WeWork India CEO: India is not price-sensitive; it's value-driven

Flexible workspace provider WeWork India has now forayed into Chennai with the opening of its co-working facility at Olympia Cyberspace, in Guindy. The facility spans across 1.3 lakh sq ft and can accommodate 2,000 seats across two floors.

Amid Chennai’s thriving business landscape, WeWork sees a surge in demand among entrepreneurs, enterprises, and global capability centres for flexible workspaces. It is also planning to expand in three other locations in the city, including DLF Cyber City.

WeWork India Chief Executive Officer Karan Virwani discusses the company’s Chennai debut, growth outlook, the WeWork Global debacle, and ambitious listing plans in an exclusive conversation with The Federal.

Edited excerpts:

Why is Chennai considered a lucrative market for WeWork India?

Chennai has a lot of things working for us.

Firstly, the fact that it is a manufacturing hub and a lot of business activities that come along makes it imperative for us to expand here.

Secondly, Global Capability Centres (GCCs) see Chennai as a strong touch-point largely because of the affordability of real estate and access to talent that caters to what they’re looking to set up. These are areas we at WeWork are looking to capture.

(GCCs are business hubs established by large enterprises to tap global talent, resources, and expertise.)

We also thought this was the right time for us to foray into Chennai purely because the office market has shifted a lot over the past two years. Last year, Chennai did almost 10.5 mn sq ft of office leasing, which is double of what it has ever done at its peak. It was almost 20-25 per cent of the entire country’s leasing last year. This indicates there’s a robust shift in demand in the city, and we would like to have multiple locations and not just one.

India has been a price-sensitive market and your pricing seems higher than your competitors'. Do you see this as a potential challenge as you scale up your business?

I think India is a value-driven market and not a price-sensitive market. India pays when they know they’re getting quality service. They are quite demanding in terms of what service levels they want from a particular product. I don’t think people are shying away from paying.

Our customers predominantly look at whether the workspace they operate in reflects the kind of business they are in.

We do have a mix of pricing as well – our lowest pricing might be closer to 11k to 12k and our highest could be 50k to 60k. Therefore, I don’t see any pushback, as such, on how the spaces are priced. We do also offer a comprehensive digital product stack with which we’re able to eliminate the price barrier.

WeWork India managed to cut down losses quite drastically and witnessed revenue grow over ₹1,000 crore last year. What’s your outlook for the current financial year?

Yes, that’s right. Last year we closed at about ₹1,800 crore of revenue and ₹410 crore of EBITDA. We were PAT positive by ₹70-80 crore.

While I can’t give you the exact numbers, we hope to grow our topline by 30 per cent and bottom line by 50 per cent. That's the trajectory we have set, at least for the next 12 months.

WeWork Global has been in the headlines for all the wrong reasons. The company has a 27 per cent stake in WeWork India as well. You did talk about the differentiated approach at WeWork India which has kept the company immune from the WeWork Global fiasco. Tell us a bit about what’s going right at the India affiliate and the lessons you have learned.

I would just limit it to focus. We were focussed on unit economics and made sure not to deviate from the core part of our business. We have no guns to our heads to have hundreds of locations within a certain period. We’re actively growing our business in a more sustainable way. We invested our own capital through the Embassy Group for 3-4 years, and we didn’t have any external capital coming in.

It was only in 2020 that WeWork Global put in $100 million. That again was in a distressed situation really. In the middle of COVID, the business needed capital infusion to survive the pandemic. We have never been a venture capital-funded business, and we have been frugal. I believe that worked in our favour.

There were reports about the Embassy Group planning to take WeWork India public. Are you looking at a listing any time soon?

The article was just speculation. The listing has become an interesting path, especially since the last couple of weeks. We’re definitely looking at it, but we don’t really have any timing attached to it.

So, no draft papers this financial year?

(Laughs)… I don’t know. With these things, we can’t put a time-stamp.