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Catcha-backed coworking space Common Ground opens in Kuala Lumpur: Page 2 of 2

 

Growth upwards and outwards

 

Catcha-backed coworking space Common Ground opens in Kuala Lumpur: Page 2 of 2

 

Akinci says that though profit is not affected by the need to quickly scale, it does mean the business is capital intensive at the start.

The two biggest costs are the capital expenditure on the renovations and the rental. “This creates a bit more risk but it’s also a barrier to entry. That’s why not anyone can just open coworking spaces - you need relatively deep pockets to be able to sustain the growth of the space,” he says.

Common Ground spent about US$565,995 (RM2.5 million) on renovation and fittings and furniture.

It aims get beyond 80% occupancy, and to reach that 80% by September. Common Ground is currently ahead of that target – a little less than 100 seats out of 280 have already been filled. Akinci says he did not expect the spaces to be snatched up that quickly but if things continue on the way they are, he expects targets to be reached sooner.

However, he admits that he and his team are still trying to verify a lot of assumptions about co-working spaces. It is doing this by using data collected from pre-registering behaviour and its marketing efforts to predict take-up as well as figure out where its next venue should be; it is currently shopping for a location for its second venue in Kuala Lumpur.

“Our goal was never to be a one-venue business. We very much have multiple venue aspirations, and regional aspirations.”

Malaysia is the first of five countries in Southeast Asia that Common Ground wants to be in.

The founding team chose to begin the venture in Malaysia because it is home base. “If you want to test out a business thesis, you want to give yourself the highest possible chance of success. This is a market that all of us know very well and have connections in. It’s not the largest market but it’s a good one and the one where we have the least amount of risk. We know how to operate here better than any other market,” says Akinci.

It will next get into the Philippines, Indonesia, Vietnam and Thailand, in that order, all within the next two years. To achieve this, it will begin a fundraising round in the middle of the year to raise a substantial amount of capital that will sustain it for the two-year regional rollout.

Based on the budgeting done on the current KL venue and research in markets across the region, Common Ground aims to raise between US$3 million and US$7 million.

“This is a reasonable amount and the budget based on projections,” says Akinci, adding that as each of the venues go online and reach profitability, the cash flow will go into sustaining the next new venues. “We believe that will be enough for us to roll out a minimum of 10 across 5 countries.”

Going beyond

 

Catcha-backed coworking space Common Ground opens in Kuala Lumpur: Page 2 of 2

 

Another thing that Common Ground offers that other coworking spaces do not is an app that connects members to each other in real time. The Common Ground app is basically a community tool that allows members to get updates, quick feedback on problems and connect to each other.

Akinci describes it as a mixture of Linkedin and Facebook, though it is more curated that the latter and functionally more advanced – it enables users to filter their feed to receive only the updates they want.

Creating a vibrant community is important to Common Ground, but just what kind of community it will be will only be revealed in time. As it is, Akinci says there is a good mix of companies, including a number of tech businesses. But he does not believe that co-working spaces such as Common Ground should solely cater to tech businesses.

“I genuinely believe this value proposition needs to transcend beyond tech startups. If you limit your value proposition this way, your addressable market is very small. There is a whole universe of SMEs out there that should be able to benefit from this value proposition. By limiting yourself to the tech space, you’re doing yourself a huge disservice as a business,” he says.

The type of businesses the coworking space attracts depends largely on location. The current location does seem to be drawing in a significant amount of tech businesses but there are also service-based businesses such as architecture firms.

Akinci reveals that with Common Ground, the founding team is trying to emulate successful American coworking space company WeWork, which was founded in 2010. This is no surprise as Akinci cut his teeth in Catcha, which is a user of the innovation arbitrage model – finding a business model that works and executing it as effectively as possible in this part of the world.

“That’s the model I know and the idea I bought into a long time ago. So having the WeWork case study is reassuring when it comes to me pulling the trigger on this business,” he says.

“That being said, we try as much as we can to think through the factors that worked for WeWork in the US that wouldn’t work for Southeast Asia,” he continues.

This comes down to little things such as ensuring the private offices have more privacy by using wooden separating walls because the team felt that Southeast Asians would not be comfortable staring at strangers through a glass wall all day.

But learning is on-going and Akinci says the team will have to see if the decisions the tweaks they have made will work out.

One more thing Common Ground wants to emulate WeWork in is scale – it wants to average 30,000 to 40,000 square feet per venue (a typical WeWork is 50,000 to 80,000 square feet). “I don’t think we will get to that scale in the near future but maybe we can talk about it six or seven years down the line.”

“I would love to have the next venue bigger, now that we have learned from this one.”

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History unlikely to repeat itself

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