Running Coworking Business in Asia: MY WORKSPACE Experience
This is a must-read writing piece for everyone running/going to run a coworking business in Asia. Though, I am pretty sure that any startup will find tips and strategies mentioned here really awesome. Maybe you will even adopt some of them.
Let me tell you a little about our guest. Ron Yang is a Vice President of MY WORKSPACE coworking network located in Seoul, South Korea.
He is running three coworking spaces in a fancy area of Seoul at the moment. The fourth giant location is coming soon.
MY WORKSPACE is a SOHO office established for low-cost sharing of office space with single-person businesses, freelancers, and small startups.
Their goal is to provide members with the best place for their businesses and free from all the fuss connected with renting, leasing agreements, deposits and brokerage fees, interior construction, firefighting facilities, office furniture purchases, Internet and Wi-Fi installations, and so much more.
Partnership with MY WORKSPACE is very special for andcards. Would you like to know why? Read the interview and learn the story behind this historical meetup told by Ron.
BTW, this interview was taken during andcards team retreat in Lviv, Western Ukraine. We are so happy that Ron joined it and shared the happiest moments with us.
Helga: How did you come up with an idea to launch a coworking space?
Ron: In August 2015, I was doing a web agency for living and had to get an office at the Gangnam area in Seoul city for winning more deals with potential customers.
It really matters in Korea where you do the business because it is the first impression you give to customers. They kinda judge you with where you are located and trust you more or less by it.
So I obtained my own office space in Gangnam, one of the best business areas and the most expensive areas in Korea, and the business was going better as I thought with showing our address in Gangnam when we exchange our business/name card at the beginning of our meetings.
After having three desks and chairs for my team, the office could have additional desks and chairs like five sets. So I just purchased and installed them and right away I posted this workspace availability at some of those space searching sites.
In a week, I could fill up all five other tenants in our office and that was the start of our shared office.
A month later, one of our tenants was asking me to make a meeting room on the back of our office because there was still some leftover space and he needed it. The cost of making a meeting room wasn't heavy for me, so I did it and that turned our place to be more professional working space in the end.
Then I decided to expand our space by renting the same size office next to ours and a month later 14 more desks were ready for potential tenants. That was how my coworking space was growing and in a year from the start, I had to completely stop the web agency business because I was already fully busy with managing our space.
At the time I started this business, I had no idea of coworking and learned more and more about it overtimes. When WeWork opened up its first location in Korea in August 2016, that was the moment I acknowledged the term "coworking space".
Helga: What was the biggest challenge on your way to success?
Ron: I think there are two most important things for coworking spaces to be successful — good business location for everyone to commute and a reasonable price for using the space inside.
In Korea, the number one preferable working area is near the street called 'Teheran-ro' in Gangnam-gu district of Seoul, which has been the mecca of successful startups over the last 20 years. And Seoul is the capital city of Korea with 10 million population living there, and another 10 million residing nearby.
It was pretty obvious to open a business center in this area, but the expensive rental price made it challenging. We tried our best to make good deals with the landlord and in the end provide good prices to our tenants. I think those were our challenges and also successors of our path so far.
Helga: What is the main difference between MY WORKSPACE and the competitors?
Ron: Definitely I would say the price. We provide a high-quality place at the proper price. This is what our customers value us for. And another thing is the location. MyWorkspace is located in the expensive business area of Seoul, so people want to come and work there. I managed to close a good deal with the landlord and now our tenants can enjoy the benefits of the luxury location at a decent price.
Besides, our vision is to run not a coworking business like a space rental business. We are striving to become a friend for startups. That means we want to help their business using all our channels, networks, facilitate connections with partners, investors, and key customers.
Korean people are pretty shy. They don't approach each other, don't say hello, don't attend the events. This doesn't work in Korea. It's really hard to build a community in our country. Still, entrepreneurs coming to the coworking space want to be connected somehow. They just need a middle man to introduce them to each other to start communication.
We help freelancers to avoid the awkward moments of first meetings and small talks becoming their friends.
In the near future, we are planning to become a startup accelerator. We are not going to increase the number of locations that much but to transform the existing ones into startup-friendly zones.
We are going to have one more big place including everything — stores, gym, showers, lounge rooms, and then put up a kind of startup acceleration program. It will be an ecosystem connecting partners, investors, entrepreneurs. There will surely be educational events — classes, training, workshops. Members will not need to go anywhere else as space covers all basic needs.
We are going to have a few seminar rooms with a different number of seats. We will invite good teachers and coaches as speakers for business growth seminars.
Helga: What amenities do your coworking spaces offer? (Maybe something special nobody else has.)
Ron: We provide coffee like any other coworking space, cereal, and fresh milk. People can have cereal all the time while they stay in the coworking space. We provide toasts with jam, they can eat that for free too. Of course, water, both hot and cold, tea. I think it's pretty much the same for coworking spaces all over the world.
What's more, we created some kind of welcome package. The project is not finished, it is still coming along. The package includes five branded pens of different colors, a business card case, and an umbrella with MY WORKSPACE logo.
At the moment we are selling this package to the members for half of its actual price but in the future, we are going to give it out for free to our new members.
At the moment members can buy each goodie separately at a reduced price but soon all the items will be available in a big box. This is one of the marketing strategies we invest in.
I never thought too much about amenities. "Cookies" are not that essential for Korean freelancers. The main things are cost-efficiency and business opportunities. So, we are focused on covering these.
Members need only bring their computer to the coworking space, the rest is provided by us (desks, chairs, projectors, monitors.) If teams are using meeting rooms, they can use the projector for free. If a hanger is needed, we usually provide it for free.
If members want some kind of decorations, green plants, we purchase a lot of them and give them to our members. They can decorate the room to feel more natural but we never thought about these as amenities. Sooner it's something included in the service by default.
If members are cold or hot in the meeting room (depending on the season), we provide an extra fan or heater. We don't charge for this, our purpose is to let them work without any problems. The working environment has to be good.
Members have different preferences, of course, we don't have everything in our space but if a member needs something we try to solve the issue.
Helga: Do you think coworking space management software is something every space should have? What do you personally use it for?
Ron: I have computer science backup, so I fully recognize coworking space management software's importance. First of all, it saves huge human resources.
We are using andcards, by the way. The product is of top quality, very well implemented. I love andcards meeting room display feature very much. The functionality shows meeting room availability on the tablet in front of the workspace. This is very convenient for residents. andcards rolls out new cool features very often, so I am always looking forward to seeing their ideas and improvements go live.
IT technologies offer powerful solutions for coworking infrastructure, really helpful.
If a coworking space cares about professional image, it should opt for high-end technologies. For instance, andcards includes streamlined solutions for meeting room booking, payment, and more. They free us from hustle with the customers.
Before we experienced unfair meeting room usage. We started to provide coupons, their number depended on the size of the company. This way we tried to take meeting room booking under control, to make it economically fair. But this solution is far from perfect.
Distributing coupons every month is also a huge work for our managers. If we let everybody come to the info desk and register in Google Calendar, it will cause problems too. Sometimes Google calendar gets updates, their API may be down. This is not professional to rely on it. We experienced that kind of problem for a long time until we found a solution. They caused real disasters in our space.
Members came to the info desks and managers manually did the job. It took a lot of their time. Now, andcards is saving so many managers' hours. In Korea, one working hour of coworking space manager costs around $10. If they spend in coworking 100 hours, it's $1000 salary per month!
With andcards it's a saving of more than $1000 and we can sell outside the coworking space. A person who is not our tenant yet can also use a meeting room paying for it via andcards with credits or credit card, which saves even more of our time. It's a great investment for us, an investment we have to do.
Helga: Do you think the right software impacts member experience at your coworking space?
Ron: Using an app for meeting room booking is the most efficient way to do that. Members don't need to come to see the manager, they don't need to get coupons.
For organizations, those coupons need to be shared. Some people just forget about them, some go on a business trip and take all the coupons with them, so teammates don't get their meeting room booking coupons. They come to our manager and start to negotiate. They ask if they can bring the coupons later or make another booking. So, we need to run a Google Sheet for these records, which also takes extra effort.
Getting back to the point, implementing coworking space management software is about efficiency both for owners and customers. They just can be anywhere in the whole world, open the app and book a meeting room.
So simple, if they don't have enough credits, they can use a credit card, andcards allows doing that. That's it, it's so easy to book a room. Korean people like efficiency, everything should be done on the fly. And with andcards everything is really quick.
Helga: How do you build the community behind MY WORKSPACE? Any special events, classes, training?
Ron: I tried to approach this matter many times. We are still trying some Korean-style community building. Frankly speaking, we didn't succeed. I am pretty sure that there is a way to build a community with Korean people but we honestly don't know it for now.
I talked to other coworking space owners and they have the same problem. Korean people are shy, they don't like to speak out too much, they are not like American people, not like European either. There always should be a middle man engaging members in discussions, trying to connect the right people. This is the work of a community manager. I used to do it when we had not so many tenants. It's way easier for a small coworking. You know everybody, know how to connect your members.
Right now, especially when we opened the third location, we became really big. There are about 250 members altogether. I know nearly 30% of our tenants, for the rest, I even don't know who they are. Our managers surely know everybody but they don't know how to connect members. They lack this kind of skill.
We decorate our coworking space on holidays (New Year, Halloween, Korean national holidays), give members traditional food but not too often because celebrations give managers hard time and I don't want to stress anybody or make my team unhappy :-)
Entrepreneurs in Korea nowadays try to find their work-life balance. They don't want to work more than eight hours like it was before. Family happiness is also very important. However, they are concerned about time, especially startups. They have a limited budget and need to push their product to the market as soon as possible.
Helga: Are you planning to scale up your business in the near future?
Ron: We want to scale up for sure. We are going to open the fourth location next year around May. This location will have 3500 square meters. I am looking for creating this space because a bigger space is definitely better.
It's cost-efficient for operators because we need to hire managers anyway. In my opinion, one location should have three managers. Two of them working all the time and one backs them up during vacations. If the coworking space is small, like 500 square meters you still hire three. Thinking human resource-wise it's definitely cost-efficient to have a bigger space as you also start with hiring three managers.
We want to provide a nice resting area with a lounge and stuff. But how big can your resting area be if you have only 500 square meters to play with? It will be very small, which doesn't give any relaxed feeling to members. With 3500 square meters of space, it's another ball game. Your resting area could be 500 square meters and you only spend 12-13% of the whole space. Still, your resting area is going to be luxury. That's why we are going to launch a large coworking space.
Right now I am not planning to open more and more new locations. One big location is enough for me. I want to focus on the startup accelerator program. In Korea, coworking space business will grow bigger and many new players will come out. It's going to be a kind of chicken game business.
But we have our standard and every brand area must be good. So, with all those operators we will be not bad at all. The key point to me is how to work with nice startups and be a key member of the startup world. That's where I want to be. One big location will be enough to reach my goals.
Helga: Could you share your own recipe for raising business revenue? What marketing strategies are the most efficient for you?
Ron: Our cost of renting a space is lower than the one outside of Korea. The reason is that many coworking spaces are supported by the government. It's really cheap or nearly free to use it but their locations are really bad. The atmosphere inside is pretty good, everything is clean and modern. The only problem is the distance to get there. Other than that, those spaces are ok.
Somehow I came up with the idea to provide coworking space in Seoul at a cheaper than average price. This is a kind of loss for us. But I tried to fulfill this loss by providing a virtual office.
Entrepreneurs can register their business at our address and receive all mail for nearly $70 per month. When we get the post for them, we send notifications right away. This is a good service for business people. That's how we are able to lower our price even below the average price for non-governmental coworking space rent in Korea located in the most expensive areas.
This is the strategy that worked for us. By providing Virtual Office we were able to lower the price for residents. It helped us find balance and become profitable.
Helga: If you were a business consultant what would you recommend a coworking startup? What should be your top priorities when you are building a profitable business?
Ron: I would probably say that the coworking business in Korea is tough. It's relatively easy to enter the market. You don't need any special technology or knowledge for the start. In the end, it's just a real estate business, or better to say a hospitality business, it's like a hotel.
I'm pretty sure that many people will jump into this area, so the competition will become harder. Right now, the demand is higher than the offer. That's why this business is going well in Korea, the same happens worldwide.
But at some point, the demand will become lower than what's provided in the market. That's the time when people will start to play with the price. And this going to make the coworking space business in Korea even tougher. You should consider the tendency if you are going to start a coworking business.
However, if you are already doing renting business and you want to add a coworking space to your portfolio, this might work because you already know how to buy the land at a cheaper price, select the land that is likely to go up in price for the purchase.
Supposing you have purchased the building and want to make your investment profitable. I this case a coworking space is the aspect that will make the price of the building grow higher.
If you consider running a coworking business together with a hotel or hospitality business you can think of rendering co-living services. The concept of co-living is rather popular in Korea, so I think this is going to be successful.
Please mind that depending on the area you are going to do business in, the ratio of coworking and co-living will be different.
MY WORKSPACE is located in a totally business area, which is not for living. But urban areas of Seoul where people actually live are great for doing co-living business. Still, a co-living space needs some kind of coworking space like a lounge. It's going to be smaller. Something like that — your co-living space will be 80% and coworking 20%.
If you purchased the whole building, you may want to have everything inside — coworking, co-living, stores, gym, café, etc. You may arrange a spacious coworking with meeting rooms, lounges, open space, and so on. You can place your co-living facilities with amazing city views right above the coworking.
It's obvious for operators like me that the longer tenants stay at the space, the more things we can sell them. If I have stores in the same building I can sell snacks, office tools, scissors, paper, whatever people need all the time. It's an extra sales opportunity.
If you create something like a sauna place with a nice chill-out room, you can sell it hourly, which is extra income.
I mean, when you are starting a business you need to think properly of every single opportunity to monetize it.
With this fourth location, I'm gonna try it. I don't know if it's going to be a success, I hope it will. But anyway, I will learn from my experience. I am an entrepreneur, I try, challenge the opportunity. If it fails, it will be a costly mistake but if it succeeds I can take my business to the next level, do more in the future, suggest the concept to my friends.
That's it for now. I hope this interview was inspiring and clarified many business points. Don't forget to show this juicy piece of content to your friends on socials!
Want to learn more about MY WORKSPACE success? Read their story here: How MY WORKSPACE Achieved 100% Self-Service Meeting Room Booking.