How The Office Exchange Was Building an Airbnb for Commercial Real Estate With $950K Raised (Interview with Founder and CEO Devin Davies)

Introduction and Background

Nathan Latka

00:00Hey, folks. My guest today is Devin Davies, the Founder and CEO of The Office Exchange. After graduation from Radford University in 2012, he began with an internship at Thomson Reuters, and then he began working full time for CGI Federal in 2012 as a software developer. Now he's building The Office Exchange, which is effectively Airbnb for commercial real estate. Devin, you ready to take us to the top?

Devin Davies

00:20>> Let's do it.

How the Platform Accesses Commercial Real Estate

Nathan Latka

00:21Alright. So first off, how do you get access to the commercial real estate? Are you buying it? Are you leasing it? How do you do that?

Devin Davies

00:27>> So that's a great question. You know, the way in which we're able to get access to the various different spaces in the CRE realm is, you know, working with, you know, folks that are looking to offload some of that space. You know, times are changing in the way in which we leverage space. And to be able to get to those individuals, you have to understand where they are currently at. And there's been a delta in the

00:56>> way in which we work, right, in the way in which, you know, folks are moving to hybrid types of models. And by proxy of, you know, reaching out to them either, you know, directly or, you know, them finding us eventually on the platform, we're able to close that gap to show folks that, you know, there is a future in how we're able to leverage CRE.

Nathan Latka

01:20So so, Devin, just to be clear, how many where do you have office space today? Is it just in Radford?

Number of Listings and Platform Scale

Devin Davies

01:25>> So the office space is actually across the nation. So the the platform is basically a conduit to be able to close the loop on the future of the work.

Nathan Latka

01:35Okay. And how many how many individual offices do you have currently on the platform, and what's the total square footage?

Devin Davies

01:42>> Oh, great question. So we've got about 50 to a 100 different listings on the platform currently, and we're growing. Literally, just before jumping on this podcast, I was having a discussion with another person within the CRE realm that's looking to onboard their spaces to the platform. And the goal is to really be able to bring the CRE space into the future and be able to close the loop on the future of the workforce and again for

02:09>> for CRE.

Competitive Differentiation from Breather

Nathan Latka

02:10Yeah, Devin, the vision makes sense. I think my audience gets that. What I'm trying to figure out here is why you're gonna be the one that wins that. That's what I'm trying to dig here. Right? So Breather tried this, didn't go so well. It was basically an acquihire when they sold. What are you gonna do differently?

Devin Davies

02:22>> Oh, that's a great question. A great question. So simplicity. Right? Simplicity is number one on the platform.

Nathan Latka

02:30Okay. But Devin, what does that mean? I use Breather personally as a customer. Probably spent over thirty thousand booking stuff. It was very easy to use. There was no problem with simplicity in my opinion.

Devin Davies

02:38>> Right. Well, you know, going to the Office Exchange is like leveraging how you would book an Airbnb. It's about how you would go about, you know, easily getting Uber Eats or anything of that nature. It's it can literally take less than ten minutes to obtain that space.

Nathan Latka

03:00No, Devin, I I know that Breather did this though. Like, they they were simple. I could do it under ten minutes. It didn't it didn't work. It didn't work. They they flash sold. It was a great run. It didn't work. So what are you doing differently?

Devin Davies

03:12>> Well, we're also taking it from the perspective of everybody wins. You know, a lot of platforms, there is a cost to be on the platform. To be on the on the Office Exchange, there is no cost to be on our platform whatsoever. We take no cost for a host to be on the platform. Zero. So to join the platform, you simply are able to create your credentials. And once your credentials are created, you're able to then

03:39>> be able to leverage it instantaneously.

Nathan Latka

03:42If also hosts don't pay you if hosts don't pay you to be on the platform, how do you make sure when a consumer like me goes on to BookSpace that that host is actually gonna have that space for you? Why wouldn't they go why wouldn't it just be whoever whichever network brings me the the least or first is who I'm gonna give it to.

Value Proposition for Hosts

Devin Davies

03:57>> That's a that's a great query as well. So what we do is we provide value to the host. The hosts are just as important as the guests on our platform. Right? When you are getting the analytics, the AI, the data to know how to specifically how to better price your space, how to better connect to your guest and to actually have the marketing handled by the Office Exchange, by proxy of the Office Exchange, we're able to

04:29>> close that gap and close that loop. And that's one of the ways in which we differentiate.

Nathan Latka

04:35Oh, what's going on there, YouTube? Good to see you guys. Now imagine this. You love watching these interviews with SaaS founders. But imagine if we took all of the valuation data out from over 2,807 interviews I've done manually. Saves you a lot of time. Well, we've done this. We've built it into the beautiful interface inside of Founderpath. Check this out. I'll show you how you can access this in a second, but you log in, you connect

04:59your Stripe account, you see your valuation real time. You can see what it changed over the past eighty eight days and even set goals for valuation this year. Now the secret evaluation is there's many different ways to value a SaaS business. So the reason you're gonna see three or four different valuations inside of your Founderpath dashboard, this is all free by the way, is because depending on who's doing the buying of your SaaS company, you're gonna

05:23get a different valuation. A VC is gonna pay a different valuation. Private equity firm is different. If you're gonna do a minority sale, that's different. And if you sell the whole business, that's a different valuation. You can see all those when I hover over here, Right? So the teal is what a VC would pay. Yellow is what private equity and red is if you sold the whole thing outright. Now what's cool about this is this is

05:45not built off random data. Again, you guys hear these interviews on YouTube. All these datas are built from real time valuation data points founders share with us on the show. So traction 1,200,000 seed round 3.7 raise. They sold 22% of their business. Go in here and filter by the event. Maybe you only wanna see companies that have sold the whole business. Well, here are a bunch that have been acquired the valuation and the multiple. Maybe you're

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06:33if you wanna check this tool out, if you wanna jump in and sign up, you can check it out for free to get your valuation at this link. This link, founderpath.com/products/valuations. Or if you go to founderpath.com and hover over products, click on get your valuation here, and go ahead and sign up to give it a whirl. Again, all that valuation data live right inside the platform. I hope to see you there. Alright. Let's jump back into

06:59the interview. But pricing do you have great pricing optimization, though? You need a massive dataset. I mean, everything you just mentioned are what companies that have scale can do. Airbnb can do pricing optimization because they have the largest dataset. They can book you because they have the larger the lowest amount of eyes on them. Their app has millions of downloads. You don't have any of this yet. So what's your mousetrap? How are you gonna get going?

Devin Davies

07:19>> Yeah. So great. Great question as well. You know, the the the name of the game is being able to execute on exactly the fundamentals of the Office Exchange, and that's providing work life balance back to folks. And in a in a time in which there is so much disruption in this this realm, by being able to close the loop from a technological standpoint

Nathan Latka

07:53in a market Devin, sorry. I just I don't know what that I don't know what that means. Like, can you can you give me real examples here instead of sort of marketing jargon?

Devin Davies

08:01>> So so it's being able to be tactful about how you reach out to the guest and you actually connect them with the software in and of itself. Being able to actually bring folks onto the platform and provide value to those hosts, be it intrinsic, but over time, those analytics and data components will add additional value Okay. To those hosts to keep them on the platform.

Nathan Latka

08:31So 50 to to 100 hosts have signed up today. Think you're getting ready to launch. Correct me if that's wrong, but how do you have anyone that has actually booked time or space in one of those listings yet?

Devin Davies

08:42>> So we actually got a few folks that are in the process of going through the booking.

Nathan Latka

08:50Yeah. But nobody closed yet. No one has actually paid and physically sat in the office that you leased them?

Devin Davies

08:55>> Correct. Not as of yet. Not as yet. Like I said, you know, we are still in, you know, soft launch mode, and we are launching actually at the end of this month and everything.

Nathan Latka

09:04That's like, well, that's an obviously very exciting time. So what is your plan to go find the other side of the marketplace? You have a 100 listings. How do you go find people to book?

Devin Davies

09:13>> Oh, that's a that's a great query. You know, we are we are focusing heavily on marketing, and we're focusing heavily on being able to obtain the right type of

09:29>> folks and companies that are really looking to be able to close the gap on Devin.

Nathan Latka

09:36Devin. Devin. Sorry. Give me a real example here. Everything you're saying is like, it's very slow and markety. Like, tell me about a listing on your platform. What's its address? What city? And how are you gonna go get a person in Radford to book the Radford office space a mile from campus?

Devin Davies

09:51>> So, so essentially going into so by proxy of the platform, If we have a space that is available, okay? That space will be marketed. Okay? It's it's it's leverage we let you leverage digital marketing on the platform to actually reach out to other individuals to close the gap.

Nathan Latka

10:17Devin, sorry. Be specific. Can you just name name one of the listings you have committed? What city is it in?

Devin Davies

10:23>> So we're actually we've moved our headquarters to Birmingham, Alabama from Denver. And so we we've the company was founded in in Denver, Colorado, and then we moved the headquarters actually out to Birmingham after RBC backing. And the reason for that was to grow the ability to grow our host on that side of the marketplace, and then also to be able to actually obtain those guests. So when you look at it from the standpoint of the Office

10:54>> Exchange, we'll be able

10:56>> to Devin, I'm sorry.

Nathan Latka

10:57My question was just can you name a location where there's a host that's committed? Is that Denver?

Devin Davies

11:03>> There's hosts that are committed in Denver. There's hosts that are in New York. So let's use Denver.

Nathan Latka

11:07Let's use Denver. Because say let's say it's someone near Union Union Station. You have a office space that's 10 foot by 10 foot. How are you gonna go market that 10 foot by 10 foot space in Denver?

Devin Davies

11:18>> Yeah. That's a great query. So, you know, it's showing that, number one, that folks on in the Denver area are looking for a solution that are they're able to fulfill the needs of the space. There there is so much space that is sitting out there that is underutilized and folks are not coming back to the office. So the position and the proposal of the Office Exchange is to show those individuals and show those folks that we're

11:54>> able to close the gap on that occupancy rate where your space is sitting there empty.

Nathan Latka

12:01Yeah, Devin, how? So I'm asking you for a specific example. How are you going to close the gap on the office space for the 10 foot by 10 foot space next to Union Station in Denver, Colorado? How are you gonna fill that space specifically?

Devin Davies

12:11>> Yeah. So we're going to go in. We're going to make sure that the the platform is in we have the appropriate spaces that are available. Folks are reaching out on a daily basis to actually look for that space.

Nathan Latka

12:27Okay. How are that's the one I mentioned. How are they finding you right now?

Devin Davies

12:30>> Great question. So we we have we've run a few LinkedIn ads, and even though the site and the platform at this point is obfuscated, we're leveraging a more guerilla type of marketing strategy to reach out directly to these individuals. So we're sending emails, we're working through our network to organically reach out to folks to actually bring them on the platform. Organically reaching out to folks

13:04>> to to find out guests that are interested in leveraging it. And that's where we're finding a lot of of value until we get to the point where we are we've launched, which will be, of course, at the end of this month.

Nathan Latka

13:17And so how you plan to make money here when you launch?

Devin Davies

13:20>> That's a great question. Know, are like I said, it comes down to simplicity.

13:28>> Once again, there's no cost to be on the platform. And that's a that's a win win situation. For a host to to essentially be able to go on and have no

Nathan Latka

13:44cost. I I totally agree with you. I agree with you. Sorry. This is exhausting. I'm just how do you make money? I agree with you. Zero cost is fantastic. You have a 100 hosts on the platform, but, like, what how are gonna make money?

Revenue Model and Guest Transaction Fee

Devin Davies

13:53>> So we take a simple 9.5% fee on the guest side of the fence. So when you actually complete a transaction on the platform, it's just a simple 9.5% fee. So once again, no cost to be on the platform Understood. With one situation. But from a guest side and acquisition, from their perspective, it's built into the cost where there's simply a 9.5 service.

Booking Flexibility: Hourly, Daily, Monthly

Nathan Latka

14:22I got it. Got it. So if I'm booking as a guest that 10 foot by 10 foot space in Denver, Colorado Union Station, and I'm booking it for two hours, 10AM to 12PM on May 20. And it's a $100 per hour. So I'm paying you $200. You're gonna effectively make 9.5% of 200 is what the platform's gonna make.

Devin Davies

14:40>> Correct. Correct.

Nathan Latka

14:41Okay. It's about 20 about $20 there. So and then the rest will go to the, obviously, owner of the of the space?

Devin Davies

14:49>> That's correct. That's correct.

Nathan Latka

14:49And do

14:50you do you allow people to do hourly, or or can they is it only half day, full day?

Devin Davies

14:55>> So right now, it's configured to, you know, be set up for

15:00>> currently by the day. We have a day rate and everything, but it can be configured to go down to the hour or it can be configured on a monthly basis up to two years. So you can also book a space on the platform from now until 12/31/2022. And that can be done

15:25>> because that's considered a a short term rental. And we do we would still take that 9.5% fee from that rental of that space on that short shorter term.

Fundraising History and Seed Round

Nathan Latka

15:36Understood. Now you raised some money to get this going. You launched in 2020, I believe. How much did you raise?

Devin Davies

15:42>> So we've raised just just under $1,000,000 today.

Nathan Latka

15:46And was that in 2021?

Devin Davies

15:49>> So in 2021, we raised about $140,000 initially from friends and family through our initial pre seed round. And then during our seed round, we've raised towards our $1,500,000 raise that we're closing here in the next couple months.

Nathan Latka

16:12Okay. Sorry. How much have you done deals? How much have you closed today? 140,000 in 2021 from friends and family in pre seed?

Devin Davies

16:20>> Correct. Correct.

Nathan Latka

16:21Okay. And and you're raising right now another 1,500,000?

Devin Davies

16:25>> Correct. But we have to date raised just under $1,000,000, so about 950,000.

Nathan Latka

16:31So where is the other 800,000 outside of the friend and family seed round pre seed round?

Devin Davies

16:36>> From our venture capitalist firm that we that raised with us.

Total Capital Raised and Valuation

Nathan Latka

16:43So when did you do that? They participated in the pre seed round, or they did a seed round?

Devin Davies

16:47>> Oh, they participated in our seed round, which is still open.

Nathan Latka

16:51Okay. So you so you have a rolling so you've opened a seed round. You've closed 800,000 of the seed round. You're raising another 800,000 on the same seed round.

Devin Davies

16:59>> That's correct.

Nathan Latka

17:00I see. Correct. And so what most people in the seed round are selling 10 to 20% of the business. Were you sort of in that same range?

Devin Davies

17:07>> That's correct.

Nathan Latka

17:09Okay. So if you end up closing 1,500,000, you're basically saying the note you're currently raising on is about a 10,000,000 valuation?

Devin Davies

17:16>> Correct. Our valuation is 2,000,000. Correct.

Nathan Latka

17:19Okay. And when you did the 140,000 pre seed around friends and family, what valuation did you choose to use then?

Devin Davies

17:25>> So we chose to use a 5,000,000 valuation at that pre seed prior.

Nathan Latka

17:30Interesting.

Devin Davies

17:31>> Yeah.

Nathan Latka

17:32And what requires why does this model require so much capital to get going?

Why the Model Requires Capital

Devin Davies

17:37>> You know, it's it's about ensuring that the tech is correct with a tech background and our founders being within the work

Nathan Latka

17:48You're one of the founders. Right?

Devin Davies

17:50>> Correct. I'm the founder and CEO.

Nathan Latka

17:52How many founders are there?

Co-Founders and Team

Devin Davies

17:54>> There are about three of us.

Nathan Latka

17:57What do you mean about? You don't know how many founders you have? What do you mean about three?

Devin Davies

18:00>> No. No. There's there's three of us. So Okay. Okay. I have a I have a another founder that she's taking some time off right now, but she's still con one of the founders. But there's the three core founders. There's myself, Devin Davies. There's my CPO, Robin Ong, and there is my CTO, Anthony Griffin. That's great.

Rapid Fire Questions

Nathan Latka

18:21Alright. Well, we're rooting for you guys, especially as you get closer to launch. In the meantime, though, we're out of time, so rapid fire questions here. First one, last book you read.

Devin Davies

18:29>> Last book I read goodness. The

18:36>> was it?

Nathan Latka

18:37We can skip it if you don't have one.

Devin Davies

18:42>> Trying to think of what it was.

Nathan Latka

18:43Alright. We gotta move on. If you come back to it, we'll we'll announce it. Number two, is there a c is there a CEO you're following or studying?

Devin Davies

18:50>> I've all I've always followed Elon Musk. And

18:57>> yeah. That's good.

Nathan Latka

18:58Number three, what's your favorite online tool for building a platform?

Devin Davies

19:02>> Probably, favorite online tool for building a platform. Well, I like I enjoy HubSpot.

Nathan Latka

19:08HubSpot?

Devin Davies

19:11>> Yes.

Nathan Latka

19:12Number four. How many hours of sleep do you get every night?

Devin Davies

19:15>> I get at least six to seven hours of sleep.

Nathan Latka

19:19And what's your situation? Married? Single? Kids?

Devin Davies

19:23>> I I have a I have a partner.

Nathan Latka

19:25Okay. Any kids?

Devin Davies

19:27>> No kids.

Nathan Latka

19:28Not quite. Alright. And how old are you, Devin?

Devin Davies

19:31>> I'm 32. About to be 33 here in August.

Nathan Latka

19:34So happy happy happy early birthday. Last question here. What's something you wish you knew when you were 20?

Devin Davies

19:42>> Oh my goodness. Something I wish I knew when I was 20. That this life goes by really quickly. Enjoy every single minute that you have. Take your time and pursue your passions. Just pursue your passions and enjoy it.

Closing and Platform Launch Preview

Nathan Latka

20:00Oh, and Milk and Honey was the last book I read.

Devin Davies

20:04>> Milk and Honey.

Nathan Latka

20:05There you go. Guys, officeexchange.com launching here shortly helping renters, a business renters find short term and long term office leases around the country. 50 to 100 listings are already on the platform as he prepares to launch. They've raised about $940,000 to get going, most recently rolling seed round 800 k closed 1.5 target at a 10,000,000 valuation as they look to continue to scale and launch. Devin, thanks for taking us to the top.

Devin Davies

20:28>> Thank you so much, Nathan. Really appreciate the time. And thank you for having me.

Nathan Latka

20:33One more thing before you go. We have a brand new show every Thursday at 1PM Central. It's called Shark Tank for SaaS. We call it deal or bust. One founder comes on, three hungry buyers, they try and do a deal live and the founder shares back end dashboards, their expenses, their revenue, ARPU CAC, LTV, you name it, they share it and the buyers try and make a deal live. It is fun to watch every Thursday 1PM

20:58Central. Additionally, remember these recorded Founder interviews go live. We release them here on YouTube every day at 2PM Central. To make sure you don't miss any of that, make sure you click the subscribe button below here on YouTube, the big red button, and then click the little bell notification to make sure you get notifications when we do go live. I wouldn't want you to miss breaking news in the SaaS world, whether it's an acquisition, a big

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21:42for that at nathanlatka.com/slack. In the meantime, I'm hanging out with you here on YouTube. I'll be in the comments for the next thirty minutes. Feel free to let me know what you thought about this episode and if you enjoyed it, click the thumbs up. We get a lot of haters that are mad at how aggressive I am on these shows, but I do it so that we can all learn. We have to counter those people. We

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