Full Transcript

Dhruv Sharma: Hello, listeners, and welcome to the Wednesday live stream of the Offline Network. We're sitting with a very, very fun guest of, or we're sitting with a very, very fun guest, Utkarsh of MyHQ. He's a friend of Offline, he's a friend of ours. Utkarsh, welcome to the show.

Utkarsh Kawatra - myHQ: Hey, Dhruv. Hey, Utkarsh. Thank you so much for having me here.

Utsav Somani: To have you. We're all excited to catch up everyone, catch up with everyone in Georgia, where we're all heading as the Offline Founder retreat starts tonight as well. So excited. Thank you for agreeing to come on the show before. I read the temperatures are minus 15. Not prepared for that at all. Everyone's ready with their gear and stuff. So for our listeners, tell us what MyHQ is.

Utkarsh Kawatra - myHQ: So MyHQ is essentially a marketplace for commercial real estate. We help anyone looking for any kind of workspace or an office solution, ranging from an individual who's looking for a space for a day, instead of going to a Starbucks, needs a better experience, to someone, a company looking for a training room, to a company looking to set up in a state and needs a virtual office, to a thousand, two thousand employee strength company which is looking for an office. So an end-to-end sort of a platform plus a solution for anyone and everyone's commercial real estate need.

Utsav Somani: And you mentioned marketplace. There are other players in the market like say WeWork or SmartWorks. They've gone down the road of becoming full stack, where they own the real estate as well. And why the option of, I mean, give us the difference between these different models.

Utkarsh Kawatra - myHQ: So WeWork and SmartWorks have not been marketplaces to be honest. They've always been the full stack approach. So these are, let's say the partners which are onboarded on a platform and help them sell their space or sell the solutions on our platform. The advantage of a layer on top is, okay, it's very similar. We're like an Airbnb or a Magic Bricks in a way. So you look at a Magic Bricks or 99 Acres or an Airbnb. We have a solution like that, which is a platform. But then we don't, unlike a 99 Acres or a Magic Bricks, we don't have brokers who are calling you if you need anything. It's our team which is actually helping you do that. So it's a full stack approach, what we're doing. The reason why we think a platform is needed is real estate is a highly fragmented market. You've got about what 2,000 odd flex operators already there. The market is growing. The number of brands in this 2,000 is, these brands 2,000 is growing about 20-30% year on year. Then you got about a lakh odd good commercial assets in terms of offices, highly fragmented. And the market has moved online post-COVID. So unlike earlier where you would just end up calling someone to help you out, most people now search online, which is where we think we'll be able to capture this demand. So that's our thesis. And luckily, it's been playing out well post-COVID. To be honest, we would have looked very stupid pre-COVID. And yeah, I think you had refused us as an angel. So you would bag that out. Thank you for putting that tone there.

Dhruv Sharma: Utkarsh, the MyHQ of today has very, very diverse supply. I'm sure it wasn't always like that. So how did you go about aggregating all of the supply?

Utkarsh Kawatra - myHQ: See, honestly, setting up a company and running it as a journey, we never planned to be what we are today. We started with turning cafes or lounges into lounges, which are bars in the night to daytime co-working. That's how we started. We didn't have money. To be honest, we could not set up centers. Over time, it's evolved. COVID happened, a lot of cafes, markets shut. So that entire business of ours got shut in a day. We tried to revive it. But the market in terms of F&B outlets took two, three years to even come back up. So we were wondering what to do during COVID. And one of the solutions was work with expand the marketplace to real estate developers, expand the marketplace to flex operators. And luckily, that supply has increased and the demand for that supply has increased.

Utsav Somani: So would you do that business again? I mean, that idea makes sense on paper. Like I mean, there are so many cafes and restaurants which are probably sitting idle on like a Tuesday afternoon, which I think would make for a good working space for many people.

Utkarsh Kawatra - myHQ: So we're still doing, honestly, we're still doing that, but very small. Well, it must be like 0.1% of our business right now. We still believe that it will work. But it's mainly for a lot of freelance market, which I don't think in India, while there are a lot of freelancers, it's a big business. And then the usage is what twice or thrice a month. So your CAC was a CLTV, it'll take us either we burn a lot of money to build a brand and then everyone knows it, which we'd never had. But I just think the CAC or CLTV will never make sense with such a small use case where you hardly make money. At least right now, five years down the line, yes, maybe, or 10 years down the line, maybe yes. And we are there for them. So hopefully, we'll correct it then. That model.

Dhruv Sharma: And you said the freelance market, how do you guys categorize demand today? Like, do you say the startup market, you say the corporate market?

Utkarsh Kawatra - myHQ: So a lot more corporates. Honestly, the way corporates have come online has been a surprise to us. We've got the likes of Atata, we've got the likes of Reliance, Jio, all different kinds of companies, BFSI segments, different companies just coming online for different solutions. The expanse of solutions is what helps us get a foot in the door, honestly, because there's no one provider who's able to say, I'll give you a training room for a day. There's no one provider would be able to provide. There are a lot of offline brokers, but no one is able to say, I'll provide you a virtual office. No one is able to say, I'll give you a solution for your remote team. So the spectrum of solutions helps ensure that at least we're able to capture companies online for one or two of them. And from there on it, the CRMs need to stack up where they know all the solutions we provide, there needs to be a CAM approach, where you've got strong account managers, and then you just upsell, upsell, upsell, upsell, and then build business out. It's like someone in the market was doing working with them, left the door a bit ajar, and then we've got our hand there. And we just opened that up with corporates. Otherwise, in India, selling to go with this enormous leader. I underestimated that.

Utsav Somani: Do you think about building your own real estate supply also at some point where you own the property and put them up on your platform? Like a private label of sorts, but for real estate?

Utkarsh Kawatra - myHQ: Yes. In fact, so we don't call it like a private label, we do work with some landlords who want to run their own show, but don't have the bandwidth to do it. So we help them out. We're not running under our brand, per se, it's more their brand, but we are helping them manage it end to end. Not thought of a private label of our own yet. I think it will create a bit of a confusion between the marketplace and the brand. So that's that's the debate. But don't, in any marketplace, we have better terms with someone, we work deeper with someone, we prioritize those, so that's generally happens. And we have some of those partners.

Dhruv Sharma: Karsh, what's the nature of competition in the co-working space? Right? Is it is a dog-eat-dog? Is it a lot more collaborative than people would, you know, people from the outside?

Utkarsh Kawatra - myHQ: Any business is a dog-eat-dog world.

Utsav Somani: And ask Dhruv, like, which business does he think is not dog-eat-dog world in India? Can you give us an example of which is collaborative?

Dhruv Sharma: Yeah, you're asking me, right? It's what I've learned. It's certainly not the co-working business.

Utkarsh Kawatra - myHQ: No, but honestly, during COVID, everyone is collaborative because everyone is struggling. When everyone is struggling and everyone has one devil to capture, then that's the collaborative approach.

Dhruv Sharma: So the next question, what would people undercut each other on? Was it price?

Utkarsh Kawatra - myHQ: Price, always. You'll work out some different terms, which will help you acquire a customer. See, real estate is an asset, you're losing money on a daily basis. Right? Which is where, as I said, as a market base, it helps us. Because people, if you don't sell the space out for a day, you're losing that money. So the inventory is getting lost, which is where they need to sell it fast. Which is where they need to incentivize and get the customer up and running faster, and maybe work with us better to actually fill it out.

Dhruv Sharma: Is that where the role of brand came into picture?

Utkarsh Kawatra - myHQ: Which brand?

Utsav Somani: Sorry, is that what I didn't get your question? We're talking about the brand, like, we will pay a premium for that. Yeah, 100%.

Utkarsh Kawatra - myHQ: But the other thesis is real estate will always be very fragmented. So I don't think it will ever be a winner-take-all market. So as an example, we've seen enough places, let's just say there's a big brand, ABC, which has set up the co-working, has run it fantastically well, has made tons of money on that center. Five years down the line, the landlord will see someone else is making more money from that. Once that lease expires, he will say, okay, ABC brand, can you go? I will run it. I will, I want to make that money.

Utsav Somani: And real estate in general has such a bad connotation to it, because there are just insane number of cases that have been filed back and forth, like property disputes and stuff. So I can imagine the complexity that goes into running a co-working space as well, because these landlords, I mean, minute they think that I was, I mean, AngelList India actually started a co- working space as well. And I think Springworks was the partner that we chose to, get a conference room from. And I think minute that, I mean, the property in itself was doing good where, I mean, it was full seats and stuff. The landlord, I think, kicked them out or terminated the thing in a bad way and said that, oh, we'll run this ourselves because now we have tenants sitting. But I mean, imagine platforms and co-working spaces always keep, I mean, helping upkeep of the place, but also an inflow of like people, right? And startups that way are typically, I mean, low LTV customers, because you never know what's going to be the case, like in one year down the line, two years down the line.

Utkarsh Kawatra - myHQ: But the good part, at least I hear the negatives.

Utkarsh Kawatra - myHQ: And we've been hearing the negatives for a while on the real estate market. But the positive is that now we're seeing a lot more mature real estate developers, and especially a lot of second generation guys, where you've got massive landlords who want to build a business for the second generation folks. And they think, okay, the flex market seems a good business, which is a combination of real estate and hospitality, and helps you increase your asset yield. So if your asset yield was 7-8%, running a center will give you 10-12%, where you can actually maybe flip the inventory faster, flip the asset faster. So that way, economically, while it's all making sense for the landlord to run it on his own, as long as he can get a partner who helps him fill it up, which is where we kind of come in. If he wants to run it on his own, we'll say, okay, we will help you run it. If there's a brand which is running it, we'll still help it. So that's where I think it helps out for us. It works out well for us.

Dhruv Sharma: Because we obviously have to ask you the Aniroc question, how did the journey for MyHQ, how did it differ before and after that strategic M&A took place?

Utkarsh Kawatra - myHQ: Yeah, that itself is a journey. See, Aniroc, as you rightly said, is a strategic investor in us. What happened was, in COVID, we were pretty much down and out. We had that 1% glimmer of hope that we'll make something out of it. There were three waves. After each wave, we would get up. But by the third, we were not willing to get up, to be honest. That was the tough point. We gave ourselves like six, eight months. I think it was what, June, July was the last day. And then till March, we were like, let's figure it out. If we can find a good home for the company. Aniroc came in, became a strategic investor. We did not honestly plan to run it. Like all founders, when some strategic comes in, you think, okay, two years, you'll say, okay, bye-bye. That was the initial thought, maybe. But I think we love the people. We really like the people, they give us the independence to work. It's not like they own the majority, we still have our equity here. They gave us the freedom. They helped us open doors. And the market also, the business also grew. So with that, what that 1% hope was, slowly became 10, 20, 30, 40, 50. We saw there's money to be made. We saw the business was growing 2, 3x every year. And then just things started looking up and then we step on and we're building a great business now.

Utsav Somani: Yes. For my issue now, after this. Sorry? What do the stats play in terms of number of seats, number of offices, number of cities that you're present in?

Utkarsh Kawatra - myHQ: So we have a team of about 250 to 300 people now, a profitable company.

Utkarsh Kawatra - myHQ: This year, we would be at a run rate ending the year or at a run rate of about a close, I don't know whether I should mention dollars here or not. But about seven to eight CR or about not now not a million dollars with the $90 but 90 rupees but yeah, about seven to eight CR monthly run rate of the net revenue that we make. So this is not the transaction. So essentially, we'd be at 100 CR net revenue number, which roughly translates to about a 1000 crore of space being sold through us as a platform. So yeah, that's not a bad. Not too shabby. Yeah. And this number in 2023 or whatever, that's when COVID ended, right? 24 was 2 CR.

Dhruv Sharma: And if you guys are the Airbnb of office space with Karsh, let's do a quick 2022 or 2025. COVID is still two years behind us. So what's the biggest office space you've seen this year?

Utsav Somani: So a couple of one or two fun questions to end the show and let's get back in for Georgia as well. Okay.

Utkarsh Kawatra - myHQ: So there was I think Bolt's office. I don't know, Varun's office. Do you remember that? Oh yeah, Varun Bolt, right? Yeah. So I like people who put their brains in an office, right? So the way that they did the arches, right? Everywhere you see glass facades, but you've not seen arches. So that I think is one of the highlights.

Dhruv Sharma: But to get into Varun's office, you have to be a friend of Varun's, right? I'm saying places that you can actually book on MyHQ.

Utkarsh Kawatra - myHQ: Yeah, that. I got...

Dhruv Sharma: You've put an architectural digester, right?

Utkarsh Kawatra - myHQ: We're covering those as well.

Utsav Somani: But that's actually a very good office. And I remember him telling us that he had to go through a lot of hoops because you typically don't have that ceiling height to do that, especially at a DRF property.

Utkarsh Kawatra - myHQ: And I think we've got some fantastic people. So I think we'll be exploring delicious houses. We're doing a series on the kind of amazing offices as well. So there are a few planned up. But okay, now coming to the question that you asked, in terms of great spaces, I think there's a new brand, which is Singapore brand, which is coming in India. We should be launching by Feb. I've seen the layouts, etc. Just go. That should be... That's fab. And I've seen the center. Then there's one which is... So I personally like Rosiate quite a bit. So Rosiate has this lounge area. Which we have... So that's a very nice lounge area to work. If you're going for a one-day experience.

Utsav Somani: Which does it cost if we book it on MySQ100? It's about, I think, a thousand bucks or 800 to 1000.

Utkarsh Kawatra - myHQ: Not a lot. And they give you obviously free tea, coffee, very fancy tea, coffee, and all of that. Amazing experience. Most of the CEOs who want to work in Aerocity use that. Then I think in Bangalore, I personally like WeWork quite a bit. I love the... There's one on MG Road. I don't remember the exact name. I think Prestige is the one. That's the one.

Dhruv Sharma: You guys have a special... This thing with WeWork, right? Like what is that? Yeah.

Utkarsh Kawatra - myHQ: So WeWork is also... WeWork India is also an investor in the firm. So we have Bandrock and WeWork India as investors. We manage the on-demand tech and the sales on that vertical entirely for them. And so, yeah, on-demand, that's doing well. In fact, we're getting a few more such partnerships with some other brands. So that should be exciting as well. So what happens is some of these brands come up and they know that these verticals will grow. They don't have the right P&Ls for it. They don't have the right people. They say, okay, can you just build it out? Or we have the solution. They don't have to build the tech for it. We take up the responsibility of increasing that number for them. So it's like an outsourced P&L for them. And it works well because as a marketplace, we have that exclusive brand with us. So, yeah. Awesome.

Utsav Somani: I think we'll cover in Georgia. Dhruv, you asked Utkarsh to bring his running shoes for going running with you in the snow?

Dhruv Sharma: Yeah, we could try. How's the running coming along though?

Utkarsh Kawatra - myHQ: Honestly, I've been trying, but I cannot run in Delhi. I struggle at 4-5 kilometers and I'm wondering whether it's the pollution. I just mean not being consistent. I don't know the answer.

Utsav Somani: Glorified environments. Luckily, we're privileged to do that, which most of Delhi cannot. So I think it's just sad that... I mean, what's happened to our city? I hope they come up with a solution soon.

Utkarsh Kawatra - myHQ: I am wondering, but I'm carrying my running shoes still.

Utsav Somani: I hope that I'll be able to run. On the slopes then, Utkarsh. Thank you for coming on the show. Perfect. Thanks, Dhruv. Thanks. Cheers. We're ending the Wednesday stream early. We've got to pack our bags. As I mentioned earlier, we're heading to Georgia for the offline annual founders retreat. It's a good, good group coming together, including Utkarsh and many friends of offline. So Dhruv and I will be taking Friday off and we'll see you on Monday. And next week we'll stream some glimpses of...