Will much of that $3-6M go into renovating and managing the Rose Garden Inn, or to cover work that could have been covered by existing funding if the Inn wasn’t purchased?
If so, I’m curious to hear more about the strategy behind buying and renovating the space, since it seems like a substantial capital investment, and a divergence from LightCone Infrastructure’s previous work and areas of expertise. I’m aware that several (primarily social?) events were held there over the past year, and I see from an earlier comment that you’re planning to host SERI MATS scholars, and to continue providing space for events and retreats.
it seems valuable to have a central and optimized space for hosting people and events, but I’m curious how large the counterfactual benefit of the Inn is. If it didn’t exist, programs would have to use existing venues such as hotels, which would charge them more (I assume?) and presumably be somewhat less nice. How would you quantify the counterfactual benefit that the Inn has provided here? How does that compare to the expense of buying, renovating and managing it? If the costs exceed those benefits, what additional value do you plan to get out of the space?
Here are some things I like about owning this space:
You don’t have to ask anyone’s permission to make modifications to it or to use it in unusual ways. For instance, if we want to cover every wall with whiteboards (as we’ve done in many rooms), we don’t have to ask anyone’s permission, we just order the boards, hire a few laborers, and have them cut them to size and nail them all along the walls. If I want to turn a 4-person team office into a 4-person bedroom, I just get a few people, carry the furniture into storage, carry some beds in, and we’re done. This means that in the span of just a few days whole buildings can be turned from one use case into another (e.g. from housing into a conference venue), as demand comes up. This is not true of rented office spaces (where you certainly cannot reliably sleep many people or do surgery to the walls) or chain hotels (I cannot ask a hotel to use a room as a team office for 3 montsh), and most residential spaces are far too small. As another datapoint about the limitations of rented spaces, the last office building I was using wouldn’t even allow us to have a fully-dark nap room due to regulations about lighting visibility in the event of a fire.
This space is much more aesthetically beautiful and harmonious with our intentions than most alternatives we could find in Berkeley. It is relatively central in Berkeley, yet has a large, private outdoor area that you can work from in the sun all day. The rooms are not inhuman exact squares with sterile lighting, they’re all unique shapes, often with nice old woods and we can install our own lighting. We’ve had the space to build a number of wooden outdoor huts to work from with electricity and soon-to-be-heated cushions. In my model of the world the aesthetics of a space really affect the sorts of affordances and feelings and problem-solving-approaches that people will consider. For example I think this sort of natural beauty helps people be more willing to go deep on an idea or hypothesis for a longer amount of time.
The space is made of 5 separate buildings, which gives a little village-like feel, and (we’re hoping) can allow some fairly different things to be happening on-site at the same time. In one building you could have a self-contained retreat (CFAR workshop, AI alignment workshop, etc), in another building a few x-risk focused teams could be getting work done in their offices as they have ever day for the last 2 months, another building could be having a weekly communal lunch open to 100+ people as well as hosting a few visitors in rooms upstairs who have flown in from out of town for a few weeks, etc. My hope is that the separate buildings can allow a lot of different things to be happening concurrently, and have natural boundaries between them.
Perhaps of interest, when we were considering alternative locations, the main other places that had the properties of my first two bullets were educational religious spaces. The School of Religion, the School of Theology, and a strange surprise-Buddhist-temple that Habryka and I unexpectedly found ourselves in one evening (as the woman was showing us around the school-like building, she fully walked past the temple doors, until I politely asked to look inside, and she unlocked them to show us a ~7k square foot room with a 40-foot high ceiling, filled with golden statues and colorful ribbons hanging from the ceiling and ancient texts inscribed on rotating pillars and 300 folding chairs and a big stage). These places had a lot of beauty. But one of them basically wasn’t on sale, and the other two were only partially on sale (we couldn’t have owned the whole property and would have to share with some religious groups, which is not a total dealbreaker but I strongly prefer having full ownership).
We also considered renting solely office spaces, which would have been much faster to get started with, and were on the verge of going through on a deal last year. But then at the last minute they explained the elevator needed replacing and would be out of use for the first 2 months of us living there (which is a pretty big obstruction for moving in all of our heavy furniture up ~3 floors). They wouldn’t negotiate at all on this and we walked away. I actually heard (epistemic status: I assign 75% to this being true, I have pinged the person who said this to me to double-check) that the elevator only actually got fixed around a month or two ago. To me not having to deal with this sort of thing is part of the advantage of having full-ownership I describe in the first bullet above.
(I googled and found their name and website, which has a history section about them here. The rest of this comment is a list of other links and recollections from our interaction with them that I found as I looked back into our chat logs and did a little googling, in case anyone is interested.)
Habryka linked it to me, I phoned the number to set up a viewing, we visited it that evening (10th March, 2022, the day after I turned 25). After Habryka and I visited that night I don’t believe we ever talked with them again.
We thought it was a coworking space (“Coworking With Wisdom”, 4 reviews on yelp, 39 google reviews) that was open to selling, but it turned out to primarily be a Buddhist space called Dharma College (whose website I’ve just found now for the first time).
The Executive Director, Wangmo Dixey, walked us around. My vague recollection is that her father had brought the family to America to spread their tradition of Tibetan Buddhism and he bought the place (Wikipedia says the building was bought in ’09), but for whatever reason she didn’t have as much demand for the space these days (it’s 35k square feet) so she was trying out renting it as a coworking space, and also was quite open to us renting the majority of the building while she had daily meditation classes upstairs (and ran other classes). We told her a bit about our community’s cognitive science / reductionist / AI background, I recall her suggesting it could be exciting to have shared public dialogues with invited Buddhists and rationalists about the mind and consciousness.
The space had a lot of windows and high ceilings and multiple kitchens and more, and I think we could get a lot of use out of it if we were there. If we did co-own I thought many people would quite like the affordance of an upstairs daily meditation session at lunchtime.
I tried to find online photographs of the Temple inside, but there are none. This combined with her initial intent to not unlock the doors for us, makes me think they’ve intentionally made it a secret space and kept photographs off the internet. I think both Habryka and I were somewhat awed by the temple room and I remember positively reinforcing myself for overcoming the slight social awkwardness in asking to go back and open those doors. I recall using the word ‘glorious’ when describing the room as we walked out of it.
The Dharma College site has more about their traditions. Its history can be found here (including a photograph of Dixey and her father at a ceremony at the White House in 2021), and Dixey’s bio can be found here, where I’ve just learned that she has an honorary degree from Mahachulalongkornrajavidyalaya University in Thailand.
Interesting background. They sound like they are struggling and, like many organizations (not to mention, individuals), wound up buying more house than they could handle—I imagine that COVID was probably a bad thing for large urban temples like that, and it’s not like the Bay Area was undersupplied with various flavors of Buddhism AFAICT. If a Buddhist temple is trying to run a coworking space on the side, they must have a lot of excess room indeed. Might be worth keeping in touch for overflow or backup purposes? They sound well-equipped for conferences or other functions.
I do agree it’s likely they’d be very open to a deal. In general office space in the Bay has taken a nosedive in terms of prices since many tech companies have stayed remote post-pandemic, and a lot of places will take any deal you offer them (I know places that previously would only consider 12-24 month leases will now jump at a month-to-month).
But we have (rough estimate) ~24k sq ft indoor space and ~20k sq ft outdoor space, the vast majority of which is not utilized and not got a set use planned, plus we’re renting a 9bdr house v nearby for overflow housing, so for now we’re certainly not looking for additional space!
These all sound like major benefits to owning the venue yourself!
To be clear, I don’t doubt at all that using the Inn for events is much better than non-purpose-built space. However, the Inn also has costs that renting existing spaces wouldn’t: I assume that purchasing and renovating it costs more than renting hotel spaces as-needed for events (though please correct me if I’m wrong!), and my impression is that it’s taken the Lightcone team a lot of time and effort over the past year+ to purchase and renovate, which naturally has opportunity costs.
I’m asking because my uninformed guess is that those financial and time costs outweigh the (very real) benefits of hosting events like you have been. I’m interested to hear if I’m just wrong about the costs, or if you have additional plans to make even more effective use of the space in the future, or if there’s additional context I’m missing.
ETA: Oli answered these questions below, so no need to respond to them unless you have something additional you’d like me to know.
Will much of that $3-6M go into renovating and managing the Rose Garden Inn, or to cover work that could have been covered by existing funding if the Inn wasn’t purchased?
Thinking about the exact financing of the Inn is a bit messy, especially if we compare it to doing something like running the Lightcone Offices, because of stuff like property appreciation, rental income from people hosting events here, and the hard-to-quantify costs of tying up capital in real estate as opposed to more liquid assets like stocks.
If you assume something like 5% property appreciation per year going forward, and you amortize the part of our construction costs that didn’t increase the property value over the next 7 years (which seems like a reasonable estimate for how long the venue is going to get used), I get an annual cost of running the Rose Garden of about $1.15M (property value of ~$19MM, ~$3.5M in uncapitalized construction costs amortized over 7 years, plus $700k in annual upkeep and maintenance costs).
This is pretty cost-effective compared to other options of even just providing office space, and I think is my preferred way of thinking about the cost of doing this construction project (most of which came from a loan that we took out specifically to finance the purchase and renovation of the place, which is insured against the Rose Garden property itself, so it didn’t straightforwardly funge against our other funding).
To compare this to other costs, renting two floors of the WeWork, which we did for most of the summer last year, cost around $1.2M/yr for 14,000 sq. ft. of office space. The Rose Garden has 20,000 sq. ft. of floor space and 20,000 additional sq. ft. of usable outdoor space for less implied annual cost than that.
In order to fund this initial capital investment, we did definitely cut into the funding we received in 2022, and we would have a bunch of money in our bank accounts right now if we didn’t do this construction project. On the other hand, our spending over the next few years would also be a bunch larger, since we would have to pay more in rent if we wanted to do anything in-person community shaped, for both events and office space, than we will have to pay in interest and upkeep minus appreciation for the Rose Garden Inn.
This doesn’t take into account the cost of having Jaan Tallinn’s capital tied up in real estate with 5% annual interest from us. In one sense it seems good for Jaan to diversify his funds away from crypto. On the other hand he has probably been making closer to 10%-20% annual returns over the last 10-15 years with his investments. My current guess is the diversification benefits here outweigh the higher potential returns (because man, x-risk efforts sure still are quite tech-stock and crypto loaded and I am very glad about more diversification), but I am really not confident, and this could easily dominate the relevant cost-calculations.
It’s also a bit unclear how to think about rental income from people working on existential risk stuff that we wouldn’t otherwise support, which I expect to also make us back some of these funds.
I could write more about how to think about financing the Rose Garden, but I’ll leave it at this. I think it it mostly makes sense for people to think that roughly $1.5M of our annual budget going forward will be used for our Rose Garden Inn, with ~$350k of that going into very illiquid long-term savings for the organization.
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By far the biggest source of uncertainty about our budget comes from the potential for FTX clawbacks, which explains most of the wide range of our budget. I currently think there are some good arguments that we owe back about $1.5M to FTX creditors, though the exact game theory here is a bit messy (and they might request up to $4M back from us), and I continue to feel quite confused about what the right thing to do here is. We don’t know if and when they will ask for that money.
If so, I’m curious to hear more about the strategy behind buying and renovating the space, since it seems like a substantial capital investment, and a divergence from LightCone Infrastructure’s previous work and areas of expertise.
The purchase of the Rose Garden Inn and really setting the whole renovation project in-motion was made before November last year, and as such before the collapse of FTX, and as is probably apparent from my comments and posts over the last few months (as well as our reasoning for closing down the Lightcone Offices), a lot of our strategy and perspective has shifted since then.
That said, I am actually still quite excited about our plans with the Rose Garden, but I do think it’s an important disclaimer to add that yeah, a lot of our plans for the Rose Garden were substantially changed when FTX collapsed, and our plans for it have become a bunch less straightforward (the original reasoning for it was something much closer to “this makes sense from a finance perspective even if we just compare it to renting office space at our current location”).
That said I am still quite excited about our plans. Some concrete things that continue to drive my excitement for our Rose Garden Inn investment:
I continue to think that in-person collaboration is really essential, especially for mentoring relationships. I think there continues to be a pretty substantial bottleneck in people getting oriented to working on AI Alignment that goes a lot better with in-person peers and via in-person mentoring from people who have made real contributions to the field, and investing in infrastructure for that is one of the best ways to drive progress on reducing existential risk from AI.
I really want to create a more distinct and intentionally separate culture both on LessWrong and at the Rose Garden Inn, and I think owning a physical space hugely helps with that. FTX, various experiences I’ve had in the EA space over the past few years, as well as a lot of safetywashing in AI Alignment in more recent years, have made me much more hesitant to build a community that can as easily get swept up in respectability cascades and get exploited as easily by bad actors, and I really want to develop a more intentional culture in what we are building here. Hopefully this will enable the people I am supporting to work on things like AI Alignment without making the world overall worse, or displaying low-integrity behavior, or get taken advantage of.
I am very excited about the setup where we get to have both long-term office space and short-term events in one location. I am hopeful that this will enable us to have a lot of people flowing through the space, and will allow us to interface and experiment with a lot of different approaches to AI alignment and rationality, and then slowly grow by picking a small number of the people coming through to work more long-term from our office space.
To compare this to other costs, renting two floors of the WeWork, which we did for most of the summer last year, cost around $1.2M/yr for 14,000 sq. ft. of office space. The Rose Garden has 20,000 sq. ft. of floor space and 20,000 additional sq. ft. of usable outdoor space for less implied annual cost than that.
I’m sympathetic to the high-level claim that owning property usually beats renting if you’re committing for a long time period. But the comparison with WeWork seems odd: WeWork specializes in providing short-term, serviced office space and does so at a substantial premium to the more traditional long-term, unserviced commercial real estate contract. When we were looking for office space in Berkeley earlier this year we were seeing list price between $3.25-$3.75/month per square foot, or $780k-900k/year for 20,000 square feet. I’d expect with negotiation you could get somewhat better pricing than this implies, especially if committing to a longer time period.
Of course, the extra outdoor space, mixed-use zoning and ability to highly customize the space may well offset this. But it starts depending a lot more on the details (e.g. how often is the outdoor space used; how much more productive are people in a customized space vs a traditional office) than it might first seem.
When we were looking for office space in Berkeley earlier this year we were seeing list price between $3.25-$2.75/month per square foot, or $780k-900k/year for 20,000 square feet.
Very small nitpick, but did you mean $3.25-$3.75? (This was the smallest diff I could think of to make your calculation clear).
When we were looking for office space in Berkeley earlier this year we were seeing list price between $3.25-$2.75/month per square foot, or $780k-900k/year for 20,000 square feet. I’d expect with negotiation you could get somewhat better pricing than this implies, especially if committing to a longer time period.
Yep, if you commit for longer time periods you can definitely get better deals, and there are definitely other ways to save on office space costs. I didn’t mean to imply this was the minimum you could rent office space for.
The $1.2M/yr estimate was roughly what we were paying at the time, and as such was the central comparison point we had. Comparing it to something more like $800k-$900k a year also seems reasonable to me, though I have less experience with the exact tradeoffs faced by doing that. One reason for that comparison is that the price estimate I did in the comment above included utilities and servicing the space, and I don’t have a ton of experience with how much cost that adds to an unserviced office lease, though I still expect it to be a bunch lower than the WeWork prices.
Thank you for such a detailed and thorough answer! This resolves a lot of my confusion.
Based on conversations around closing the wework Lightcone office, I had assumed that you didn’t want to continue hosting office space, and so hadn’t considered that counterfactual cost. But the Inn expenses you mention seem more reasonable if the alternative is continuing to rent wework space.
The FTX context also makes a lot of sense. I was confused how the purchase fit into your current strategy and funding situation, but I understand that both of those were quite different a year or two ago. Given how much things have changed, do you have conditions under which you would decide to sell the space and focus on other projects? Or are you planning to hold onto it no matter what, and decide how best to use it to support your current strategy as that develops?
I really want to create a more distinct and intentionally separate culture both on LessWrong and at the Rose Garden Inn, and I think owning a physical space hugely helps with that. FTX, various experiences I’ve had in the EA space over the past few years, as well as a lot of safetywashing in AI Alignment in more recent years, have made me much more hesitant to build a community that can as easily get swept up in respectability cascades and get exploited as easily by bad actors, and I really want to develop a more intentional culture in what we are building here. Hopefully this will enable the people I am supporting to work on things like AI Alignment without making the world overall worse, or displaying low-integrity behavior, or get taken advantage of.
I’m extremely excited by and supportive of this comment! An especially important related area I think is “solving the deference problem” or cascades of a sinking bar in forecasting and threatmodeling that I’ve felt over the last couple years.
Will much of that $3-6M go into renovating and managing the Rose Garden Inn, or to cover work that could have been covered by existing funding if the Inn wasn’t purchased?
If so, I’m curious to hear more about the strategy behind buying and renovating the space, since it seems like a substantial capital investment, and a divergence from LightCone Infrastructure’s previous work and areas of expertise. I’m aware that several (primarily social?) events were held there over the past year, and I see from an earlier comment that you’re planning to host SERI MATS scholars, and to continue providing space for events and retreats.
it seems valuable to have a central and optimized space for hosting people and events, but I’m curious how large the counterfactual benefit of the Inn is. If it didn’t exist, programs would have to use existing venues such as hotels, which would charge them more (I assume?) and presumably be somewhat less nice. How would you quantify the counterfactual benefit that the Inn has provided here? How does that compare to the expense of buying, renovating and managing it? If the costs exceed those benefits, what additional value do you plan to get out of the space?
Here are some things I like about owning this space:
You don’t have to ask anyone’s permission to make modifications to it or to use it in unusual ways. For instance, if we want to cover every wall with whiteboards (as we’ve done in many rooms), we don’t have to ask anyone’s permission, we just order the boards, hire a few laborers, and have them cut them to size and nail them all along the walls. If I want to turn a 4-person team office into a 4-person bedroom, I just get a few people, carry the furniture into storage, carry some beds in, and we’re done. This means that in the span of just a few days whole buildings can be turned from one use case into another (e.g. from housing into a conference venue), as demand comes up. This is not true of rented office spaces (where you certainly cannot reliably sleep many people or do surgery to the walls) or chain hotels (I cannot ask a hotel to use a room as a team office for 3 montsh), and most residential spaces are far too small. As another datapoint about the limitations of rented spaces, the last office building I was using wouldn’t even allow us to have a fully-dark nap room due to regulations about lighting visibility in the event of a fire.
This space is much more aesthetically beautiful and harmonious with our intentions than most alternatives we could find in Berkeley. It is relatively central in Berkeley, yet has a large, private outdoor area that you can work from in the sun all day. The rooms are not inhuman exact squares with sterile lighting, they’re all unique shapes, often with nice old woods and we can install our own lighting. We’ve had the space to build a number of wooden outdoor huts to work from with electricity and soon-to-be-heated cushions. In my model of the world the aesthetics of a space really affect the sorts of affordances and feelings and problem-solving-approaches that people will consider. For example I think this sort of natural beauty helps people be more willing to go deep on an idea or hypothesis for a longer amount of time.
The space is made of 5 separate buildings, which gives a little village-like feel, and (we’re hoping) can allow some fairly different things to be happening on-site at the same time. In one building you could have a self-contained retreat (CFAR workshop, AI alignment workshop, etc), in another building a few x-risk focused teams could be getting work done in their offices as they have ever day for the last 2 months, another building could be having a weekly communal lunch open to 100+ people as well as hosting a few visitors in rooms upstairs who have flown in from out of town for a few weeks, etc. My hope is that the separate buildings can allow a lot of different things to be happening concurrently, and have natural boundaries between them.
Perhaps of interest, when we were considering alternative locations, the main other places that had the properties of my first two bullets were educational religious spaces. The School of Religion, the School of Theology, and a strange surprise-Buddhist-temple that Habryka and I unexpectedly found ourselves in one evening (as the woman was showing us around the school-like building, she fully walked past the temple doors, until I politely asked to look inside, and she unlocked them to show us a ~7k square foot room with a 40-foot high ceiling, filled with golden statues and colorful ribbons hanging from the ceiling and ancient texts inscribed on rotating pillars and 300 folding chairs and a big stage). These places had a lot of beauty. But one of them basically wasn’t on sale, and the other two were only partially on sale (we couldn’t have owned the whole property and would have to share with some religious groups, which is not a total dealbreaker but I strongly prefer having full ownership).
We also considered renting solely office spaces, which would have been much faster to get started with, and were on the verge of going through on a deal last year. But then at the last minute they explained the elevator needed replacing and would be out of use for the first 2 months of us living there (which is a pretty big obstruction for moving in all of our heavy furniture up ~3 floors). They wouldn’t negotiate at all on this and we walked away. I actually heard (epistemic status: I assign 75% to this being true, I have pinged the person who said this to me to double-check) that the elevator only actually got fixed around a month or two ago. To me not having to deal with this sort of thing is part of the advantage of having full-ownership I describe in the first bullet above.
(I’d enjoy hearing more about the background/history of that temple.)
(I googled and found their name and website, which has a history section about them here. The rest of this comment is a list of other links and recollections from our interaction with them that I found as I looked back into our chat logs and did a little googling, in case anyone is interested.)
This was the LoopNet listing we responded to, where it advertises itself as a coworking space one block from the Downtown Berkeley BART station.
Habryka linked it to me, I phoned the number to set up a viewing, we visited it that evening (10th March, 2022, the day after I turned 25). After Habryka and I visited that night I don’t believe we ever talked with them again.
We thought it was a coworking space (“Coworking With Wisdom”, 4 reviews on yelp, 39 google reviews) that was open to selling, but it turned out to primarily be a Buddhist space called Dharma College (whose website I’ve just found now for the first time).
The Executive Director, Wangmo Dixey, walked us around. My vague recollection is that her father had brought the family to America to spread their tradition of Tibetan Buddhism and he bought the place (Wikipedia says the building was bought in ’09), but for whatever reason she didn’t have as much demand for the space these days (it’s 35k square feet) so she was trying out renting it as a coworking space, and also was quite open to us renting the majority of the building while she had daily meditation classes upstairs (and ran other classes). We told her a bit about our community’s cognitive science / reductionist / AI background, I recall her suggesting it could be exciting to have shared public dialogues with invited Buddhists and rationalists about the mind and consciousness.
The space had a lot of windows and high ceilings and multiple kitchens and more, and I think we could get a lot of use out of it if we were there. If we did co-own I thought many people would quite like the affordance of an upstairs daily meditation session at lunchtime.
I tried to find online photographs of the Temple inside, but there are none. This combined with her initial intent to not unlock the doors for us, makes me think they’ve intentionally made it a secret space and kept photographs off the internet. I think both Habryka and I were somewhat awed by the temple room and I remember positively reinforcing myself for overcoming the slight social awkwardness in asking to go back and open those doors. I recall using the word ‘glorious’ when describing the room as we walked out of it.
The Coworking with Wisdom website however links to a very faithful virtual tour of the rest of the building.
The Dharma College site has more about their traditions. Its history can be found here (including a photograph of Dixey and her father at a ceremony at the White House in 2021), and Dixey’s bio can be found here, where I’ve just learned that she has an honorary degree from Mahachulalongkornrajavidyalaya University in Thailand.
Interesting background. They sound like they are struggling and, like many organizations (not to mention, individuals), wound up buying more house than they could handle—I imagine that COVID was probably a bad thing for large urban temples like that, and it’s not like the Bay Area was undersupplied with various flavors of Buddhism AFAICT. If a Buddhist temple is trying to run a coworking space on the side, they must have a lot of excess room indeed. Might be worth keeping in touch for overflow or backup purposes? They sound well-equipped for conferences or other functions.
Coworking with Wisdom was around pre-pandemic, although that could mean they overbought years ago instead of recently.
I do agree it’s likely they’d be very open to a deal. In general office space in the Bay has taken a nosedive in terms of prices since many tech companies have stayed remote post-pandemic, and a lot of places will take any deal you offer them (I know places that previously would only consider 12-24 month leases will now jump at a month-to-month).
But we have (rough estimate) ~24k sq ft indoor space and ~20k sq ft outdoor space, the vast majority of which is not utilized and not got a set use planned, plus we’re renting a 9bdr house v nearby for overflow housing, so for now we’re certainly not looking for additional space!
These all sound like major benefits to owning the venue yourself!
To be clear, I don’t doubt at all that using the Inn for events is much better than non-purpose-built space. However, the Inn also has costs that renting existing spaces wouldn’t: I assume that purchasing and renovating it costs more than renting hotel spaces as-needed for events (though please correct me if I’m wrong!), and my impression is that it’s taken the Lightcone team a lot of time and effort over the past year+ to purchase and renovate, which naturally has opportunity costs.
I’m asking because my uninformed guess is that those financial and time costs outweigh the (very real) benefits of hosting events like you have been. I’m interested to hear if I’m just wrong about the costs, or if you have additional plans to make even more effective use of the space in the future, or if there’s additional context I’m missing.
ETA: Oli answered these questions below, so no need to respond to them unless you have something additional you’d like me to know.
Thinking about the exact financing of the Inn is a bit messy, especially if we compare it to doing something like running the Lightcone Offices, because of stuff like property appreciation, rental income from people hosting events here, and the hard-to-quantify costs of tying up capital in real estate as opposed to more liquid assets like stocks.
If you assume something like 5% property appreciation per year going forward, and you amortize the part of our construction costs that didn’t increase the property value over the next 7 years (which seems like a reasonable estimate for how long the venue is going to get used), I get an annual cost of running the Rose Garden of about $1.15M (property value of ~$19MM, ~$3.5M in uncapitalized construction costs amortized over 7 years, plus $700k in annual upkeep and maintenance costs).
This is pretty cost-effective compared to other options of even just providing office space, and I think is my preferred way of thinking about the cost of doing this construction project (most of which came from a loan that we took out specifically to finance the purchase and renovation of the place, which is insured against the Rose Garden property itself, so it didn’t straightforwardly funge against our other funding).
To compare this to other costs, renting two floors of the WeWork, which we did for most of the summer last year, cost around $1.2M/yr for 14,000 sq. ft. of office space. The Rose Garden has 20,000 sq. ft. of floor space and 20,000 additional sq. ft. of usable outdoor space for less implied annual cost than that.
In order to fund this initial capital investment, we did definitely cut into the funding we received in 2022, and we would have a bunch of money in our bank accounts right now if we didn’t do this construction project. On the other hand, our spending over the next few years would also be a bunch larger, since we would have to pay more in rent if we wanted to do anything in-person community shaped, for both events and office space, than we will have to pay in interest and upkeep minus appreciation for the Rose Garden Inn.
This doesn’t take into account the cost of having Jaan Tallinn’s capital tied up in real estate with 5% annual interest from us. In one sense it seems good for Jaan to diversify his funds away from crypto. On the other hand he has probably been making closer to 10%-20% annual returns over the last 10-15 years with his investments. My current guess is the diversification benefits here outweigh the higher potential returns (because man, x-risk efforts sure still are quite tech-stock and crypto loaded and I am very glad about more diversification), but I am really not confident, and this could easily dominate the relevant cost-calculations.
It’s also a bit unclear how to think about rental income from people working on existential risk stuff that we wouldn’t otherwise support, which I expect to also make us back some of these funds.
I could write more about how to think about financing the Rose Garden, but I’ll leave it at this. I think it it mostly makes sense for people to think that roughly $1.5M of our annual budget going forward will be used for our Rose Garden Inn, with ~$350k of that going into very illiquid long-term savings for the organization.
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By far the biggest source of uncertainty about our budget comes from the potential for FTX clawbacks, which explains most of the wide range of our budget. I currently think there are some good arguments that we owe back about $1.5M to FTX creditors, though the exact game theory here is a bit messy (and they might request up to $4M back from us), and I continue to feel quite confused about what the right thing to do here is. We don’t know if and when they will ask for that money.
The purchase of the Rose Garden Inn and really setting the whole renovation project in-motion was made before November last year, and as such before the collapse of FTX, and as is probably apparent from my comments and posts over the last few months (as well as our reasoning for closing down the Lightcone Offices), a lot of our strategy and perspective has shifted since then.
That said, I am actually still quite excited about our plans with the Rose Garden, but I do think it’s an important disclaimer to add that yeah, a lot of our plans for the Rose Garden were substantially changed when FTX collapsed, and our plans for it have become a bunch less straightforward (the original reasoning for it was something much closer to “this makes sense from a finance perspective even if we just compare it to renting office space at our current location”).
That said I am still quite excited about our plans. Some concrete things that continue to drive my excitement for our Rose Garden Inn investment:
I continue to think that in-person collaboration is really essential, especially for mentoring relationships. I think there continues to be a pretty substantial bottleneck in people getting oriented to working on AI Alignment that goes a lot better with in-person peers and via in-person mentoring from people who have made real contributions to the field, and investing in infrastructure for that is one of the best ways to drive progress on reducing existential risk from AI.
I really want to create a more distinct and intentionally separate culture both on LessWrong and at the Rose Garden Inn, and I think owning a physical space hugely helps with that. FTX, various experiences I’ve had in the EA space over the past few years, as well as a lot of safetywashing in AI Alignment in more recent years, have made me much more hesitant to build a community that can as easily get swept up in respectability cascades and get exploited as easily by bad actors, and I really want to develop a more intentional culture in what we are building here. Hopefully this will enable the people I am supporting to work on things like AI Alignment without making the world overall worse, or displaying low-integrity behavior, or get taken advantage of.
I am very excited about the setup where we get to have both long-term office space and short-term events in one location. I am hopeful that this will enable us to have a lot of people flowing through the space, and will allow us to interface and experiment with a lot of different approaches to AI alignment and rationality, and then slowly grow by picking a small number of the people coming through to work more long-term from our office space.
I’m sympathetic to the high-level claim that owning property usually beats renting if you’re committing for a long time period. But the comparison with WeWork seems odd: WeWork specializes in providing short-term, serviced office space and does so at a substantial premium to the more traditional long-term, unserviced commercial real estate contract. When we were looking for office space in Berkeley earlier this year we were seeing list price between $3.25-$3.75/month per square foot, or $780k-900k/year for 20,000 square feet. I’d expect with negotiation you could get somewhat better pricing than this implies, especially if committing to a longer time period.
Of course, the extra outdoor space, mixed-use zoning and ability to highly customize the space may well offset this. But it starts depending a lot more on the details (e.g. how often is the outdoor space used; how much more productive are people in a customized space vs a traditional office) than it might first seem.
Very small nitpick, but did you mean $3.25-$3.75? (This was the smallest diff I could think of to make your calculation clear).
Yes, thanks for spotting my typo! ($2.75 psf isn’t crazy for Berkeley after negotiation, but is not something I’ve ever seen as a list price.)
Yep, if you commit for longer time periods you can definitely get better deals, and there are definitely other ways to save on office space costs. I didn’t mean to imply this was the minimum you could rent office space for.
The $1.2M/yr estimate was roughly what we were paying at the time, and as such was the central comparison point we had. Comparing it to something more like $800k-$900k a year also seems reasonable to me, though I have less experience with the exact tradeoffs faced by doing that. One reason for that comparison is that the price estimate I did in the comment above included utilities and servicing the space, and I don’t have a ton of experience with how much cost that adds to an unserviced office lease, though I still expect it to be a bunch lower than the WeWork prices.
Thank you for such a detailed and thorough answer! This resolves a lot of my confusion.
Based on conversations around closing the wework Lightcone office, I had assumed that you didn’t want to continue hosting office space, and so hadn’t considered that counterfactual cost. But the Inn expenses you mention seem more reasonable if the alternative is continuing to rent wework space.
The FTX context also makes a lot of sense. I was confused how the purchase fit into your current strategy and funding situation, but I understand that both of those were quite different a year or two ago. Given how much things have changed, do you have conditions under which you would decide to sell the space and focus on other projects? Or are you planning to hold onto it no matter what, and decide how best to use it to support your current strategy as that develops?
I’m extremely excited by and supportive of this comment! An especially important related area I think is “solving the deference problem” or cascades of a sinking bar in forecasting and threatmodeling that I’ve felt over the last couple years.