Julien Smith, founder of Breather, says it was a stupid, crazy idea at the outset; on-demand room rental in cities for as little as an hour, offering a quiet space for workers, entrepreneurs and others. But the service, which now handles thousands of reservations at nearly 100 properties in Canada and the U.S. each week, seems much more sane now that they've attracted a significant new funding round. The announcement of a new $20 million round of funding led by Valar Ventures (helmed by PayPal co-founder Peter Thiel) brings Breather's total investment to $28.5 million, and more importantly to potential users, allows the on-demand workspace startup to expand to new markets, including Los Angeles, Chicago, Washington, D.C., London and Toronto. It also provides more legitimacy for the model, says Smith, who founded the company in Montreal in 2012, a middle ground between coworking space and camping out at coffee shops.
While Breather and other sharing economy real estate startups frequently get compared to Airbnb, the comparison Smith aims for is Starbucks, which he calls a ubiquitous space network. The chain offers uniform space on demand, a valuable asset for mobile workers. But while Starbucks packs as many people in a coffee shop as possible, Breather offers privacy and more comfortable workspace (costs range from $25-$65 per hour in New York). Breather leases commercial space and partners with property owners in revenue share agreements, so it can offer a more controlled, consistent atmosphere; each room offers a conference table, free high-speed Wi-Fi, charging stations and a whiteboard.
"We're not a pure marketplace," says Smith "Craigslist is a pure marketplace, and it's a great business model for Airbnb. We have a mobile-first experience, and it's based on the idea that people want the same thing. Our experience is like that. You always get the same thing."
Smith says users find a variety of uses for Breather rooms, staging photo shoots,, meetings and conferences. Actors have even rented out rooms to practice lines for auditions. While the concept utilizes commercial real estate in new ways, it's also predicated on the idea that, as urban populations grow, space in central business districts becomes more and more valuable and crowded. Breather wants to help share that space, part of the sharing economy shift towards better utilization.
"I remember when podcasting came out and everyone was like it's going to destroy radio, and it's actually still really strong," says Smith. "Twitter was going to ruin journalism, and it hasn't. It's the same thing with the sharing economy and the real estate industry. These central business areas aren't going to get bigger; it's a fixed resource increasingly in demand. Breather safely allows more people to use them on a daily basis."
∙ Is There Room in the Sharing Economy for Splacer, a Creative Space Rental Service? [Curbed]
∙ NYC Tech Accelerator: Let's Update "Dinosaur" Real Estate Biz [Curbed]
∙ New Startup Lets You 'Test Drive' a Tiny House for $99 a Night [Curbed]