PlaceTech: Knotel Expands London Footprint
As published in PlaceTech
The flexible office provider has confirmed two additional London locations, totalling over 23,000 sq ft.
The two locations are both situated in London’s Soho quarter, with 11,000 sq ft at 7-11 Noel Street and 11,900 sq ft at 33 Soho Square.
The company, which offers customised spaces to firms with 50 or more employees, has an overall London footprint of 240,000 sq ft across 18 locations, and more than 3m sq ft globally.
Eugene Lee, chief investment officer at Knotel, said London is a “key global hub for Knotel”, and businesses in London are “incredibly receptive to the flexible office offering.”
Knotel’s customers include Microsoft, Domo Europe, Starbucks, Knight Frank, Lastminute and Twilio.
Launched in 2016, Knotel has raised $160m in funding, supported by a team of investors including commercial brokerage Newmark Knight Frank, and venture capital firms Bloomberg Beta and Norwest.
Edward Shenderovich KnotelPlaceTech spoke to Edward Shenderovich, co-founder and chairman of Knotel, about the beginnings of the company, the current state of the space-as-a-service market, and Knotel’s plans for this year. NB: How was the idea for Knotel created?
ES: We originally started a technology company called Knotable, and created a product called Knote, which we still use internally. We took a larger space than we needed, it was 5,000 sq ft for the two of us because we felt that we were both seasoned guys and we would build a vast global enterprise, as Amol Sarva [co-founder and CEO of Knotel] said. We filled it up with friends, and then some of these companies started growing, so we took another floor in the same building and that floor got filled up. Then we took another floor and thought, this strange real estate thing is really feeding our software business, why don’t we take it seriously?
We identified that our competition wasn’t coworking. When we started Knotel, WeWork and 143 other coworking companies existed, and within a year we became the second largest flexible space provider because we didn’t go after this highly competitive coworking market. We went after the other 98% which is just office, with our competitor being the lease. When we were building Delivery Hero, my previous company and one of the largest online food ordering businesses in the world, our competitor was not any incumbent in the space – it was the telephone. In any country in the world the telephone is still responsible for the majority of food orders, and online companies like Just Eat, Deliveroo, Delivery Hero, and Seamless are just a fraction of the market. With the lease it’s the same, it’s the incumbent and the incumbent is weak. It doesn’t innovate, it’s fed by inertia, and we will try to be better than that.
The space-as-a-service market
Coworking has been a wedge which the flexible space market used to show the owners and customers that flexibility is really achievable. I think coworking is somewhat of a limited use case, it’s expensive for companies, and also expensive to build. You change the use case of the space and ultimately companies don’t cowork, they work. No one likes to cowork, people want to work and achieve goals. They want to feel that they’re part of a creative and innovative environment, but it doesn’t mean that they need to be surrounded by other companies. I think that we are at a level where coworking is certainly more saturated than flexible as a whole, and flexible has a lot of room to grow. Flexible could be 30% of the market as JLL says within 10 years, it could be 50% of the market in some places. Ultimately, all space should be flexible. Why should anyone sign a lease? How can you sign a 20-year lease when often a company cannot plan for two years in advance?
Plans for 2019
We’re in eight cities globally right now, we will probably be in 15 by the end of the year. In every city where we are, we will double or more before the end of the year. We will also expand within cities and make our products better. Ultimately, we want to bring flexibility to companies across a number of sectors. Not only flexibility in terms of being able to flex up and down in the spaces they have, but also to have flexibility in the space that they occupy as it relates to their business processes. To be able to change the space to move things around, and to create new work areas. Internally, as we grow, we are focusing more and more on our culture and internal communications and making sure that the people that join our company can achieve their fullest potential.