Transcript of the Interview
Honey and Abhishek [Kathuria], you're the first husband and wife founders we've spoken to so far. Can you talk a little bit about what that dynamic is like?
Honey: It is great. We know each other for like forever it seems, but working together is always different. It is not easy, in case people have any doubt, but it is fun though. You can discuss a lot of things, you can fight over a lot of things, not exactly in the boardroom, but outside of it, not exactly in front of your employees.
With Abhishek and I, I think we complement each other very well. He, with his background has so much knowledge about entrepreneurship, because he teaches it. I have always been like a consultant on the operation-side. With his strategy and my operational capabilities, I think we kind of make a very good team. Yes, it has its ups and downs, but it has been great.
What a lot of startup founders say is, "their startup is their baby", it's their life - but you guys are already sharing your life with each other - how do those two different dynamics actually play into each other?
Abhishek: The way I would look at it is, we're able to make a difference between what's going on in the company and what's going on at home. As Honey said, there's also a clear distribution in terms of boundaries on who's doing what bit of the piece in terms of Kowrk. That kind of helps.
Then again, yes, a startup is like a child. We end up talking about Kowrk over breakfast and then you go into the office and you're talking about it as well. You've got to be a little bit aware of these things and take conscious efforts to switch off at certain times. Otherwise you end up thinking about the startup all of the time. You do need to recharge occasionally.
One would say, that you were as experienced an entrepreneur as you could be, without being an entrepreneur. Abhishek, you're a professor in innovation at the University of Hong Kong, Honey, you obviously have 15 years of experience in the travel space, with Expedia and Hotels.com. How is your life different today than it was before.
Honey: We're travelling less, one thing for sure. When you say that a startup is a baby, that's so true. I don't think it's the type of baby that can grow this much that we can just leave it with somebody. You commit a lot when you start your own business.
Everyone would agree that it becomes a more difficult decision when you start your own company after a few years in your career. It's not just that you're accustomed to a certain lifestyle, but also everyone keeps on drawing a very fat check at the end of the month. So letting go of that is a very big decision. The finances obviously have an impact one way or another. So it's the time that we see each other, has gone down, also the time that we spent traveling around the world, which we enjoy, has gone down as well and financially, you have to see where you will spend that next penny. Which is not the kind of attitude you have with the salary you earn with big companies.
What about the pressures. A lot of people talk about that startup founder pressure, obviously, you were in pretty big jobs before. You ran Hotels.com here in Asia-Pacific, how does that compare to the stresses and the endurance required from a startup founder?
Honey: The comparison is literally not there. I'm so much invested into Kowrk. Of course, you're always doing your job before, but having a startup where each and every decision is being made by you and has a long effect on where the company is going, is tremendous, so you have to really keep on thinking about it. As Abhishek said earlier, you have to switch off at some times, that's really important. Because, when we start anything, especially a startup, you're just too much into it, and you forgot you're an individual other than a startup.
In an office, there are Fridays where you leave the office and you don't think about the company on Saturday or Sunday. As I love saying: "There are no Mondays when you're working for yourself, but that also means there are no Sundays."
What is Kowrk and what is your business model?
Abhishek: Kowrk is a platform that connects two sides of a market. On one hand, you have providers of shared office spaces, co-working spaces and eventually, other shared office space providers as well. On the other hand, we have users. In Asia, predominantly startups, who want to work out of a shared office space or co-working space. What we do is connect these two sides of the market.
How did you come to this idea? Why do you think Kowrk as a model has a need in the market?
Honey: That started with me. Basically, I had a friend who wanted to work from Hong Kong for a few weeks. In Hong Kong, houses are small, maid is there and so forth, so you can't really work from home.
So she wanted to look for a proper place where she could organize meetings and set up calls. Coffee shops were therefore out of consideration. We went to a few places around. I knew some of these places because I had ended up networking there before. We went there, looked at the website and she ended up not liking it and we kept on visiting different spaces. My threshold was reached after 10 visits and as I mentioned, I'm an operational person. Process and efficiency is very important to me.
I thought, you should be able to go and look for what you want. If you know what you need, you should be able to look for it accordingly, the same way you book a hotel. You don't go to ten different hotels, you just know that you want a specific place.
We did some market research at that time. The idea of Kowrk wasn't there yet, but that's where it started from. The need for a platform, where people can come and find all the information they want in order to book a space and they can go on from there.
At that time, we had 25 co-working space, by the time we ended, it was 35, but in between it went up to 40 again. We did some research with people we know who like to work from such places. I talked to the founders of co-working spaces to understand what's going on there.
I realized there's a lot of demand and it's an upcoming trend. We studied the US market, as you said, the WeWorks and others are there. When we did the market research, we found that this is an upcoming industry and there will be more and more requests, with people becoming more sophisticated in finding co-working spaces. That's where the concept started from.
The concept of Hotels.com and Kowrk seem to be similar, because it's basically searching co-working spaces and then booking them. How have you actually used your previous experience into Kowrk and is there any difference in your negotiations or your on-boarding of co-working spaces, compared to hotels?
Honey: The experience that I had at Hotels.com was really useful. It helped me understand the online business a lot more or appreciate it a lot more than I had done before I had worked there. The processes are similar in terms of the value proposition. It's a perishable inventory in the end, it's a desk in an office, so if nobody is using it, it's getting wasted. There are people are looking for them, but a lot of the times, they just don't know they have an option available. Sometimes, pretty cheap even, and trials are possible before committing.
Since we knew how the hotels industry worked, we kind of simplified it. We created a lean process to onboard shared office spaces on our platform. It's very simple. The negotiations were not very difficult. Everyone understands the value-add a platform or market place would bring in and for users it's of course much easier, because you don't have to open 25 websites.
I think the Hotels.com experience was really helpful in making a more efficient process. It's a very easy process in our case, with a new place being onboarded in less than 45 minutes. Negotiations, based on my experience in visiting these places across many countries, it's not a rocket science. Our value proposition is very clear and the way we have designed our terms and conditions and contracts, people get the value of what we bring in. Customers are pretty happy on the same end. That really helped us.
What some premium providers in the market, like WeWork or Garage Society would say, is that the difference between them and the hotel space, is that there is a mass user base that compares based on price as a main differentiator for hotels, which Hotels.com as the ultimate aggregator plays into nicely. Some people would say, in the co-working space right now, especially if you're a startup which is looking to have that deeper connection with other premium startups, you go to brand names and end up with WeWork or Garage Society so the comparison is not as necessary as in the hotel space. How do you look at that? How does that compare with the experience with your users so far?
Honey: WeWork is a bit different, because it's a multinational place. When you're looking at entrepreneurs who are mobile or people who are looking for a big name, they do end up there. The others, like Garage Society, which has two offices and they're opening more, only have price as one of the factors playing into the decision-making. We've seen startups be more concerned with other things.
Price and location is not always the most important criteria. The one thing we've seen people asking us is for instance, how easy it is to end a contract or to move up and scale up or scale down. When you're a startup and we're obviously also a startup we realize our requirements change every two or three months where we need one more desk or no longer need it and want to release it.
For a startup, that's a cost, no matter how much you are paying, whether you're paying US$250 or US$500, if you do not want to use the space, you do not want to pay for it, so that flexibility is one criteria.
Another thing which a lot of places look for is the actually the amenities they get there. When we started Kowrk, free coffee wasn't a regular feature. Now, it's common, you just expect that that'll be there. Same thing with wifi, in Hong Kong that is not at all an issue, but in other countries like India, having a very strong wifi or a backup of internet connection, is more important for companies than let's say paying a few hundred dollars or rupees extra.
The other thing is 24/7, that is becoming one of the most searched criteria among startups nowadays. They want a place where they can work on Sundays, after 9pm anytime, any place that's not able to offer it, no matter where they are, they are kind of losing business.
At the same time, there are certain startups, which are looking for the name, as you said, or the location. The requirement are so wide right now. Yes, there are spaces which focusing on one kind of segment, but believe me, we are seeing demands coming from all kinds of directions.
Abhishek: Just to add onto that. We were very cognizant of that when we started Kowrk. It is absolutely different from the hotel industry in terms of price-sensitivity. Pricing is not everything. That's why when we first started Kowrk, we focused on getting user reviews.
Based on the user reviews, we created a list of amenities on the site, which are a list of checkboxes of sorts, that users can come in and see. In a hotel, there's a finite set of amenities. The size of that set for co-working spaces is much larger. Honey's gone through a few these just now, but these amenities or these add-ons, and one of them is for example how many events they have. Those kinds of details get captured in qualitative reviews as well as a list of amenities we have. These are important factors that we see.
What is your growth strategy? One, you're competing against similar products in the market. Second, you're competing against the WeWorks, which have their own dedicated marketing teams. How do you build awareness and get more and more people to use the product?
Abhishek: First of all, I don't think it's a zero-sum game. We've been in a situation, where in many ways, we were market makers in a lot of the markets we went into. When we came to Hong Kong, we were the first in Hong Kong. When we went into India, there were one or two platforms, that were offering a slightly different product from us.
See, I'm very careful about the words I use, being an academic. I call Kowrk a platform. When we go out, a lot of people say, you're an aggregator or a marketplace. No, we're not. We might have been an aggregator a few months ago and we're currently a marketplace, but that's not where we want to be.
From a growth strategy perspective, we started off thinking of ourselves as a Yelp or a TripAdvisor in terms of getting reviews and rich content about the co-working spaces in the market and that was a certain phase we were at.
Once we were through that phase, in certain markets we're in an Expedia-like phase today, where we're more of a marketplace or an aggregator, but eventually in other markets, we're moving towards becoming a platform.
Our growth strategy is both horizontal as well as vertical. What we tend to do is, we enter a city and we start off with the review model like TripAdvisor, after which we move to an Expedia-model and eventually we move to a platform or Airbnb-like model.
When I say platform, the idea is from a future perspective to provide more value-added services where more third-party service providers can come on board. Simple things like for example, right now, we're in the process of setting up deals with partners like crowdfunding sites or shared residential spaces startups and they're going to come on the platform where you have startups, co-working spaces and you now can get a partner where you have someone help you hire people or have someone to help you crowdfund your idea.
Using our partnership deals that's kind of what we want to bring into the platform model.
I sense some tension in your model. You're a platform and you're trying to work together with some of the major brand names in your space, thinking again of the WeWorks and the Hives etc. How do you deal with that tension. Obviously there are some overlapping segments. I think a lot of our listeners either work with platform models where they're trying to work with established names in their space, at the same time, it's 'co-opetition' or 'frenemies' or call it what you may. There's certain vested interests there and you're trying both to dislodge them and work together with them. How do you deal with that?
Abhishek: I don't think it's a 'co-opetition' model, it's a simple collaboration model. Simply because what we're doing is growing the market. On one hand, for the established spaces, we're an additional channel to bring them A) leads, B) business and C)more exposure or brand awareness. On the other hand for the new players in the market, the new co-working spaces who come up, we are actually expanding the market.
We're increasing awareness of the concept of co-working, in India for example, that awareness was pretty low a few months ago and it's increasing by the month. The place where I see the tension come in is, yes, we're also increasing the supply base in a way.
Obviously, that's the whole concept of a market space. As more customers, more providers are going to come in. It might be harming in a certain way the established players, however that's only happening because the market space is growing.
Again, we're not looking at this from the basic philosophy that this isn't a zero sum game. It's a growing market and the potential is enormous. The more players who get in, the more, even from a competition perspective for us, other platforms who are aggregators or marketplaces, we welcome it, because the more there are, the less the effort for every single one participant in terms of pushing and pulling the kart to grow the market. It just increases the awareness and gets more people on board.