WeWork enters Thailand

[webfact]

WeWork enters Thailand

By The Nation

 

 

WeWork – a platform for creators that provides space, community and services to help people build a life, not just a living – announced on Wednesday that it was officially entering Thailand with the introduction of WeWork Labs in Bangkok’s Asia Centre Building on Sathon Road and T-One Building on Sukhumvit Road.
 

Fortified by strong demand from enterprises, small and MSMEs (micro, small, and medium entrepreneurs) and start-ups, the American company is making landfall in Sathorn and Thonglor. In Asia Centre, WeWork will occupy five floors, welcoming 1,200 members to its community, while it will occupy seven floors in Thonglor’s T-One accommodating 1,700 members.

 

“With Thailand embarking on a new phase of economic development, building on its digital transformation goals, WeWork is committed to becoming a partner to help achieve the ‘Thailand 4.0’ vision by acting as a launch pad for the mid market segment,” WeWork’s Southeast Asia managing director Turochas “T” Fuad said. 

 

“As our footprint in Thailand grows, we see a huge potential for serving the demand from the MSMEs to Fortune 500 companies looking to us as a solution for flexible, high-quality spaces, along with accelerating their business in the local ecosystem empowered by a global network.”

 

“This will pave the way for WeWork’s unique proposition to connect two major groups within the WeWork community: corporations looking to innovate, and start-ups looking to grow and better establish their business,” he said.

 

“As we are creating a new engine to drive the Thai innovation economy, we see how start-ups in Thailand need the global and Southeast Asian perspectives to attract investments and break into new markets,” said Dr Krithpaka Boonfeung, deputy executive director for the National Innovation Agency’s innovation system. “With WeWork Labs’ expertise in stimulating the growth of local start-ups and innovation-based businesses, we are confident that closer partnerships will pave the way for strengthening Thailand’s local ecosystem.”

 

These announcements also celebrate the milestone of WeWork strengthening its local community powered by a global network, while supporting early-stage start-ups and corporations seeking to disrupt their industries. Making entry into the heart of Bangkok, this will further enable interconnections of business districts, innovation hubs and creative communities, as fostered by WeWork commitment in line with the “Thailand 4.0” vision.

 

Source: http://www.nationmultimedia.com/detail/breakingnews/30369856

 

-- © Copyright The Nation 2019-05-23

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[Oxx]

It's a topsy-turvy world we live in where a company that lost $1.9 billion last year can afford to expand into another country when its business model is clearly broken.

[dddave]

The business attire worn by these innovative corporate specialists tells you all you need to know. Especially suave is the older dude in jeans and a sailor cap.

[jonclark]

13 minutes ago, dddave said:

The business attire worn by these innovative corporate specialists tells you all you need to know. Especially suave is the older dude in jeans and a sailor cap.

I think you will find that the older gentleman is the founder of the Oishi and Ichitan group in Thailand (Tan Passakornatee) ...and he is a staggeringly rich and very successful businessman. 

[donnacha]

1 hour ago, Oxx said:

It's a topsy-turvy world we live in where a company that lost $1.9 billion last year can afford to expand into another country when its business model is clearly broken.

It is only a loss if you attribute no value to the assets they acquired last year.

If you own a successful bakery and decide to open another on the other side of town, you will probably make a paper loss that year, but the overall value of your business will increase. That is how almost all ambitious young businesses operate. I would hardly call it a "clearly broken" business model.

It took Amazon over a decade to turn their first annual profit, despite being one of the biggest and most feared companies in the world by 2004.

WeWork is less than a decade old. To grow fast, they must, as quickly as possible, acquire other companies that fit their strategy while simultaneously expanding their own operations.

Based on the valuation agreed earlier this year by their most recent investor - the shrewd Japanese hi-tech company SoftBank who put in $2 billion - WeWork was worth $36 billion earlier this year. Now, a few months later, private investors value it at around $47 billion. In the same period, my net value has increased by around $230.

The bigger they become, the greater their efficiencies of scale and the more dominant their brand. If you own your niche, you become a prime buyout target for even bigger operators in adjacent niches. Don't be surprised if, in the next year or two, you hear that Microsoft (who bought LinkedIn for $26.2 billion) have got into the shared workspaces business by buying WeWork for well north of $100 billion.

 

[yellowboat]

If they buy into a Thai only solution, the will get great accolades from the junta government.   Most programming tutorials are written in English. 

 

Was at a software development company in Saigon.  During office hours, everybody was forced to speak English.

 

Been fortunate to work with great Thais.   None of them programmers though.  The xenophobes that run Thailand hold it back with their silly nationalism and crazy labor laws.  They should accept programming talent no matter where it comes from. 

[donnacha]

1 hour ago, yellowboat said:

The xenophobes that run Thailand hold it back with their silly nationalism and crazy labor laws.  They should accept programming talent no matter where it comes from. 

Sadly, no chance of that.

Armies: Terrific at marching around squares, not so hot at understanding the networked, granular nature of value-creating innovation in modern economies.

At one point, they could have parlayed the sudden elevation of Chiang Mai into the world's leading hub for digital nomads into something that would rub off on local startups and entrepreneurs.

Even simply at the level of Thai teenagers noticing all these Westerners in cafes, beavering away on their MacBooks, it exposed them to the idea that it is possible to make a good living online, even from Thailand.

Instead, the tougher new visa rules about five years ago - blatant xenophobic populism to distract from their lack of a democratic mandate - took the wind out of those sails.

For all his faults, Thaksin at least had the virtue of understanding the direction in which technology was taking the world. If Thailand had remained a democracy there would have been no shift away from the West and, in particular, visas would have remained liberal.

Hell, they might even have seized the momentum and established some sort of tax residence for nomads. Imagine how many highly-earning programmers and online business owners they could have creamed off from European countries by offering just slightly less crazy tax rates.

Thailand might actually have been able to become a hub of something real, not just the hub of announcing hubs. They have pissed away their future on a mixture of buffoonish pride and face-saving Thailand 4.0 fantasy.


 

[futsukayoi]

6 hours ago, donnacha said:

It is only a loss if you attribute no value to the assets they acquired last year.

If you own a successful bakery and decide to open another on the other side of town, you will probably make a paper loss that year, but the overall value of your business will increase. That is how almost all ambitious young businesses operate. I would hardly call it a "clearly broken" business model.

It took Amazon over a decade to turn their first annual profit, despite being one of the biggest and most feared companies in the world by 2004.

WeWork is less than a decade old. To grow fast, they must, as quickly as possible, acquire other companies that fit their strategy while simultaneously expanding their own operations.

Based on the valuation agreed earlier this year by their most recent investor - the shrewd Japanese hi-tech company SoftBank who put in $2 billion - WeWork was worth $36 billion earlier this year. Now, a few months later, private investors value it at around $47 billion. In the same period, my net value has increased by around $230.

The bigger they become, the greater their efficiencies of scale and the more dominant their brand. If you own your niche, you become a prime buyout target for even bigger operators in adjacent niches. Don't be surprised if, in the next year or two, you hear that Microsoft (who bought LinkedIn for $26.2 billion) have got into the shared workspaces business by buying WeWork for well north of $100 billion.

 

 

I don't know much about this company but if they are just a provider of shared office space then that suggests a couple of problems with your analysis. 

 

Is their growth really by adding assets with much real value.  I would assume they are just renting the office space not buying it, their cost of refurbishment would also not be a cost they could reclaim if they moved.  Their assets would seem to be furnishings (which are now second hand) and coffee machines.

 

Do they really own their own niche ?  There are dozens of shared workspace companies around (admittedly not able to sustain the same level of losses for advertising and expansion).  What unique value are they offering.  On the surface there would seem to be almost no barriers to entry of a competitor without the need to buy them.

 

 

 

[Oxx]

36 minutes ago, futsukayoi said:

I would assume they are just renting the office space not buying it

 

To date you're be right.  However, they've just announced a $2.8 billion fund to buy properties, their "logic" being that the value of the properties will increase when they have a WeWork space within them.

 

https://www.bloomberg.com/opinion/articles/2019-05-15/wework-separates-buildings-and-beer

[Pravda]

8 hours ago, jonclark said:

I think you will find that the older gentleman is the founder of the Oishi and Ichitan group in Thailand (Tan Passakornatee) ...and he is a staggeringly rich and very successful businessman. 

 

That's him all right. One of the more generous Thai billionaires out there.

[donnacha]

17 hours ago, futsukayoi said:

I don't know much about this company but if they are just a provider of shared office space then that suggests a couple of problems with your analysis. 

Their most important investments and acquisitions have been in intellectual property, such as realtime analytics (of how people use spaces), booking systems, property management systems and websites that focus local communities around their centers.

Meetup.com, which allows groups to meet in the real world, is very popular. As an organizer of WordPress meetups in Thailand, I can tell you that providing a meeting room to such groups - and there are hundreds of such groups in most cities - greatly increases the awareness of such venues.

Try to imagine a world in which people work on a far more granular basis, renting office space or facilities on an hourly basis, and in which a far wider range of work is pulled into their orbit - for instance, look at all the Thais who now sell products via live video streams on Facebook. Now they mostly use makeshift studios in their apartments, but you will increasingly see activities such as that move to video and audio studios in Wework buildings.

Equally, look at all the digital nomads who arrive in Chiang Mai and are amazed to discover, after all the hype, that there is no one big, accessible place where all the nomads hang out. By contrast, in New York, or London, or now Bangkok, you would probably head straight for Wework.

None of this is rocket science, Wework were simply the first to get how big this would become and find angel investors who agreed enough to fund a hyper-growth model.

Nothing Airbnb did was rocket science either, it was pretty clear even around 2000 that vacation rentals presented a viable challenge to the hotel industry, but it was only a decade ago (around the same time as Wework) that Airbnb was founded and presented the same hyper-growth model to investors. Now, at $35 billion, Airbnb is worth only a bit less than Wework.

What both companies do is very simple but, all the same, they do dominate their niches, and they have been systematic in expanding their lead by building as much intelligence into their systems as possible.

Other companies can try to replicate what they do but, ultimately, this is a winner takes all game, the second place company will always be far behind and unable to offer property owners anywhere near the same level of value. You and I could produce a website that charged only 10% of the fees that Airbnb grabs but, realistically, the vast majority of property owners would not even bother to list with us, and guest would skip right over our dead body to get to Airbnb.

Wework is in almost the same position in a market that is far more lucrative overall (business services). What they offer a potential buyer such as Microsoft is the equivalent of Apple's stores: a real world network of buildings that put Microsoft and LinkedIn at the center of business communities all over the world. This could also work for Google or Amazon, and that is why the valuations are so high, but it only comes together if Wework successfully continues to lead their niche.