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The co-working wonder

Amit Ramani, who’s been coming to his Delhi office every day since May, says if you don’t have resilience in your DNA, you cannot be an entrepreneur. (Photo: Pradeep Gaur)Premium
Amit Ramani, who’s been coming to his Delhi office every day since May, says if you don’t have resilience in your DNA, you cannot be an entrepreneur. (Photo: Pradeep Gaur)

  • Awfis’ CEO Amit Ramani on sailing through the pandemic, strategies to make profit during a global crisis, IPO plans, and why it is important to be paranoid to be successful
  • Ramani has been involved with eight ventures, including Awfis, over the years, four of which were failures. These include a business selling Ayurveda ‘amla’ shots

The workplace I’m looking at through my laptop camera is attractive but unassuming. A well-designed conference room is fitted out in a contemporary palette of shades and materials, accompanied by clusters of workstations and smaller meeting rooms. Leadership quotes and cityscape illustrations decorate the walls—nice enough, but not remarkable.

What is visibly exceptional, though, is my subject’s big smile beaming back at me, with a good reason. While his industry has been stumbling during the pandemic, this chief executive officer hopes to double his company’s capacity by the end of the year. I’m speaking with Amit Ramani, 46, the founder of co-working provider Awfis Space Solutions. He works from an open-plan desk in a little nook of the office. Located in New Delhi’s Qutab Institutional Area, he has been coming here every day since May. The workplace reflects the company ethos: a professional work environment with broad appeal, to startups and corporates alike.

Ramani represents an interesting phenomenon. To paraphrase the famous saying by American entertainer Eddie Cantor, he is an overnight success, 20 years in the making.

The growth hack

Flexibility is at the heart of co-working, and so it is unsurprising that many co-working outfits saw client occupancy drop during the prolonged lockdown, as tenants chose to cut down on rentals. Long-term leases from landlords became a costly burden for co-working providers. Ramani, too, saw clients exit as soon as they could from his network of 72 centres in 12 cities, especially smaller cohort sizes on short-term leases, but he subverted the negative financial impact through his “managed aggregation model" of revenue-sharing with landlords. This model differs from conventional leases. It asks landlords to bear the entire cost of the office fit-out, except for white goods and IT equipment. Priority on revenue-sharing for landlords makes this a win-win partnership in the long-term, he claims.

“Over a nine-month period, we were able to get concessions for almost three months, almost 30-35% discounts, from our partner landlords, where it was a managed aggregation property. Our landlords were very flexible. There were minimum guarantees in certain cases, but they understood that we have made a lot money in the past for them. For one of our landlords in Hyderabad, we have delivered almost twofold returns consistently for two years. They were more than willing to partner with us for the future, and help us through the transition period of this challenge," claims Ramani.

He adds: “We have done 46 such managed aggregation deals going forward. We are going from 30,000 seats to 60,000 seats this year. In that doubling of capacity, 90% is going to be managed aggregation. The positive part of it is that if you deliver, those landlords become your ambassadors. It’s a very small community when it comes to a local city."

Ramani supplemented this business model with several new initiatives to keep the company going through the lockdown. These included a new facility management division, a new in-house fit-out division, and Awfis@Home, a work-from-home offering for both B2C and B2B customers. They helped to make the company profitable. “If we were only doing the co-working business, my revenue would have dropped significantly for FY2021, but because of these initiatives, that drop will be about 15 to 20%, from what we did in FY20. We will be profitable for the year," Ramani claims.

As always, luck and fortuitous timing helped. The company raised 200 crore in August 2019, just a month before global co-working provider WeWork’s spectacular failed IPO in September. The company held on to its “dry powder", says Ramani. “Between August 2019 and March 2020, we did not go crazy with our expansion. A large part of that funding was with us even in March and continues to stay with us, because our expansion strategy is on the back of our managed aggregation model. Once we saw the sales were picking up, we became extremely bullish as we are today. So we don’t need funding for this year. 2022 we will be at a point, if all goes well, that we will be generating enough cash flows internally to continue to fuel our growth. And 2023 is when we want to take the business IPO."

The wins and the learnings

This success was not guaranteed. Ramani has spent the past 20-odd years experimenting, and learning from ventures that were less than successful. The managed aggregation model itself was not an intuitive bet for most landlords at first, he explains.

“When we started in 2015, we were initially thrown out of the door. It was unheard of to ask developers to put in the money. It’s not an easy model to crack. In the first six months of the Awfis journey, we could not sell 70 seats. Today, we have built businesses that are generating revenue equivalent to the first three years of office business in six months," he says.

A serial entrepreneur, Ramani says that he has been involved with eight ventures, including Awfis, over the years, four of which were failures. These include a wardrobe and kitchen business, and a venture selling Ayurveda amla shots, both of which did not succeed.

He also encountered setbacks as a student. Having studied architecture as an undergraduate from the School of Planning and Architecture in New Delhi, he was keen to study further at an Ivy League college. He got admission at Cornell University but couldn’t secure a scholarship. “Kansas State gave me a full-paid scholarship, with a stipend and a teaching assistantship. So I went and did a master’s in architecture even though it wasn’t my first choice to be very honest," Ramani says. He followed it up with a master’s from Cornell in real estate and planning, which was “one of its kind, and really gave me the ability to completely differentiate. It provided workplace strategy at the core of the real estate program."

Accumulated experiences have left him with tangible learnings on being an entrepreneur.

First, he believes in being paranoid. Only The Paranoid Survive by Andrew S. Grove is a favourite. “In the first quarter, April through June, there was an extreme amount of paranoia in the company. I think that also gave us the grit and the ability to say ‘we have to take a few bets’."

Second, he emphasizes resiliency. “I think that goes without saying: If you don’t have resiliency in your DNA, you cannot be an entrepreneur."

Third, he highlights risk. “Every entrepreneur has to have an ability to take calculated risk, not unnecessary or astronomical risk, but calculated risk is something that we have done. And that’s the reason that we are where we are," he says, acknowledging that some ventures, such as Awfis@Home, have not met expectations, but they always lead to new learnings.

For Ramani, the future is visibly bright. “Any large customer that is coming up for renewal today is giving notice (to a commercial office landlord) lock, stock and barrel, and either going to a flex or giving up space altogether, or consolidating their portfolio. All three are happening as we speak. It is going to be a demonetization- Paytm moment for co-working… We have bids out there with five large multinationals, which have asked us give us five to 10 seats in 60 of your centres, give us a work from home option and consolidate a location for us in one of our cities."

The big smile looks justified.

Aparna Piramal Raje meets heads of organizations every month to investigate the connections between their workspace design and working styles.

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