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U-Co - Brink of Bankruptcy

U-Co - Brink of Bankruptcy

Marco Barrio
April 05, 2024

by Marco Barrio

A digital nomad community exploring the world. The place where we feel at home no matter where our journey takes us.

Got a question or feedback? Please send me an email at [email protected]

Have you heard that about 9 out of 10 businesses fail within the first 5 years? Imagine pushing a heavy rock up the mountain with several landing zones to catch your breath. Well, this is how entrepreneurs feel daily. Let me share U-Co’s near-death experience.

Year 1, it’s 2019, a year full of dreams, the market is at its peak, and Mexico City is blooming with beautiful Jacarandas down Rio de Janeiro Park. As I visit a 250 square meter house with a unique facade only two blocks away from the park in Roma Norte, I decided this was the house to create an MVP (minimum viable product), my first U-Co location to build a digital nomad community. After a few months of work, I got the location up and running. Within two months, we were fully booked with our 15 beds. The dream was becoming a reality. The community was growing and vibrant. In 2020, I was ready to expand and take our business model and the community around Latam.

Welcome March 2020, as we brace for a life-changing moment, cities begin locking down, borders closing, and fear of the unknown begins to show up. As the pandemic news goes viral, we go from 90% occupancy to 50% within a day, and overnight, we drop to 25%. We are left with a small community of guests that have nowhere to go but to stay put in our location. In the upcoming weeks, Airbnbs/hotels lower their prices to stay afloat, and these 3 guests decide to move in together to a nearby Airbnb to weather the storm together but away from a 20-people coliving space. We are left with 1 guest, yes, only 1.

This was my first ‘real’ business struggle; I hadn’t experienced anything like this before. I was freaking out; I had one month left of savings to pay the lease but after that, I was done. Just like everyone else, I decided to negotiate with the landlord to give us a break and pay only half of the rent payments until the dust settled. She took a couple of days to think about it, but on a Friday afternoon as I was sitting in bed trying to come up with a solution, she said that I had to pay the rent in FULL or move out. My heart sank, and I burst into tears.

At this moment, I had three choices:

Option 1 - Shut down the business and let go of our small team, find a job.

Option 2 - Move to a different location with better rent terms, keep moving forward.

Option 3 - Pay the full rent, without knowing when the lockdowns will end.

Fear got the best of me. I decided to pack up and move to a different location, U-Co Juarez, which had more options of private rooms and fewer capsules per dorm. I was able to close on two 6-month leases for the new location with renderings. Payments were made upfront which gave us two months of survival mode. My team and I were able to keep the lights on in this new location barely scraping the surface of the debt, rent, and payroll. By November 2020, we were finally out of the woods financially.

U-Co Roma V1 (Orizaba Street) 2019-2020

As I look back on that decision, I don’t regret building U-Co Juarez, but I do think about how one life decision can take you into a different scenario. Fear is a huge motivator or paralyzer, it motivated me to take action and push through the tough times. Fight or flight. Grateful to all of you, we are 4.5 years into building the #ucofam; we hope to make it into year 5 and more thereafter.

If I can leave you with one lesson from all this, it is to make sure that whatever your life-changing decision, whether it’s personal or business, do not let fear cloud your judgment. Analyze your options and make the best decision based on your data points/gut feeling. Mistakes are just life lessons in disguise.

“May your choices reflect your hopes, not your fears.” - Mandela

Community

April weather in Mexico City is fantastic—hot during the day and chilly in the mornings and afternoons. Don't forget to pack your sunscreen and hat for your hop-on-hop-off bus ride. I know, we usually don't opt for the tour bus; we're cooler than that. But sometimes, it's nice to feel the breeze through your hair while you’re in a zoom call 😜.

Don’t Forget! The Coliving List is launching in May 2024. We are working on getting a compiled list of our favorite accomodations around Mexico. The list will be updated once a month with new countries featured every month. Sign up, today!

Current Monthly Guests

Gabriel (Canada)
Carlos (Mexico)
Julieta (Argentina)
Daiana (Argentina)
Vishnu (India) - He’s safely back! He has new battle wounds to share with us all.
Jack (UK)

Also, don’t forget to share with us via this Google Form how you'd like to partner with U-Co. Don't be shy – we all face problems. Sharing them means we can help each other out. After all, isn't that what being a community is all about?