Byron Smith - Co-Founder, XSpace

A Sydney native, Byron is an entrepreneur with a background in commercial real-estate, the family business.  He's run and been the co-founder of several ventures in a variety of fields.  His latest XSpace is bringing a new type of commercial space to Austin, TX.

 

Troy: Good morning Austin. Hope everyone is having a wonderful day today, enjoying some actual sunshine. I know we've had some crazy inclement weather here lately, but it's nice to see some sunshine and some warmer weather and hopefully people are, Starting to get outside and enjoy the weather before it gets to hun be a hundred degrees here sooner rather than later.

Today I'm joined by Byron Smith of X Space Group. How's it going today, Byron? Very well, thanks. And not necessarily X space, makes it sound like it could be part of Elon Musk's. Group or something like that, but it's not quite as well. It's while it's visionary in the storage and commercial real estate space, not so much in the space technology world.

Kinda give us the low down of about you and about the business.

Byron: Yeah, actually our our name was a placeholder name that we thought was a placeholder name, and I brought in the former chief marketing officer of Aston Martin, cuz in my previous life I was in the automotive industry. And he really liked it.

But yeah, when we, Elon turned up into Austin and then there was like, , everyone's mild dyslexia kicked in. People get, get it confused with the other other SpaceX expos. So anyway yeah, so my background is in automotive. We so I'm not really from the real estate industry originally, but.

My partner was building this type of asset, this type of industrial product in Australia. And so what X space is a market adaptation from the Australian market where it's been a big success. So we've bought it to America, but we've made it, bigger, better, faster, stronger, ized it, if you will.

I was gonna say

Troy: that's the kind of way that Texans and Americans like their things bigger. Yeah. Bigger.

Byron: I'm. Bull crapping. When I say it as well it's, that's literally what it is. It's taking that bigger, better, faster, stronger, and that's what X space is. It's an evolution of that and it evolved over the process of construction.

Just using what we were seeing with customer demand. But essentially it's, they're called, I suppose we define them as commercial condos. They're mini warehouse space that can be used anywhere from 300 square feet for, an individual all the way up to 3000 square feet for a, a business.

We've got some, local celebrities and high net worth guys in there that use it for their cars. But when, whenever there's an application for cool warehouse space in a highly secure building, that you own rather than lease then, that's where we sit. So that's the concept of X space, if you will.

Troy: Sure. You mentioned from your partners back in Australia and obviously it doesn't sound like you have a Texas accent per se yeah. What's a little bit about your background. How did, what what was the journey to get you here to Austin, Texas?

Byron: Yeah I grew up in Australia.

My first business was a race car company in Australia. And that started off with four or five cars. That was my first job out of university or first business I suppose. And we started with four or five cars not knowing what was going on, and then turned that into the largest Motorsport dealership in Australasia.

So that was my first thing. From there I moved to London. I did my MBA in London. I started an analytics company there, which morphed into a consulting business, which is based in Sydney. And then I was in New York at the time and we had just purchased the land with cash here in Austin as our first project.

And Because we were trying to do ex, I was living in New York and we were trying to do X space in LA and New York, and we're just like, this doesn't work. Like something's off here, it just it's expensive and, and I ended up in Houston one Thanksgiving and I was having a margarita and it's just somewhat of a known story now.

But I was sitting at LTPO, I think, and I was looking out and there was a sort of a B class building there. There was a church next to it with a school and then a strip club. And I said to everyone, I was like, Hey, is there a strip club next to a, like a school here? Isn't that on the, a little bit on the nose?

I thought, like, why would someone let that happen? And they said welcome to Houston. There's no zoning. So I was like, aha. All right. So we came down to Texas and we did a scoot round of Houston. And Austin ended up in Austin just because we thought it would be a. It's a bit more of a, Austin's a more embraces innovation a little bit better than say other cities.

And so that's how we ended up in, that's how we ended up in Austin. That's where the building is. We started the building and then I was in New York and then a little bug went round at the start of 2020 and New York was not a good place to be, so we moved down to Austin. , that's the end of that story.

We've been in Texas and intend to build the business outta Texas.

Troy: Nice. Yeah. Houston is definitely unique in their kinda lack of building codes and just the free for all that it is there. And so that catches, I think a lot of people off guard. When if you first moved there, if you're, not familiar with the area, which I don't spend a lot of time there, but being in real estate myself enough about some of the other parts of Texas and it's just Like no building restrictions.

Like I'm all offered not too many things. Like we don't need to get over the top, but no, pretty much like you say, yeah. You think there be a little bit more.

Byron: No. And then you wonder why they flood every bloody two years. ,

Troy: so what kinds, you mentioned your first business was the race car business was what got you.

What made you decide that? Was it something you'd always, loved, with loved cars? Yeah,

Byron: I've always loved cars. My dad was always into cars so me and my brother were always into cars. Quite honestly, it was just, it was accidental. It wasn't anything planned. It was a total accident.

And I did it because I wanted to be just part of the deal and part of be involved and And that's really how it started. It wasn't anything major. But then, I was good at what, I was good at it, and I was good at I was, look, if you look back at it, my, my background is basically a used car salesman, right?

, if that are, that's how it started. And Yeah, the automotive thing was total accident, but it was, it showed that, I had a skillset set and I liked doing certain things within the business. Yeah, we just ran with

Troy: it. I not quite the same as some of the F1. I was like, Lance Stroll's dad behind the team.

So he can be a part of it that way. But no, my dad

Byron: wasn't a, my dad wasn't a billionaire and by Aston Martin so that I could have a race seat in Formula

Troy: One. But you're like, I gotta start, but I wanna be involved. So we're gonna have to try to start something from the ground up.

I gotta do it a

little

Byron: bit more humbly here.

Troy: What what made you want to like, say, move to London and then the states from there?

Byron: I just, I followed from London, that was just, I wanted I wanted to be there. I was doing a lot of work in London with the race cars cause all, everything was coming out of Europe.

. So I always wanted to be there. I wanted to move to London and take the experience. And then I did my MBA in London and stayed there for a bit. And then we opened up a office in New York. , and again, I wanted to live in New York and enjoy those big cities. Yep. It was more combining I suppose the best, the biggest and the best cities in the world with progressing the career.

Troy: Sure. And once you moved from Australia to London, going from London to New York, some pretty simple,

Byron: Yeah. London to New York's much easier than Sydney to London. This also geographically you look

Troy: closer. Yeah, no, for sure. For your partners in the business, was that, you mentioned like the, was the one guy from, at least from Australia, like how did, were they just people that you had met along the way or?

In Austin we obviously have a pretty good startup culture. There's a lot of times that, people come up with an idea for business and then through reaching out, trying to reach out to investors or different things, you tend to part, you sometimes tend to partner with people that you didn't necessarily know.

But it sounds like with, in your case, it was at least some, in some of the investments, some of the partners were people you knew. How did that kind of relationship build? Yeah,

Byron: To be honest the The principal relationship that got this business from, idea to execution was Howard Ecker, who's our chairman, and he's known me since I was zero.

My dad has done business with him for, thir, I don't know how old am I? 38? Yeah, 38 years. So he's, my dad came over to bring tenant. From America to Australia. And that's what he did. And he built a big business and sold it. And Howard ECA was the one that partnered with him and was one of the pioneers of tenant rep in amongst other things, amongst many other things.

But he was a pioneer of tenant rep in North America, based outta Chicago. He's our chairman. And yeah, I mean I think there's a lot of startups that have to like, have got an idea and they need to do whatever it takes to get from point A to point B to point C From us, it was more like we're doing this thing and we're doing it with people that we know and trust.

Which I mean, I think in hindsight is a very It's a good thing because you go through a lot of ups and a lot of downs, a lot more downs than you do ups. And having people that you trust that have the same value system as you is, that's when it all gets tested. It's like with our building, we had everything in place and then covid hits and no one wants to give you money.

No one wants to give you debt. No one wants to do a. You do whatever you need to do. Yeah,

Troy: sorry. No, de definitely, like I say, be because starting a business, starting a company is so challenging and there are, like you mentioned, a lot more failures than successes to get to Ultimate ultimately being successful.

, having, a core group of people working towards the angle that you trust and that are aligned with what you're doing is awesome. It definitely can. sometimes make it a little challenging if there's those preexisting relationships though too, because then it, for some people it can make it harder to want to make the tough choices on different things.

So that's, but that's, but in general, I think it's usually a good thing when you have that previous relationship because it does make navigating a lot of other things a lot. Yeah.

Byron: Look I agree there's pluses and minus with it all, but at the end of the day, like if you're in the trenches, you want to be with people that you trust rather than, people you just met.

Networking.

Troy: Yeah. . Exactly. You mentioned your dad also starting a business is how he went to Australia to begin with being an entrepreneur or kind of that mindset and mentality just been a part of your life, always growing up. It's always interesting to me to see the paths of people who, go into business for themselves versus, maybe go to school and, go into corporate America.

And a lot of times it feels like it's something that. Generational in a lot of places where people, have this idea or have, see what their parents have done, or have at least that freedom to do things on their own. And then other people where it's like, Hey, this is, go to school, get the education, go get a really good job at a great company and go that route.

Was that always something that was welcomed and fostered to go out and do your own thing?

Byron: Yeah, very much. You don't realize that at the time, but yeah, like that it's,

Troy: yeah, it's just life, right? It's not necessarily, it's life.

Byron: Like from when I was very young, like my dad made me like, I was washing the car, I liked washing the car with him, and he would make me then, not make me, but like he would encourage and say, Hey, like, why don't you go walk around the block in the neighborhood and watch other people's car and you can make five bucks.

And so like on the weekends I would go and, make money by washing other people's cars and doing that sort of stuff. And he would push me to do those type of things in other areas as I grew up. And then I think obviously when you have that influence of someone who's successful they allow you to have the platform to go and do those type of things.

And you have these skill sets that you. You never think about that you're building up, you do. And even in that first business, the race car business, it was understanding an entire business from how do you run the accounts to making sure that you get the money in to making sure that you're doing, no, not just structuring and doing deals, but every single aspect of a business, how that interplays with each other, right?

Yeah, absolutely. That has, that had a huge influence in like how I did my things and how I ended up where I am for

Troy: sure. Yeah like you mentioned the how when Covid hit, you got a lot of nos for the business there. I'm sure you probably got a few nos when you're walking around asking for car washes and so it builds up that ability to like not take, cuz a lot of people have a hard time.

Asking the question because they know they're probably gonna get a no. And that feels devastating to a lot of people. But for entrepreneurs it's generally something that they're just

Byron: walking your water off duck. Yeah. I think, yeah, if you take that thought to, its like nth degree.

I think being an entrepreneur in essence is not it's a mindset and a lifestyle choice. It's not , there's skills that go around it, but I wouldn't classify them as particularly, like hard to obtain. Sure. But I would just say it's a, from my perspective, like it's a mindset and it's a lifestyle choice.

And if you're gonna do something, then it's gonna get done well, one way or the other. And if you have that outlook on life and that's what's gonna happen and, then that's how I see it or believe in it. Sure.

Troy: I know you guys are in the process of getting your Houston space open up as well too.

You obviously mentioned the kind of lack of zoning that HA is happens over in Houston. What, are there any other kind of differences or similarities that have stood out to you between Austin and Houston as you're getting that second project up?

Byron: Yeah I think that , I think doing business in Houston is just getting stuff done there I think is a little easier than in Than in Austin.

I think Austin is very, I think Austin's a great lifestyle city and a great city to be in. And they've, as a developer, they do put a lot of restrictions on you from like how long things take to get done from impervious cover. So that the place looks beautiful and but, doing business in Houston it's all business.

It's, that's all they do. So it's been good. I think it's been good in that sense. And I think that it'll be, a quick positive construction process. But, I would say yeah, it's been easier than Austin, but I would just say I would just classify it more or less sort of Austin versus Houston, but I think doing business in Texas is excellent.

I think just doing business in Texas relative to New York right, or relative to California or many other states, I think is just a very. , embracing forward thinking entrepreneurial thinking kind of state and you can get. stuff

Troy: down. You mentioned initially when you were in New York, the thought being that you would, New York and LA might be the places you were initially going to to build these. How far down the path did you get? Was it something where you just as you try, you tried to go down that path, it was just super challenging to even get the ball rolling or was it not even something where. Too far down that path before realizing you, Texas was the place.

Byron: I, no we went pretty far down the path on one or two deals in LA , , putting together drawings and stuff like that. But suppose the thing that kills you in those deals is, it's two to three years to get a permit and, land is two to three times more expensive.

That's basically end of it. You can do it there, but if you're trying to do what we are doing, which is, Show everyone that there's demand for what you're doing. Do it in a quick and effective way. Buying land at a decent rate and being able to have quick permitting processes like you do in Houston, Dallas, a lesser extent Austin, but still relatively quick.

Then, you know that's how it ended up. So New York didn't really, New York was just like, the price of land was too much. So that didn't, that wasn't, that was a pretty quick decision. . But la when I say LA, or anywhere from downtown LA to Orange County. Sure. What, there's a SWA of space and opportunity down there.

Yeah. But

Troy: yeah, but like I say, with it being so much more expensive and then with the delays to try to get something done, like you have that huge caring cost that of massive of the land that you can't purchase any kind of return on for a couple

Byron: years. Yeah. You've gotta basically put down this, $5 million for land and then you've gotta spend two years.

Not getting paid to not getting paid and then paying everyone else to get a building done. It's it somewhat prohibitive.

Troy: Sure. Okay. Sure. What so like with the space you have here currently in Austin, like what kind of businesses have been, or indivi, I know you well, obviously not like specific individuals, but what has been the mix of the owners and tenants for the space there?

Yeah,

Byron: so if I just go through it, it would be, I'll just go act through actual people that have purchased or releasing, but you've got production companies who do video photography podcasting studios. Like just media production in general cuz that suits that space. So that's down there.

We have an interior profile, interior design group that have got two spaces together and they're combining them for their sort of office slash you know yeah, officey, showroom kind of stuff. We have local entrepreneurs who might have two or three businesses and they're like, this is my hub.

. So you have a bunch of that people with a lot of few interests people that buy it as an extension of their home office. So PE again, people that have a lot of interest, but they might not have an office or their office might be downtown, so they're like, use it as another way of me saying satellite office.

We have property developers who are using it there as their chairman's office. So we have a handful of guys doing. And then we've got a bunch of, as I said, celebrities or high profile, high net worth people that blast through and have big space that use it for car gym man cavey sort of places because it is very secure, very discreet.

The guy that Bo who owns the Oasis up on Lake Travis, he has a big space down on the corner there. Beautiful space. That he leases out. And then I'm just trying to think. That sort of covers it, it leans a little bit to the office and so really moves away from traditional storage though, though it is.

Troy: Yeah. Yeah, man. Cavey. So did, would anybody throw any Epic Super Bowl parties over the weekend then with

Byron: I was away, but I do know like Thursday nights, up in the lounge are known cause there's a bunch of NF X N L players who live around the area and have space in there. So we have two big screens up the top in the lounge.

So they usually Thursday nights there usually get,

Troy: Good place to come, go on. Good place to go and see some people, it'll be interesting if they stay with that routine Now that the season's over and. Have to wait. They'll find something else. , there's another reason to come on Thursday nights and just kinda get away and unwind.

You mentioned that the lounge area too. I was fortunate enough to tour the place not that long ago. And the view itself, like there's, you would don't have to be up there watching TV by any stretch of the imagination. Like just build to see the view and actually see like Travis and everything's a pretty, pretty cool spot that way.

Byron: Yeah, I think the lounge. One of those things we talked about on top of the conversation is one of those bigger, better, faster, stronger bits that I mentioned. Having a 3000 square foot lounge with a terrace that looks over Lake Travis, that's, basically free. Yeah. That's that's an amenity a costly amenity.

But something that's okay, that differentiates Differe Sure differentiates us from someone, from anyone else really. So you basically have a free WeWork to, do work by day, happy hours by night, or, product launches by weekend. So

Troy: yeah, say you mentioned too, it, it definitely differentiates.

So the people that wanna work there, and then if you, if they'd wanna bring in clients or do things that way, like that's not, not something, especially out here, if you do, some of the shared space downtown. Yeah, great. You can get some, cool downtown views and different things.

But that's we're out, out by the, up by the Mansfield dams a bit of a ways away and so gives it just a different vibe, a different feel, but can still be a really engaging space for sure. Absolutely. . So what are obviously Houston is. One that's on deck here to go in as well as finishing out.

 There are still, I know spaces available in Austin, but what are some of the plans moving forward from there?

Byron: Yeah, we will make our announcements about Houston and other projects close by, I think in the next, few weeks. But really for us it's about building up our pipeline.

We have. A bunch of, we have a bunch of projects in the pipeline and some partners, some pretty high-fi pro profile partnerships. So for us it's about watch this space probably in the next four to six weeks. And you'll just start seeing some announcements about like where we're gonna be next and what we're up to.

It's ex look, it's exciting because we have this downturn. Which, will be, last probably this year. , but, I have an economics degree of enough friends from London to New York who really understand the markets in depth. And from what I've read and what I understand this downturn will be mild and short and it'll probably last this year, which gave us a great position.

Cause we can go and belt out You. A bunch of projects while things slow down a bit. And then we can emerge on the backside of this really with, a handful of, world class projects and then ride this next cycle up. So it's exciting time. Yeah,

Troy: no and it's definitely one of those, say if you have the backing and have that confidence, like now is a good time to be building, it's obviously probably a tougher time to maybe raise some of the investment side of things, but a good time from the building standpoint, so that way when things do.

Fully turn you're ready to go. Versus now starting to try to ramp up, like I'm sure a lot of companies will do at that point in time. Oh, wait until wait until we know everything's good. And now if you have to start the construction process now you're behind where you guys hopefully will be ahead of everyone.

Byron: Yeah, exactly. I think can, from where we've seen, from what we did in Covid to basically like the highest prices of construction, ever literally prices of steel and lumber and what we did for the Austin deal. It is an opportune time to let the debt marks debt markets settle a little bit and then go start.

And to your point, yeah. In the next, 18 months, we'll be 18 months to two years ahead of everyone. Sure.

Troy: Yeah. Have you seen much change in the start of the year with interest in the commercial space? I know on the residential side of things it's definitely been a renewed, at least interest in the residential market where for the second half of 2022, everything was pretty dead.

People were worried about their jobs, people were worried about rising interest rates. And again, it'll be interesting to see if the re there's always in. in residential, there's always kind of some of that renewed interest, the start of the year because it's a planning base for a lot of people.

Like what are our plans for the year? And so people start to think maybe buy or sell home. And so there's always renewed interest, but it will be. But it's good that we're at least seeing that, cuz again, we didn't see much of any interest the second half of last year. But it'll also be interesting to see if that turns into.

Actual business it's definitely not gonna be as crazy of a market as it was in 2021 or early 2022 on the residential side. But it does feel like, for January already, prices were slightly ahead of January, 2022. And so like it, it feels like prices are gonna stay relatively flat.

The number of sales will decline, but that it's gonna be picked up from where it was the end of last year. You guys seen. Similar, dissimilar in that regard? Yeah.

Byron: We, the only thing that impacted us was people that wa like the micro reality of, from our perspective was there were people that really wanted to be in our space that had deposits down and, interest rates went up so sharply sure.

Sharper than anyone had ever seen. And they went from being able to afford it to being a stretch and they moved from buyer to Lisa. , . But I suppose since people started coming back online in January, everything started going, back to normal, smoother. And yeah, particularly as far as like our pipeline of inquiries.

Sure. It's coming back, but yeah, I don't think anyone should. it to be the boom, what happened in 19, 19 and 20? I don't think that's the, that's not reasonable, but I think that, it's back to a bit more stability. I think people were very spooked at the end of last year, so Sure.

Troy: For people that are trying to find out more, what are the best ways to find out more, stay in touch to hear some of the announcements coming in down the pipeline. Yeah,

Byron: I think just going to x space group.com. Everything funnels really digitally through x space group.com.

Announcements and Try announcements, but also if you want to get onto the social platforms and see up to date stuff, it all funnels through there. So that's the best place to, to keep tabs on what's going on and reach out if any, any of these X spaces are popping up in your city as well.

So nice.

Troy: Cool. I appreciate the taking the time to, to jump on. I know it's been busy and good ways for you. Yeah. With with all the investor stuff and just, anytime, so anytime you're running a business, there's always things going on really appreciate it and look forward to staying in touch.

Byron: Thanks. Thanks, Troy. Appreciate it.

Troy: Hope everyone has a wonderful day.