convene and I was hooked. And so I came to New York on vacation and I never went home. And I guess the rest is history.

19:32 CK: That's a great story. I think one of the things that I find really interesting whenever we talk is the entrepreneurial mindset you bring to it. But you also bring the things, in my interaction with you through YPO and things, also kind of a holistic view of what real estate is and should be and how we should live our lives. I'm amazed at your ability to run marathons, you're a sub three-hour marathon guy. You're also married, have two kids. Before we jump back into the business of Convene, how do you look at the world and what kind of habits and disciplines do you think are really important to your success and your health and then therefore your company's success and health?

20:19 CR: Yeah. Well, I think a couple of things. One is, being a parent, I love trying to see the world through my kid's eyes and realizing that every single time, especially when they were younger, every time they look at something, they look at it with such deep curiosity and with zero assumptions, and that they discover ways of looking at things that, through our fixed mindset, because we've already determined what the utility of an object is, they bring such a fresh set of eyes and I really relish in that and I pull a lot of energy from that as a parent. For my endurance running, I just see such a clear parallel between endurance sports, and specifically marathons, and building a business, which is you have a vision for what the performance is that we need to do and you need to wake up every single day when everybody else is sleeping, and you need to work harder to execute against it than anybody else. And if you do that every single day and you never skip a step, you can build things and do things that you thought were impossible, like, for me, the three-hour marathon was a big feat and I'm actually now, Berlin marathon this year, I'm targeting 2:50, so I'm taking my time down from... First marathon was 3:20, so really taking a lot of time off, 30 minutes off my best time.

21:55 CR: But that goes back to the kind of the pursuit that we have at Convene, which is this idea of being 1% better every day, which is having a big vision and executing against it. Specifically, in my marathon running, the later stages of the marathon really become a mind game instead of a physical competition. What I do in my training is I try to build in my mind such a vivid picture of the last three miles of my finish that when I get there, I feel like I've been there a thousand times before. And that is what happens; when my body gives out, my mind takes over, and I'm really proud that the last mile of my New York City marathon, my sub three, was the fastest mile that I ran and negative split. So the back half of my marathon was faster than the first half because the performance actually improved as I shifted from body to mind. And the parallel to business that I make is that, as a leader, you need to be able to paint a really clear picture of the future of your business.

23:12 CR: So clear that everybody that works with you can see it so that they know what they're building against, and I draw the analogy of it. It's like painting the picture on the cover of the puzzle box, which is, it makes the task of reassembling the pieces so much easier when you know what the picture looks like that you're creating and building into. So, to me, I enjoy the marathon because I just see that it's such a close correlation to building a business, which, for me, is what I enjoy doing.

23:48 CK: Well, I think that's a great analogy. My experiences in... And I'm gonna date myself, but I ran the LA marathon in 1998 in 3:59:59.

24:00 CR: Oh, amazing.

24:00 CK: And since my football number was 59, I figured I'm not gonna run another one. That was a great experience, moved me toward triathlons, and then now it's just, "Can I get on a bike several times a week?" I do think there's something about that discipline that translates to the world we live in because of what technology has done to business, and I wanna kind of get into an area that you and I have talked about before, but it really starts with, and I spend a lot of time thinking about this, why the heck do we even have an office? My opinion, if you look back, it came from two different areas. One, from the manufacturing floor, where the accountants were close by, and then as those manufacturing floors got louder and bigger, the accountants needed to be put somewhere else.

24:52 CK: And the other areas really came from lawyers, who would spend their times in bars on a court circuit, going to different courts, and going to bars and restaurants and working, and that then moved to office buildings. And then it became a very important place where people stored documents and where you could really only work at a place like an office. We don't live in that world today, and yet there is a large portion of major companies who act as though we do. And you and I have talked about this, what do you see today and what do you see going forward to just the whole concept of an office and why do we have it, and how should it be used?

25:37 CR: Yeah, and that by the way, great progression that you painted in terms of what the evolution of the office was, is we're moving from the utility of the office being to provide physical proximity between people because that was the only way the work got done, to it really being more of a cultural center of the business, where people get to connect and exchange ideas and be proud and inspired of their work and so the fundamental purpose of the office is changing, and the design and the office experience of a company is the company's body language. It speaks so much to who the company is, just like the way that a home speaks to who the person is or who the family is. I think what's happening in terms of the way that work place is becoming humanized is, because there's a couple of major shifts that are happening in life that are manifesting itself in the physical form of the office, which is, one, the relationship between people and work is changing, in that the traditional office was built for the 9:00 to 5:00 workplace where work was not supposed to be fun, it was work.

27:00 CR: And then every minute outside of the work, you were removed from the office. Today, because of mobility, our work follows us absolutely everywhere, and I know that I'm not alone in that I wake up in the morning and the first thing that I touch, barely before I open my eyes, is my phone, and I'm on my email and I'm on that thing until the second I go to bed and charge my device again. And we can talk about maybe trying to change my personal behavior, but I would say that's probably representative of what everybody else is doing. And so, now that my work has completely moved into my personal time, why should my personal needs and interests not be met while I'm at work? So we're living in this world where the lines between work and life are really completely merging, and it's changing fundamental assumptions that we've always just taken for granted, like going back to the way my kids look at things without any understanding of what they do.

28:02 CR: Like something as simple as compensation that work is changing. Compensation used to be cash compensation with health benefits. Now, quality of life at work is a major part of employer-employee decisions when they're trying to choose who they want their employer to be. And so, especially now, that is the mindset of... Especially technology talent. And now that every single business is defining themselves as a technology-enabled business, everybody is competing for that tech talent, which means that everybody is competing against the Googleplex as a weapon in the war for talent. And so the dynamic is really changing. And kind of going off your progression and just observing the old behavior, one question is like, "Why do so many companies build and own their own real estate?" Why would a company that's a bank or technology business, why are they in the business of owning real estate and spending massive amounts of capital on real estate development?

29:13 CR: They're consuming other required elements of their business, like their servers, which are probably even more important than their office these days, those things are all in the Cloud in today's world, but they used to all be owned. What we saw happening with servers was every company had all their own servers, and then at some point they realized, "Huh, this is getting really complicated. It would be so much more efficient if we just pulled our volume and requirement for servers with other people and used the Cloud." I think the same thing is happening with office where a lot of companies are saying, "Look, why are we doing this?" And if there's another company who specializes in this who does it better, who can offer it to us at a higher quality with more flexibility so we can be agile in our business, I think that's better than signing a 10 or 15-year lease, because if I'm the CEO, my strategic plan probably goes 12 to 24, maybe 36 months in the future. But I don't know a lot of CEOs that are really serious about their 5-year plan, let alone their 10 or 15-year plan, but they're expected to sign leases against that timeframe, which is almost like financially irresponsible.

30:26 CR: These are changes that are happening, and I actually think it's a really great thing for owners of real estate. A lot of them feel like change is bad, but I'd say like, "Hey, guys, real estate, as an industry, is moving from commodity to experience," and that's code word for, you can make a lot more money. It's a way higher profit margin business, and I pull a lot of inspiration in terms of where our industry is going from, like look at ballparks and airports, how they've evolved over the past 10 years where the experience of a ballpark used to be you watch the game and you get a beer and popcorn. Today, Ballparks are essentially the largest restaurants in the world. They've all become like theme parks in and of themselves. And as a result of that, there's no NFL team in the United States anymore that's worth less than a billion dollars, because it's good business to sell people more things, and same thing with airports. I don't know about how you're flying these days, but I show up early to airport these days, and sometimes I'll even stick around afterwards because there's a work lounge, there's great food. I no longer kind of trim as much time as possible off my flight because they have changed from commodity to experience. As a result of that, they have a lot larger portion of my wallet share.

31:47 CK: Well, I think you made two good points on both airports and stadiums, and I also think there are things that are happening there that make our life easier, so it's not what we used to think of an airport. I use Clear in every airport I go to, puts me right... Easy, right in front of the line, ahead of the pre TSA, I get in there. I agree with you. I was in New York the other day, and I would always... My mind would always be, "Oh, God, I wanna leave for the last second," and now I'm like, "I can sit in a hotel room and work and risk the traffic and be late," or I can go there and do exactly what you said, "Well, they've got a caviar bar. They've got this here. They got that. I've got full connectivity."

32:27 CK: I think the reasoning that you're getting to, is really hitting into the office because I would say that the majority of the office space in the country and in the world still is being owned and operated in the old model. And what's driving it now are companies that are, for the most part, being run by Gen Xers, but a big portion of Millennials, who I think really are driving this, what you just said. Look, I need a three-year lease, at most, and what I'd really like is to have a one-year lease with the ability to renew it and renew it. But what has prevented that to date, which I think is gonna change very soon, has been the financing industry. They've demanded these long term leases for the TI dollars. And I know we're pushing hard, and I think the debt markets are so frothy that you're gonna get these debt fund lenders going for... We'll start with maybe three or four floors, and the lender is gonna say, "Okay, you can go, create space out of these three or four that don't have to have long term leases," and then eventually it'll move up the building.

33:39 CK: But that's where I see it going and that's where I see what you do, and quite... In some respect, I see us as compatriots, and in other areas I'd say a little bit of competitors because I think you're gonna see... For me, I'm trying to create that and keep that revenue without the middle person, and you're right in the market because most people just don't get it, and you're getting it. And you are changing, and I've seen it firsthand in LA, the way Wells Fargo Center, used to own that building, not me personally, but I worked at a company that owned it, and what you've created there out of three of the ugliest floors that they had into one of the more dynamic... I think people would choose to be on the bottom three floors than the top floor now because of what you created.

34:25 CR: Definitely.

34:25 CK: So.

34:26 CR: And, to us, the model is almost like, I think of it as democratizing the Googleplex, which is making that Google-style workplace available to tenants of any size, scale, or capability because now that every company is competing for that talent. If I'm a 20,000-square-foot or a 30 or 40,000-square-foot user, 100,000-square-foot user, supporting your own kitchen infrastructure and massive amenity spaces and huge meeting spaces really doesn't make a lot of financial sense, but I do wanna be in a building where I'm co-located with those things being on-premise, and so a convenient-able building, you couldn order catering to your office the way you would room service in a hotel. You can book meeting spaces in your building off of your balance sheet on a per person per day basis like what you would in a hotel, but it's even... It's a much better, more special experience. And so I think that that concept of democratizing the Googleplex is what the building looks like.

35:28 CR: And I would say that role of the landlord just shifts to selling that full service product. And the reason why I would say you and I are not competing is because you're competing against WeWork, but Convene is working with landlords to help to build these services as a subject-matter expert of hospitality, technology, experience, and design, who's helping to uphold the commodity assets. So we really are deeply committed to the landlords being our partner as opposed to us trying to set between them and their customer.

36:01 CK: Let's talk a little bit about what's happening within the space these days. I think those who have a periphery knowledge of WeWork, we think of it as a place where there's beer kegs on the floor and there's glass offices where your elbows hit the side of it because it's so dense. And that's good and bad, but also I think a lot of people have the sense that, you go to WeWork, you're now part of the WeWork brand and maybe your company is not as important as a brand. I don't see that with Convene. Convene, I see some real, real obvious differences, but can you walk through that for people who haven't been in a Convene space but have been into a WeWork space?

36:43 CR: Yeah. And thank you for that. I want to break that into two parts. One is the importance of brand, which you referenced, which is if you stay at a hotel and you tell me you're staying at the Motel Six, or you're telling me that you're staying at The Four Seasons, there's so much that I know about you because of where you stay. And it's not uncommon when you're meeting somebody from out of town, when you say, "Oh, so where are you staying?" Because immediately, based on what their hotel selection is, you feel like you could have a pretty good read on who that person is, right?

37:15 CK: Mm-hmm.

37:16 CR: In the future, and right now in a WeWork or Convene environment, but especially in the future, when somebody says, "Where do you work?" The brand that you associate your business with is gonna speak a lot about what you do, about what stage of business you are, about what your values are. And so we aspire to be the top of market brand, where if somebody says, "Oh, yeah, our office is at Convene," I want somebody to say, "Oh, wow. So you guys are really into design. I didn't realize that about your business." Whereas if somebody says, "I work at a WeWork," the first question is like, "Oh, cool. Congratulations. Like, are you... What round of funding are you on? Have you done your Series A yet?" which there's nothing wrong with that, but just like in a hotel world, how there's nothing wrong with staying wherever you wanna stay, it's okay to stay where you wanna stay, but do realize that that is a reflection on who you are as a person. And so there is this brand element that's coming into the real estate world that has... I don't wanna say it's never existed before, 'cause it existed in certain pockets where there were a couple of [38:29] ____ buildings that all the hedge funds would be in and we all knew that if you said you worked at Nine West 57th Street in New York, it's like, "Oh, great. You just throw money at problems."

38:42 CR: For the most part, brand was not a big part of real estate, and that is changing a lot. Now, the way that Convene thinks about brand is we're extremely understated about brand, because WeWork is really about the way that WeWork works. Convene is really about the way that our customers wanna work. And we are very understated in our brand because we understand that, psychologically, when somebody has an office, they want the office to be about them. And so we think a lot about branding and ownership inside of our spaces, I would say, almost like the way that a mall operator thinks about featuring the brands of their tenants, likewise, we think about, we take that branded approach to the way that we build our spaces. Because when somebody comes to our space, the guy who signs the lease is my customer. Their guest, their client, is their customer. And we don't need to be with our brand all over the place in order to feel good about the relationship we have with our customer.

39:52 CK: Well, how big is your... To be able to provide this experience, tell us how big, how many employees do you have? How many locations do you have? Where around the country are all of them?

40:05 CR: Yes. We are currently... We have about 400-plus employees today. It might be about 450 now. I don't keep track that closely, but over 400 employees. We're about to close a round of investments that will leave us with almost half a billion dollars of capital raised. Our partners are Brookfield, Black Rock, and some other very well capitalized, both financial investors and strategic real estate investors. And we just signed our 22nd lease, which has over a million square feet either open or in development. And we're currently in New York, Philadelphia, DC, Boston, Los Angeles, with active projects in Chicago and immediate expansion into San Fran, Houston, Austin, Dallas, and London.

41:05 CK: And for your typical property, outside of people who are working behind the food service counter and things like that, how many employees does it take to operate two or three floors of conference room space and co-working space that you would typically take?

41:23 CR: Yeah. It depends on the size of the property, but I would say we're staffed like a hotel. So a typical co-working space is gonna have maybe four or five employees. We'll usually have at least five times that.

41:42 CK: And how does the technology that you're using and providing to your clients interact with the amount of people? Are you able to use technology to keep head count down? Does head count matter to a tenant's use of technology? I just kinda think of it... If you're doing it on your phone, when you're booking a conference room, who's there if something goes wrong? How do you deal with that?

42:07 CR: Okay, so there's three areas where we have excellence in technology. One is event presentation services. So all of... At Convene, if you're doing a large conference, all the guys who are working the sound boards, doing your microphones, videoing your program, all those are Convene technology specialists. And so we have a complete event presentation services team that does an amazing job with world class production. Then we have a communications and IT team that makes sure that we are delivering enterprise grade WiFi and Internet connectivity. And also, we can do things like creating dedicated virtual private networks for clients, especially, we do a lot of big training programs for banks and stuff where that's important. And then lastly, is our tech development where we're developing a proprietary operating system that really connects people, places, and things inside of a building, so that the user journey as they float throughout their day and touch different systems can be contiguously connected and frictionless. And so those are three different areas of technology that we're using to improve our business. They're all staffed very differently, but we're completely vertically integrated around tech.

43:24 CK: And then what do you do to run the employees that are there and also your executive staff? Is there a software, and as I've obviously said, we're a Google-based business; we use Gmail services and all of that. We also use Asana and ProsperWorks. So we are a paperless company and totally based in the Cloud. How do you interact with your senior people? Are you an email-based or do you use a project management software?

43:56 CR: All of that. We have a... Company-wide, we have our Slack channels and our email. We actually use Instagram for internal employee communications. Our Instagram feed is really vibrant. We have a private feed for the company that just makes people feel really connected to each other's lives. So that's kind of what we use company-wide, but then every single department has its own operating software. And right now, in this moment in time, we have a major project going around our infrastructure and systems. Because as we're maturing as a business, we really need to be kind of having things be very connected across departments. So right now, every department has their own thing, but it's all starting to be connected under one umbrella. And every department is producing a one-page dashboard that has all of the key performance indicators of their respective functions indicated, so that we can see that in real time and really navigate the business. We want to be able to navigate the business like the way a pilot flies a plane. You need to have all your instruments up and running in real time at all moments.

45:12 CK: I agree with you. Let me ask you one thing about Slack. So we've tested it early and stayed away from it because I've been worried about the overload on our employees, that that is a constant stream. And it just concerns me that people don't take time off, and when that thing is going, it's going. How do you deal with using Slack for your company, and do you have any concerns about the notification overload?

45:38 CR: So, yeah. Notification overload, and just overload in general, is something that is concerning to me. Now, if you asked me if I could choose to get rid of one thing in my life, it would be can you make all my emails magically disappear, or just answer themselves. Because it's very draining as an executive, the amount of communications we get.

46:00 CK: It's just a to-do list, right? I feel like email sent to me is somebody else's to-do that they're trying to give to me. Maybe I'm cynical about it, but that's how I look at it.

46:12 CR: Yeah. And then Slack is much more like chatty stuff, where it eliminates the back and forth and clicking and scrolling through message history and people's obnoxious signatures and legal disclaimers and everything. So it's just a more efficient way of doing the same thing. I would say that the single biggest thing that has reduced email in our company, and I would say dramatically reduced email and dramatically improved communications and relationships was we moved to a new headquarters where 70% of our employees, myself and my partner included, don't have desks. And we all work in this open common area space, but then there's also lot of private spaces like the one I'm in now where you can step aside into a huddle room and have private work or conversation. But being physically co-located in one place in an open environment has done more for our business than any technology ever has, and I think ever could.

47:14 CR: And so that really comes back to that is the purpose of the workplace today. It's about providing those connections between people and getting everybody into one place. And like on Wednesday we did a community lunch, which we do almost every week, we do every week, yeah. And the community lunch, it's like Thanksgiving for everybody at work. We had over 100 people at our community lunch this week and everybody just sits down and has lunch together. For one hour a week, the whole company gets together. And especially as the founder, it must be like what a grandparent feels like at Thanksgiving when the entire family is around the table. There's nothing better, to me I think.

47:50 CK: We do the same thing. I think, I still... You're of my brother's generation. I'm a little bit older, I'm a Gen X'er, I grew up learning from baby boomers that you got promoted and moved up, if you had your light on first in your office and it went off last, whether work was being done or not sometimes was irrelevant. We don't live in that world at all. We live in a world where a lot of the work work can be done anywhere. And I think, what you just said about your Wednesdays, we share it. We have two days a week where we ask senior people to, unless there's some travel that comes up, be a leader, be in the office. We do our Wednesday lunches too. And I just think it's just so radically different. In the office space, if you have exterior offices with interior cubicles, you can't do things like that, you know?

48:47 CR: Well, it speaks a lot about your company, right? It says that you're very hierarchical as opposed to egalitarian, right? And, unfortunately, I'd say that when your executives are squirreled away in private offices, they're probably not doing as good a job as they would if they were able to be connected with their team and in the center. But this is what... Every company needs to be thinking about their space in that way of, how are we using this space to improve communication and increase the human experience? And so, for me, if that means that if I don't have a dedicated desk, but I have all these amazing spaces to work from and I have my Wednesday community family meal, the trade-off is totally a win of reducing dedicated space and increasing shared communal space.

49:40 CR: And I think that, I don't care what generation you come from. If you were ever on a college campus, then I think you understand how people need to work today, which is, on a college campus, we always knew what job we had to get done, and we always knew the place that was the best to get that work done. So if you had to put your head down and study you'd do it in your dorm room, in your library, under a tree on a nice day, wherever. If you were doing group work, you'd go into a cafe-type environment, and if you were teaching and learning, you'd be in a classroom. And when you turned in your term paper at the end of the semester, the teacher never asked, "Where'd you do the work?" That was never part of what factored into your performance evaluation. And it should be the same thing in the office. It's more about the work that you're doing as opposed to where you're doing it.

50:32 CK: I agree with you 100%. I also think one of the important evolutions in it all is everything is a project and broken up into projects, and those projects require collaboration. The idea... I just... Look, when I was a young lawyer, I remember I was really disappointed because I lost my Friday nights. The reason I lost my Friday nights is the partners wanted a young lawyer to be the one who put together the packages that went out on FedEx for the overnight delivery over the weekend because they didn't feel, rightly or wrongly, that an assistant who was making less money would take that as seriously. And that's what I was getting paid to do as a young lawyer, and we don't do that stuff anymore. And so work is... I agree with you. I think the analogy towards the college experience and projects, project-based work, is where we're at. It's been a really interesting conversation. I can't let it go, though. You have your finger on the pulse of so many things that are happening. What is something in technology outside of Convene in the office world that you see coming that is gonna change the way the world works?

51:44 CR: So two things that are... One or two things. One is artificial intelligence. It matters to people in brick and mortar and services businesses because artificial intelligence is changing customer expectations. It is, every customer in their digital life is being served as an individual. Every person's digital experience is completely customized to them. And so artificial intelligence has reduced every market segment down to an audience of one, and people's expectations have been conditioned around that. And when they show up into a physical environment and they're treated as a generic member of some larger population who they don't identify with, that is offensive to them. And best-in-class service creates an individualized human experience. That's one thing.

52:42 CR: Two is, self-driving cars will reshape our cities and our lives and we'll start to redefine the value of location. And so the adage of "location, location, location," location is a... A location's value is assessed in the eye of the beholder. And so self-driving cars is a true paradigm shift. And I imagine a world where I have to explain to my grandkids why I would stop at a red light in the middle of a rural area, and just wait for a light to turn green, even though I knew no cars were coming. There are things that we have in our lives today that we have a fixed mindset around. We think we know how things work, but those things will be completely redefined. And there are things today that we think are so normal and so right that will be so wacky to people in 10 years from now. And so we live in a world where we need to be questioning everything and thinking about, what are the trickle-down implications of some of the innovations that we have.

53:54 CR: And then smart building technology will really, I think, enable our office environments to become much more personalized, responsive and empathetic. And so that will really... There's a whole dimension of real estate that is about to open up that we've never seen before.

54:12 CK: Yeah. I don't think we're that far away from Minority Report or those Schwarzenegger movies where you walk into a building, the building knows you're there, where advertisers are hitting you in the retail context. I agree with you. Now, the question I would ask you, as it relates to self-driving cars and this kind of experience in a building, is in your mind, is that three years from now, is it five years from now, is it 10 years from now, where we see this happen? What do you think the timing is?

54:45 CR: It's closer than we think, because we often reflect on how fast the world is moving, but we always forget that it will never move this slowly ever again. Right now, is the slowest that the world will ever move in your lifetime. And so, whatever we think is a 10-year projection is a five-year projection. And so I really believe that... And once it happens, it happens really quickly. Think about when BlackBerry just had such a foothold, and we could not imagine our lives without it. It was an appendage to most businesspeople. And then in 12 months, it was like gone, and like 24 months, out of business. It would have been unimaginable that the world could move that fast. Self-driving cars will do that because I think very quickly we'll understand that the amount of bad drivers that are running around, it's really a hazard to so many people's lives. I think somebody dies every minute in the United States in a car accident, computers will probably do better. I think these things will move way faster than we expect.

55:53 CK: I think they're gonna move. I do think when it comes to self-driving cars, though, there's infrastructure that's gonna be required, that's gonna take investment from cities that takes time, because anytime the city does that, they move slowly. I think the lidar-based systems all have severe limitations. I have a Tesla, and it is really a great thing in bumper to bumper traffic. It's a really good thing to use when the roads are well painted and all that. It really doesn't work, though, if you're on a road that has twists and turns, and it's had construction and some is asphalt, some is concrete. So I think it has some way to go. But I do agree with you that this stuff happens quickly, but I think anything that's gonna combine some sort of government requirement for an investment and infrastructure will slow it down.

56:46 CR: Yeah, but we'll have lots of old phone booth spaces and parking spots to put to work to solve the problem.

56:57 CK: Well, this has been a great conversation. I'd love to come back to you and have you on six months from now and look back where we're at, but, Chris, I appreciate your friendship, I appreciate you spending time with all of us here, and so thank you so much.

57:14 CR: Likewise, and thanks for all your great questions and for getting the word out, every time I speak with you I always learn something new. And thank you and it's fun to be on this journey of trying to figure things out together.

57:26 CK: I agree, and I can't wait 'til I can proudly say that Convene's in one of our projects. So we're gonna make that happen.

57:33 CR: Alright. Sounds like a plan.

57:34 CK: Thanks, Chris.

57:37 CK: Well, thanks, Chris. That was a terrific conversation. I look forward having you back on our podcast sometime soon. And for those listeners, please subscribe to our podcast. You can do so on our website chrisrising.com, or you can go to Apple Podcasts or any of the other Podcast providers and go to the Real Market with Chris Rising and press subscribe. We'd also love to have some comments and some reviews, so please take the time to do that. And lastly, don't forget to follow us on Twitter at @ChrisRising. Thank you very much.