Space-as-a-Service with Ryan Simonetti

Speaker 1 (00:05):

Hi, I'm Phil Hazelhurst, and welcome to another episode of In The Loop, a podcast series from LoopNet where we explore the stories, ideas, and people behind the world's commercial real estate. Well, here we are on the 100th floor of Hudson Yards in New York City. You can see the spectacular views from up here, and it is a beautiful day. We've come here to meet with Ryan Simonetti, CEO, and co-founder of Convene, a fascinating business that sits somewhere between hospitality, brand, uh, event spaces, hotel and lifestyle and service office. And what we're here to talk to Ryan about is how did the idea come to him? Where's it taken him so far on his journey in business? And what does the future hold, not just for him, but for the sector as a whole. So, uh, we're gonna go down a few floors now and catch up with Ryan. Welcome to In the Loop, Ryan Simonetti. Uh, we are here today at 30 Hudson Yards. And Ryan, it's fair to say that you're in the middle of, of it at the moment, , yes. Given everything that's going on here.

Speaker 2 (01:19):

Still a little bit of a construction

Speaker 1 (01:21):

Site. Yes, that's right. So can you tell me a little bit about what's going on here at

Speaker 2 (01:25):

Yeah. Well, first, thank you so much, uh, for having us on. We really, uh, appreciate it. And I guess before we get started, probably, uh, is worth giving, you know, everyone a little bit of context on Convene. Uh, we're a global hospitality group, uh, operating multiple brands, uh, 38 locations, and as you can tell, growing.

Speaker 3 (01:44):

Hmm.

Speaker 2 (01:44):

Uh, and I think, you know, what we believe is that we're better together. And while we love the flexibility, uh, that tech technology has given us, uh, there's something magical about being in person and in a world that is ever changing, we think an organization should be doing that more frequently and with more intention. And so we've set out on a mission as an organization in the last 15 years since founding the company to really create the places and experiences that bring people together and convene at 30 Hudson Yards. Our newest signature event venue, I think speaks to that.

Speaker 1 (02:25):

And can you tell me a little bit about how you came to, uh, co-found a business like Convene?

Speaker 2 (02:30):

We probably need a lot more time in a martini . Uh, so, uh, in a formal life, I used to be in real estate, uh, finance and investing. Mm-hmm . I worked for a company called Gramercy Capital, uh, which spun out of the large office landlord, SL Green. Uh, and it just so happened I spent a lot of time investing in and around office, uh, in boutique hotels. And if we all remember, uh, to the kind of mid two thousands, it was really the birth of lifestyle as a movement.

Speaker 3 (02:57):

Mm-hmm .

Speaker 2 (02:57):

In Schrager w Hotel, SoulCycle, Equinox, the list goes on and on, but nobody had thought yet about bringing lifestyle, hospitality, and experience to office or to the workplace. And the thesis was what if you ran an office building like a hotel? And, uh, instead of tenants having to build all of these hospitality amenities, uh, and infrastructure within their own footprint, what if we partnered with the landlord, uh, to do it? And we're probably a little bit ahead of our time, but I think as you know, uh, keeping an eye on the industry and some of the trends, I don't think there's, uh, an office landlord today not talking about magnetization, and there's not a tenant today not thinking about delivering a differentiated experience to their employees.

Speaker 1 (03:43):

It's interesting to me that you describe the business as a hospitality company that feels significant. Kind of what is it about the idea of hospitality that drew you into this business? And also what is it about hospitality that's so important to this

Speaker 2 (03:56):

Business? Well, uh, I grew up in it. Um, so my dad, who, uh, was a small business owner and, uh, an entrepreneur, I dunno if you've ever had a Shake Shack burger.

Speaker 3 (04:07):

Yeah. Uh,

Speaker 2 (04:07):

Speaker 1 (04:42):

There's a fingerprints of hospitality throughout the concept of convene. So can you describe some of the ways that hospitality kind of surfaces in the experience that customers have when they they use your facilities?

Speaker 2 (04:52):

Yeah. You know, I'd say first and foremost, and we talk a lot about this as an organization, you know, there's a difference between service and hospitality.

Speaker 3 (05:00):

Mm.

Speaker 2 (05:01):

Uh, and we think about hospitality as the emotional human to human delivery of a service experience. And it's done in a really genuine, authentic and, and real way that's so human to human. And if I think about my favorite restaurant, my favorite coffee shop, uh, the best places that my family and I go and travel to year in and year out, yes, design is important. Yes, food is important, but what keeps us coming back is the people and the sense of warmth that we feel in that service delivery. And so I think since we started the company, that's been something really, really important to us. And really what differentiates us is, you know, our team of a thousand plus people and growing around the world that, uh, you know, every day do their best to not just deliver a great experience to our client, but really anticipate needs. Mm-hmm . And that's why our NPS scores are 88, uh, through May. Uh, which for anyone in the industry knows that that's like unheard of.

Speaker 1 (06:06):

Yeah. That's seriously impressive. Tell me about the transition from being in real estate as a pure play to running a business that now as you describe it, is about hospitality people, emotion. It's much broader than just bricks and mortar. What was that like as a journey for you, as a, as an entrepreneur?

Speaker 2 (06:23):

Well, you know, when my partner and I started the business, we were both, what, 26 and 27. Uh, and, you know, yes, we had had experiences professionally, but, you know, starting a business, especially one that's so operationally and human intensive as convene is

Speaker 3 (06:41):

Mm.

Speaker 2 (06:41):

Uh, no one really prepares you for that . Right. And, you know, we always say you learn through trial and error, uh, and you often learn through failure. And I think thankfully for us, we made mistakes, but we learned quickly and moved on. And, you know, most importantly, we built an incredible team of people around us that knew the industry could kind of take the vision that we had and really make it real in a tangible way. So no manual for this. Yeah. Um, but, you know, one of the things that has been kind of part of our core value system, if you want to think about is this mantra of 1% better each day. Mm. And you know, I think if you do that for a year, you make a lot of improvements for us. We've been doing it for over 15 years, and hence when you come into a space like this, you can see all of those learnings playing out to deliver something really special for our clients. Mm-hmm.

Speaker 1 (07:33):

And you're saying that this is property 38 in the portfolio, is that right?

Speaker 2 (07:37):

I, yeah, I believe so. I'm starting to lose track, but 38 is, is the right number.

Speaker 1 (07:41):

To what extent are you still learning as you go along?

Speaker 2 (07:44):

Every day,

Speaker 1 (07:44):

Every, every month,

Speaker 2 (07:45):

Every day the world is changing quickly.

Speaker 1 (07:47):

Mm-hmm.

Speaker 2 (07:48):

Uh, the needs and expectations of our clients are ever evolving. And, you know, not only are we learning as an organization on what we need to do better or maybe new opportunities to serve our clients in, in different ways. I mean, our transition into doing large experiential event venues like this, that's not where we started.

Speaker 3 (08:10):

Mm.

Speaker 2 (08:10):

Um, you know, this is really a trajectory and a journey that we've been on. And it was not until we listened to our clients deeply that we saw that there was a need to actually do this. So I think this idea of listening deeply and intently observing Hmm.

Speaker 2 (08:25):

Uh, both macro, the things that are happening around us, but also how our clients are utilizing our space and services has continued to allow us to evolve and try and stay a step ahead and then look, as a leader, every day is a learning experience. Um, you know, what it took to be a CEO of a company when we had a hundred employees, were operating five locations in two markets is so different than now running a global business. And hopefully I, I do a decent job of, of continuing to try and learn, evolve, and grow myself, you know, setting an example for the rest of our leadership team and, and team to, to kind of stick with it.

Speaker 1 (09:00):

Can we talk about the past a little bit? I'm very interested in the time when the company was founded, because a year later, another big name in, in the kind of, uh, space or office as a service in industry, we Work was founded. And obviously the two companies are very different in many ways, but they share some common, uh, commonalities too. What do you think it was about that time back in 2009 when, when you were founded that made the industry ripe for new ideas, for fresh changes, disruption?

Speaker 2 (09:30):

Well, let's think about what was happening in the world around us in 2008 and 2009. It was the great financial crisis. I'd say economic crisis, probably last seen maybe great depression, at least to that severity. And I think what we have observed throughout human history is, um, moments of crisis breed innovation. Mm.

Speaker 2 (09:53):

And you know, it just so happened that there was a moment in time over a 3, 4, 5 year period where, you know, it was convene, it was WeWork later, it was industrious, it was tog, it was for, there was a whole generation of companies that identified a similar problem. We all went to create solutions a little bit differently. Like we are a very different business than WeWork or Industrious, but the thesis is relatively consistent mm-hmm . And it's been a heck of a ride, uh, especially having to navigate through a pandemic, which I'm sure will come up. But I think there was something about that moment in time Mm. Where, you know, we knew there was a better way to deliver both experience and really outsource solutions for organizations that would ultimately make them more efficient in how they, you know, consume their real estate portfolio.

Speaker 1 (10:48):

And we were talking earlier about the influence of the pandemic on office usage and on business real estate planning in general and how that's been a big influencing factor in the trajectory of Convene. So can you speak a little bit to that about the kind of shifting needs for space that businesses have and how you fit into that?

Speaker 2 (11:07):

Yeah. You know, our original thesis was that, you know, if I was Warner Brothers Discovery, who is who we sublet this space from here,

Speaker 2 (11:16):

Why would I ever want to build and design and operate and maintain my own food service operation, a meeting and event facility that I don't really use all the time, or my own wellness facility or my own mobility and coworking facility. Like if it was in the building that I was in, I would probably outsource it and not build that infrastructure on our own. So we've been big believers for a very long time that real estate should be more flexible, elastic, and create better agility for companies. And candidly, especially when it comes to the high touch hospitality infrastructure, if you could outsource it and not build it and in your own footprint and pay rent on it, you would do that. And I think if anything, the pandemic just accelerated that trend. Right. Um, and whether you look at coworking or Flex Office or us as a real outsource kind of hospitality infrastructure and amenity provider and meeting event provider, the pandemic just put those trends on steroids and accelerated it. So I thought we were well positioned, heading in, I'd never want to go through a pandemic again. Right. Uh, but you know, I think our business is as well positioned today as it's ever been. And my sense is there's a lot more of these Warner Brother discovery conversations, uh, to be had mm-hmm . And, you know, we can continue to create value both for them and our landlord partners.

Speaker 1 (12:40):

Uh, so while we're talking about this building, I would love to hear a little bit more about what makes this location Hudson Yards so unique and, you know, what is it about being here that's special for convene and and fuel business?

Speaker 2 (12:53):

Well, look, I, I think, you know, Hudson Yards and, uh, and what this has meant to the city of New York and, and what related and other developers have done is incredible.

Speaker 3 (13:02):

Mm-hmm.

Speaker 2 (13:02):

Um, you know, for us and the business that we're in, when you look at the companies that are now calling Hudson Yards home, it's our client base. Mm. And so, you know, from talking to them, it was clear that there was a huge opportunity to do a project at Hudson

Speaker 3 (13:21):

Yards. Mm.

Speaker 2 (13:22):

The challenge was finding a space to do it right. And, you know, we have a great relationship with, uh, the team at Related, and we had been trying to figure out for quite some time, you know, what was the right opportunity, uh, within Hudson Yards. And it just so happened that, you know, Warner Brothers Discovery, who had taken on a lot of space, but was then thinking about downsizing, had built this crazy, you know, meeting and event facility that was really just for their own use. Mm. And so when we toured it and there was an opportunity to sublet it and redevelop it into something as special as this is, we jumped at it.

Speaker 1 (14:01):

And how significant of a shift do you think that is this kind of repositioning of major businesses in New York to this location, is that like a seismic kind of change in the way the city works?

Speaker 2 (14:11):

If you study kind of the movement patterns within New York, there's been a shift, I would call it West, generally speaking, and obviously Hudson Yards is a big anchor to some extent. What v's doing at Penn one and two, which has also been pretty successful, I think the center of gravity in the city has shifted this way.

Speaker 3 (14:29):

Mm.

Speaker 2 (14:30):

It's gonna be interesting to see with the Grand Central redevelopment, um, because I think Grand Central is another center of gravity. And with what's gonna happen there from a zoning and redevelopment perspective, I think you're gonna see this Hudson Yards Grand Central, not to say a battle, but a fight for who decides to go where. And I think a lot of that has to do with, um, you know, transportation and access. You know, if you think about where Hudson Yards is located with access to the Port Authority, one stop off of the seven Penn Station, a walk away and what's happening at Grand Central, you know, I think if anything, the pandemic put a huge focus on people's commute times.

Speaker 3 (15:11):

Right.

Speaker 2 (15:11):

And people realized how much time and energy they're spending, especially if you're coming from Long Island or Westchester, Connecticut or New Jersey. And so there's no doubt that both the quality of the product, and this, let's call it flight to trophy, is, is benefiting Hudson Yards. But, but the proximity for people coming in and having to commute to New York between Hudson Yards and Grand Central, like, what do they say, real estate, location, location, location. Mm-hmm

Speaker 1 (15:36):

Speaker 2 (15:37):

Uh, I think a lot of that has to do with public transportation infrastructure.

Speaker 1 (15:40):

So here at Hudson Yards, you were telling me earlier that you are three weeks or so away from wrapping up this project, but you also mentioned to me that you are always thinking a year, two years down the line. So can you talk a little bit about the future of Convene and what are you working on now and what's coming next?

Speaker 2 (15:59):

Yeah, great question. The biggest evolution in our strategy was this idea of being not just multi-product, because we were that before the pandemic, you know, we had meeting and events as a product. We had a very high-end kind of flexible workspace coworking product. We were doing membership, we're running amenities. But coming outta the pandemic through acquisition, we're now very focused on like a multi-branded strategy. Mm-hmm . So similar to Major Food Group in the restaurant business or a company like Ennis More with Hoxton and the different brands that they have. You know, we see an opportunity not just for different products, but different brands that speak to the unique needs of our clients and also at different price points.

Speaker 1 (16:43):

Yeah.

Speaker 2 (16:44):

Because that is part of the value equation, uh, for our clients. So plan is to grow the ones we have. Sure. Uh, and then potentially whether it's through m and a organically, maybe even launch some new stuff. So that's exciting. Very, it's a new

Speaker 3 (16:59):

Chapter. Yeah.

Speaker 2 (17:00):

Um, brings with it its own set of complexity, which I know, uh, our team is always up for a challenge and excited to dig in. And then I'd say lastly is, you know, we have plans to really double, I would say, the footprint over the next five to six years. So we're at, you know, 38 now. Uh, we see an opportunity to expand both within existing markets, but also into new markets both within the US uk and then Canada and Europe is all on the horizon.

Speaker 1 (17:27):

And that international expansion, uh, how, how is it, uh, taking something that works well here in the US and exporting it somewhere like the UK or beyond, you know, how, how, how much do you have to adapt and how much is it universal?

Speaker 2 (17:39):

The meeting event gathering? The hospitality bus has been around for, I dunno, thousands of years. Mm-hmm. Uh, and I think that there's principles worked their way and like are time tested. So I, I think a lot of the things from a product service delivery, we know from now being in the UK and being pretty successful that mm-hmm. You can take that show on the road. What we've had to learn is the cultural nuances, um, especially internationally. And, you know, I think the experience we've had in the UK both organically building our business, but also doing a pretty transformative, uh, acquisition a couple of years ago and, and going through the integration is we say act global, think local. And that's both from a product and delivery and menu design standpoint, but it's also respecting local culture, local culture, and the way that people do business. And, uh, to me that's gonna be a bigger challenge for us than it's going to be, you know, is the product gonna work.

Speaker 1 (18:31):

Mm-hmm . What was that acquisition that you were involved in in the uk?

Speaker 2 (18:35):

Uh, we acquired a company called, uh, ETC venues, et cetera, venues. Yeah. So we closed on that just over two years ago, and I'd say integrations are never done. Uh, but you know, now being two years in, I think our team's done a really great job integrating that business. And then, um, we ended up converting a number of the et cetera venues to convenes. And that was part of our strategy in doing the acquisition. Uh, we thought there was an opportunity in like the hotel where they call it Reflag. Uh, so we refl a portion of that portfolio and that's worked out really, really well for us. And we went from having, you know, one convene location in the uk, uh, in London to now having four. And that was all part of that, that process and journey we've been on

Speaker 1 (19:17):

Does strike me that there are lots of similarities with the hotel business.

Speaker 2 (19:21):

Say good artist copy, great artist, steel.

Speaker 1 (19:23):

Yeah.

Speaker 2 (19:23):

Uh, there's no need to reinvent the wheel. Um, you know, I think we can take learnings from different industries that have been successful executing this kind of multi-brand, multi-product strategy. Right. And just apply it to third spaces. Yeah. Is really kind of how I think about this. When I think about coworking and what we do and membership clubs and, you know, some of these things happening within wellness, to me it's all this experience driven third spaces that we're choosing to go to. And a a lot of that I think has to do with trying to find a sense of place and belonging and experience that we can't get at home or in our office. Mm-hmm . And, uh, to me that's also a structural change that's happening. And, um, you know, no one's built the Marriott or Hyatt or Hilton of that yet.

Speaker 3 (20:15):

Hmm.

Speaker 2 (20:15):

Um, somebody's going to, maybe it'll be us. I don't know. Yeah. Yeah. But I, I think there's like, there's an even bigger macro opportunity at play

Speaker 1 (20:23):

That's certainly a great

Speaker 2 (20:24):

Target is peaking our interest.

Speaker 1 (20:25):

Yeah, I can imagine. Yeah. And the way you describe it, I think there's huge potential there as well. The business is clearly very rooted in, in person interaction. So, um, given everything that the workplace has been through in the last few years, what do you think it is that keeps people coming back for in-person meetings, events, happenings?

Speaker 2 (20:45):

I think in our DNA, we are social creatures. We naturally learn for a sense of belonging, a sense of place and community. And look, technology's amazing. Um, you know, it allows me to do stuff and be present with my kids in a way that a CEO of a business like ours a decade ago could have never done mm-hmm . And I think there's a, a beauty, uh, and a power in that, but at the same time we craved this. And would this have been the same if we were doing it over Zoom?

Speaker 1 (21:14):

No, not

Speaker 2 (21:15):

At all. It just, it wouldn't have been. So to me, uh, this idea of being together in person

Speaker 3 (21:22):

Mm-hmm.

Speaker 2 (21:23):

Um, both as individuals and organizations is probably even more important now than it was, um, pre pandemic. And especially with people working more hybrid and more flexible in order to maintain culture, trust, relationships as an organization, being together to me is gonna be an even more critical element of being able to do that.

Speaker 1 (21:47):

Ryan, I do appreciate you taking so much time for us out of your busy day, uh, and in the middle of, uh, so much going on. It feels like you're gonna be busy indefinitely, I would say certainly for the next few years. So we appreciate you making time for us. We appreciate it. I wanna wrap up, um, today by asking you three questions that I'm asking everyone.

Speaker 2 (22:05):

Hot seat. All right.

Speaker 1 (22:06):

Yeah. Some kind of quick fire questions. The first question is, what's your favorite city or built place on the planet?

Speaker 2 (22:13):

Barcelona is my favorite city. Studied abroad there. Favorite built environment. I'd say favorite building in New York right now is 2 81 Park Avenue South.

Speaker 1 (22:23):

Mm-hmm.

Speaker 2 (22:24):

The old photograph isca, it's just architecturally stunning.

Speaker 1 (22:27):

So, uh, the second question was gonna be why? So because of the beauty of the building itself,

Speaker 2 (22:32):

There's something about timelessness.

Speaker 1 (22:34):

Mm-hmm. And

Speaker 2 (22:35):

We talk about in our design of our venues, you know, how do we design something today that's gonna be relevant a decade from now or 20 years from now? And I have a deep appreciation for timeless design and architecture in that building in particular has definitely caught my eye the last couple months.

Speaker 1 (22:52):

Mm-hmm . And so the final question is, uh, what would you do to improve these places? If you could change anything about them?

Speaker 2 (22:58):

Just more budget. . I'd like to spend more money. . Yes. Uh, but you know, being real estate investor trained, we talk a lot about IRR and return on capital.

Speaker 3 (23:09):

Right.

Speaker 2 (23:10):

Uh, no, I think, uh, you know, our team does an absolutely incredible job. Mm-hmm . You know, I still believe we build the best meeting and event product in the world. We could always be better.

Speaker 1 (23:17):

Mm-hmm.

Speaker 2 (23:17):

Uh, but a little more budget won't kill.

Speaker 1 (23:19):

Never hurts.

Speaker 2 (23:20):

Yeah.

Speaker 1 (23:21):

Well, thank you again. Uh,

Speaker 2 (23:22):

Thank you Phil.

Speaker 1 (23:22):

Brian Simonetti, co-founder and CEO of Convene. Do appreciate you making time for us. Awesome. Thank you. You appreciate, appreciate, appreciate. Thank you. And so do join us again, uh, on in the loop where we're exploring the people, stories and ideas behind the world's commercial real estate next time. And we'll see you then.