WEPLUS Liu Yanshen ：“Rent of Cowork is not important”is a false proposition
Author: Real Estate Innovation Agency
Media Reports: Real Estate Innovation Agency
On 3rd June, “ New space, new service, new finance” real estate stock asset operation and innovation summit was held in Shenzhen Kempinsi Hotel.
As the value of 200 trillion RMB real estate stock market was founded and acknowledged, real estate innovation agency invited 4 leading presidents from stock area to elaborate on new stock model and management strategies.
Liu Yanshen ,founder of WEPLUS united office and Asia &Pacific Region Director & GM of Colony Capital, has developed from a traditional capital master to have obtained a great success in stock asset , what is the secret behind him? Today he will be sharing with us how to employ resource, scale and capital to become the leader in united office field, on the basis of experimental experiences of WEPLUS united office.
1、 The success of united office depends largely on scale.
So we invest our energy in two things, which are expansion of scale and establishment of brand respective. These are the two very important strategies proposed in first board meeting in May 2015. After two years, we have expanded our territory to 16 major cities, 45 space stations and 3 countries in total by merging with COWORK. So our strategy has remained the same.
2、 When we were about to do it, the idea of “ mass entrepreneurship” was not proposed yet.
However, we think anything we do has to do with the era. It is often repeated that a certain individual is very successful. In fact, success is a result of constant efforts in most cases. However, the point is if you keep up with the trend of the time. The development of technology and time is not linear but wavy, which occurs every 5 or 10 years. If you manage to keep up with the wave, you are on the trend. You will be most likely to do something very great. However, even if you have a good idea, you will not be successful if it is against the trend. So I always believe that anything is a result of a era and a wave.
3、 Why would I think united office is the product of an era?
There are three important factors contributing to update and innovation of this kind of office model, technology, policy and customer group.
4、 The limitations of traditional office is no longer suited to the individualities of young people.
I believe that 90% of people would tell you that they are going to work in united office. In our space, a great many entrepreneurs often tell me that it has been much easier for them to employ people since they moved to united office. A employee rejected his offer of 13,000 RMB in Zhangjiang while the employee agreed to his offer of 11,000 RMB in united space. Nowadays, young people have their own individualities, which are different than our generation.
5、 Young people have different needs for united office. This kind of need for environment is different than our generation.
In the 1980s, we had to take responsibilities of the family all by ourselves while the post-90s live a well-off life in face of various job opportunities. They would work for things they like. In China, innovation is needed in the future, which depends largely on these young people. If young people work for things they love, they will show a passionate attitude. If they work to earn a living, they will probably have to do things they don’t want to do. Personally, it is found that more and more post-90s generation are setting up new ventures on their own interests, which I think is extremely essential. In this case, Young people have different needs for united office. This kind of need for environment is different than our generation. Detailed record of viewers.
6、Client Orientation of WEPLUS
When I began doing united office, I was thinking how to orientate my clients. I would say that 25% to 30% of my clients are large enterprises, about 65% are medium & large-sized enterprises and 5% are set-up companies. If a group accounts for 1/5 or 1/6, the whole office atmosphere will change as a result.
7、When a team is up to 50 employees, we will make some private space for them.
For example, our building is of 6,000 ㎡, yet you have your own private space, which is our new customizable product.
8、Charm of United Office or Its Imagination
Valuation of WEWORK is up to 20 billion dollars with each office cubicle of up to 330,000 dollars while valuation of each office cubicle of Regus, largest enterprise in middleman field, is only up to 80,000 dollars. Besides, there was a large merge in hotel industry this year, which was Starwood being acquired by Marriott at 13,3 billion dollars. Starwood manages a total of 450,000 rooms while WEWORK manages 450,000 cubicles as well. Valuation of each room in Starwood is 40,000 dollars while each cubicle of WEWORK is about ten times the valuation of Starwoo, which indicates that the charm of united office or its imagination.
9、We divide cowork into two parts.
First part is the idea of “ middleman”, which is about price difference we discussed earlier, from 12㎡ to 7.8 ㎡ per person. Your rent cost can only take up 45% to 60%, otherwise you can’t do it.
10、WEWORK is a typical Customer model.
Since 30% of American population are freelances, the majority of whom have high income, such as lawyer, accountant , designer etc. In the beginning, 53% of WEWORK customers are freelances, who are fond of this kind open and flexible environment. We made a survey covering 90% of customers.
11、In the first place, we have focused on B as core.
Since there are not as many freelances as in the US. So we focus on enterprises. In united office, there are incubators and accelerators while our target is not incubator. First of all, we take into consideration operation revenue and profit. Without professional judgment and rich experience, you can’t be an incubator. 。
12、My choice of area has been a very important strategy so far, which is centered on core part of city instead of remote areas.
In Beijing, our operational zone is within five-ring while central parts of Jingan and Xuhui are top priorities, which are the standards in choosing sites. Thus we can attract competitive companies, which can be small ones of 5, 10 or 20 employees. However, as of now, our turnover rate is less than 10%. Among 10 groups, only 10% of them chose to leave after half a year or one year’s lease was fulfilled, so our orientation is right.
13、We believe that cowork is not only a real estate model
But also a real estate+ Internet mode. There are three key points in Internet model : flow, retention and transformation.
14、Your scale decides the flow.
Flow larges depends on your scale. Without a large scale, you won’t have a large flow. Online flow is controlled by BAT. However, it is worthy of consideration as for how much of the flow can be transformed into our business model.
15、Retention is about how to improve customer satisfaction and brand loyalty by communities, activities and value-added service.
We are talking about distribution ,design, route and public area reasonability, how your affiliate each desk and statistic analysis accumulated over the past two years. In addition, it’s about if you can keep customers with your management and operation. You can use space to attract customers but keep them by service, community and satisfaction.
16、The idea of middleman is a low-margin industry
As a middleman, you investment return is about 6% to 10%, which is low margin. United office is a difficult industry. I’ve been working in this industry for two years and 50% of my hair is turning grey. Cowork is an industry that attaches much importance to operation.
17、The most successful innovative countries are Switzerland, Sweden and Finland.
Small countries, strong innovative atmosphere, sophisticated technologies, and low valuation are extremely important.
18、Many people say that I am going to Israel and Silicon Valley of the US.
I have lived in America for a few years and made some investments as well. Israeli and Silicon Valley market is out of our reach, unless you give a high price, otherwise you will end up getting nothing good. So we did not choose Israel and instead we chose Finland as our penetrating point.
19、Now we have a total number of up 500 teams and have held more than 600 activities with 20,000 participants. Besides, 15% of the activities were self-initiated.
In 2015, I thought it was important to organize various activities on a weekly basis. Later we realized that quality of activities was more important than the number of activities as a whole.
20、I found a number of false propositions.
Two years ago, it was told often enough that space rent was not vital and 90% of my future revenue would be from value-added service, which was not true. WEWORK has a total of 60,000 members while non-rent revenue accounts for less than 5%.
21、Low-efficient community links and low value-added service are not our target.
Loose communities are not of much commercial value, which lies in small-sized social groups. We expect to find 1000 out of 15,000 people while 1000 people are divided into different vertical fields. Every vertical field can be 50 or 100 people, which can result in authentic satisfaction and participation. Regardless of any united office, it will be ideal to have 15% to 20% of people participating if you talk about the idea of community. So it is important for us to find 15 to 20 teams that are willing to grow and cooperate with you and then you put your energy and resource in them instead of other activities, since your boss does not like a growing number of social activities.
22、It’s very important concerning if it will bring us revenue.
To an operator, it does not matter how many links you have, yet what matter is if it can bring revenue.
23. United office is a very new trend, which will certainly make a different, yet with a lot of obstacles.
We are exploring on our own as well. Deng Xiaoping once said “ cross the river while touching the stones”, which is exactly what we are doing. I can not guarantee our scale after 3 or 5 years. But I can safely tell you that we will be in top 3 in China. After 2 or 3 years, we will build up more than 100 space stations and our model will come into through practices.