'Hacker hostels' let tech hopefuls snooze -- and schmooze (video)

In Silicon Valley, the next million-dollar idea is easier to find than a place to sleep. That's why a handful of hostels have popped up, all catering to the entrepreneurial crowd. CNET's Kara Tsuboi visited one of them and found out why some residents would pay a premium to stay there.

Kara Tsuboi Reporter
Kara Tsuboi has covered technology news for CNET and CBS Interactive for nearly seven years. From cutting edge robotics at NASA to the hottest TVs at CES to Apple events in San Francisco, Kara has reported on it all. In addition to daily news, twice every week her "Tech Minutes" are broadcast to CBS TV stations across the country.
Kara Tsuboi
3 min read
Two human residents of Startup Embassy trade tips as a third eavesdrops via a self-made telepresence robot (right). Screenshot by CNET

From the outside, it looks like a typical California suburban home: garage, driveway, tidy yard. But walk down the path leading to the front door and you'll find your first clue that a traditional family of four does not live inside. On the front porch are dozens and dozens of pairs of men's shoes, all removed before entering in order to keep the house as tidy as possible.

When we knocked, Carlos De La Lama Noriega, the manager of the house, greeted us and welcomed us inside for a tour. The main living space was clean and airy with good natural light. But instead of a typical living room with a sofa, coffee table, and rug, it was furnished with long folding tables, rolling chairs, and roughly eight computer stations with busy tech entrepreneurs typing away. Welcome to Startup Embassy.

Watch this: Inside a 'hacker hostel'

Carlos has been running Startup Embassy since July and has hosted more than 60 guests from more than a dozen different countries. He says he got the idea to run this hostel out of necessity and his own experience. When he first relocated to the United States from his home country of Spain, he needed an affordable place to live while he worked on his tech startup. Apartment rents were expensive and hotels were out of the question. Through word of mouth, he learned of a tech hostel called Black Box.

"I lived in a garage for three months, which was really, really cold. I remember the first day I had to sleep with a scarf. But at the same time I didn't care. I just thought that it was the Valley, and I was going to live my dream." That positive experience and a desire to help others gave him the idea to start his own hostel to cater to international entrepreneurs.

For a bed in a dormitory-style room at Startup Embassy, Carlos charges $45 a night, $300 a week, and $1,000 a month. Outside of metropolitan areas, those prices may sound steep. But Carlos insists the money barely covers expenses like utilities and his twice-weekly cleaning service. "It makes sense for me to stay here because everyone (is) helping (to pay) for the cost, but it's not something I make money off of."

Given the consistently filled rooms, people are clearly willing to pay the prices. We spoke with a man named Erik Linde from Sweden, who has enjoyed his stay at Startup Embassy so much that he's planning on bunking there for a total of three months. "You don't live (here) because it's cheap. Because it's not necessarily cheaper. I would actually almost pay a premium to live in a place like this because of this network that you get," says Linde. And by network, he doesn't mean an intranet. Linde says that during the creative process there's a lot to gain from sharing a work and living space with other like-minded business people: tips, resources, even connections to investors.

Our stay at Startup Embassy concluded with a family-style lunch of paella that Carlos whipped up. The residents working at the house happily peeled away from their computers to join us at a picnic table in the landscaped backyard. Sitting in the sunshine, enjoying delicious food with new friends, it was easy to see how life in a hacker hostel is truly a win-win for the landlord and the tenants.