by zerone zerone No Comments

How will we work: A look at the coworking industry post-COVID-19 – YOURSTORY

Tanya Aggarwal 23rd Jun 2020

Will the second- and third-order effects of a near-global lockdown change how we perceive workspaces? What would that world look like and how does that impact a CEO’s decision to lease a space today? To understand some of these questions, this week, A-scale examines an industry that burst onto the scene, crashed commercial retail’s party, and asked similar questions not too long ago: Coworking.

COVID-19 and the coworking industry

What is happening globally?

COVID-19 has forced most companies to implement work from home (WFH) regimes that serve to threaten coworking spaces across the globe in the short term. 72 percent of spaces said they have witnessed a significant drop in the number of people working from their space since the outbreak, based on a survey of over 14,000 coworking spaces across 172 countries worldwide by Coworker.

Concurrently, 41 percent of coworking spaces reported a negative impact on membership and contract renewals since the outbreak, and 67 percent of spaces have experienced a drop in the number of new membership enquiries.

Coworker reported in late March that the top consequences co-working spaces are experiencing are:

  • Event cancellations (71.04 percent)
  • Meeting/conference room cancellations (65.99 percent)
  • Membership cancellations (34.68 percent)
  • Changing the behaviour of members (24.2 percent)
  • Space closure (20.2 percent)
  • Sick members (8.75 percent)

In the UK, Plexal, one of Europe’s larger coworking spaces, has seen 70 of their 123 member companies urgently needing access to grant funding to cope with disruptions caused by COVID-19.

The total market for flexible or coworking spaces was expected to grow from 30 million square feet to more than 40 million square feet in 2020 in India across the top 10 cities this year. COVID-19 has, however, not only forced many coworking firms to alter growth plans, but also to renegotiate rentals in the wake of lockdowns across the country.

Clients won’t be able to pay rent on time and many have asked for concessions. With member health put into question, these firms need to re-imagine their position. But the one thing we’ve learnt from last year is that co-working spaces are resilient and even a pandemic cannot cause their downfall.

Post COVID-19 opportunities Flexible rent As paying rent for office spaces that cannot be utilised during state-imposed lockdowns is causing companies to bleed further. Businesses, especially SMEs, are renegotiating or cancelling leases through force majeure provisions. Moving ahead, businesses will still require office spaces, but will prefer cheaper and more flexible arrangements.

De-densification of offices Once COVID-19 panic abates, larger companies may also look to de-densify their offices as a response to

(1) increased demand for remote working arrangements and

(2) residual risk of community spread from asymptomatic carriers of COVID-19. This presents an opportunity to coworking spaces as they can offer such companies professional office amenities, spaces for small- to medium-sized teams, and cleaning services all included in their fees. In India, as things stand, offices are designed to maintain 60–80 sq ft per person.

This means that an office of 10,000 sq ft currently accommodates around 166 people. With COVID-19 making social distancing the new norm, office spaces will have to be re-calibrated to maintain a minimum gap of 6 ft among employees. That typical 10,000 sq ft office will now be suitable for 100 people only.

Companies that require coordination between various teams may opt to take additional space in coworking offices nearby, instead of getting the teams to report to work simultaneously. Sign up for Newsletters Check out our popular newsletters and subscribe Rapid growth in the gig economy Long before COVID-19 struck, the gig economy was already experiencing rapid growth.

It was projected to grow at 17 percent CAGR and generate a gross volume of roughly $455 billion by 2023. Moreover, India is also the 5th largest country for flexible staffing across the world. With the gig economy already moving in an upwards trajectory, freelancers such as consultants and graphic designers have always turned to coworking spaces in search of more professional and well-equipped workspaces than their own homes.

As COVID-19 leads to an increase in unemployment and as companies turn to freelance and part-time staff in favour of full-time ones, we may witness an increase in demand for flexible working spaces. Not only do coworking spaces present a more professional working environment, but also the opportunity for freelancers to meet new clients within the community. Rise in online education Online classes are on the rise, with schools and universities being shut down worldwide.

This, however, presents a lucrative opportunity for coworking spaces. As any student will tell you, the ‘environment’ of education is key to determining the educational outcomes. Home and dormitories, being casual, become sub-optimal choices, as compared to coworking spaces. Remote learning experiences can be provided to interested students, via partnerships with schools and universities, and by offering students memberships at subsidised rates.

Who knows, the schools of tomorrow may well be decentralised, with the present being the point of inflexion in that revolution. Also Read How COVID-19 is transforming the education sector in India Revenge Working Have you heard of revenge spending?

Meet revenge working. Lockdowns and state-imposed shutdowns of companies have caused significant economic damage and many industries do not have the luxury of being able to work from home effectively. Industries across the board are gearing up to get back to work and pick up the pace the moment lockdowns are lifted. To resuscitate the economy, some business leaders even believe that Indians should work for 60 hours a week. We posit that when people get back to work, they’ll be hungrier and more motivated to make up for the lost time — at least in the immediate term.

Thus, coworking spaces that plan and prepare for members spending longer hours stand to gain. But what can coworking spaces do today to ride out this Pandemic? We take a look at some of the best practices by large players in the market. It is clear that social distancing and lockdowns have become an existential threat to coworking spaces, many of which have now turned digital to sustain their communities.

Yet, the industry also faces a myriad of opportunities once the crisis abates. Having weighed up the threats and opportunities, let’s take a closer look at what we think the future of coworking might look like. Looking Ahead The coworking business model is a unique mixture of real estate and experiences.

After the pandemic, both aspects of the business model will see some changes. Real Estate Lease arrangements The coworking model came under criticism last year due to an inefficiency in the lease arrangements where companies were taking long-term leases from their landlords and giving out short-term leases to their tenants. Having seen a loss of revenue almost overnight during COVID-19, coworking spaces will be more cautious with their lease arrangements. This may include negotiations for alternate lease arrangements such as revenue share models or shorter lease terms.

Private office spaces COVID-19 has inadvertently functioned as a giant work-from-home experiment. With social distancing now hard-wired in our brains, coworking spaces may optimise their floor layouts to mimic it in their offices, while simultaneously balancing it with community interaction. Further, large companies seeking to trim operations may opt for more flexible arrangements, leading to a potential rise in private-office spaces or open-close office spaces.

These office spaces would be large enough to accommodate small- to medium-sized teams, yet affording teams the opportunity for community interaction with others. Alongside private office-spaces, we may also see an increase in private cubicles, as freelancers and ‘hometrepreneurs’ recognise the limitations of working from home and the benefits of office amenities.

Small houses tend not to lend themselves to a productive work-from-home culture (the average household size in India is 900–1,200 square feet). We posit that freelancers will be driven to coworking spaces, which provide access to a greater amount of space as well as private cubicles for privacy if desired. Rise of corporate and private coworking spaces Corporate real estate companies may find their properties under-utilised post the pandemic.

With the demand in coworking spaces increasing, these companies will look to enter this market by creating bespoke, niche, and standalone coworking space outlets to efficiently manage their unused inventory. This would provide an opportunity for the current coworking spaces to find partnership opportunities with these corporations.

Experiences Heightened sanitation and touch-free experiences Consumer behaviour is changing to a more cautious approach, with heightened sanitation and touch-free experiences atop the hierarchy of needs, and handwashing and mask-wearing being imbibed into our values. As such, we anticipate the increased frequency of surface disinfection and cleaning in coworking spaces to remain, opening avenues for coworking spaces and technology startups to design and implement a full suite of contactless experiences, from visitor management systems like Zerone’s contactless visitor management systems to social-distancing breakout sessions.

No more frills With both investor confidence and cash reserves low in this industry post-COVID-19, coworking spaces will have to take a more no-frills-approach towards their services. These spaces will have to let go of some free events and services, and would instead have to explore more efficient ways to leverage their community to maintain brand loyalty and create inelasticity.

Specialty value-added services With the surge in revenge working, coworking spaces will see a demand in speciality value-add services. These include basic professional office amenities like access to meeting rooms, mailing addresses and answering services. Apart from the basic professional services, demand for new services like mental health services would also crop up with people working all these extra hours.

Coworking spaces would need to cater to this demand by providing services like meditation sessions and para-counselling training for staff. Online community experience A major and rather latent aspect of every coworking space is the ‘community’ experience. Having been dealt a COVID-19 blow, these coworking spaces have had to make efforts to replicate this offline community online.

Even when the coronavirus pandemic starts to abate, mainstream society will not return to normalcy at once. There will be an initial ‘test the waters’ phase, which will last for varying periods, based on each individual. Therefore, to ensure loyalty, coworking spaces will have to set, but more importantly, maintain the bar of their online experiences high. COVID-19 as such has upended the traditional meaning of “work”. During this time, we can no longer enjoy watercooler chats or the luxury of face-to-face meetings. Instead, we grapple with Zoom calls, and define for ourselves new concepts of “work” entirely.

Coworking spaces have been, and will continue to be, significantly hurt by lockdowns and social distancing requirements, but several opportunities for the industry lie at the end of the proverbial tunnel. This may truly be a time to sink or swim, and coworking spaces that can be early adopters will truly have the opportunity to shine and become the future of workplaces.

Read more at:

by zerone zerone No Comments

How this startup by ex-KPMG exec is providing payments solution to credit-starved merchants – YOURSTORY

Sindhu Kashyaap 20th Dec 2019
Today, we are living in a society driven by technology, which in turn is transforming the business and customers. But for 47-year-old Jaijit Bhattacharya, tech-led societal transformation has been the proverbial Gordian Knot. Jaijit always believed that the financially abundant have access to systems, processes, and technology that a majority of the population does not have access to.  According to him, this begins with the cost of credit. The poor have to pay a much higher cost of credit as they do not have a credit rating, which comes from the fact that they have perhaps never taken an institutional credit. “This becomes a vicious cycle wherein one does not have access to institutional credit, and so one does not have credit scores, and hence do not get institutional credit. So, the idea was, could we get at least small retailers get access to credit by leveraging their payment data? However, that would imply that we would need to provide them with access to digital money in a low-cost manner,” says Jaijit.
This led him to start Zerone in 2018 in Bengaluru. The startup provides SoftPOS (a software that converts the smartphone into a payment POS machine) solution built on its proprietary technology SoftPOS.
What does it do? Zerone was started to provide small retailers with a low-cost and highly scalable digital payments system that could accept all kinds of payments, including card payments.  “This could happen if we could convert their existing smartphones into payment PoS machines by simply downloading an app without the need for additional hardware. One could create such an app using Near Field Communication (NFC), but unfortunately, less than two percent of the phones in India have NFC,” says Jaijit.  Hence, Zerone started building an alternative to NFC that would work like NFC on all mobile phones. Jaijit says, this technology solved only one part of the problem, which was to provide cheap POS machines in a highly scalable manner. The other part of the problem was to provide low-cost credit to small merchants. For this, Zerone developed a technology that converts all smartphones into POS machines, and users can make payments with a simple swipe of their phone.“We allow any smartphone to be converted into a payment POS machine without the need for any additional hardware to be attached. The SoftPOS accepts payments by another phone waving on the SoftPOS phone or by tapping a card on the phone or by using any existing app such as PhonePe, Paytm, GPay, etc., to pay through a QR code that can be displayed on the screen,” says Jaijit. 

How does it work? Zerone allows small merchants to avail low-cost credit based on their payment data. The criteria to provide low-cost credit to small merchants is the ability to accurately assess their credit risk profile based on proxy date, and being able to disburse low value credit quickly at low cost, and being able to collect low value repayments at a low cost.The ZUP SoftPOS enables the above in a seamless orchestration of multiple technologies. “We have filed for four patents on the technology, including two in the US. This technology allows our SoftPOS to initiate payments when one phone waves on top of the SoftPOS phone, without the need for any additional hardware. We use radio frequency waves to orchestrate the payments,” says Jaijit.

A merchant has to simply download the ZUP SoftPOS app and on-board themselves through the app. This would involve doing the eKYC and providing their bank details for remitting the payments. Based on the data available, a credit line will be made available to the merchant, which they use to make payments against invoices.  The credit line is provided by a backend bank/NBFC. They also help the retailer collect payments from their customer through the same ZUP SoftPOS. The amount received from the retailer’s customer is then used to start making repayments against the credit taken by the retailer. The ZUP system orchestrates the entire retailer payment and credit experience, including default management.The offering works as a payments-credit combined platform that aggregates retailers, banks, and the extended ecosystem, rather than treating it as a standalone payment or credit system. 

“We target middle-of-the-pyramid retailers who operate in a trusted ecosystem. We charge a fixed-monthly fees for the combined offerings of SoftPOS and credit,” says Jaijit.  While the team refused to share how much it charges the merchants, Jaijit says, “Our incremental cost of deployment of one more SoftPOS is near zero. The key cost is in outreach to the retailer, which we have significantly reduced due to our unique go-to-market approach. Our cost of on-boarding one merchant is a fraction of the cost borne by other players who also need to do merchant on-boarding.”

The team Jaijit graduated from IIT Kanpur and has an MBA from IIM Calcutta. He is also a PhD from IIT Delhi. Before starting up, he worked for Arthur Andersen (currently Accenture), IBM Research Labs, Oracle, Sun Microsystems, HP, and KPMG India.  At KPMG, Jaijit met Richard Rekhy, a CA, and the CEO of KPMG India. “Around 2016, I started working on this technology as a hobby, and kept Richard updated on the developments. By 2018, we ended up building a very strong technology and we took the call to take it to the market. Richard quit KPMG in 2017 end, and I moved on from KPMG in 2018 to commercialise the technology,” says Jaijit.  The duo roped in Pia Bruce, a senior advisor for the UN Women, Co-founder of Angels of Impact, and a founding member of Aidha, which is a micro-business school for domestic workers. She has a Master’s from Harvard University. Another team member is Parag Deshpande, a Former Member of Board and VP Operations of Amex Biz Solutions.  The other team members include Aditya Loonkar, a CA and former manager with KPMG’s International Taxation and Economic Valuations practice, Akshay Kapoor, who has experience in payment processing and rural loan management, a former banker with Axis Bank, and has an MBA from XIMB, are also part of the team. Vivek Sharma (25) brings in deep technology experience in development and deployment across 12 large projects.The market and funding  The team members initially invested their personal savings into Zerone, and also raised funding from angel investors. Recently, Zerone raised a round of funding from Anthill in the form of Convertible Notes.

Speaking of their investment in Zerone, Devang Mehta, Managing Director, Anthill Ventures, says, “Zerone has shown early promise to be a strong disruptive force in the fintech/payments space. It has a talented team, compelling IP, and a huge growth potential. We look forward to partnering with Zerone, and be in their explosive growth trajectory”

Some of the other prominent players in the space include sound-based payments provider ToneTag, which recently collaborated with Japan’s GMO Payment Gateway. In October last year, ToneTag tied up with First Abu Dhabi Bank, one of the largest banks in the UAE, to deploy sound-based contactless payments. ToneTag counts Amazon, MasterCard, and Reliance Capital as its investors.  Speaking of their future plans, Jaijit says, “We would like to take the platform to other economies that face similar challenges. We are already in preliminary discussions with potential clients in Vietnam and the Philippines. We would also like to provide additional services through the same platform that enables digital proximity interactions. One can download Zup app and be able to exchange contacts by simply swiping one their phone over another. We would like to help build a larger ecosystem, so there is considerable stickiness to the platform.