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Love in the Time of Breather: From Marriage Proposal to $40M Investment

December 7, 2016

We are thrilled to announce that Menlo Ventures is leading the $40 million Series C in Breather, the marquee network of on-demand meetings rooms and workspaces. Menlo got to know Breather’s CEO Julien Smith in 2015 after our Associate Steve Sloane proposed to his wife in a NYC location (a story that Julien was naturally a big fan of!). Since then, we’ve been incredibly fortunate to have witnessed the fantastic progress that Julien and team have made, and now look forward to being a part of the journey to transform the world’s relationship with workspaces. Breather represents our continued commitment to growth-stage investing out of Menlo’s Opportunity Fund, joining eeroClarifaiRover, and BitSight since we raised the fund early this year. The investment also aligns with our expertise in backing transformative marketplace companies, with prior bets including Uber, Rover, Poshmark, Getaround, UpCounsel, and others.

The notion of creating an “Uber for office space” is not necessarily new, however it took a novel approach and incredible execution for Breather to realize this vision. Disrupting commercial real-estate is an incredible opportunity—with an estimated domestic market size of $15 trillion, it’s worth roughly the same as the U.S. stock market. To be more precise, we considered that 55 million hours of meetings happen each day in the U.S., implying an opportunity in the $700 billion range given Breather’s current hourly pricing. It seemed intuitive that a traditional “asset-light” marketplace model could be the best way to attack this problem—allowing extra office supply to connect to demand on a platform. However, the very diversity of experiences that makes for an interesting vacation is a non-starter in a business use case. At the very core of Breather’s greatness is the confidence that a space will be available, easy to enter, consistently furnished and beautiful every single time. Only by controlling their inventory is Breather able to deliver on these promises.

While we’ve learned a lot from the team at Breather about tackling markets in unconventional ways, we’ve also witnessed some of the classic characteristics of great marketplaces that we’ve been documenting. By creating a beautiful experience in a hybrid network of leased and marketplace locations, the company has managed to capture the characteristics of the world’s best marketplaces by:

  1. Driving NPS and creating a habit – Breather’s NPS is among the highest in our portfolio (with an NPS score in the 70s that is on par with Apple)—as each guest that unlocks a Breather is treated to a peaceful, productive workspace. Such consistency gives customers the confidence and desire to return to a Breather space repeatedly.
  2. Harnessing the benefits of on-demand – Breather’s ability to control inventory means that guests always have the opportunity to book when the moment is right. Have an unexpected guest, last-minute travel, or a sensitive call? Breather is there for you at the push of a button.
  3. Curation – Great marketplaces go to extreme lengths to ensure the quality of supply on the platform through reviews and curation after the fact. Breather’s thoughtful design, real estate know-how, and location curation flip this paradigm, and ensure quality from day one.
  4. Data and network-effects – The Breather team uses data to both optimize existing spaces and understand ideal locations for a new space. A Breather user will notice that prices vary depending on the time of day—creating dynamic pricing that maximizes consumer and company value. By locking up liquidity in key locations, Breather’s lead only continues to grow over time, and with that comes the opportunity to leverage their brand to expand marketplace locations.

While Breather checks the box on a number of exciting fronts, at the core of our bet on the company is our belief in the platform providing a transformational service that unlocks a shadow market. While we all know that the CRE market is massive—it can be hard to pinpoint exactly what sorts of use-cases Breather subsumes (for a far better discussion of this topic than we could provide, we’ll point you to this brilliant piece by Julien). Breather exemplifies the expansion of traditional CRE opportunities through its diverse use-cases from board meetings to therapy sessions and everything in between (including fake meetings for marriage proposals). Naturally, Breather is a better experience than a hotel conference center, but most importantly, before its launch the ability to book a great workspace with the push of a button simply didn’t exist. As a result, much like Uber and Rover, Breather proves that the analogous market (in this case the narrowly defined $10 billion spent on meetings) can fail to capture the true potential for the service.

We are incredibly excited to join the team at Breather, as it takes a truly special group of people to pull off the grand vision of changing the way the world uses space. We love entrepreneurs that create transformational services to scratch their own itch—Julien started the company when he was a best-selling author who simply craved some peace and quiet to write. While Julien eloquently spreads the Breather mission to the world, his co-founder Caterina Rizzi leverages the unique Montreal heritage of the company to build upon a beautiful and distinct brand that is present in each-and-every space. We’ve learned a lot from Breather’s COO Luca Ranaldi about operational excellence, and trust that each decision the company makes is rigorously guided by data and metrics.

Whether you are simply looking for a place to relax, or need to make sure that next big meeting goes off without a hitch, we encourage you to try Breather and understand why we are so excited!