This Week in Startups - E999: ROOM CEO & Co-founder Brian Chen is building phone booths for the modern office, shares insights on maximizing open floor plans, partnering with Calm to reduce stress at work, maintaining capital efficiency as a hardware startup

Episode Date: November 8, 2019

0:53 Jason intros Brian Chen 1:15 Brian demos ROOM’s collaboration with Calm 2:42 How did ROOM get their room.com domain name? 3:49 Upside & downside of open floor plans 5:52 Why ROOM manufactures the product in Indiana (for US distribution) & Portugal (for European distribution) as opposed to China 13:47 How did Brian convince VCs to invest in his DTC furniture business 18:13 What Brian thinks about ROOM’s defensibility 21:20 ROOM’s case studies with Density 26:20 How does Brian keep ROOM so capital efficient? 31:28 How does ROOM ventilate their booths? 34:58 Will ROOM raise another round or continue building off profitability? 36:49 What will ROOM’s next products be? 40:05 What would a Jason themed booth look like? 44:01 Alternative solutions for manipulating open floor plans

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Applications are due December 23rd. Learn more and apply at launchaccelerator.com. Hey, everybody. Welcome to This Week in Startups on the program today is Brian Chen. He is the CEO and co-founder of Room.com, which makes phone booths. You make phone booths. That's what you do, Brian. That's right.

Soundproof phone booths. And most people would look at this and say, is this a technology business? Is this like a great idea for a startup? But you and I were talking because I noticed that you partnered with com.com to make a signature crossover. Limited edition collaboration. So you made a phone booth with a com logo on it. what else does it do? It has smoked glass.

We're looking at it here. So it's a phone booth. Yeah. So first of all, I guess the phone booth ships flat, assembles on site. It's designed to give it a little bit of peace and quiet in the open floor plan. And the Calm collaboration, the design of the booth is inspired by Calm's nature imagery. The frosted door gives visual privacy because it would be a little bit weird if you were meditating inside and people would see you. Yeah, that could be a little awkward.

And then actually it comes bundled with 12 one-year subscriptions for the Calm Premium app. And it's painted nicely inside with some greenery and it's got some nice wood finishes. And it's four grand. Now, these phone boots, these little, I guess, quiet boots have become actually a very large business. You charge $3,000 for a booth. It comes flatly back. $3495. $3495.

It comes flat. so you kind of build it like IKEA, but belts batter, I guess. Yeah. And these things have been flying off the shelves. You have done how much revenue? We're on track to do with over $30 million this year. All right. And you're making so much money that you were able to buy the domain named broom.com?

That's a million dollar domain. Would you get that for $300? We don't really talk about that. Well, you're a guest on the program. You've got to bring a little something here. I mean, I'm talking to you about a goddamn phone move. Give me something. No, I mean, it's...

Six figures or seven? We're paying it for over five years. Oh, over five years. So it's a million dollar domain. You pay for it over five years. It's worth it. Why did you choose to do that? You know, Room, we're trying to build a brand that it becomes known and synonymous with fun, productive, creative work environments.

Yeah. So if you know that you want to build something over the long term, then having that domain is going to be, is critical. right? It's critical for credibility, for recognition, and it pays for itself, honestly, when you think about if you're ever doing any offline advertising or if word of mouth is important. Any of these things, it starts to pay for itself. Makes total sense if you are doing radio advertising or any of those things. Now, people save a lot of money with open floor plans, but the downside is if you need to make a phone call, you have to take up the whole conference room for one phone call. Absolutely.

And so these phone boots have become a thing. Well, the other downside is mental health. Yeah. You know, because in the open floor plan, people are, it's very distracting, it's noisy. You can never find a moment to focus. Yeah, but now people do like the, you do, you do do library rules. That's what we have is library rules, which I think is like, you can whisper, but if you can have a longer full blown conversation, take it in.

to a conference room or take it outside or whatever. Yeah. That's kind of the ground rules now, right? We had, so we had a library room in our office as well. We ended up having to... No, I said library rules. Oh, right, library rules. So basically you just tell your employees, like,

listen, we're going to have an open floor plan, but it's library rules, which means you don't just start talking to people randomly when they're reading a book. You let them read the goddamn book. And if you're going to say something, it's a whisper. And if you're going to have a conversation, you take it outside. Well, when you have the library rules, then it kind of defeats, I think, the original intention

of the open floor plan, because the open floor plan originally was designed to encourage more conversation, more interaction and collaboration. So when you introduce the library rules, it kind of, it actually defeats the purpose. Yeah, and now people put headphones on.

And then I think the new thing is, I told everybody, like, if you're in focus mode, they should just put a, you should take a yellow post-it and put it on your monitor, like a flag, on the top, like right-hand side of your monitor.

That's the new standard. Okay, everybody, we're going to do this, starting with this episode. If you're in an open office plan and you need to focus, just write the word focus on a post it and put in the top right hand corner. Take it down when you're done.

We've seen some pretty funny products. There was one that was kind of like horse blinders. Yeah, that's great. That's hilarious. That was another way, you know, visual indication that you're supposed to be focusing and gives you that. How long you've been doing this? We started in mid-2017.

And you build these in China, you build them in America, How difficult is it to build like one of these little rooms? We actually have two contract manufacturers. One is in Portugal and one is in Indiana. Portugal and Indiana. No, wait a second. Most people would think if you're going to build something like they should be going to China. Why are you going to Portugal, of all places, and Indiana?

So I've actually worked with manufacturers in China before. And while the per unit cost might end up being. really low or appear to be really low. There are lots of hidden costs. Ah. Right. There's the cost, travel becomes non-trivial. There's the psychological.

You're traveling there. Yeah. Because if you work with Chinese manufacturer, then you really do need to travel there. To make sure they're doing a quality job is that the reason? Exactly. Exactly. Interesting. And so the travel, not just the dollar costs becomes expensive, but the emotional and

kind of like cost to your well-being also is yeah people who do this are constantly getting on plans yeah they're doing 10 flights a year and usually if you are manufacturing in china then you you're going to want a minimum order quantity of like 10,000 units or something and that's actually one of the things that locks in makes it really difficult to be capital efficient so our product is one that where the logistics is a significant cost driver um and so it doesn't really really make sense actually for us to have our products sit on a boat for, you know, 30 days. Yeah. To save $500 a unit or $1,000 a unit.

If you make it in Portugal, I assume that's for all of Europe. Yeah. And then Indiana, you can ship to anywhere in the United States and it costs you a couple hundred bucks to ship. Which one? Yeah, more or less. Two or three hundred bucks? Yeah. It's not cheap.

Do you assemble them too or are you just people assemble them themselves? We have a network of last mile carriers that will also take care of assemblies. but it can be self-assembled, but we offer a white glove as well. How'd you come up with the idea? Well, I mean, it definitely starts just like everybody knows and understands the pain point, right? But the idea was actually presented to me

by Ryan Peterson, two I see guys, so Ryan Peterson from Flexport and Henrik Zilmer from AirHelp. I had just left my last company, which was called Blue Smart and was in... Yeah, you were on the podcast, a 483 episode, What was Blue Smart again? I'm trying to remember. It was a suitcase company that had location tracking and way-sense.

I remember. What happened? Didn't work out? There, well, the company ended up getting acquired by Travel Pro. But there was actually a ban issued by airlines on the battery packs. Why did that happen? Why did they ban the battery pack? Because I travel with anchor battery packs, like four of them.

I've got an iPad Pro. giant and a laptop, they all have batteries and I have two phones. I mean, I literally have five to ten pounds of batteries with me. What is the one in my carry-on matter? Well, I think that, I mean, it happened also with hoverboards and it happened with the Samsung Galaxy 7, right? Where, I mean, more so with the hoverboards, there end up being a lot of copycats of unknown quality.

And if, you know, if you're not. producing batteries to the right certifications, they can become hazardous. So I think the airlines were just making kind of a blanket statement. They had a scare. Yeah. And they said no more smart luggage with batteries in them. Yeah. But totally fine to bring other batteries with you.

Yeah. And when that happens to your company, do you have the ability to then prove to the airlines that you have batteries that are just as good as the anchor one that's in my backpack? We actually worked with the regulatory agencies that define what's safe to bring on flights and whatnot. And we got a letter of interpretation where we submitted all of the documentation about our battery and our product. And they actually greenlit our product. So it was a blanket statement issued by airlines. That's kind of what happened.

I had this happen to me on a flight. had in a way bag, I had the first version with the non-removable battery. And I get on, and I was one of the last people on the flight, and the woman's like, oh, is that in a way bag? And I was like, yeah, I just got it. And she's like, oh, this is not allowed on the flight.

And I'm like, all right, so what do you want me to do? And she's like, well, you can take the battery out. I'm like, so I open the thing up. I'm like, it's kind of screwed in here. Unless you have a screwdriver, I don't think I can. And they literally held the plane for like five minutes and put the bag underneath. So you're allowed to have the bags under the plane, just not in the cabin.

Yeah. I can't understand any of this lodger. Me neither. So you only raised $2 million for this company, and you got it to $30 million in revenue. It seems incredibly efficient. The product's got 30, 40, 50 percent margin, something reasonable. Yeah. When we get back from this commercial break, I want to understand.

why you only raise two million. Was that a function of the fact that it's a hard business to raise money for because venture capitalists don't think it's a tech business? Or is it because you just knew how to do it on a nickel and didn't want to dilute your cap table when we get back on this week and start it? You need to find the perfect software to solve your problem at work. But how do you find it? Well, you go to Captera because you need to find a solution fast

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You're going to find great tools, and they save millions of people. They've got to save them billions of hours of research and mistakes. Don't make a mistake. Get software selection simplified. That's it. software selection simplified captera.com slash twist okay let's get back to this episode all right brian chan's back on the program he was on episode 483 with blue smart and smart luggage that company uh what you sold it uh it was yeah it was acquired by travel bro

good sale bad sell single double triple uh single by getting hit with the ball kind of like one of those yeah yeah that happens but you still got on base hit by pitch you get hit by pitch you got on base yeah it happens uh so you have this other right you have this other you have this next idea for room.com, you get two million bucks from two angel investors. Well, actually, our seed round was led by slow ventures. Oh, Dave Morin. Yeah, exactly. And his crew.

You were able to convince venture capitals to invest in a furniture company. How did that conversation go? How did you convince him to do that? Because most people would say, this is a lifestyle business, not a venture-scale business. Certainly you got that feedback? Yeah, no, for sure. I mean, I think some... Had you overcome it?

Well, the insight for us was that it's not just about noise and privacy in the office. It's the fact that office layout designs honestly are just are failing people, right? When you Google Open Floor Plan, the first 10 articles that you see are about how people, how much people hate the offices. Well, if you Google Open Floor Plan, it's pretty universal, the vitriol. Really? Yeah. Is that people would rather be in an office? people hate the distraction, the noise.

People would rather have a little bit of privacy. Huh. Okay. So still how? So over, like, it's over 50% of people who complain to their bosses about noise. Okay. And people literally call in sick because of this. No, I get the, I get the use case and the need in the market.

What I'm getting at is how did you convince investors who are venture investors who normally invest in software that can scale much faster than a furniture company? How did you get them to, aside from the use case, make a venture investment in what most people would say is a lifestyle business, a furniture business? How did you overcome that? Well, part of it would say it's twofold. One, a lot of the story when we did our seed round was about an innovative go-to-market and very similar to direct-to-consumer companies who are bringing, you know, e-commerce plays, direct-consumer e-commerce plays to old industry. there was that angle and that story as well, right? So if you think about the office, there aren't any brands, really,

that are known to resonate with the millennial workforce. So there was that- Permianiller, those things, air on chairs. Yeah, I mean, they sell like $10,000 chairs. Nobody's going to get really excited about it. Right. So we felt that there was a gap where we could build a brand in this kind of new era of brand building.

And that we could, instead of a company like Herman Miller where they only sell through dealers, we could actually have a direct channel selling directly businesses. So that was the way you got over that, hey, is this just a lifestyle business? You're just selling furniture. No, no, we're going to be able to do online direct to consumer marketing, cut out the middlemen, not have resellers and keep all this profit for ourselves. Exactly, exactly. But the inside, there's actually evolved over time, right?

So I think that insight remains true. There is this opportunity to have this direct-to-consumer play for businesses and to build a brand in the modern workplace. But I think what we've also realized is the fact that we're replacing construction, the alternative to our product is literally calling up your landlord, getting a building permit, hiring a general contractor, and, like, hammer a nail to build a physical room. The fact that we're replacing that means that this is a totally new product category. So when somebody wants to rent an office space and there's like one conference room and 30 desks and they're like, there's not enough conference rooms, we're going to pass on the space. They say, well, we can just throw in four of these rooms and you've got these phone boots here or whatever and you're all set. That's an interesting observation as well. So we want to essentially totally change the way that tenant improvements are done.

So, I mean, you've moved offices many times and every single time. I mean, we're moving from a world where seven to ten year leases were the norm to a world in which people want and demand a lot more flexibility, right? Yeah, I mean, people love we work. They don't want to sign big leases. That makes total sense. But these, I wonder, if you've thought about the fact that there's got to be a half dozen people doing this right now. And of course, you have the giant elephant in the room, Amazon, or somebody like that,

who can take a knockoff from China and sell it for $1,000. How do you look at making this defensible in some way? Because isn't all furniture kind of like and clothing and these kind of factors? built stuff a race to the bottom? How do you convince the investors that it's not going to just be a race to the bottom? Well, I don't think it's going to be a race to the bottom because, I mean, the innovation for us is not just the product, but it is the entire experience around it, right? So it is the seamless purchase experience, the delivery, you know, we have really high MPS. That's actually really hard to do if you have, if you're trying to buy something on Alibaba,

right? Right. That's part of the answer, just like customer loyalty, building up that brand, right? I think the other domain in. Yeah, exactly, room.com. And thus the partnership with Calm. You know, this is not just a commoditized knockoff product. This is something that, that makes an impact on health and wellness in the office. And it's a, it's a brand and a company that stands for something. Are people buying a lot of stuff off Alibaba and like getting this direct shipment of like furniture from China? Like, well, not really. And I think that that speaks to why it's not a race to the bottom, right? Because.

But they do let you do that now, right? Alibaba is here in America. Yeah. And I started playing with it. And I was amazed. Like I was looking for a new desk for this, like studio. And I was thinking about podiums. And I started looking for like party furniture for events and podiums.

And I was amazed at the array of knockoffs, a famous furniture from like really high-end builders. And then you type in the name of that. that builder and you find like somebody's made like a variation on it. Yeah. It's not, none of this is protectable with IP, right? Or is furniture protectable? Well, the design, we have design patents that we've already filed.

Yeah. But, you know, we're definitely moving away from a world in which people are buying products for products sake. Like people are buying a solution, right? And so if you're setting up an office, you're not just looking for a desk or a phone booth. You're looking for a great workplace environment that's going to be attractive to the people who work there. So, you know, the defensibility comes from being able to understand that and being able to offer a true solution for building a great workplace environment, building a place that will

attract and retain talent. You have, I saw one of my portfolio companies, I think it was density had like one. It's not yours, but it was like a double wide one and had a little table in it. You just do the one phone booth right now. Yeah. You need to do that double one. That seems to be the big win. It's like it's almost like a conference room in a box. It kind of goes to your thing about building out. Yeah, replacing construction. Replacing construction. No, absolutely. That's definitely in our roadmap. And we've actually partnered with density on certain things where to understand how space is being utilized. Oh, you think about putting a density sensor on it? Well, so we did a case study where we place these density sensors in an office, no phone booths, and then we dropped

in six phone booths. To see what happened with the conference rooms. Yeah, exactly. So you start seeing the one or two people who are taking up a conference room just for their phone call or video conferencing. They're now using the phone booth, and it relieves the conference room congestion, right? But the fact that, so I love what density does because they bring data and, you know, to understand how offices are being used.

And they might recommend, they did this report actually, right, where they found that 76% of meetings are between one to four people. And they might recommend, hey, you actually need more phone booths. But there's no way to do that unless you have a very modular. Yeah. For people who don't know, density is an investment we made, I think 2014. So it's five or six years ago. They were at our launch festival back in the day.

And what they do is they have a reader that goes above doors and they count the number of people coming in. But it's not done with a camera. So you don't have like creepy privacy issues. Like we have drop cams in our studio and stuff like that. And some people are like freaked out about like, oh my God, there's cameras in the workplace. It's like, yeah, every workplace has cameras now. Like you have to like for security. But they you don't have to worry about that because they're just capturing the body, like just the image of a body through computer vision.

not through computer vision, but through another technology. And they can just tell you how many people are in the cafeteria with a high degree of. Well, and they can tell you how many people are in this 10-person conference room. Right. And whether it's being utilized. And that's where you think about the cost of real estate, especially in a place like San Francisco. If you can make meeting room, meeting rooms that much more efficient, then you're just saving tons of money. So you're selling about a thousand of these a month, something in that room.

range, just doing back of the envelope. What I want to understand is how you're able to do something so seemingly capital intensive, but with so little money when we get back on the swing and startups. Small business owners have to wear a lot of hats. You got to do your product, you got to do hiring, you got to build a sales team, maybe PR, customer support. There's a lot on your plate. I know this. I invest in, God, I did 80 companies this year. And one of the most acute things they deal with is payroll, taxes, and HR. These things are mission critical. You cannot mess with people's paper or their paychecks. These things have to be dialed in and perfect. And if you want it to be perfect, you just use gusto, G-U-S-T-O, Gusto. We use gusto constantly in all of our

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building 10 of them in an office. God, they're probably going to charge 150,000, and 10 from you will be 35,000. That's a pretty good deal, and you can drop them in anywhere. How are you able to get to this level of sales without raising more money? I am amazed at how capital efficient you've been. How do you make it so capital efficient? For us, it was really at the very beginning, I would say, focusing on the fundamentals. So focusing on making sure that the product and the product experience is really strong

so that there is strong retention for customers and a strong word of mouth. It was also ensuring that the unit economics made sense, right? So that there was enough margin to pay for all the acquisition costs and all of the delivery costs. And then just really diligent cash flow management, right? So it doesn't sound like anything genius, but. But don't you have to inventory a ton of these now that you're selling, you know, whatever it is, a thousand a month? Like, don't you have to then order 5,000 at a time or 2,000 at a time?

But I guess you do get the money up front. How long does it take somebody to get it after they order? Standard lead time right now is 6 to 8 weeks. Okay, so you get to get the money first and then build it and ship it. Well, and we offer the, we do stock up on inventory because it's not that we have 10 different options, right? We try to keep the product mix relatively straightforward so that we don't have to stock up on tons of inventory. But you have to stock up on a ton of inventory if, you know, as we were talking about before, if you manufacture in China and you need to order 10,000 of these. That's one reason why you'd have to stock up on inventory.

The other reason would be if you don't know or can't predict your revenue. So because we sell to the B2B space, we, from a very early stage, made it like a big point to be able to forecast and predict our sales. So predictable revenue from kind of a software perspective. We applied those principles to how we think about. How do you make it predictable? Well, it's about having that sales engine, right? And understanding how many leads. are coming in through search and marketing

and your other kind of acquisition channels, what are the conversion sales conversion cycles and how many salespeople, what's the time to ramp? Do you use salespeople to try to sell these or is it just go to the web and order it, putting your credit for a number? We started off just e-commerce, right? So basically just go to the web.

But what we found was that there's an opportunity for us to basically have a Slack, like, go-to-market strategy, where you can have really low-barried entry to start. It can be an office manager and a satellite office that purchases, but then there's an opportunity for our

salespeople to bring that up the procurement ladder and then ultimately talk to the CFO or head of real estate or head of facilities and sell hundreds of booths, right? So our acquisition costs, that's how they're so low, because I'll give you an example.

Because Uber is one of your investments, right? Yeah, sure. the Pittsburgh Advanced Technology Group bought, I think, five or six phone boots to start because they had a problem with noise. Then all of a sudden people started hearing about this product in HQ. We had a salesperson talk to the HQ team, went up to facilities and went up to the real estate team, and now we're selling much larger quantities to Uber across their real estate portfolio. So there's this kind of bottom up very, very. sales and capital efficient method for growing accounts.

So if you catch somebody at a big company and it cost you $500 in advertising and clicks to acquire them and that each into your margin for the one or two they're buying, that doesn't matter if you follow up with them and six months later they buy 20 of them and then a year later they buy 200 of them. Yeah, exactly. What's the largest order you gotten today? Have you gotten anybody to buy over 100 of these at once or 50? We have two customers who have purchased about almost 2,000.

So almost 1,000 each. Really? Yeah. A thousand each. Yeah. They must have giant, giant campuses of... Well, these... So we have a very strong product market fit, I would say, with flexible office providers.

Ah. Because flexible office providers are constantly building new offices. They need to get their... The reworks of the world. The reworks of the world. But you don't have them as a client. They're a terrible client. They're cheap.

Well, they're a client that's in turmoil, I guess. Well, now they are. Oh, were they previously buying stuff? We actually just received their first order. Oh, that's interesting. Because they always built the phone boots in when they built out of space. They would build phone boots, and people don't have to reserve phone boots there, I think. You just can use them.

And their phone boots, I think, to be honest, I'm not sure that they're great products in terms of ventilation and stuff. They're pretty bad in terms of ventilation and soundproofing. They're okay. But yours are super soundproof. You can't hear anything. They're more soundproof. They're more soundproof for sure. Yeah.

If I'm like standing in front of it, would I hear the conversation if I was like right in front of it or? You would hear muffled murmurs. Got it. And then ventilation. That's the number one complaint people have about the ones we have here is that even I think they have fans in them, but. Ventilation is incredibly important.

Yeah. And the way that we've set it up is there's an intake in the floor because cold air will sink. And then the fans actually excavate the air above. So it's kind of a natural. So hot air rises and it blows that out as it rises and the cool air then goes up. Exactly. All right. It's like a little wind tunnel.

So it'll match your ambient temperature more or less exactly. Oh, really? Yeah. Is there a thermostat in there to know to turn the fan on or is it manual? Well, there's a motion sensor. So as soon as you step in, the fan gets activated and then we'll stay on. So if you're in, then the fans activated. And it's got power and all that kind of stuff and a shelf.

Yeah. So when we get back from this quick break, I want to know why you didn't choose to build a network of spaces in airports or your own sort of we our competitor because I've been pitched on people who have these booths and there's one company particular that pitched me in, I forgot the name of it right now, I think you're in New Jersey, where they let you slide a credit card. You can put this in a cafe or something and you're in a cafe. You can just rent it for five bucks an hour. It's just kind of dope as well. I'm curious why you didn't pursue that vision or if you thought of it when we get back on this week and start. All right, you guys know LinkedIn. You're on LinkedIn all day. Me too. We love it. There's over

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LinkedIn marketing works. Go get the hundee. Let's get back to this amazing episode. All right, Brian Channis Smith is from Room.com. It's a Pegasus, basically. They spent $2 million. They're making $30. Profitable or close?

Spitting distance? Spitting distance. Yeah. Are you given the current market? turmoil thinking you should just plow your way right into profitability or do you want to go back to the market with your $30 million run rate or whatever and raise money and see if people buy that this isn't a lifestyle business? I think we'll, I mean, we have a really big vision and the market opportunity is enormous that we want to move quickly. We want, you know, we want,

probably will raise more money. So why didn't you go with the very obvious like, oh, it's Uber or rent a space and just slide your credit card and you put these into cafes and it becomes like a pinball machine and that, you know, the cafe now has another revenue stream. Has anybody put these in their cafes? We've seen our products put in pretty interesting places, including like libraries and in public spaces at universities. So that definitely occurred to us. And we've seen demand come from airports as well, right?

Business lounges, things like that. You know, one of the reasons is for us to stay, we want to stay really focused. And the biggest problem today is in open floor plans. And the demand there is tremendous. So maybe someday you get to that. Yeah, exactly. And I think to your point about the Pegasus concept and being capital efficient, that was, that's one of the reasons we've been able to be capital efficient is the focus and the fact

that, you know, people are paying us and we have margins on the products. Yeah, you get paid in advance. You don't have to float the cost of putting a thousand of these in market. What's next? Because obviously you're making a furniture company here that kind of addresses the modern workplace. What will the next products look like? Are you going to go into desks?

Are you going to go into... So I wouldn't call it furniture because I think that... The motivating theme for us is how do you build a great workplace environment with zero construction? Okay. So what other things would be constructed, I guess, is what you would have to ask, that you could make prefab. And for the most part, that's meeting rooms, it's dividers, it's ways to carve up space. Cafe spaces, maybe. It's ways to carve up spaces in purpose-built ways.

So you see like a freestanding conference room kind of product? So if I've got like 13 foot ceilings, you could just sell me a box that becomes like a little box inside of my giant warehouse space. Exactly. And with a data layer as well, right? Because like we were talking about earlier, if 75, 76 percent of meetings are four people or less, then your meeting rooms should be designed accordingly. Right. So we, you know, we see an opportunity to become experts in how space is being utilized and to provide those spaces. for customers in the most optimal way.

So you'll have your own density-like sensors in them. You already do with the motion detector, but they're not connected to a central piece of software that shows somebody what percentage of my phone booths are in use, right? Well, we already have a couple of pilots that show that show that, where there's an occupancy sensor in our phone booth to show utilization, and whether you need more or less. Yeah.

So do you have the software built to do that, or that's all in bed? It's still kind of in pilot beta phase. Got it. Yeah. So they're smart by default. They have Arduino or something in there. They have a computer in there that can relay the data. Exactly.

And the motion sensor just knows there's somebody in there. Exactly. So if you know the utilization, it can tell you, if somebody complains that all the phone boots are always in use, you can say, well, actually, we've only had, we have one hour a day where they're at seven. Yeah. Of seven. Exactly. And I think when people come to us and they know they have a problem. problem with noise and they need to buy phone booths. They often ask, well, how many phone booths

should we be buying? What is the right ratio of employees to phone booths? It depends on if they're salespeople or developers. It totally depends. Yeah, riders. But for the most part, they, they don't have a data-driven way to answer that question. No. And that's one of the things that we start seeing is like, well, there's such a lack of data when making these decisions. And we're in a unique position to understand. and spatial requirements for different types of companies and different types of teams. Is the future going to be people working in a box all day like this?

No, absolutely. Because I see some people go into these boxes for two hours. These boxes should not be private office replacements. Right. It should be that you have an open floor plan that has different zones to accommodate different types of activities. Because sometimes you want to brainstorm. Sometimes you want to focus.

Sometimes you want to get a phone call. Yeah. I need to come up with my own booth. I want to have like a J-Cal booth. Maybe we could do a crossover. What are the features? What features? Well, I think in my booth, I would like to have the soothing sounds of my guided meditation for founders.

And so you just close the door. Is there a J-Cal guided meditation on Calm? It's coming. It's coming. It's J-Com. And it just, the idea would be you go in there and it says like, you're not working hard enough to have exceptional results. Exceptional results come from exceptional effort. You need to do the work.

You're currently phoning it in. Why not consider adding a new skill on your time so that you're more valuable to the company? You know, you would have. be afraid of adding skills and doing things you haven't done before. Everything in this life you didn't do before you did it. Be brave. Be confident. And get the fuck back to work and get...

Not, I'm going to do anything but... Get back to work. Jason, you wrote a blog post that was advice, early career advice to recent graduates. Yeah. It was like... Yeah, advice I get to myself kind of situation. I remember that, yeah. But I give that blog post that you wrote to all of our new hires.

You're kidding. And that's actually going to the Pegasus theme. I would say that's part of the key. Because you want people who, as you said, in your blog post, if the company needs a blog post, you want somebody to hire somebody who's going to come to you with a solution, not with just more questions. But if you start hiring in that way, then your team becomes kind of superpowered. Yeah. I mean, if everybody in the team, like literally, if somebody,

comes to me and they're like how do I do something and I'm the first thing I say to them is like what did Google and YouTube tell you? Yeah. Like literally the I have people who like something goes wrong in their life and then

they never typed into and I'm talking about like across your entire life like I don't know. They can't figure out how to get the Tesla charger to unplug or something and it's like Tesla charger jammed Tesla charger the charge are stuck. And you do that and all of a sudden you find all of them so easy.

Many folks will tell you the world is not a zero-sum game with one person not having to lose at the expense of another winning. This is simply not true. I said most startups is a very limited number of seats and they go to the people who work the hardest and who have the most skill. If you're in your career, you will find that life is a zero-sum game. The winners get the prime positions and the person who comes in second place for that position is the first loser, or not the second winner. I think that's a different blog post from the one that I was referencing.

This one you might not want to give to them. They may cry. Yeah. Click on the he writes in his blog post. That's the blog post, I think. But there's probably some other things there. Oh, no, they just don't meet to calcanus.com. Yeah, we'll find it later.

It's a good post. So you don't think you have to worry about Amazon. You are actually in the space planning and utilization. Space building. Space building and space utilization business. Not just the box. Exactly. So whereas I looked at it and was like, oh, it's a box.

It's actually optimizing the office and keeping you from having to hire a construction company. And enabling flexibility. What does that mean? It means that... In this context. So if you're trying to rent a new office... Oh, for the landlords. For the landlord.

Yes. Because if you're spending... $500,000 in tenant improvements for a 5,000 square foot office, you're locking yourself in for 10 years. Are you allowed to put up a wall that is temporary that you know, you could take out of a box and just use poles or something to have it hit the roof and the floor? Does that exist in the world? I wonder why.

I mean, I know partitions exist, but they don't go all the way to the ceiling. I wonder if you could take a corner. They're called demountable walls. Demountable walls. Oh, so you've done a little research on this. But they're also very expensive. And they're not that much more flexible or affordable than actually building yourself. Yeah, because they would have to have some kind of spring mechanism or something to lock them in place really well.

And by the time you do all that rigamarole, you got to put it yourself because you can't have a wall fall on somebody. That's the key problem. Yeah. but you could build a depending on the height of the ceiling you could build a small conference room and that's what people are doing with these phone boots is building like small conferences when you have a conference room out by 2020 you think yeah for sure that's going to be the nuts that's what I need here because I have two of these phone booths what I want to get is a four person one that we can fit four people and when are you going to have that you can cue second half of 2020 or

two hopefully earlier oh really maybe I could be the first person what's that going to cost you think. What is a four-person conference room type thing going to cost $8,000, $9,000? $7,000, $6,500 feels like the right number. Well, there are existing products that do it. That costs $24. What? Yeah, it's, it's dumb. And they're made out of, you know, glass and double-pane glass and they're very expensive materials. They're unnecessarily complex.

They're over-engineered. Over-engineered. And they don't necessarily solve. So what I learned at BluSmart was we over-engineered the product, right? Like there was location tracking and weight sensing. That was my favorite part was the location. But did you have the thing when you pick it up with the handle? Yeah, there was weight sensing.

And the thing is people just wanted like a nice looking suitcase that would charge their batteries. They wanted away with the battery, yeah. It was essentialism, at the right price. So price mattered. And price matters in this case as well. I got one of those on Amazon for like five bucks. They have a scale that you hold in your hand, you hook it onto your bag and you pick it up. Not because I ever overpack my bag, but I have a friend who overpacks her bag every single time.

And every time we check in, we get into a debate with the person who is at the counter. and then we're opening up the bag trying to figure out what to do with the last seven pounds that it's over. You put it on. You wear the jacket. No, what you do is you do it before you leave the house and you're like, this is seven pounds over

and then you get another bag. It is a life changer. And then the location thing, I actually figured out a way to solve this. You know, tiles. Yep. So tile has such a robust network now. Tile was like,

there were two different companies doing this tile and, God, what's the other one? some look it up uh say nick but uh there were two of these tracking companies and they've now both of them are very good actually in the first in like the fifth or six versions the batteries last a long time they look good and i just throw those into every bag and backpack so i just put a number on them they cost like 20 bucks i put them into every bag so if a bag does go missing at least we know when other people have the tile app on their phone, all tiles will, my phone will pick up your tile anonymously send it to their server.

Then when you're looking for your tile, it knows where it is if you're not there. And have you actually found stuff? We had a missing pair of keys. And our nanny had moved back home. And I was looking for these keys. And then I got a, and I put the tile alert, and then I got a tile alert from her hometown. So I texted, I texted her. I was like, I think you have the set of keys.

She's saying, yeah, I don't know. And I was like, you might want to check because I have the tile on it. And she found them, yeah, she had them. And which is actually, it worked out pretty well because those, you know, keys and those fobs now cost, you know, whatever, $150,000, 100 bucks to replace. So it's actually worth finding them if you lose them. And is there anything else smart you've thought about putting in these things? Like, do people want anything else in them? Speaking of all over engineering in the rooms?

Oh, here we go. What is this? This is two days ago. What is it? A sticker. A sticker. Wait, who is this? Which company? Oh, tile has a sticker. Wow.

The tile unveils, I can't see the headline. You're moving too fast. Go back up. Tile unveils the sticker alongside Refresh Slim Pro. Oh, yeah, stickers that little tiny one. These things really work. And the tile slim is really, you put it in a wallet. Oh, and Apple is going to reveal Bluetooth-enabled location trackers to affix to book bags, wallets, and purchases.

How about AirPods, which you're supposed to be able to find, but Bluetooth is not going to get it done? You need to have the network. That's the thing that makes Tile special as a network. Do you have any features you're going to add to these things? Do people ask for anything and they want monitors in there? Yeah, absolutely. People want video conferencing capabilities. They want...

Can't they just bolt like a Chrome box in there? That's what you should do. Well, it needs to be kind of like special custom fit though, right, for the right experience. Otherwise, it feels too close or the audio is wrong or the lighting's not optimal. So you need to put in one of these... Have you seen these external USBC monitors that you can travel with?

So now they make just a U.S.S. USBC monitor that's on a kickstand. So let's say you're traveling and you like a two monitor set up. When you're in your hotel, you take out a second monitor. It looks like an iPad and you just plug it into USB and now you split your monitor into two. No, I haven't seen that. Yeah, it's a pretty cool kind of concept. If you're really a super geek, you'd have like, you know, give you that guy at Starbucks with two monitors, like a CRT monitor.

But yeah, you need just to put one of those on the wall, right, in the room and some lighting. Yeah, so the lighting and the right distance so that when you're when you're, If you're doing a video demo, you want a great experience. You don't want, yeah, because that can increase your sales conversion. Yeah, you just have a nice, beautiful camera, beautiful lighting, get that ring around the light. All right, listen, great job, Brian. Continued success. Congratulations on building a Pegasus.

I wish you would continue luck for it. If you want to buy a room, go to room.com. Get a room at room.com. Yep. All the hotel people must have wanted that, huh? room.com for hotels. That's who you were up against, weren't you? Yeah.

Wow. Crazy. I can't believe that you are able to outbid them. Outbid the room, people. Well, it's a Pegasus. It's a Pegasus, so you could. All right, great job. We'll see you all next time.

Bye-bye.