“I've closely followed the Co-working Space for Almost a Decade and I've been monitoring this Industry Worldwide”- Sudeep Singh, CEO, GoWork
In an Interview with BW Businessworld, Sudeep Singh, CEO, GoWork talks about the co-working industry and more
How did GoWork start? What is the story behind it?
There's an evolution every industry goes through and in case of co-working, it started about 15 years ago. In the U.S. it began with the concept of incubation centres that were giving physical space to startups, helping them with basic requirements like, accounting services, HR services, etc. That matured to an acceleration model where they said they’ll even fund these startups so they could also benefit some from this exercise, which eventually evolved into co-working. This has been the journey of co-working in the West with WeWork being the torchbearer in this space and being the first to encash on the growing popularity of this model. WeWork started to make noise about this in 2010 when they launched their first centre in the U.S, before which there were a lot of co-working spaces people didn't know about. They were instead known as ‘Incubation Centres’ or ‘Acceleration Spaces’.
This is how the ‘Space as a Service’ model started grabbing attention and gaining popularity slowly blossoming into what we today know as co-working. I always wanted to get into co-working and was on the lookout for the right partner for this for the past couple of years. I must have met 150 odd partners before we finally got here. From the perspective of building a core team, I wanted to partner with someone who would not look at this as mere real estate, but be willing to look at it and work towards it from a larger perspective. Co-working actually falls under the hospitality industry, in terms of how GoWork looks at it. It was therefore very critical for the founding team to understand that from a service standpoint because as I said earlier, this is ‘Space as a Service’ and not just a regular rental deal where a company comes in and they pick up a bare space and start paying you rent. This is not what we’re building at GoWork. When we started visualizing how we wanted GoWork to pan out in early 2017, we were very clear that we will go with a campus model. The idea behind that was that we wanted the Corporate and SMEs to coexist under the same roof, in order to have a better community aspirations, community effects and community vibe.
What happens then is that there's a lot of exchange of ideas and business and a lot more interaction between the community. So that's how we started GoWork. What I also did was that we went across various entities, right from startup level to estbalished MNCs to meet their founders or CEOs or MDs and get insight into what exactly they required, from a space/office set up.
Based on those recommendations, we designed GoWork and also the amenities were designed accordingly; so whether it is the sleeping Pods that we brought in, or the Frustration Zone or an all day Bar & Café, It was all based on the feedback of the users. Another important aspect to consider here was flexible spaces in terms of enabling their growth. Whenever an expansion happens in a company, they always fall short of space. They wanted the flexibility to be in the same building, on the same floor and extend the number of seats.
That is an option GoWork has given them. We always keep about 20 to 30% of our per floor occupancy vacant so that we can accommodate a spike in growth of the companies that are working out of GoWork. So that's how we've devised and created the entire concept of GoWork.
What does the future hold for GoWork? What is the vision of the company for the next five years?
The future is bright. We were really fortunate to have BlackRock and CLSA as our investor partners on board. And getting any triple-A grade investors on board is always good for a brand. They help you in expansion and other aspects of growth, as well.
We are definitely looking at co-working as a very beneficial and vibrant atmosphere in India, and are looking to capture that. We have plans to open 50 or so centres across the key cities, over the next five years. Now these centres could be a combination of campuses or it could be a combination of small managed service offices, which is something we will decide at some point in time. Along with co-working, even managed office spaces have come to carve a niche and create a market for themselves.
Over a period of time, larger companies have figured out the benefits of co-working, but they don't want to share the same space with others. So they want the essence of co-working but as a fully managed/serviced office and a lock and key for their company only and by default GoWork has come to be not only a co-working campus but also a “Serviced Office” provider. We now plan to set up and service such large companies, so the 50 centres we plan to launch will be a combination of both.
Tell us about the recent funding? What was the valuation?
We're not chasing valuations. I don't believe in chasing valuations, they come to you organically, if you are doing good work. For us it was majorly important to get a triple A grade investor on board because like I said, that's the valuation in my perspective. I didn't want just any investor, but name that would add true value to the brand we have built. Investors can also help a lot in maturing a concept to a full-fledged business. For example, BlackRock is managing six trillion U.S dollars worth of assets. That's a huge portfolio and they come with a lot of experience. So an experience like that is invaluable and we see that as true valuation of our business. The recent funding that we got was a debt round by design because our business can sustain the debt pricing. We thought, let's not get into the talks of valuation. Let's start with picking up debt and then probably in the next round we’ll do a dilution of part equity and part debt.
Who are your main competitors and what makes you unique?
Our main competitors, I would say in this industry is any and every co-working space. We are affordable. We are profitable per seat from day one. And that's why we were able to attract a triple A grade investor.
So for me pricing the product correctly and strategically was the key aspect when we started this business and we figured out early on that a large MNC or a company would want these prices. So at the end of the day they would want to come to a place where they get to materialize the expansion and growth plans that they have in mind and also the pricing can be taken care of. We start our pricing at Rs. 6,500 per seat and go up to Rs. 12,000, whereas, WeWork or any other co-working space for that matter starts their pricing from Rs. 15,000 and can go upto Rs. 30,000. We are probably not even one-third of their pricing and that's what makes us unique, given how much we offer to our community members within the said price points.
The other unique aspect is the kind of amenities and the kind of flexibility we offer to our clients. No other co-working space does that. The third aspect where we are unique is the night occupancy. We are a 24/7 co-working facility and the only ones in the country today that offers a 24/7 facility.
Tell us about meditation and frustration zones.
This was something that I figured out from the conversations with people I met initially. And also, I read a lot. And I wanted to understand consumer psychology about this business over a period. What I figured was that the millennial or the GenZ is very hassled and very stressed for one reason or another. They often quit their jobs and move on to something else as they are still trying to figure themselves out. They have a lot of pent-up frustration. That's why two things were required, firstly was to get those frustration levels out and second was to offer some relaxation at work.
The second aspect was that to have them lead a healthy life. Though there are many options to live a healthy lifestyle, what about a healthy lifestyle at work place? What about right from your regular meals or cafeteria meals to just going up and down the steps and probably the gymnasium.
So all these amenities have been collaborated in a way that help these guys to move forward. Like in the cafeteria we’ve tied up with Radisson. They are preparing healthy meals under Rs. 100, which no other co-working space has done. We have our own gymnasium, which no other co-working today has. All these facilities are cheap. We offer a gym membership as low as Rs. 1500 a month and we’ve made it affordable for these kids to actually come out and use such facilities. The frustration zone, on the other hand, is just a room where you can go break stuff, shout and scream, do anything. It's been very well received because it just takes about two minutes to get the frustration out and the meditation side of things is where we offer yoga, therapy sessions and maybe a massage day session for them to feel relaxed.
What are the future plans in terms of products offered?
The one product we are very excited about is the Sleeping Pods and we would like to take that on as a business model and see whether it will work for us or not, so this is right now a testing round. I'm trying to promote this concept within the Indian government and want to procure the necessary licensing to further develop this concept and expand into domains such as government owned entities like hotels and guest houses. Shared economy in every sense has a great future in India, and these capsules too have great prospects especially with respect to the price sensitive international backpackers who visit India around the year.
From the co-working standpoint, we wanted to introduce a concept where you just have to walk to work. You stay here, you get breakfast at the GoSocial cafe, you come down to work, in the evening you can go to the gym or to the frustration zone, have your dinner and you can retire for the day at the pods. We've designed the entire concept in a way where it's an ecosystem of its own. And the millennial of today will appreciate this because it's affordable and convenient.
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