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Riding the Asian E-Commerce Wave



In October 1999, Goldman Sachs invested $3.3 million in an unknown Chinese Internet startup operating out of its founder’s apartment. Shortly after came the dotcom bust in 2000, but the startup survived and by early 2004 Goldman cashed out for $22 million — nearly seven times ROI.

Good deal for Goldman, right? Except for one minor detail — that startup was Alibaba, and ten years later it was returning the favor to Goldman in a very unexpected way, employing the investment bank to underwrite its IPO on the NYSE. Which, by the way, valued Alibaba at $168 billion, more than double that of what Goldman’s worth today.

Success stories like Alibaba’s and mobile upstart Xiaomi’s ($45B and still private) have romanced investment in Asia’s startups to reach unprecedented levels over the last five years. Riding the Alibaba dragon, e-commerce startups have been particularly successful at attracting prodigious funding, even at a nascent stage. With Asia having 45.7% of the world’s Internet population and yet only 34.7% penetration rate (the rest of world is at 51.8%), it’s not hard to see why. Nearly every country has either been colonized by Groupon or Amazon, or has invented its own localized clones. But with so many e-commerce startups emerging with billion-dollar valuations with no profits, and talk of yet another Internet bubble forming, can we realistically expect any of them to replicate Alibaba’s success? To make sense of these heady valuations, let’s take a deeper look at four comparable Asian e-commerce startups which have caught the public eye a lot lately. I’ve chosen these subjects because they share the following traits and may make for interesting comparison:

  • Founded in 2010 or later
  • Achieved Unicorn status (> $1B valuation)
  • Originated from a country ranked in Asia’s top 5 by number of Internet users
  1. Coupang (South Korea), founded 2010 :

At a $5B valuation, Coupang is a behemoth in startup terms. Beginning operations as a Groupon clone, Coupang has pivoted and is now a full-fledged ecommerce platform maintaining its own inventory and logistics chain. South Korea’s answer to Amazon, Coupang’s pages are refreshing, colorful, and modern — filled with the latest fashion items and advertisements featuring KPop celebrities. Its founder, Kim Bom, is a Harvard Business School dropout who idolises Masayoshi-son of Softbank fame. And one can imagine it’s no accident that of the $1.4B it’s raised so far, Softbank alone contributed a cool $1B in one of the biggest single startup investment of 2015. While South Korea has a (relatively) small market of roughly 45m Internet users, it has a tech-savvy population and one of the highest Internet speeds in the world, conditions which have allowed e-commerce to flourish rapidly.

2. Snapdeal (India), 2010:

Gurgaon-based Snapdeal has doesn’t do its own logisticsand pretty much still operates a Groupon-like business model. Like Coupang, its two co-founders went to prestigious universities, in UPenn and IIT respectively. Very recently, it received a $500 million injection from Alibaba and Softbank, valuing it at an impressive $5 billion in a country with roughly 250m Internet users.

3. Meituan (China), 2010:

Meituan is the equivalent of Snapdeal in China — by far the biggest market with over 600 million Internet users. A group discount website, it specializes in localized consumer services and last year alone sold $7.4B of deals and vouchers. It’s also received a monster round in 2015 ($700M in January), and at $7 billion is currently the highest valued of the four.

4. Lazada (Singapore/Southeast Asia), 2012:

For good measure, I’m throwing in Lazada into the mix to give some perspective from one of the hottest regions in Asia right now — Southeast Asia. The youngest of the quartet, Lazada is an outlier from the above three in many ways — It’s only valued at $1.25 billion, it didn’t start out as a Groupon clone, and it wasn’t founded by a native (it’s of Rocket Internet* origin). But having hit the $1B mark in 2.75 years there’s no questioning Lazada’s ambition. At this level of valuation, it’s slightly ahead of the other three at the same stage — though with Rocket’s backing it’s almost expected to immediately outperform. Operating primarily as a B2C platform (but also some C2C) and spearheaded by a McKinsey alumnus, Lazada has been allowed to expand with ruthless, German-like efficiency in courting the over 190 million Internet users in Southeast Asia.

*For the unacquainted, Rocket Internet is a German Internet company which runs a global empire of businesses primarily founded by replicating the strategies of other successful companies in new markets.

Some Numbers:

Numbers don’t lie. Well, assuming we can trust the authenticity of the numbers in the first place.

Let’s begin by looking at the cumulative investment in the four companies over the last five years:

Snapdeal has raised the most with $1.56 billion, followed closely by Coupang with $1.4B and Meituan with $1.07B. Most of the investments have come in 2014 and 2015 (Snapdeal was particularly prolific in 2014 and Coupang in a similar sense in 2015 with that $1B Softbank infusion). Meanwhile, Lazada has yet to publicly disclose any funding rounds in 2015, and lags behind the pack at $680m. Yet, Lazada is only three years old, and is well ahead of the other three companies at their respective 3-year marks.

Cumulative investment, however, only tells us how much cash the companies have to burn, but indicates to us little about their value. While it’s difficult to ascertain the valuations at each funding stage, we can at least confirm that at the moment, Meituan is valued the most. For reference, Meituan, Coupang & Snapdeal are all — for now at least — valued more than the very company they set about emulating —yes, the father of daily deals, Groupon ($2.8B).

  1. Meituan: $7B
  2. Coupang/Snapdeal: $5B
  3. Lazada: $1.25B

How do these astronomical valuations compare with how the companies are doing? Here’s where the picture gets slightly murky. Having no access to properly documented income statement disclosures, I’ve had to rely on whatever’s been said in press releases or the companies’ own reports. Profitability is shrouded in secrecy but it’s probably safe to assume none of these companies are profitable. Still, I’ve gathered sufficient information about their sales numbers.

Here’s where Meituan’s performance — in line with its valuation — outshines the rest. Meituan claimed $7.5B GMV in 2014 and is forecasting a $16B GMV run-rate for 2015. In comparison, Snapdeal, also a daily-deals pure play, only broke $1B in 2014 but is growing at a similar rate as Meituan, forecasting $10B by end 2015. While we’d expect the GMVs of an end-to-end e-commerce model to take off slower than a third-party, daily deals model — Lazada & Coupang both illustrate that, Coupang is impressively predicting its GMV will break $3.9B in 2015. Lazada grew its GMV from 300% through 2013 to 2014, and should break the vaunted $1B mark this year. If they manage to hit these numbers (remember this is a prediction), here’s how their valuation/GMV multiples will look like:

  • Meituan: 0.44
  • Snapdeal: 0.50
  • Lazada: 1.25
  • Coupang: 1.26

How do the industry veterans compare? Here are the Price/Sales multiples for Amazon, Groupon, and Alibaba as of 18 Sep 2015:

  • Groupon: 0.910
  • Amazon: 2.635
  • Alibaba: 12.85

Revisiting the earlier valuations, they don’t seem so crazy after all. Meituan’s and Snapdeal’s multiples are half that of Groupon’s, while Coupang’s and Lazada’s are half that of Amazon’s and four times lower than Alibaba’s. The mechanics of this direct comparison are flawed (especially when we consider factors like Groupon charging merchants 40-50% of their listed deal price while Meituan only charges something like 5%), but at least we get a clearer picture of why they are valued that way.

The immediate phase ahead : Domestic supremacy

At a high level at least, we’ve justifiably established that Asian investors haven’t gone mad and there is still some sensibility in the market today. But what lies ahead for these power-hungry unicorns?

In theory, the next phase is straightforward: Establish oneself as the undisputed domestic leader by channelling as much money as possible towards customer acquisition. Get customers, and deals will flow right? With so much money on the table, it seems impossible to fail. E-commerce is continuously growing and Asians love to shop, so what’s there not to like about this strategy? Competition, that’s what. Asia is synonymous with competitiveness and it takes a lot of investment — and strategy — to become peerless on the domestic scene. It’s a large factor that explains why Amazon and Groupon, despite their scale, have been largely unable to penetrate into the region. The other, of course, is that Asian markets are less homogeneous than Western markets.

China: A thousand Chinese Groupons

There’s no better place than China to begin a conversation about competition. It’s no secret that the Chinese are ridiculously good at “copycat innovation”. As a result thousands of e-commerce sites exist and there is no model more copied in China than Groupon’s. The stories of the rise and fall of these Chinese Groupons contain so much drama it would take days to tell them all. But here’s the gist: When Groupon tried to launch in China five years ago, it found — to its horror — that someone in China had beat them to the Groupon domain and had already started a business called As a result original Groupon had to launch under a different name (Gaopeng) when it expanded to China. Groupon then had to acquire to boost its business, but that’s another story. In 2011, possibly the peak of the Groupon craze where there were at least 1500 clones, the market leader was Lashou, and things were looking up for the fledgling startup. A few years, a failed IPO and some market stabilization later, Lashou has fallen way off the pace, dozens of other startups have traded market share leadership countless times, and Gaopeng still hasn’t even been able to break into the top ten.

Meanwhile, a pattern of what might become the most interesting three-headed fight in China over the next couple of years has emerged with increasing clarity. A direct showdown among the big three in China — BaiduAlibaba, and Tencent is happening right now, not just in e-commerce but in all sectors of the Internet economy. B.A.T, as they are otherwise known, made their name through disparate channels — search engines, e-commerce, and social media/messaging respectively, but have since expanded so astronomically that they that it almost takes the backing of one of them to enjoy prolonged success in the Chinese Internet market.

Meituan’s arsenal? A direct and big-money backing from the Alibaba Group (which also owns Juhuasuan, another successful Daily Deals platform that’s even enjoyed expansion to Hong Kong and Taiwan). With 51% of the B2C market through TMall and 95% of C2C through Taobao, Alibaba’s support will be crucial to Meituan’s prolonging its longevity. Alibaba led the $50M Series B round for Meituan and also helped finance the $300M Series C round. Meituan has grown rapidly to become the industry leader with 60% market share, which is promising, especially with the powerful asset of Alibaba’s user reach and e-Commerce engine.

But don’t expect the competition to back down without a fight. Meituan’s closest competitor now is $4B valued and Sequoia-backed DianPing, in which Tencent bought a 20% stake in 2014. The advantages of having Tencent in your boardroom? An immediate incorporation into WeChat, China’s top messaging app with 600 million registered users, and an important component of Tencent’s online-to-offline strategy. Not to be outdone, Baidu announced in June this year it was pumping in $3.2B into Nuomi, a group buying site Baidu has fully acquired. The impact? Imagine if Google bought Groupon today and integrated Groupon into Google Search and Google Maps. The current results are favouring Meituan, and I’m hard-pressed to bet against it, especially if it gets Alibaba’s full backing, but as history has taught us, it’s not how one starts, but how one finishes.

India: East versus West heats up

India doesn’t have the same level of economic xenophobia that China has, so American tech companies have traditionally enjoyed a great degree of success in India, which is also a recruitment mecca for precocious, talented engineers. Unlike in China, Google, Whatsapp and Facebook are all market leaders in India. But in 2007 a couple of ex-Amazon employees set out to prove that an Indian-born tech eCommerce startup could emulate the successes of its Western counterparts. They founded eCommerce portal Flipkart to become India’s Amazonand with overwhelming success — Flipkart now reportedly commands 44% of the market share by sales. Realizing India’s potential, Amazon invented Junglee in 2012 to compete with Flipkart(and also to cleverly skirt the regulations around a foreign company running a full fledged service in India) and commands around 12–14% of the market now. (There’s an interesting thread here outlining the differences between Flipkart and Amazon.) There’s still a reverence for Silicon Valley ideas and companies even amongst traditional Indian tech conglomerates, but there’s an increasing feeling that homegrown tech startups now have enough machinery to compete with the Valley’s finest.

Where does Snapdeal stand in all of this? Snapdeal’s currently at 22% market share, but in the purest sense of competition, Flipkart and Amazon aren’t really group-buying sites so Snapdeal doesn’t directly compete against them. Groupon has a presence in India, but has achieved more mixed success than Snapdeal, having exited once and been rebranded twice. It has recently given up control to Sequoia, been rebranded as Nearbuy, and is planning to nip at the heels of Snapdeal again. However, Snapdeal seems to have held up strong. And I think Flipkart and Snapdeal can both co-exist to some degree given their different focus. Snapdeal’s biggest competition to profitability is probably itself —we earlier mentioned that Asian versions of Groupon have much lower margins per deal sold and this has probably led to Snapdeal’s rapid acquisition of customers. Will Snapdeal be able to generate enough volume to make its low margins profitable or will it be able to pivot to a model which can allow it to charge higher margins?

KoreaA titan emerges

In Korea, the picture seems to be a lot clearer. I’ve narrowed the key competition down to three. There’s the two with enormous financial muscle — Softbank-backed Coupang and KKR-backed (formerly Groupon-backed) Ticket Monster [TMON]. But then there’s also the odd case of WeMakePrice, which is still 100% owned by its founder Huh Min (although there are plans to change that to a small degree). There’s also a significant player in eBay Korea, which recently acquired GMarket for $1.2B, but C2C is really eBay’s strong suit while the other three are more similar in adopting Amazon’s model — selling both direct goods & third party brands.

For a relatively smaller market, their achievements have been phenomenal. Mobile commerce in Korea is dominant (e.g. Coupang and Ticket Monster’s mobile sales account for 75% and 70% of revenue respectively). Coupang’s mobile app has been downloaded 25 million times from the App store. To put things in perspective, Korea’s population is 50 million. That’s one download for every two people in Korea. While the number of customers may not have that much room to grow further, the transaction volumes do. eCommerce in Korea, like in several other advanced Asian economies, still take up a small percentage of overall commerce, and investors are clearly banking on mobile commerce sites to disrupt commerce further.

TMON was first in 2010 to introduce social commerce in Korea, but was quickly followed in the same year by the other two. Since then the trio have traded positions in a closely balanced market, and in 2014 all three were still regarded as even players. Fast forward a year, and Softbank’s faith in Coupang seems to have transformed a close dogfight into a David vs Goliath contest. Coupang’s value is now more of five times TMON and [x times] WeMakePrice (I say x because WeMakePrice is still 100% owned by its founder and difficult to value for sure). With this level of financial muscle and Softbank’s impressive track record, my money’s on Coupang to make the transition from market player to market champion.

Southeast Asia: No clear winner

There’s a solid piece on Techcrunch which kind of details the eCommerce scene in Southeast Asia, so I’d recommend that read for a detailed analysis. In short, the authors argue that despite Lazada’s best efforts to establish itself as the market leader (it’s present in six Southeast Asian countries and has a reported 20% market share), the competition is still very much open — much more so than China and India at least. They highlight the $100M investment partly financed by Softbank in Tokopedia as a potential threat to Lazada’s foothold. Which, given the kind of genius investments Softbank has made over the last decade, should definitely give us reason to believe that Tokopedia can become a force to be reckoned with.

In summary, achieving domestic supremacy is hard — even with a ton of cash in the bank. There’s only one thing for sure — competition drives prices lower, and consumers are going to love every bit of that.

What lies beyond — Long Term Survival

What does a tech startup do with hundreds of millions of dollars? Aside from the obvious need for to acquire customers through publicity campaigns and discount programs, a substantial sum is often reserved for acquiring similar companies which already have a sizeable user base. This allows the startup to grow at a far more burgeoning pace than if they tried to grow organically, and at the same time clear the market of any pesky competitors.

Assuming our eCommerce startup gets past the domestic hurdle, somehow overthrowing or acquiring its competitors, establishing a superior position in the domestic market and getting a ton of loyal customers, what can we expect from it in order to continue growing in the longer term?

Let’s consider some possible approaches —

  1. Expanding internationally into Asia/rest of world with the same business model

All four startups certainly have the pedigree to go global once they have taken care of their own domestic challenges. (To some extent, Lazada’s already done that since they are now present in six different countries, although succeeding in Southeast Asia is still very different from succeeding across Asia.) However the main difficulty is the adaptability of their businesses outside of the domestic niche in ultra-heterogeneous Asia. Amazon and Groupon have failed in China and haven’t really taken off in the rest of Asia. But Asian companies will do better in Asia, you say. Not true. Take the example of Rakuten, the shining star of Japanese eCommerce, who failed spectacularly in China and, having enjoyed limited success in other parts of Asia, is now looking at focusing on its U.S. expansion plans instead.

But as they say, if you can’t beat them, join them. And as investment bankers and venture capitalists love to say — if you can’t beat them, acquire them. Thus, what’s likely to happen, if we ever see Meituan trying to expand to India, or Snapdeal trying to enter Korea, et cetera, is that it will be achieved via a merger or acquisition, rather than a head-to-head battle.

There is an incredible synergy among the main investors of Coupang, Meituan, and Snapdeal. I’ll call this the S-A-S connection, short for the Softbank-Alibaba-Sequoiaalliance. Softbank is the main investor in Coupang and Snapdeal, Alibaba is highly involved in Snapdeal and Meituan, and Sequoia is considered a main investor in Meituan and a co-investor in Coupang. To reinforce this alliance, Softbank (majority) and Sequoia (minority) both own stakes in Alibaba, so they are really vicariously invested in anything that Alibaba decides to lay its hands on. It’s a clear and powerful message to the entire continent that SAS is after domination in every major market in Asia, at least where eCommerce is concerned. But why is Lazada conspicuously absent from the SAS portfolio — it’s links to the other three merely through Temasek Holding’s minority stake in Snapdeal? Well, that’s because — as hinted earlier — Softbank and Sequoia are anti-Lazada. They’ve both invested in Indonesian upstart Tokopedia and are betting that Tokopedia can upstage Lazada to become the kingpin in Southeast Asia. When I began writing this piece I picked the four startups because of their similarities in value and age. But now looking at things this way, it becomes clear that the biggest factor Meituan, Coupang, and Snapdeal have in common is who’s filling their seats in the boardroom.

2. Evolving business model to stave off competition

While the Groupon model is quick to implement, enjoys excellent initial traction and good profit margins, it’s always been a concern — considering Groupon’s recent stagnation — whether the model is at all sustainable.

The biggest critiques of the Groupon model is that Groupon

  • Is too easy to replicate by competitors, driving margins lower
  • Attracts too many one-time buyers looking for specific discounts
  • Has its reputation tarnished by merchants having poorer quality services/products
  • Leads customers to believe the merchants have to be inferior in some way to have to aggressively discount their prices

Daily deals sites like Groupon often perform poorly compared to full fledged eCommerce sites like Amazon and Rakuten because of they attract customers through the cheapness of the service/product, rather than product quality and customer experience. For Meituan and Snapdeal, this could mean that their impressive growth numbers now give a poor indication of continued growth over the next few years. Coupang may have realized the opportunity when they pivoted to build end-to-end eCommerce infrastructure, but trying to do the same would be a gargantuan challenge in China and India, as it would involve upstaging Alibaba and Flipkart at their game. Besides, one might argue that it’s easier for Alibaba and Flipkart to enter the daily deals market than it is for Meituan and Snapdeal to try to do end-to-end eCommerce.

An alternative way for eCommerce companies to succeed could be to specialize. Companies who have differentiated themselves well from the rest of their peers include vintage marketplace Etsy, designer-good-centric Fab and members-only Gilt Groupe. These niches are great, but unfortunately being too specific doesn’t present the best option for our four unicorns because of the small market size and lack of scalability.

What about diversification? Let’s not forget that both Amazon & Alibaba, while still largely e-commerce at their core, have already diversified into an array of other products and services, most notably on-demand media and cloud computing infrastructure. Over its two-decade lifespan, Amazon has acquired anything from shoe e-tailer Zappos to live streaming site Alibaba, apart from its investments in other eCommerce outfits, has also shelled out billions into things like online education (Tutor Group), video streaming (Youku), and ride-sharing (Lyft). End-to-end eCommerce often means the need for things like great data processing capabilities and an extensive merchant/customer network, which can be naturally extended to other online-to-offline commerce platforms like education or taxi services.

Our subjects are beginning to do exactly that. They are acquiring either companies who have a useful piece of technology, or companies which help to plug the gaps in the overall value chain. For instance, Meituan’s invested $35M just this month in, a Shanghai-based campus-oriented delivery app. will help Meituan overcome its last-mile problem by providing food deliverymen access to campus dorms. Snapdeal’s acquired a dozen startups itself, the most notable being the $400M acquisition of Indian mobile recharge platform Freecharge, which is popular among the 18–25 year old segment of the population. Coupang’s even begun acquiring abroad, turning to Silicon Valley startup CalmSea, which specializes in large-scaled database systems and distribution optimizations, irrevocably useful for Coupang’s massive logistics operation.

Will we ever see the next Alibaba in any of these four startups? Probably not, but only time will tell.


About the Author

This article was written by Leonard Lu of medium. see more.


Is There A Coworking Space Bubble?



An annual growth rate of nearly 100%, almost five years in a row? More than 60 coworking spaces in a city like Berlin? Are these the characteristics of a bubble? Nope, these are characteristics of a lasting change in our world of work, which has been further catalyzed by the recent economic crises in many countries. But what makes this change different to a bubble? We’ve summarized some arguments of why the coworking movement is based on a sustainable change. However, that doesn’t mean it’s an easy job to open a good working coworking space.

Five reasons why the growth of coworking spaces is based on organic and sustainable growth: 

1. Coworking spaces invest their own money and create real wealth

Already, there is a convincing argument supporting why coworking spaces are not developing in a bubble: the fact that they create real wealth.

Whether referring to the dotcom bubble a decade ago or the real estate crisis in Spain or the United States, the crisis originated in a glut of cheap money, in an environment in which the sender and the recipient were unacquainted. From funds and banks, money flowed in steady streams to investments which offered little resistance and the most promising returns – which only a little while later turned into delusions and ruined investments.

Redistributed risks create illusions. Those people who distributed the money rarely wore the risk of investment decisions. The risk was mainly taken by small shareholders or people who bought parts of those investments. This was because either both parties’ (better) judgement was drowned out by the noise of the market, or because shareholders were unaware of the risk, and were at the mercy of banks and funds for reliable information.

Another fundamental condition for the creation of bubbles are the sheer amounts of money that flow from various locations globally and are concentrated, by comparison, in much fewer places.

Most coworking spaces, however, receive their funding from local or nearby sources and do not operate within this financial system. In fact, the founders mainly inject the bulk of the required investment, and turn to friends or relatives for additional support. They wear the full brunt of the risks that are involved in small-time investment.

They have access to much more information, because it is their own project, rather than a foreign one thousands of miles away. This also includes failures and mistakes that are encountered along the way, but the risk is less redistributed, thereby decreasing the probability of failures.

2. Labor market changes demand on certain office types lastingly

Most users of coworking spaces are self-employed. The proportion of employees is also on the rise, in many cases simply because they work for small companies that increasingly opt to conduct their business in coworking spaces rather than in traditional offices. The industry of almost all coworkers fall within the Internet-based creative industries.

With flexibilisation of work markets, new mobile technologies that are changing work patterns, and the increase of external services purchasing from large and medium-sized enterprises (outsourcing), the labor market has changed radically in many parts of the world.

The long-term financial and emotional security of becoming an employee no longer exists, especially for younger generations of workers. Bigger companies are quicker to fire than hire, and precarious short-term contracts are on the rise. Promising options on the labor market are more often recuded to freelancer careers and starting your own company.

And that’s possible with less money to invest. All you need is a laptop, a brain and a good network. For years, the number of independent workers and small businesses has been growing worldwide – particularly in internet-based creative industries. Anyone who has sufficient specialized skills and the willingness to take risks may adapt more quickly to market conditions if they own a small business or are self employed; more so than if they were to work in a dependent position in an equally volatile market.

Coworking spaces provide an environment in which to do this. Once they have joined a (suitable) coworking space, these factors become apparent to coworkers, who will remain in their space for years to come.

Furthermore, independent workers rarely fire themselves in crises, and even small companies are less likely to give their employees the boot – compared to their large counterparts. This combination enables more sustainable business models – and less business models à la Groupon.

3. Coworking spaces don’t live on crises

Global economic growth is waning while the number of coworking spaces is continually growing. Do coworking spaces thus benefit from this crisis?

The current crises accelerate the formation and growth of coworking spaces, because they offer solutions and space for the resulting problems. Coworking spaces are therefore not a result of a crisis, but the product of change that pre-dates their existence. A crisis is simply the most visible expression of change.

The first coworking spaces emerged in the late 1990s; the movement’s strong growth started six years ago – before the onset of economic downturns in many countries.

4. Coworking spaces depend on the needs of their members

Most coworking spaces are rarely full. Does this mean they are unsuccessful? On average, only half of all desks are occupied. But the average occupancy rate of 50% refers only to a specific date.

In fact, coworking spaces generally serve more members than they can seat at any given time, since members do not use the spaces simultaneously. Coworking spaces are places for independents who want to work on flexible terms. Smaller spaces rely more on permanent members. Larger spaces can respond more flexibilty to the working hours of its members, and, can rent desks several times over.

If a coworking space is always overcrowded or totally empty, the purpose of said space would be defeated. Firstly, it is rather impossible to work in an overcrowded room. Second, it’s impossible to cowork in an empty room. Given the nature of flexible memberships, a coworking space only can survive if they fit the needs of their members. Members would otherwise be quick to leave, and membership would be much more transient.

5. The coworking market is far from saturation

Less than 2% of all self-employed – and even fewer employees – currently work in coworking spaces. Reporting on coworking may increase, but inflated reporting on the coworking movement in the mainstream media is still far away.

Coverage of coworking space are most likely to be found in the career or local sections in larger publications – front cover coverage remains the dream of many space operators. This is because the whole coworking movement can’t be photographed in one picture. What appears to be a disadvantage, however, is actually a beneficial truth: niche coverage allows the industry to grow organically, and avoid over inflation.


Coworking spaces don’t operate in parallel universes – like the financial market. Demand and supply are almost exclusively organic and operate in the real world economy.

For the same reason, there is no guarantee that opening a coworking spaces will be automaticly successful. Anyone who fails to learn how to deal with potential customers in their market, or is unfamiliar with how coworking communities function, will have a difficult time of making one work. In the same way that business people in other industries will fail if they do not understand their market.

Those who simply tack on the word ‘coworking’ to their space’s facade will need to work harder. The structure of most coworking spaces is based on real work, calculated risk, and real-world supply and demand.


About the Author

This article was produced by Deskmag. Deskmag is the magazine about the new type of work and their places, how they look, how they function, how they could be improved and how we work in them. They especially focus on coworking spaces which are home to the new breed of independent workers and small companies. see more.

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Callum Connects

Dextre Teh, Founder of Rebirth Academy



Dextre Teh is a consultant and marketing guru, helping F&B businesses to tighten their operations and grow their businesses.

What’s your story?
I help frustrated F&B business owners stuck in day to day operation transform from a glorified operator into a real business owner. I’m a 27 year old Singaporean second generation restaurant owner and a F&B business consultant. Entering the industry at 13 years old, I have always been obsessed with operations and systemisation. At the age of 25, I joined the insurance industry and earned a six figure yearly income. However, I left the high pay behind because it was not my passion and returned to the F&B industry. Now I help other F&B companies to tighten operations and grow their businesses with my consulting and marketing services.

What excites you most about your industry?
The food. I’m a big lover of food and even have a YouTube show on food in development. But that aside, it is really about impacting people through food. Creating moments and memories for people, be it a dating couple or families or friends. Providing that refuge from the daily grind of life. So in educating my consulting clients and training their staff to provide a better experience for their customers, I aim to shift the industry in the direction of creating memories instead of just selling food.

What’s your connection to Asia?
I was born and bred in Singapore. I love the culture, the food and travelling in Asia.

Favourite city in Asia for business and why?
Singapore hands down. The environment here is built for businesses to thrive. The government is pro business and the infrastructure is built around supporting business growth. Not to mention the numerous amount of grants available in helping people start and even grow business. If I’m not mistaken, the Singaporean government is the only government in the world that offers grants to home grown businesses for overseas expansion.

What’s the best piece of advice you ever received?
Learning to do things you do not intend to master is a BIG mistake in business. Focus on what you are good at and pay others to do the rest.

Many business owners including myself are so overwhelmed by the 10,000 things that they feel they need to do everyday. We try to do everything ourselves because we think it saves us money. The only thing that, that does for us is overload our schedules and give us mediocre results. Instead we should focus on what we do best and bring in support for the rest.

Who inspires you?
Christopher M Duncan.

At 29, Chris has built multiple 7 figure businesses. He opened me to the possibility of building a business on the thing that I loved and gave me a blueprint of how to do it. He also showed me that being young doesn’t mean you cannot do great things.

Imran Mohammad and Fazil Musa
They are my mentors and inspire me every single day to pursue my dreams, to focus on celebrating life and enjoying the process of getting to where I want to be.

What have you just learnt recently that blew you away?
Time is always more expensive than money. Money, you can earn over and over again but time, once you spend it, will never come back.

If you had your time again, what would you do differently?
I am a firm believer that your experiences shape who you are. I am grateful for every single moment of my life be it the highs or the lows, the successes and the failures because all these experiences have led me to become the person I am and brought me to the place that I’m at so I will probably do things the same way as everything was perfect in its time.

How do you unwind?
Chilling out in a live music bar with a drink in hand, listening to my favourite live band, 53A. Other than that I’m big on retail therapy, buying cool and geeky stuff.

Favourite Asian destination for relaxation? Why?
Bangkok. It feels like a home away from home where the cost of living is relatively low, the food is good and the people are friendly.

Everyone in business should read this book:
Everything you know about business is wrong by Alastair Dryburgh. It is a book that challenges commonly accepted business “truths” and inspires you to go against the grain, think different, take risks and stand your ground in the face of the challenges that will come your way as a business owner.

Shameless plug for your business:
I’m the creator of the world’s first Chilli Crab Challenge. It gained viral celebrity earlier this year with 3 major newspaper features and more than a dozen blog and online publications featuring it in the span of two weeks. In the span of the two weeks, the campaign reached well over a million people in exposure without a single cent spent in ads.

Now I help F&B companies to tighten operations, increase profits and grow their businesses with my consulting and marketing services. Chilli Crab Challenge (

How can people connect with you?
You can connect with me on Facebook ( or visit for more information or book a 10 minute call with me @

This interview is part of the ‘Callum Connect’ series of more than 500 interviews

Callum Laing is an entrepreneur and investor based in Singapore. He has previously started, built and sold half a dozen businesses and is now a Partner at Unity-Group Private Equity and Co-Founder of The Marketing Group PLC. He is the author two best selling books ‘Progressive Partnerships’ and ‘Agglomerate’.

Connect with Callum here:
Download free copies of his books here:

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