So WeWork has launched in India and while it will heat up the competition, I am wondering how do you guys decide on a coworking space?
Typically, there are 3 types of coworking spaces.
1 : Catering to early stage startups / Community feel.
This is where most of the co-working spaces fall. There are community events / beer bashes etc etc. and the crowd typically represents early stage startups to freelancers.
What's the most attractive thing about these coworking spaces? Free beer on Fridays / workshops / meetups etc. You get to meet a lot of fellow founders. Many of these coworking spaces have now started offering space-as-a-service (that is for a limited duration) as well.
2: Targeting the mid-segment.
If you are into serious business (i.e. moved past 'startup' definition), your team size is more than 10 and have enough money to pay for the rentals (per seat ~Rs 15-18K/month), you will end up outsourcing all your real estate infra to co-working spaces.
Most of the funded co-working spaces are now trying to move here.
3 : The Regus of the world.
This is where the real money is. The playbook is simple - get Series A + startups to corporates to MNCs and setup their space. A separate one - with its own access control / infra etc.
Cost wise - they are on the premium++ side (like crazy!) but works out better for a huge setup. They do bring economies of scale if you have more than 50 people in your team.
4 Upcoming : the accelerators.
Accelerators of 2015-16 are trying to be your next coworking spaces, largely because they have space (actually that's the only thing they ever had!).
Most of the accelerators know that they hardly add any real value - and now that coworking spaces are cool, many companies are positioning accelerators as coworking spaces (for now, they are positioning coworking spaces as accelerator - but wait for another 2-3 months).
The truth about coworking spaces is that they are on the costly side, but if you look at the cost of managing / scaling up infrastructure - the cost does seem justified (?). For early stage/bootstrappers with limited $$ to spend, there aren't too many options (everybody is selling to the rich) - which is a sad reality, but that's how the real world operates.
How do you decide ?
There are various factors - right from proximity to whether you have a private space to infra, but if you really look at this space - my gut feel is that many smaller players will be taken over by bigger ones in the next 3 - 6 months.
This is a 'pure' real estate play with very little differentiation and the ones who will survive/scale are the ones who can offer consistent experience over multi-locations, ensuring one-team-diff-location mantra.
In 2014, I wrote about how accelerators are the new ecommerce players - I think it is now the turn of coworking spaces. There are way too many of them, though the good news is that most of them are operating at 80%+ occupancy (and mostly breaking even at per seat level).
The world IS moving towards remote teams (+ chaotic traffic) and it'd be great to see coworking spaces evolve. As far as India is concerned, it is "just" a real estate play right now. It is still early days.
Will WeWork win? Well, my guess is as good as yours but WeWork does have the technology / expertise to scale up while most of the Indian players are just about real estate. And in real estate, there ain't a single winner. The ones who will win are the ones who manage to stay put for a long time. Very very long time.
But, are investors ready for the long haul ?
I don't know.