Tag Archives: entrepreneur

Dorms for Grownups

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The Bridge quoted me in Why Dorms for Grownups Are a New Way of Life. It opens,

If you think applying to Stanford or MIT is a long shot, consider the odds of landing a spot in a Brooklyn co-living residence. Common, the company now operating six co-living facilities in the borough, recently received more than 15,000 applications for about 300 available rooms in three of the cities it serves: New York, San Francisco, and Washington, D.C. Why the demand? Co-living, essentially the residential version of the co-working trend, offers dorm-like, amenity-filled living that’s particularly attractive to millennials. The apartments come pre-stocked with furniture, appliances, fast WiFi, and lots of prospective friends.

John Bogil, 24, has shared a giant living room, kitchen, basement, and backyard with nine other people since moving into a Crown Heights facility called Common Albany a year ago. Although it sounds crowded, Bogil enjoys the company. “It’s awesome. I’ve made friends for life,” Bogil said. Common, launched in 2015, is Manhattan-based but has found fertile ground in Brooklyn. The growing portfolio in the borough includes the newly built Common Baltic in Boerum Hill, which offers co-living spaces as well as traditional apartments. The rent varies by neighborhood, with spaces in Crown Heights starting at $1,475 and Boerum Hill spots going for $2,143 and up.

Tenants have their own private bedrooms, many with private baths, but share the living room and kitchen as well as amenity spaces including lounges, fitness rooms, roof decks, dining rooms and work spaces. Convenience is a major selling point: the suites in a Common building come fully furnished with beds, dressers, couches, tables and chairs, a TV, towels and sheets, and a weekly cleaning service. Many of the issues that traditional roommates wind up fighting about have been taken off the table, like Real World with less drama.

Common was launched by Brad Hargreaves, who earlier had co-founded General Assembly, now a global educational company with campuses in 15 cities. Like many entrepreneurs, Hargreaves was looking to solve a problem. When the Yale grad first moved to New York City, he looked for an available room in an apartment on Craigslist and found the process cumbersome. “Common offers an alternative to this,” he said. “We make living with roommates better, more convenient, and more efficient.”

With young people increasingly crowding certain urban areas, the idea of a starter apartment is changing. While rents in Brooklyn have eased lately, thanks in part to new construction, the median rent is a daunting $2,785. With rents like those, some 76% of people 21 to 34 years old say they’ve made compromises to find a place to live, including living with roommates, according to the NHP Foundation, a group advocating affordable housing.

“Co-living has proven to be more than a passing trend,” said Hargreaves. “The response to opening our first home in Brooklyn was so strong that we were able to rapidly expand in the borough as well as into San Francisco and Washington, D.C. We now have nine homes on two coasts and are actively looking at new homes and new cities.” Common chooses its spots carefully, aiming to balance affordability and urban amenities. “We look to open in neighborhoods where there’s access to public transit and great local retail for our members to explore and enjoy,” said Hargreaves.

Common has the financial fuel to grow much more. The company has raised more than $23 million in two rounds of financing from 15 investors. The budding co-living industry now has multiple competitors as well, including WeLive, HubHaus, Node, and Krash. In Long Island City, a co-living company called Ollie plans to operate what it calls the largest co-living facility in North America, occupying 13 of the 42 floors in a new skyscraper.

While much of the allure of co-living is practical, many residents appreciate having the company, which in a cosmopolitan place like Brooklyn creates diverse collections of roommates. “I really appreciate the exposure to different peoples, ideas and cultures,” said Bogil. “I’ve learned so much about Australian politics and South African sports, for example, which might sound like useless info on the surface, but it helps me to learn about the world in a way that I never would normally. It makes the world feel smaller.” More than 70% of Common members are on 12-month leases but most stay longer than a year.

While typical co-living residents are in their 20s, the format could work for older adults as well, once the format goes mainstream. “There is growing interest in more communal types of living environments of the type offered by Common,” said David Reiss, an attorney and professor of real estate at Brooklyn Law School. “Co-living appeals to different people and our membership is diverse,” Hargreaves said. “We have young professionals, married couples, those moving to New York City for their first job, those moving from abroad, and ranging in their early 20s into their 30s and 40s.”

Consumer Protection Changes in 2017

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Business News Daily quoted me in 6 Big Regulatory Changes That Could Affect Your Business in 2017. It reads, in part,

It’s a new year and there’s a new incoming administration. That means there are likely some big-time regulation changes in the pipeline, not to mention changes that were already on the agenda. Some proposals will fail, while others will pass, but all of them could significantly affect your business in 2017 and beyond.

Top of the list this year are the potential repeal of the Affordable Care Act, the currently suspended change in Department of Labor overtime regulations, and minimum wage or paid sick leave efforts at local and state levels. However, there are a bevy of other potential changes on the horizon that the savvy entrepreneur should be aware of as well.

Here are some of the proposals we’re keeping an eye on this year, and how they might affect small businesses.

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3. Consumer Financial Protection Bureau (CFPB) arbitration rules

Proposed rules from the federal CFPB would prohibit what are known as mandatory arbitration clauses in financial products. Those clauses essentially prevent consumers from filing class-action lawsuits against the company in the event that something goes wrong. The rules would instead leave people to litigate on their own, a time-consuming, costly endeavor that often has very little payoff in the end.

“It is expected that the Obama administration will issue the final rule before President-elect Trump’s inauguration,” David Reiss, research director of the Center for Urban Business Entrepreneurship at the Brooklyn Law School, said. “Entrepreneurs with consumer credit cards should expect that they could join class actions involving financial products. They should also expect that credit card companies will be more careful in setting the terms of their agreements, given this regulatory change.”

Reiss added that the final adoption or rejection of these rules is also subject to the Congressional Review Act, which empowers Congress to invalidate new federal regulations. Even if the rules were adopted, Congress could ultimately reject them.

“Republicans have been very critical of the proposed rule, which they see as anti-business,” Reiss said.

Reiss on Legal Snares for Entrepreneurs

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Inc.com quoted me in 6 Legal Snares All Entrepreneurs Should Be Ready to Dodge. It reads,

The last thing you want to do as an entrepreneur is pour through long dull documents written by lawyers for lawyers. But there’s a reason it’s called work and not fun. Miss taking care of this aspect of your business and you might find yourself being investigated by the federal government, on the hook for thousands in otherwise unnecessary costs, in a never- ending fight with others involved in the company, or stuck at the exact time you need to be moving.

I was speaking with David Reiss, a professor of law at the Brooklyn Law School and research director of its Center for Urban Business Entrepreneurship (CUBE). Entrepreneurs often lack the broad business experience that would help them avoid a number of traps on the way to growing a business, he said. Here are some of the most common.

Real estate contract snags

“You have a great idea but know nothing about the basics of being a small business person, so you sign the first lease [you’re offered],” he said. But a commercial property lease is a complex document that makes an apartment lease look like nothing in comparison. It typically is something to be negotiated, and getting help to understand the ramifications of various clauses is crucial. “Often there are pretty complicated rent increase provisions that entrepreneurs don’t get,” he said. The document as written might assign you a portion of the building’s increased operating expenses in addition to rent increases. Overly strong restrictions on the ability or reassign or sublease the lease’s obligations could mean an inability to move to a larger space when the business grows. “What are the use restrictions?” Reiss asked “What if the business morphs into something else? Does that violate the use limitations on the space? “

Pick the right corporate structure

You’ll likely have many choices of how to legally and financially structure the company. Some are an LLC, sole proprietorship, partnership, S-corp. , or C-corp. “They have different tax implications, different implications as you increase in size and revenues,” Reiss said. If you have the wrong structure in place, you might find yourself having to unwind it as the business expands. Not only might that be unnecessarily expensive, but you’ve potentially opened yourself to renegotiating some basic arrangements that could be troublesome.

Get a fitting partner agreement

If you need a reminder of how badly partnerships can go, look at Snapchat or Square. One day everything is fine. The next, former best friends are at each other’s throat. You have to consider how to allocate both profits and losses (some investors might like more of the latter).

“Some people are putting in time, some are putting in intellectual property, and some are putting in cash,” Reiss said. “People have different expectations for each of those contributions.” A thorough and well-constructed partner agreement provides a framework for addressing the important issues before everyone is at an impasse.

Have appropriate protection for intellectual property

All businesses have intellectual property. Getting protection on every aspect can burn through cash. For example, patents are great, but if you can’t lock down broad enough protection, competitors might be able to easily work around the walls you built, in which case you may have wasted money. Perhaps trade secrets might be more appropriate. Do you really need to trademark every single name and phrase? Maybe yes, maybe no. Talk to a professional to devise a useful strategy, keeping an eye on what you can afford and how much effort you might need to divert from getting business done.

Check insurance

You’ll need commercial general liability insurance and might also need property insurance. Might directors and officers liability insurance, also known as D&O, be advisable to protect principals in the company? Does your lease or contracts with clients demand particular levels of coverage?

Regulatory compliance

On one hand, anyone who says that regulations make it impossible to open a business is someone to be questioned. On the other, you can get badly tripped up in some common areas like taxes, handling inventory, or labor laws. “A little bit of planning can save you lots of headaches, money, and bandwidth,” Reiss said. “If you’re working 16 hours a day, you don’t want to be thinking about an investigation by the Department of Labor. You need someone to run through a checklist with you of the regulatory overlays on small businesses.”

Bringing lawyers, accountants, insurance brokers, and others in for reviews and discussions isn’t cheap, but it’s a lot less expensive than trying to solve problems after they’ve snared and tripped you.