The co-working industry, while not as highly discussed as AI or VR, has become the hotbed of deal activity globally, moving from the niche market to the mainstream. And if anything, New York-based WeWork can testify for it.
Right after SpaceX and Palantir, WeWork is the 7th most valuable startup in the world with a most recent US$20 billion valuation. The co-working startup has reinvented dull offices as platforms for creators and is now even moving into homes.
In Asia, co-working startups are also headlining news with Chinese co-working firm Ucommune recently acquiring rival Woo Space and boosting its valuation to US$1.7 billion. Meanwhile, Second Colony has also reported opening its new luxurious co-working space at KL Eco City worth MYR4.6 million, and that’s just the news published yesterday.
But unlike the co-working sphere in the United State, where VCs have already settled for their favorite spot. The Asian scene is still pretty much open for game with recent trends in the co-working industry seeing startups beginning to form alliances, in an effort to strengthen their foothold in the growing market.
Ucommune, formerly known as UrWork has made two acquisitions in the past three months, one Woo Space and the other was New Space earlier this year, which allowed it to attain the unicorn status with a boost to valuation of US$1.7 billion.
To date, Ucommune has grown to cover more than 100 locations in more than 33 cities, claiming the title of Asia’s biggest co-working space with offices in China, Singapore, London, and New York – servicing over 4,000 enterprises with 50,000 members in total.
However, the co-working space in Asia is still undecided, as the market in the Southeast Asia region still sees a disperse scene of local and regional co-working players making their foray into the market. In Singapore, local coworking pioneers like JustCo are also aiming to dominate the Asia market, while WOTSO still dominates as Australia’s largest coworking space.
There’s little doubt that a co-working startup will continue to grow and one will emerge on the top in Asia, like how WeWork stands in the United States right now.
It’s not just about creating a fun, friendly atmosphere with slides as stairs and an ever-full pantry. At its core, co-working or collaborative sharing spaces is a real-estate sector that has cleverly packaged and positioned itself as a tech play attracting top-tier investors and major developers. The key is in how they can manage the space.
The competition between China and the United States in Artificial Intelligence (AI) development has always been ongoing and tricky to quantify. While there has been some hard numbers, they have been open to interpretation.
The latest numbers were derived from technology analysts CB Insights, which reports that China has overtaken the United States in the funding of AI startups.
Then again it’s not a straightforward victory for China. In terms of the volume of individual deals, the country only accounts for 9 percent of the total, while the United States leads in both the total number of AI startups and total funding overall. That is to say China is ahead when it comes to the dollar value of AI startup funding, and according to CB Insights, the country accounted for 48 percent of the world’s total AI startup funding in 2017, with the United States comparatively holding 38 percent.
This certainly does not come as a surprise, as truth is China has always been aggressive with its quest to become the global leader in AI. The reason behind China emerging as an AI hotbed is because of its government support and growing venture capital funding.
China’s natural advantages in AI are well-documented. For one, the country has a huge population of 1.4 billion people, which offers a wealth of data and opportunity for companies to scale quickly. Not to mention, China’s thriving mobile Internet ecosystem also provides a test bed for AI researchers to collect and analyze valuable demographics and transactional data.
Besides, its AI sector also has the backing of a central government that’s able to quickly shift resources, and the country’s looser approach to digital regulations means companies can experiment more freely.
The rapid growth of AI in China can also be witnessed in Beijing as they laid out a development plan in July 2017 to become the world leader in AI, with an aim to build a domestic AI industry worth at least 1 trillion yuan (around US$1,5 billion).
Chris Nicholson, a former Bloomberg news editor who co-founded Tencent-backed artificial intelligence firm Skymind told DigiDay, “We saw lots of interests in AI in China, and the sector is moving so fast in the country. Beijing supports AI, while Baidu, Alibaba, and Tencent are all getting into AI.”
Research firm CB Insights also selected seven Chinese startups – including English teaching app Liulishuo and ByteDance, news aggregator Toutiao and Musical.ly for its AI 100 list.
Meanwhile China also has its own AI unicorn – iCarbonX, a biotech company has achieved its US$1 billion valuation after its Series A. The startup built a digital life ecosystem combining biological, psychological, and behavior data with internet technology and AI.
2017 has ended, but it will always be remembered as the year of the bitcoin.
It can be hard to forget with the rates of cryptocurrency surging more than 400% since January or the amusing name change of the ice tea company inspired by blockchain.
Still, there remain many rhetorics about bitcoin and its backbone technology blockchain. Some experts speculate it as another dot.com bubble, while others are predicting that its value will continue to rise.
Nevertheless, cryptocurrency has definitely driven a lot of attention and awareness, from interested investors to head-scratching audiences who are still unclear of the trend.
Bitcoin, blockchain, and cryptocurrencies – to date some might have used them interchangeably but cryptocurrency at its very core dictates the facilitation of peer-to-peer transaction.
Few people are aware, but cryptocurrencies emerged as a side product of another invention. Satoshi Nakamoto, the unknown inventor of Bitcoin, the first and still most important cryptocurrency, never intended to invent a currency.
At first, he was looking to develop a peer-to-peer electronic cash system. It’d be decentralized with no server or central authority but still be able to prevent double spending.
Through this Satoshi came up with the idea of a decentralized network – one where every single entity of the network is to hold the list with all transactions to check.
In other words, a cryptocurrency like Bitcoin consists a network of peers. Every peer holds a record of the complete history of all transaction and thus the balance of an account.
If a transaction is confirmed, made permissible by the user public key cryptography, then it’s set in stone and no longer reversible, becoming part of an immutable record of historical transactions of the so-called blockchain.
This makes sending money as easy as sending an email. It doesn’t matter where you are, or where you are sending to but the effect of cryptocurrency is to save money.
The invention of cryptocurrency didn’t just benefit business transactions, it opened up an industry and also many possibilities.
Of course, one being the financial business we are all so familiar of, which uses cryptocurrencies because of its low or close to none fee, as well as its instant ability to move any amount of money around.
On the other hand, there are those that utilize it for its blockchain technology, the decentralized network that allows every entity on the network to receive the same message at the same time.
Shiraz Malik, a regional expert even foresees it being implemented in the systems of airline companies through blockchain-powered loyalty programs and user-friendly mobile services. According to the expert, the technology would allow for streamlined authentication, data distribution, and security protocol.
“Blockchain can ensure that everyone involved in travel – airline crew, airport staff, ground services crew and passengers – have access to the same, up-to-date, verified information about arrivals, departures, and delays,” said Malik, who is vice president of sales APAC for CellPoint Mobile.
“This can help to avoid situations where airline and airport websites, mobile apps, text messages, passengers and staff members have outdated or conflicting information about flight statuses.”
Despite the speculations surrounding bitcoin, the frenzy, however, is proving to be essential in the developing markets of Southeast Asia.
In fact, most Southeast Asian startups are embracing cryptocurrencies both as investment products, as well as cost-effective methods for offering services.
So much that the remittance economy in the Philippines is the highest in the world – contributing to US$26 billion in a single year alone.
According to Forbes, approximately 10 million Filipinos have employed abroad, and this statistics does not include workers who are taking jobs in the cities, so they can send money home to their families in the more remote area.
That’s an arduous process when overseas domestic workers try to send money back home. They face steep fees relying on traditional cash transfer services. Even then, there are no guarantees that the beneficiary will be able to receive it, nevertheless receiving it immediately.
According to Mikko Perez, the founder, and CEO of Ayannah, it’s also not uncommon for agents to run out of money and force receivers to return the next day. It is generally time-consuming for people who have to travel hours just to pick up their money.
Stepping in to solve these issues, startups, and services like BloomSolutions Inc or coin.ph are using cryptocurrencies as a solution to reduce remittance fees, in addition to driving financial inclusion.
This is through creating crypto-powered services, accepting bitcoins from overseas and converting them into pesos, dinars or any desire currency, then deliver those funds to the final beneficiary through domestic transfer methods.
There’s no volatility risk and the beneficiary does not even need to know that those funds have been transmitted via bitcoin. Less money is spent doing so, and this makes it both affordable and accessible to a wide range of customers.
This is just the first mile. The service also renders the need for a physical agent or remittance outlets and traveling altogether. In Singapore for instance, migrant workers can use applications like Toast to do a peer-to-peer money transfer through their smartphones.
However, though some may argue that if you put it into the context that it is simply impossible for small bitcoin startups to overthrow the Western Union or Remitly at this stage.
Still, bitcoin and blockchain provide a compelling alternative for a small subsection of their customers, and unarguably startups are always best at focusing to solve the smallest possible problem.
In Southeast Asia, it’s not just remittance. Bitcoin and blockchain open up a world of possibilities from salary payments to business incorporation. This is just the beginning.
Most people don’t notice it. But it is intriguing how Uber, the world’s largest taxi company does not own any modes of transportation; or how the popular media owner Facebook does not create any content. And these are just two examples of businesses in the sharing economy.
A time where crowdsourced assets become the core of the supply chain, the sharing economy is gradually replacing the traditional large-scale production. Roles of designers and manufacturers or distributors and retailers are blurred with most businesses operating on a peer-to-peer model.
You may be familiar with taxi services like Uber or home-sharing service Airbnb, but what exactly is the sharing economy? What is it that makes these companies different? Just as its name implies, the sharing economy describes a system that is based on shared assets rather than individual ownership.
Through sharing, this brings along the benefits of allowing assets that would otherwise remain idle to generate more value. For example, renting out a vacant room or an unused car. This can provide owners with more income and the people who share or rent assets can cover the cost of full ownership.
With this new paradigm, the balance of power is thus shifted from manufacturers to consumers, curbing large-scale production, and succeedingly creating a new business cycle, i.e. Interface Owners.
Exemplary to the sharing economy, Interface Owners refer to startup companies like Uber, Airbnb, and Facebook which act as an intermediary in these peer-to-peer transactions.
In this case, Airbnb helps travelers to rent spare rooms, apartments or entire homes, thereby generating income for hosts while providing travelers with savings over hotel rates. Meanwhile, ride-sharing services like Uber allow people to share long-distance rides.
But Airbnb and Uber are just the tips of the iceberg, various sharing economy startups have emerged across the globe especially in the Asia Pacific Region. From China-based Didi Kuaidi to Singapore headquartered Grab, various businesses have emerged in Asia, covering almost everything from vegetables to designer handbag.
Although the United States has been the pioneer of sharing businesses such as Uber and Lyft, Asia, in general, is the region to offer innovative services that bridge many existing gaps in life today.
From Meicai, a startup that connects farmers and restaurants to the infamous Touch which launched and withdrew its shared sex doll services, China has been in the frenzy of the sharing economy. In fact, in China alone, about half of the country’s population, that is 1.4 billion people are using online sharing services.
But at the same time, China’s soaring sharing startups are failing. By the end of November last year, at least six well-known bike-sharing startups has shut down, and more than RMB 1 billion (about US$ 150 million) in deposits could not be refunded to useers.
The question, then again is not how popular it will be but rather is it sustainable?
Ultimately, trust is at heart of the sharing economy. Just look at Airbnb who persuade people to rent out their homes to complete strangers, are reassured that the renter has been checked across social networks and the web.
Similarly, an issue of trust has also burst in the Asia Pacific scene. A prime example is seen in China whereby startup E Umbrella has lost most of the 300,000 umbrellas that it has rented out in the country. Other cases are the frequent vandalism of shared bicycles, whereby one case in Singapore sees a person throwing the bicycles from their apartments.
But it’s not just from consumers perspective, the sharing economy has received critic for roughshod over regulatory and tax regimes, gaining an inappropriate business advantage. It is also arguably paying low pay to service providers when compared to the pre-sharing economy.
Then again, despite the hiccups. From a local perspective, companies such as these are succeeding in the Asia Pacific region due to customer’s need to have something quick and on-the-go, which is the formula provided by all these platforms like
Besides, these business models have better chances to grow, adapt, and scale up. Though unlike full-stacked companies that have ownership of the whole production line, they are still able to have a sort of quality control over the services or products being streamlined into their platform.
Take a company like Grab, there is a number of standards and requirements that the platform requires of the user base before you can register. This makes it one of the power player in the equation.
Southeast Asia, on the other hands, has foreseen a spread of office sharing startups in crowded cities like Kuala Lumpur and Singapore. This sharing economy not only solves the problem of lack of space but rather it also provides a cafe-like environment where minds can mingle and connect.
From changing economics and customer preferences, the momentum of the sharing economy is unlikely to dissipate anytime soon. In other words, the sharing economy is here to stay in Asia. But then the question becomes, what are the requirements for the startup to stay and get on the top?
The shopping bonanza has finally ended. The month-long sale period that starts from the 24th of November on Black Friday and succeeded by Cyber Monday, as well as the never-ending End-Year Sale. For the Asia Pacific region, however, it has already started on 11.11 on China’s annual shopping gala known as the Singles Days.
It is a time when hundreds of millions of people worldwide surge onto the web and buy billions of dollars worth of stuff within a 24-hour period, creating a record expenditure that is way bigger than both Black Friday and Cyber Monday combined. This year, Jack Ma managed to nab yet another US$25 billion on the occasion, breaking his own record from the previous years.
However, if you were to look back just a few years ago, one would have thought that the e-commerce battle has already been settled with Amazon and eBay taking the top spots. But then come along Japan’s Mercari, India’s Flipkart, and Jack Ma’s Alibaba that has set out to carve its own niche in the field.
Today, there are altogether 34 unicorn companies in the e-commerce sector and most are based outside the United States. China is home to 15 e-commerce startups that owns a valuation markup of more than US$1B whereas India also houses 3 e-commerce unicorns.
It’s no sheer coincidence, as there is a reason why these latecomers are increasingly becoming more significant and influential. One reason being mobile immersion.
The internet took off a bit later in Asian countries compared to its Western counterparts. The timing made it so that the first online experience for Asian internet users has been Facebook, giving Asian countries way to significant growth in internet adoption rate.
This created a different platform for Asian countries as almost all if not more than 90 percent of the population are internet savvy, having ownership to a mobile phone in one form or another. And most importantly, this growth in internet users across all demographics and regions has accelerated development and proliferation of e-commerce driven models.
Mobile immersion, however, is only a driver. There are other keys to why Asian e-commerce startups are rising so fast as compared to their Western peers.
Last year, it created a stir when Amazon tried to enter India’s e-commerce market with US$5 billion earmarked, but still, Flipkart remains to be the biggest e-commerce player in the region, landing Amazon at second place.
The reason as to why Flipkart’s cites its success is based on the startup’s focus on user experience. In 2015, the startup took a bold move and adopted an app-only strategy where they developed a progressive web app combine the best of its native app and website. The web app runs instantly, work offline, and re-engage users tripling their time onsite.
The Indian company also has a focus on relevancy, having hired AI experts to improve their product recommendations and customer interface.
In South Korea, there’s another emerging e-commerce startup which is carving its own niche in the online buy and sell the platform. It is disrupting the Fast Moving Consumer Goods (FMCG) sectors, moving consumers online to buy processed foods, toiletries, and over the counter drugs.
One of the toughest nut to crack according to Branding Asia, the percentage of FMCG shopping globally is at an overall 4.4 percent. However, the FMCG completed via e-commerce in South Korea is at a hefty amount of 16.6 percent, while the United States pales in comparison with only 1.4 percent.
So how did Coupang win the game at FMCG when all other countries could not? Yes, Korea has a high smartphone penetration rate with highly dense population confined to small cities, but so does other cities like Tokyo or Bangkok.
The story is Coupang started off as a Korea’s version of daily deals site like Groupon, but soon founder Bom Kim realized the failings of the business model and pivoted to become an e-commerce platform that not only owns the marketplace but also shipment and fulfillment capabilities.
Today Coupang offers a curated selection of merch ranging from baby products to fashion, beauty, consumables, home goods, decor products, books, toys, sporting goods, electronics, and even ticketing for travel and cultural events. The daily deals section still remains but it’s the sales that bring in the company’s revenue.
Rather than his business model, his success was derived by his customer-centric approach. The startup provides a choice selection of on-demand commerce and same day delivery whereby the latest would be the very next day. This provides customers instant gratification, and they end it off with a handwritten thank you note – a small but fine touch, touché.
According to Stéphane Roger, global director of shopper and retail at Kantar, “Coupang is successful because their service delivery staffs acted as the brand ambassadors. They built their businesses from the ground up on customer service.”
In Japan, a peer-to-peer marketplace for selling second-hand goods, Mercari achieved its unicorn status in March 2016 after it has raised its Series D round worth US$74 million. It places itself as a peer-to-peer marketplace app and a notable point of this startup is that it’s pushing through not just locally but worldwide as well, entering into European and American markets as well.
Kei Nagasawa, the CFO of Mercari cites superior user experience as their reason for thriving. He boasts that it does not take more than 3 minutes to list an item in their marketplace. Besides, on Mercari, items are sold really fast, with more than 50 percent sold within 24 hours.
Besides, the startup also strive to provide a one-stop solution whereby delivery solution is also provided, as they established a partnership with logistics partner Yamato Holdings.
Then again, who can forget the e-commerce titan in China led by Jack Ma? While Amazon has a good increase of 30 percent this year, Alibaba’s stock has nearly doubled. Though it is arguable that there is a difference in the Chinese market – and middle class – that is growing much faster than the US market.
But Alibaba has not just set its sights on just the middle class, the ambitious entrepreneur is an innovator – setting sights on singles with its 11.11 one-day shopping festival which has raked in US$25 million this year. Besides, the startup has much in-house innovation including a drone delivery which is intended to expand its market even to the rural areas in China.
Also unlike the Amazon effect in Western countries where brick and mortar stores are gradually closing down. In China, it’s a different story, China’s two largest e-commerce platforms Alibaba and JD.com are expanding their business into bricks and mortar stores.
At the end, the setting of mobile immersion in the Asia Pacific region is not the only catalyst for this fast growth in e-commerce startups. To win, startups need to establish a world-beating solution and a clear point of differentiation that will make your users stick with you.
Like Alibaba with their Singles Day or Coupang with their personalized thank you notes, customer-centric innovation is really the ultimate key to any e-commerce store.