It has been 2 years since I’ve started this small coliving business. As much as I hate to say it, it might be time to move on. This is the story of Transylvanian Coliving, my first real successful business. Successful in what way though?
TCL came into existence out of necessity more than anything. Being a digital nomad, I needed a place to live that would satisfy the basic essentials of what a digital nomad needs. I was my first and most loyal customer (a key philosophy that I apply in my business ventures). The idea popped in my head after I spent time traveling and reflecting on what I wanted in life. Through my travels, I ended up at The Hive (which is now Vine21). I lived at The Hive, a full-fledged coliving space in Bucharest. It was indeed starting to fall apart but it gave me the inspiration that I needed. After spending time there, I felt like I truly fit in. I realized that I belong to a tribe of people like this. This is something I would have never realized if I were to never travel and take some chances. After about 2 months in Bucharest, I made moves to come to Cluj. Coincidentally, The Hive changed ownership and became Vine21 at this time. Vine21 started taking roots and it was time for TCL to do the same.
The journey for TCL started with about 2 weeks of relentless searching. I dedicated all my time for 2 weeks just to viewing locations. This was an adventure in itself. I had to apply a wide range of skills to successfully pull this off. Not only did I need exceptional time management skills, but I needed to know how to communicate, how to negotiate, and a whole slew of other business skills. I was able to put into practice everything I learned in relation to business. I did my research and implemented my knowledge in real estate to make the best possible choice. After I saw about 15 locations, I came across one and decided it was the one but it required work. Most importantly, the owner of the location vibed with me and my project.
The startup cost
When I first found it, TCL was just a shell. Getting it up & running required 2 months of renovation. That was just to get it started. After that, I implemented the kaizen philosophy to introduce many new improvements over time. The start-up cost was essentially 3 to 6 weeks of 20 to 40 hrs/week for about 2 or 3 people. I used Airbnb to find 90% of my clients. After that, running costs hovered around 6 hrs/week for 1 person for the next 2 years.
I strategically chose to start this business at this time of the year and in this city so that I can start taking clients for some of the biggest festivals in Romania. Renovations finished just in time for me to move in and take clients for Electric Castle and Untold. Accommodation during the festival season in Cluj allowed me to charge about 10 times the nightly rate for about a week. This yearly financial boost is what kept TCL alive.
The first year at TCL was the most impactful. I knew that I would come across some interesting people and spend time together in unique ways. I was certainly unprepared for what was to come. There were many surprises; most pleasant but some not so much. I never expected to connect with people as well as I did in such a short period of time. I had some interesting experiences with some unique people and I learned a lot in my first year. It felt like life was passing in slow motion. It becomes painfully apparent that time flies by with each person that comes and goes in life.
After year 1, I started getting into the groove of things. I noticed that the theory of diminishing returns definitely applies to this industry. To continue pushing myself, I started considering doing a master’s program in Cluj in entrepreneurship. I did my research and wrote a paper on the Challenges for Entrepreneurs and Managers in the Era of Globalization as part of the application process. I decided that instead of studying theory in a classroom, I am better off taking action and applying what I know in the field. I never finished my application for the program and that paper is instead published on my website for your reading pleasure. I pivoted and started focusing all my extra energy into creating an online business.
Meanwhile, I found my first collaborator and I was able to insource my weekly cleaning responsibilities rather than paying someone external to do it for me. A win-win scenario with a resident of TCL. This individual was 90% of the reason why I was able to continue this operation for as long as I did. I was super grateful for this help, it was much-needed. With the help of this collaborator, I was able to finally take some vacations away from TCL but I always had to come back. TCL was like a plant that needed attention, care, and love. Every time I came back from a long trip, I would notice things that were neglected for too long and had to fix them. Without the presence of someone with the incentive to improve it, TCL would follow the natural trend of the universe and move towards entropy.
The unfortunate reality is that most people don’t see the value in Transylvanian Coliving. Haters always gonna hate. Most people don’t understand the business model, the value that it delivers, or how it can even be considered a business. Almost nobody knows what coliving even means and most people don’t understand Airbnb. It was always a pain for me to enthusiastically explain that I run a coliving space only for people to tell me that it was not truly a business. I even consider it an incubator and those closest to me vehemently deny that possible reality. At the end of the day, TCL provided me (the first client) many benefits. The most valuable benefit was exposure to individuals who also saw value in what TCL had to offer.
Learning over time
Looking back, I thought running this kind of business would be straightforward but boy was I wrong. Here is a graph that demonstrates my confidence as I maintained TCL over time.
You would think that running this sort of business would be relatively easy. After all, it was just an Airbnb right?
Of course, I needed another income stream. In order to properly manage TCL, I chose to forgo any full-time jobs. I instead focused on working as a freelancer or as a startup founder. TCL provided me the freedom to pursue these endeavors. Rather than trading time for money to afford rent, TCL lowered my cost of living and subsequently I had to work less hours to cover my costs. I implemented the techniques I learned from a book that still has an impact on me to this day, Early Retirement Extreme by Jacob Lund Fisker.
Playing win win
TCL was the incubator that gave me the freedom to pursue my other entrepreneurship endeavors. It provided me with the resources and opportunities to take action. It is my personal philosophy to pursue the lifestyle of a Modern Renaissance Man. Part of this journey involved the application of a wide range of skills and TCL presented me with the opportunity to put these skills to the test. I’m absolutely certain that someone with a specialist mentality would have a hard time adapting to the different roles that you would have to take on in this scenario.
I noticed that most people would save money but instead what I did was save time. I did my best to use this time developing other entrepreneurship escapades. Without the need to work as much to cover my living costs, I was left with a lot of time to work on other stuff. Of course, this came with its own challenges and I had to learn how to hold myself accountable and get shit done. It is incredibly easy to just goof off and if you’re not careful, time will simply fly by. Luckily, TCL never let this get out of hand because the coming and going of people made it easy for me to notice how quickly time passes. On top of this, Cluj has 4 seasons and the passing of seasons had a similar effect. Growing up in Phoenix, Arizona, we didn’t have 4 seasons and the lack of the presence of snow, for example, made it less evident that time was passing.
Unfortunately, the Coronavirus had quite the significant negative impact on the business and everybody is now scared out of their wits. It is difficult to estimate the full impact, but just financially TCL lost over $1,500 in profits in July. On average, a month shows profits of about $200 – $500. That means TCL lost between 4 to 7 months of profits. Luckily, TCL caters to short, medium, and long term guests and I was able to offer incentives for residents to book longer stays to keep the occupancy rate as close to 100% as possible and minimize the negative impact.
Regardless, I started taking action by finding someone to replace my role as ambassador; an apprentice. Finding anyone to help me continue running this business will be more difficult now more than ever. After a few months of searching, I haven’t been able to find a good match. In order to offer enough to an ambassador, I now have to renegotiate terms with my investor.
I foresee exceptionally high levels of uncertainty for the next few years and TCL can leverage this. For example, a student booked just a month to come back to school in Cluj instead of the classic 1 year contract that most apartments offer. On top of this, more people will be working remotely from home and TCL offers solutions specifically designed for people who work from home. I created TCL out of necessity to provide everything that a digital nomad needs and as more people work remotely due to Covid-19, more people will become digital nomads. However, there are many uncertainties that can interfere with this.
It’s a shame. There’s more opportunity than before but due to uncertainty I need to take action. I’ve essentially exhausted every option I have but now I need help. I need a co-host.