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Former Launch House residents were angered by party, COVID outbreak

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9/22/2021 10:57:00 PM

A wild party and a COVID outbreak are forcing Launch House — where young founders pay to live and work in mansions — to face scrutiny over safety

Insider tells the global tech, finance, markets, media, healthcare, and strategy stories you want to know.

and start reading now.There was vomit on the stairs of Paris Hilton's old mansion. It was a cool night in May, and the white stone house, towering above Los Angeles, was occupied by about 20 tech entrepreneurs who were participating in a coliving program called Launch House. The Launch House staff had planned a big, invitational party for the residents, or"cohort." Hundreds came, and soon the event was out of hand. 

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People were sneaking into the kitchen to steal alcohol, and at least one fight broke out — something that Launch House denied to Insider but three previous residents said happened. The party didn't end until the police broke it up. In the following days, resident Efren Plasencia, who ultimately had a good experience living at Launch House, became fed up. 

He told the founders:"I've never seen anybody as stupid as you guys are. And the fact that you allowed a situation to unfold like this speaks a lot to your fucking character."This was in the early days of Launch House, a Los Angeles startup that received $3 million last month from top VCs such as Day One Ventures, Alexia Bonatsos, and Balaji Srinivasan.

In a statement to Insider, Launch House said the party was"mismanaged," and that the organizer responsible was fired. The company also said that the police intervention was a result of too many cars on the road, and that residents were told during orientation that"Launch House is not a place for excessive drinking."

But some who signed up for the Launch House coliving experience told Insider that they felt a strong"work hard, play hard" ethos, and five previous Launch House residents said the community was, at times, poorly controlled and potentially unsafe. In a previous incident, five people contracted COVID-19 after some people went out clubbing during lockdown, multiple people said.

Launch House's founders — (from left) Jacob Peters, Michael Houck, and Brett Goldstein — at the Beverly Hills Launch House.Eray Alan'Smart people in paradise'The idea for Launch House began in September 2020, when 19 tech entrepreneurs hopped on a flight to Tulum, Mexico, rented a house, and worked remotely together. It was, as cofounder Jacob Peters previously told Insider, a gathering of"smart people in paradise."

"We basically quickly realized, you know, within the first few days of being there that it was just magical when you put that many brilliant, driven folks together in one place," Peters said. When the three founders — Peters, Michael Houck, and Brett Goldstein — returned from Mexico, they wanted to repeat their experience, this time by renting Paris Hilton's former Beverly Hills mansion. Over the last year, the company has hosted dozens of founders at the house from companies such as Wombo, Lolly, and Showtime. Now, the Launch House company is expanding. It just opened a luxury town house in New York City.

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Members pay to stay in one of the Launch House mansions for about a month, where they develop their product and mingle with Silicon Valley heavyweights such as Andreessen Horowitz's Andrew Chen andTwitch's billionaire cofounder Justin Kan. Launch House won't disclose how much it charges for the experience.

Peters said the goal of Launch House was to create a community that lasted beyond the in-person month. The company has developed an internal social platform () and charges past residents a yearly fee to remain members."It's much more than those four weeks in those four walls," Peters said. 

But it's also more than networking and fireside chats. Launch House cohorts tend to party a fair amount, past residents said.One previous member described most cohorts as"90% party and 10% work." Other members described a culture where having a post go viral on social media was prioritized by some members over company-building. 

Former residents all agreed that Launch House had its benefits. They left with a strong community and an invaluable network, with most recommending the experience to other entrepreneurs. But some also felt that, especially in the early cohorts, the Launch House founders were ill-equipped to handle the problems that can arise when young people live, work, and party in the same house.

Jacob Peters, a cofounder of Launch House, shows off COVID rapid tests at the Beverly Hills location.Eray AlanCOVID outbreakThe party in May wasn't the first time that the Launch House founders ran into safety issues. The first big problem occurred when the initial group went to Tulum in September 2020. At the time, there were about 40,000

new COVID-19 casesa day being diagnosed in the US, and the world was still in lockdown. The trip was full of entrepreneurs wanting to escape the isolation and work alongside their peers, one of the attendees told Insider.The attendee, who asked to remain anonymous but whose identity is known to Insider, said Launch House cofounder Houck organized and implemented protocols to lower the risk of spreading the coronavirus, such as having the founders wash their clothes after their flight and requiring non-cohort members to wear a mask in the house.

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But in those early days, the experience was more like a group of friends than a formal company, the attendee said, and Houck struggled to enforce the rules. People flouted the protocols and went out to clubs in large groups, the attendee said.When one member developed COVID-19 symptoms, the attendee said the person was hesitant to get tested, which angered the group.

The cohort looked to Houck and the trip organizers to enforce testing, but considering the informal structure of the trip, the organizers didn't have any mechanism to impose their guidelines, the attendee said. The company said Houck immediately made the person move out of the Airbnb. 

At least three people in the group, and two who lived separately but regularly hung out with the group, contracted mild cases of COVID-19, which caused some to extend their trips by weeks to recover. "Launch House was explicitly not a company at this time. This Tulum trip was a group of friends staying in an Airbnb and became a proof of concept for what would become Launch House," the company said in a statement."In an effort to promote safety, Michael put guidelines together for people joining, but everyone in the group was aware that taking this trip during a pandemic had inherent risks."

By the time Launch House became a formal company in Los Angeles, the founders had implemented more extensive COVID-19 protocols, such as regular rapid tests. But the incident highlighted how difficult it was to manage a community, the attendee said. This became a point of struggle that would continue as Launch House established its LA house and started hosting big events.

It would become a particular problem on May 21, when the founders decided to throw a"gala" at the LA house. In the days leading up to the event, the group was buzzing with excitement, Plasencia said. The house stuffed the fridge with hundreds of White Claw seltzers, and the kitchen counter was packed with bottles of hard liquor, as seen in a

video of the partyreviewed by Insider. Plasencia and his cofounder Elijah Delos Reyes got suits tailored for the occasion. But, even with five hired security guards, the night spun out of control, with attendees repeating a wide range of stories about events that took place at the party that Insider could not confirm. The next day the cohort wanted answers from the founders about what had happened, but Plasencia and Delos Reyes said they didn't hear from the cofounders for two or three days. 

"The vibe was completely flipped," Delos Reyes said."Are they going to do something? Should we do something? We just literally didn't know what to do."In their statement, the company said the founders waited until they had"all the facts from the team, community members, and security before addressing any rumors."  

Eventually, they called a meeting, gathering the group in the living room around the silver fireplace. Everyone got to speak their mind: Plasencia called the founders incompetent and warned them that it was"hard to reset a culture."Launch House cohort members gather for breakfast in the company's new New York City town house.

Madeline RenbargerInvestors sail inLaunch House's culture has given some venture capitalists pause. One VC, who asked to remain anonymous, said the founders pitched the firm last year, describing it as an educational program for entrepreneurs to live together and develop their companies. 

"Which, you know, is a great pitch," the VC said."But I just don't know if I had as much conviction in that being the reality of what their product or what they were at that point in time."  The social aspects of the living arrangements caused the investor to grow concerned about safety issues. 

While the founders had community guidelines and plans to hire staff to deal with issues such as sexual assault, the investor still had doubts about their preparedness to handle crisis situations. "Launch House has a serious code of conduct, including a zero-tolerance policy for any infringement of the member policy," the company told Insider.   

Plasencia, who has stayed in touch with the company, thought the startup had matured significantly since that May night. And former cohort members told Insider that, all told, they felt like it was an educational experience.Even the founders themselves said the party, and the fallout from it, taught them"several lessons" that they used to"strengthen core operating procedures" and"expand the team with experienced leaders." The company told Insider that the last cohort rated the team's competence a four out of five.

The company also said that future parties only served wine and Champagne, and that events ended before 10 p.m. Still, parties remain a part of the culture. To celebrate the new New York City location, the company gathered hundreds of founders, investors, and influencers on a four-story yacht in the East River. 

"There was more networking done than partying done at that party," Plasencia said. With millions in fresh funding, the startup has a chance to become what it sold to investors: the future of entrepreneur community building."Launch House might be like a home or a house for a month," Peters said."But it really is a home for life."

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