Workspaces have transformed in three years: Innov8 founder Ritesh Malik

'We will differentiate on location, design and community', says Malik

Oyo recently acquired Innov8. Since their core business is also driven by real estate, what are the possible synergies?

The similarities are in location dependency —whether it is co-working or hotel, both thrive on location. The second is utilisation of captital expenditure. Despite sales being a goal common to both, the differences between the two businesses also lie there. Oyo has to sell on a per-night basis while our contracts are even three-year-long. Most of our contracts are long-term when we deal with enterprises, at least 12-months-long but we do have flexibility. For us enterprises and MSMEs are the core value areas driving 60 per cent of our business, then comes technology start-up which bring 25 per cent and then the rest.

Oyo as a company is known for its operational capabilities. They have scaled the real estate as a tech platform business very quickly in an operational nightmare country like India. And we are deriving a lot of value from their capabilities.  

How do you see the Indian co-working ecosystem shaping up?

My personal prediction is that by 2040, co-working will be 90 per cent of the total workspace. Eventually most organisations will realise that setting up an office is too much of a hassle. Three shifts will come. First, organisations that have a handful of persons working in a remote location will ask them to go and work at a co-working space and will provide them online attendance punching facilities. The second shift will be winding up regional offices and utilising the likes of us and then the third shift, where even headquarters are moved.

We started in January 2016 when people did not even understand what co-working meant but within the past three years, massive occupancy has started happening. The acceptance is massive and it will increase. The logic is simple, to establish any office, one needs a long-term lease, then you need the set up cost which will always exceed the HR calculations. The other way is to come to someone like us and tell us about the specific requirements about seating capacity, conference rooms, meeting rooms etc and it also gives you the flexibility to expand or reduce the rented area depending on one’s needs. For us, we adjust the bills accordingly and have better operational efficiency because this is our main job. We not only provide you a cheaper solution but also give you the choice to spend the capital expenditure on operational expenditure and generate more revenues.

Are there signs of it happening already?

Yes, there are. One of our clients is Ratnakar Bank Ltd (RBL) which took 500 seats with us in Mumbai last year. This is encouraging as banking set ups are the ones that are security conscious and have conventionally opted to work from their own premises. There are three-four other large listed companies too that have booked 200-300 seats each. We cannot disclose the names because of the non-disclosure agreements but a shift in trend is being witnessed already and gives us more hope for the future. 

You are up against some global giants in this space. How do you hope to differentiate yourself?

For us, location is the most important thing and no matter how low the rents are, we won’t go where the location is not appealing enough for us and the prospective clients. So we decide that when in Delhi, we will be in Connaught Place, in Gurgaon we will be in Cyber Hub or Golf Course. Besides being prime properties, the public transport connectivity is seamless in these places. One of our fundamentals in Delhi is that reaching a metro station from our property should not take more than three minutes by foot. The high occupancy that we get makes up for the high rentals we incur.

Design is another aspect which sets us apart. We compete with the likes of WeWork or CoWorks charging half of their fee but the functionality and design is at par with them. Having said that, we don’t copy them and our designs are made from scratch. Third is community as locations are ubiquitous and designs can be copied. But community is an intangible asset and we measure our performance by analysing how happy a particular campus is. Talent is often sceptical but when they meet hundreds of start-up founders, a sense of community feeling kicks in. We do our bit by arranging events like thought leadership or skill development programmes.