Business & Real Estate

Startup's co-housing concept adds Los Altos Hills luster

Megan V. Winslow/Town Crier
HubHaus residents Matic Ferk, above, from left, Adam Lugowski and Kerry Jones gather in their Los Altos Hills kitchen at dinnertime. Their home’s communal living room provides a shared space to gather. It gazes out on Silicon Valley,

You’ve got a job – maybe even one you love – and now you need to find housing.

In the Bay Area, great work has become far easier to come by than a reasonable home. Creative workarounds to the housing crunch have become a market opportunity for entrepreneurs like Los Altos resident Shruti Merchant, who co-founded HubHaus to attract some of those unhomed professionals.

People looking for a housing option south of $2,000 a month apply, HubHaus screens and matches them to an existing peer group. Its shared houses offer furnished common areas and perks meant to help a community peacefully coalesce, such as monthly group dinners. The Los Altos-based startup operates 70 homes in the Bay Area and Los Angeles from its headquarters on El Camino Real near Whole Foods Market.

Kerry Jones, Merchant’s co-founder, lives in a Los Altos Hills HubHaus and started as a resident before getting hooked on work with the startup. He moved into one of Hubhaus’ first rentals in 2016, when the company didn’t have any technological infrastructure, just an idea and the master lease on several houses in the area.

“They literally just got a house and filled it with people,” he described. “It was the only one I could find out there that looked like a reasonable living situation – it was everything I wanted.”

HubHaus still uses Craigslist and other housing listings to find potential tenants. A casual skim of rental availability for the Los Altos area showed non-HubHaus rooms in shared apartments and housing for prices ranging from $1,100 to $1,900. In HubHaus listings last week, “Sirius Haus” in Los Altos listed one room available for $990, “Lyra Haus” in Mountain View had two rooms for $1,200 to $1,250 and “Hawking Haus” in Los Altos Hills had one room for $1,550.

Like Jones, Merchant lives in a HubHaus herself – positive experiences with shared housing launched her entire enterprise. When she first moved to the Bay Area in 2014, she moved in with seven strangers she found on Craigslist.

“It was awesome in one sense – they became my best friends – but it was also a total pain to set up,” she recalled.

Instant community

Merchant started thinking of how a startup could make it easy and accessible to move into a shared house and find that instant community atmosphere. She thought that the setup work would scale and tested the idea, signing the leases on a handful of houses in 2016 and then trying to fill them with roommates.

When she started, she catered to Stanford University students such as postdocs and research assistants. But as she expanded to include Stanford’s MBA program and local workers, the broader interest in (or at least need for) shared living became obvious.

“People are getting married later and they’re more comfortable with the shared economy,” Merchant said.

Jones liked that he participated in two events within his first two weeks in the house, found that he genuinely liked spending time with his new roommates and felt as though “suddenly I had 40 friends.”

That baked-in community is a major selling point in HubHaus’ promotional literature. It’s a lifestyle offering – decent housing, with the perk of a community of young people who’ve expressed interest in making new friends. Its particular take on this model has attracted increasing financial backing. HubHaus raised $10 million in funding led by Social Capital last month, after an initial $1.5 million seed round from General Catalyst, Spinner Ventures and Yardley Ip in 2017.

Hacker houses – loose conglomerations of young, single techies – have long been a local cliché and play out, in narrative form, on HBO’s “Silicon Valley.” Until he experienced Hubhaus’ variation on the theme, Jones said he didn’t think of them as a business model so much as a group of people brought together by necessity.

HubHaus wasn’t the first company to try to professionalize the concept, but success has been mixed and venture funding wasn’t quick to materialize in this arena. The startup Campus raised money, made a strong start with more than 30 Bay Area and New York houses and then folded in 2015. WeLive offers “furnished, flexible” apartments for short-term contracts in New York and Washington, D.C., but doesn’t handle the roommate part of the equation. Common operates 18 houses in four metro areas.

Opportunity knocks

As rental prices in the Bay Area continue to climb, and options to buy constrict further, the opportunity for a company to get it right has only grown. Whether they want to or not, many local residents find they have to team up with strangers if they want to afford housing. How to do that with dignity remains an open question for many renters.

HubHaus operates as a property management company and a roommate finder, trying to offer a “better experience,” as Jones put it, than informal hacker houses that self-organize while more or less matching their rental prices. HubHaus doesn’t buy properties, instead leasing large homes from local landlords. The homeowners who provide the houses get rental income without having to handle day-to-day maintenance calls or tenant screening.

Merchant said HubHaus pays attention to neighborhood reputation, trying to avoid parking or noise problems that could make their houses feel like a disruption. They only lease houses with adequate parking onsite. She thinks that attitudes are changing, and that having young professionals “moving in next door” could be an exciting thing rather than a negative.

By operating large houses with many bedrooms and some communal space converted into additional bedrooms, HubHaus can match the going rate for a two bedroom that offers fewer roommates but also fewer luxury amenities than a Los Altos Hills mansion.

“We’re creating a new thing, creating community where there wasn’t before – it’s actually returning to a style of living that used to be very commonplace,” Jones said. “The other part that’s really interesting is the positive effect it has on people coming into the community who see change in their lives personally. If you try to find two people and make them match, that’s a hard process and an inefficient one. When you have a group of people who are actively looking to make friends, that changes the mindset.”

Jones added that valuing diversity of experience can be more important than having a shared background or temperament – “that’s a growth mindset that is necessary to have a good household.” He thinks that when you recruit a community of people who are open-minded about their future roommates – and interested in being flexible about themselves – the ultimate mix works out surprisingly amiably.

Inclusive environment

Stephanie Corona moved into a HubHaus a year and a half ago after living in apartments with a string of roommates found via Craigslist. The house she moved into, in Los Altos Hills, at first seemed too good to be true.

“I thought there must be a catch – this listing and location, amazing people, multimillion-dollar house and competitive rent,” she said. “I have a giant – I mean, giant – room. And it’s the least I’ve ever paid in the Bay Area.”

The 27-year-old works as an office manager for a website in Palo Alto and said that her peers all seem to be in tech, which may largely be a product of the area’s demographics.

“People who are in tech and a little bit socially awkward think, ‘I’m not going to make friends as an adult on my own,’” Corona reflected.

She had found shared housing uncomfortable when she first started sharing apartment leases.

“I have Asperger’s,” she explained, and “it was too close for comfort. I just didn’t feel comfortable, ever.”

But the emphasis on group socializing among the HubHauses ended up having the opposite effect on her. The shared houses, which typically include six or more residents, offered a kind of “opt-in” environment in which events were often happening, but no one was expected to attend them all.

“The environment in all the houses is extremely inclusive – you come when you want, or not. Everyone can participate at their own pace, and that worked for me,” Corona said. “After easing into it, eventually I became so much more comfortable that I was co-hosting events and everybody knew my name. This version of myself had only ever been available to my family.”

For her, that version of comfort included trusting that she could be relaxed about acknowledging when she might misinterpret a social nuance. Letting down her guard had to do with trusting that people would get that she had Asperger’s, and know how to read her intent even when her communication style wasn’t totally standard.

The marketing language on the HubHaus site isn’t subtle about this offer of a value add, describing “cultural” shared housing and suggesting that prospective tenants can “rent one of our rooms & find your tribe.” Residents schedule events across the houses as a regional community, ranging from “wine & art” nights to hiking. HubHaus handles utilities and twice-monthly cleaners and facilitates conflicts and tenant screening, a process that includes interviews with current house members.

Thus far every startup to launch in this space has focused almost exclusively on the millennial market. Merchant said shared living is also a practical option for people later in life who find themselves living alone, and she hopes that HubHaus one day expands in that market.

The “culture fit” HubHaus creates skews young and professional. Merchant said they’ve had “awesome” fits with some people in their 50s and 60s who enjoy being sociable in the houses, but the majority of tenants tend to be between 23 and 35. Merchant said the average person might visit three HubHauses before moving into one that made a best match.

“As we have more members and are collecting more data on people, we’d love to expand out into different demographics and create specialty houses with more varied types of cultures,” she said. “One thing we found pretty early on was that the more diverse groups that we could put together, the better the houses got along. Having a teacher mixed with a tech person mixed with a doctor mixed with an actor created a strong bond because everybody had a different perspective to bring to the table.”

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Startup’s co-housing concept adds Los Altos Hills lusterHubHaus residents Matic Ferk, above, from left, Adam Lugowski and Kerry Jones gather in their Los Altos Hills kitchen at dinnertime. Their home’s communal living room provides a shared space to gather, below left. It gazes out on Silicon Valley, below right. Photos by Megan V. Winslow/Town Crier

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