Aug 11, 2017 · 29m · 20vc
20VC: Why Not Every Element of A Scalable Business Has To Scale, Why You Should Be Bearish on Retail & Why Fewer Businesses Are Getting Started Today Since The Great Depression with Brad Hargreaves, Founder & CEO @ Common
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of The 20 Minute VC, host Harry Stebbings interviews Brad Hargreaves, founder and CEO of Common, discussing the residential co-living model, urban real estate dynamics, a bearish outlook on physical retail, and structural regulatory barriers impacting generational wealth creation.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 29.4% of the talking time here. How this is scored →
Harry as informed peer 3.0 Guest teaching 3.5 Guest disagreement 1.8 Harry pushing back 2.5
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 11:31 Brad dismantles the bullish retail thesis
Brad firmly rejects Harry's assertion that the Amazon-Whole Foods deal proves retail resilience, reframing the acquisition around distribution hubs and pointing out how wildly overbuilt US retail is compared to Europe.
Hardest push from Harry ▶ 9:52 Harry openly disagrees with Brad's retail thesisHarry explicitly declares 'I'm bullish, so we're gonna go for it here' and demands Brad defend his bearish real estate predictions.
Biggest teaching moment ▶ 16:46 Brad defines and details occupational licensingWhen Harry asks 'What is occupational licensing?', Brad delivers an extensive macro breakdown of how regulatory licensing expanded from a dozen fields in 1970 to hundreds today, suppressing American entrepreneurship to Great Depression levels.
Harry holds his own ▶ 11:14 Harry cites Amazon-Whole Foods deal as counter-evidenceHarry demonstrates industry awareness and active pushback by bringing up Amazon's multi-billion dollar acquisition of Whole Foods to argue that physical retail presence remains necessary for e-commerce leaders.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Brad Hargreaves' Origin Story and Founding Common | 1 | 3 | 1 | 0 | Harry invites Brad to share his origin story and the founding rationale behind Common. Brad explains the roommate market dynamics and asks Harry to name a multi-city residential brand, which Harry struggles with before guessing Trump. The dynamic is polite and informative with minimal host intervention. | |
| Urban Housing Affordability and Real Estate Dynamics | 3 | 3 | 2 | 2 | Harry asks whether real estate in core urban centers will continue to appreciate or correct to the mean. Brad explains rent-to-income ratios and compressed cap rates, while Harry follows up by asking whether potential price depreciation threatens Common's business model. | |
| Bearish Outlook on Physical Retail vs. E-Commerce | 5 | 4 | 4 | 6 | Harry directly pushes back against Brad's bearish outlook on physical retail by declaring himself bullish and challenging Brad to justify his stance. Harry then uses the Amazon acquisition of Whole Foods as a concrete counterexample to question whether physical retail is actually dead. | |
| Autonomous Vehicles, Urbanization, and Economic Impacts | 3 | 2 | 1 | 2 | Harry and Brad discuss the economic impact of autonomous vehicles on urbanization and rural communities. Harry raises the specific macro risk to four million truckers and local stop-off economies, which Brad agrees will face severe challenges. | |
| Occupational Licensing and Barriers to Millennial Wealth | 3 | 5 | 2 | 3 | Harry asks why millennials are poorer than their parents, leading Brad to explain occupational licensing. Harry admits ignorance by asking what occupational licensing is, allowing Brad to deliver an educational breakdown on regulatory barriers, followed by a brief back-and-forth on the move-fast-and-break-things startup ethos. | |
| Quick Fire Round and Business Scalability | 3 | 4 | 1 | 2 | During the quick fire round and discussion on scalability, Harry questions whether a real estate model can deliver venture returns. Brad educates Harry on how operations and property management don't need to scale perfectly as long as distribution channels do, citing Google as an example. |
Statements from this episode (14)
Hargreaves: 750,000 NYC households are shared roommate apartments
“Three quarters of a million households in New York alone are shared apartments, roommates of some sort.”
Hargreaves: NYC and SF renters spend up to 65% of income
“In most of these cities, it's well above 50%. In New York, it's between 55 and 60. In San Francisco, it's between 60 and 65.”
Hargreaves: Common prices co-living at a 20% discount to studio apartments
“Common tends to price at about a 20% discount to a Traditional studio. Ours is an all-in price that includes Wi-Fi, utilities, cleaning, etc.”
Hargreaves: Urban real estate prices will not see vast continued appreciation
“I actually still believe that people are going to, do want to live in cities. There's a huge attraction to urban centers, but I guess I just don't see it appreciating vastly beyond where it is right now.”
Hargreaves predicts severe economic pain for commercial retail landlords
“If I am neutral on residential, I am very bearish on retail in particular, and I think, you know, we're just at the beginning stages of the immense amount of pain That retail landlords are going to face.”
Hargreaves: The US is significantly over-retailed compared to European cities
“Keep in mind that the United States is wildly over retail in comparison to other developed countries. The U.S. Has some Retail space per capita than most major European cities.”
Hargreaves: Autonomous vehicles will not significantly disrupt city urbanization
“So hesitant to say, just given a lot of natural preferences that go towards cities, that AVs are going to really disrupt things that much.”
Hargreaves: Gas stations and rest stops will suffer from AV adoption
“I think gas stations, rest stops in particular, take a huge hit off of this between moving to autonomous vehicles and moving to electric vehicles as well.”
Hargreaves: Millennials are poorer than their parents in income and wealth
“This is the first generation in American history to be poorer than their parents from an income standpoint, from a wealth standpoint”
Hargreaves: Licensed US industries grew from a dozen in 1970 to hundreds
“If you look at the number of industries or fields that have, that require occupational licenses, it's gone from something like a dozen in 1970 to hundreds today.”
Hargreaves: US business creation is at its lowest since the Great Depression
“Fewer businesses are getting started today than have been started at any point since the Great Depression.”
Hargreaves: California homeownership requires tech wealth or parental real estate
“So you pretty much can't own a home in California unless you make it big in tech or parents own a home.”
Hargreaves: Every Common co-living location generates positive cash flow
“Well, we have a model that works, Every one of our homes makes money and sends cash back to common, and the economics are good, and the members are happy.”
Hargreaves: Scalable businesses do not require every operation to scale perfectly
“I think there are some aspects that scale and some aspects that don't, and not Everything has to scale, so property management is just one of those things, for instance, that you hire one person for every X members, and the distribution channels, however, do s…”