Image source @ Visual China
Text | Tsingshan Capital, Dialogue | Zhang Ye and Randy, text finishing | Lu Yao
On November 24, 2020, Ucommune officially landed on the US stock market through SPAC, becoming the "first joint office stock".
Boundless Space is a project invested by Tsingshan Capital in the angel round in 2015, which has been invested by a number of institutions, on March 9, 2018, Wujie Space and Ucommune Factory announced a merger, after the merger of the two, Tsingshan Capital held Ucommune Workshop, this listing brought 10 times the return of Tsingshan Capital, and Randy, the founder of Boundless Space, also embarked on a new entrepreneurial journey.
Zhang Ye, founder of Tsingshan Capital, participated in the opening ceremony of the first co-working space of Boundless Space
At every important node in the growth process of the boundless space, you can see the figure of Zhang Ye, the founder of Qingshan Capital. On the occasion of the listing of Ucommune, investor Zhang Ye and second-time entrepreneur Randy had a dialogue, telling the companionship and growth of angel investment and early projects from different perspectives.
The following is a transcript of the conversation:
Ye Zhang: You founded Unbounded Space in 2015, when you left BCG at the age of 25, and I remember when WEWORK was more popular, were you inspired by WEWORK to create a co-working space project?
Randy: Yes, I think no matter how much, all entrepreneurs who do co-working are influenced by WEWORK. At that time, when we chose to look at this industry, on the one hand, it was because I wanted to start a business very much, because I did not have a technical background, and considered my personal connections, I did not know the technical mouth, so it was basically impossible to do any technology-related entrepreneurship. But I also hope to be able to do something that will allow me to quickly enter this circle and at the same time pave the way for some technology entrepreneurship in the future. During this period, we saw that WEWORK was doing co-working in the United States, that is, the concept of joint office, and later I found that co-working can also be done very large, so I began systematic research. It doesn't take much technical stuff to start, and although everyone tried to do some space management-related software afterwards, the essence of the beginning was design, decoration, and community operation.
On the other hand, it can help us know more people in the whole circle, and we also found that the friends around us who started a business, no matter whether the conditions are good or bad, the office environment is not very good, so at that time, I wanted to hurry out to do it, but I didn't expect that the co-working thing would become such a hot outlet in The country, a bunch of people rushed in to do this industry, which was more unexpected.
Zhang Ye: I remember when I worked with Wujie, you were still in the stage of having this idea, and the first office space was not fully grounded. We Qingshan has just been established, and it can even be said that it has not been formally established, the fund has not yet been registered, it is first called to you with its own money, and the fund is replaced after it is established. At that time, many institutions were very interested in you and this track, why did you choose Aoyama in the end?
Randy: Yes, in fact, at that time, we had a lot of choices, about 10 or so investment institutions, but basically four or five of them wanted to invest, the essence is because in 2015, the entrepreneurship itself was very hot, co-working was also very hot, and then we were a relatively tall team of returnees, so many people were optimistic.
At that time, we were also facing a difficult decision, and Aoyama actually happened to know each other, we met Brother Wild when we had already decided to take Plum Blossom's money, and then Meihua's office chat. The main reason for choosing Aoyama is because of Brother Wild, who is very fun and can talk very well, and especially can feel that he really wants to help entrepreneurs. At the same time, I think that as a new fund, we will definitely give all the resources to the first few projects invested, because the success of the first few projects is very critical to the new fund, plus we believe that Ye Ge will definitely use all his energy to help us, and finally decided to take Aoyama's money.
Zhang Ye: I remember that at that time, I also helped you to get a workman's site together, and the result was that the middleman was pitted, and that person took the deposit you gave him to speculate in stocks, and then lost. Did you know that this money was later put on my personal pad?
Randy: Ah ~ I don't know, I really don't know this!
Zhang Ye: The money you think he gave you back, in fact, I lent him an advance payment, and has not paid it back until now, it has been 5 years. So the relationship between angel investing and entrepreneurs is actually very interesting, sometimes it seems to be more like the relationship of doing one thing together, not very much like the relationship between capital and enterprises.
Randy: Yeah, I think only angel investors, especially angel institutions like Aoyama. Because later we also took some money from other institutions, of course, it is not that they are not good, but I think it may be because they have invested in more projects, so the energy and resources are actually limited, and it is impossible to dock a certain resource to a special number of invested companies. So Aoyama itself will not invest so much, but every time you look at a project, you will continue to support, constantly increase, and help you with all the resources, in fact, this is the best kind of angel investor.
Zhang Ye: In 2016, co-working spaces and various incubators seem to have risen rapidly in China. Looking back now, what did Borderless Space do right to keep you at the top of so many coworking startups?
Randy: From day one, we positioned ourselves as the main group of young entrepreneurs, I think we did a very accurate job in the selection of market segments, because at that time I was 25 years old in the team, my partner was 26 years old, the entire senior management team basically did not exceed 30 years old, through positioning ourselves is the most understanding of the post-90s entrepreneurial space, so that the entrepreneurial projects attracted are young and very good quality projects, whether they are the first batch or the back, which also makes our reputation in the industry quickly distinguished.
In the early days, our publicity path and customer acquisition channels were different from most players in the industry, which made us have a better individual model. Over the period of 15 to 17 years, we did very well with very little money, and when the whole industry was losing money, we were able to achieve a level of profitability in some months and even some quarters. So I think
Positioning differentiation is the most critical element that distinguishes us from others.
Zhang Ye: At that time, why did you choose to merge with Ucommune instead of continuing to rush forward independently? At that time, we seemed to have some different opinions on this matter.
Randy: Yeah, I remember we were quite divided, and in 17 years, from the macro data, we found some underlying problems. The biggest problem is the number of tenants, the number of potential tenants is rapidly decreasing, and the new increment of office buildings in the next few years is increasing in the same period, so this means that there will actually be a lot of new area out, but there are not many tenants.
So at this juncture we realized that we needed to quickly take more money to spend the winter, but found that the genes of our team, compared with players like Ucommune, their advantages were much greater than ours. We're a young team ourselves, and the good thing is that we can find something different, like beating young entrepreneurs as a group that does better than others. However, on the capital side, big money will still tend to some more experienced entrepreneurs, or big guys. In the industry, Ucommune's financing ability has always been the strongest, when they took nearly 10 times the money we did, but when we merged, our income was 1/3 of his, so we felt that it was difficult to rely on our own strength to get more money to prepare for the winter. It is not that it cannot be done, but it is almost impossible to achieve the financing level of Ucommune Workshop, so we need to find a most effective way to spend the winter, Ucommune has a lot of power in the capital side, and Wuji has a very strong advantage in operation, and the merger of the two must be a way of strong combination.
Zhang Ye: What is it like to create a company that is no longer under its own control?
Randy: Actually, it was very difficult, and it was a long struggle. But I think from the perspective of the founder, the longer the entrepreneurial time, the more I feel that when making a decision, we must separate the emotional and rational, although the emotional things cannot escape, but we must use rationality to analyze. I remember on the day of the merger, we had a great ceremony, everyone was happy, and then there was a drink, and I actually couldn't help but cry for a while when I got home, because it felt like giving my own child to someone else. And later when facing the team, it was also difficult, because everyone was in order to be able to make the company the biggest in the industry, with the hope of changing the dream of the industry, no one started a business to finally sell the company, so I felt that the team was the most difficult to account for at that time.
Although intellectually we all think this is a necessary path, emotionally the whole team is still very sad. I think at the moment of the merger, 50% was happy, and the other 50% was very sad.
Zhang Ye: The process of being acquired was relatively smooth overall, but after the fact, it also experienced many twists and turns, especially the overall delivery process has encountered many difficulties in succession, and finally your team sacrificed a lot of interests to protect the rights and interests of investment institutions. What kind of mentality was it to deal with such a thing at that time, so that a relatively complete delivery could be finally achieved?
Randy: Surely not everything will go as smoothly as expected, and I think it's the same as starting a business. Especially when melting angels, dreams are very beautiful, but the continuous growth of enterprises, the more you will find that the deviation between dreams and reality is very large. Therefore, in the whole process, although we are in a state of struggle, we still insist that we must complete the delivery in order to give investors a good account. Because when the merger was found, the market situation we saw in 17 years, since 18 years began to occur and rapid deterioration, the entire co-working has begun to cool down, and then in 19 years WEWORK explosion, you will see the entire industry want to finance has become an almost impossible thing, in this case, only the industry's leading enterprises have a certain opportunity.
Therefore, in such a market situation, we feel that we must finish the transaction, which is the most rational way. When it came to some sacrifices, our team unanimously decided not to sacrifice the interests of investors at the beginning, because we were very grateful for the whole process, and it was also the first time for me to start a business, and we were very grateful to every investor who supported us. Looking back on the long time of entrepreneurship now, I think angel investors are quite courageous, choosing to support an entrepreneur who is so young and ignorant, if I can make an investment, I may not invest when I meet that year at that node, so I am more grateful to investors. I hope they support us and choose us, we can't let them sacrifice their interests after encountering problems, and finally have the privilege of ensuring the interests of investors and letting the team make some sacrifices.
The good thing about our team is that it's young and it won't be the last time we start a business, so it doesn't matter. We continue to do our own new things, including inDeco that we are doing now, and even if the benefits are gone in the short term, they can always be earned back in the long term, and we have maintained such a mentality throughout the process.
Zhang Ye: After you left Ucommune, you started a new company, inDeco, a new tooling solution, and we are about to move to a new office, which is also the renovation that inDeco is doing. The whole process experience is still very standard. Why do you want to do this direction? Is it related to the entrepreneurship of the unbounded space at that time?
Randy: I think there is an absolute relationship, and no child grows up thinking about being a contract foreman in the future, which can't be anyone's dream. Especially when I went to the United States at the age of 8 and grew up in the United States, I probably never expected to be such a big contractor now.
But in the process of making unbounded space, we have raised a lot of money, which is actually spent on design and decoration. We found that the pain points in this industry are too big, from the designer and the decoration company to the fight, to the entire project management, to cutting corners, and the process is opaque, and then to each project has more or less certain additions, these problems are basically experienced in the process of doing no boundary, and found that there is really no solution, and no one in the industry is doing this, then it is decided that we will do it, set up inDeco. The core still feels that this market is big, and the problem is very obvious, and we hope to make a little contribution to change this industry.
Now inDeco is growing faster, nearly 300 people, and we are also preparing to open up our own internal tools and software to improve efficiency to other renovation companies next year, hoping to empower players in the entire industry, so that they can do better and give customers more services.
So I am also very grateful to Wujie for this entrepreneurial process, which allowed me to see the opportunity to enter the renovation thing. Although it is true that we are a big contractor now, we are still passionate about changing the industry, and ultimately hope to make everyone's space healthier and happier.
InDeco Shenzhen office opened
Zhang Ye: Ucommune Is listed through SPAC this time (Special Purpose Acquisition Company, that is, special purpose acquisition company), this time to list in this way, but also to show domestic entrepreneurs that there is such a mature industry in the United States, can be capitalized to land in the secondary market, what kind of startup do you think is more suitable for the SPAC model?
Randy: I think most companies actually deserve to consider SPAC as a weapon. There are many channels in the capital market, but in China, everyone's idea is still too single, and some people may feel that only some poor companies will go public through SPAC. But in the U.S. capital market has found that far from this situation, this year, 50% of the IPO market in the United States is dependent on SPAC, there are some very large companies, such as Opendoor through SPAC this way to list for $1 billion, so it is a complete change in some of the traditional view of SPAC.
For entrepreneurs, this must be a good thing, the advantage of SPAC is that first of all, its speed is fast, and the traditional situation of doing an IPO is basically a preparatory period of 9 months to a year. And it is very likely that you will have to make a series of preparations a year to a year and a half before going public, but if you find a good SPAC, you can basically go public in 3 to 6 months after the negotiation. The second is that its cost is relatively controllable, and in a sense it will be lower than the direct cost of pure listing, so I think SPAC is a way worth considering for all startups. It is not limited to any industry and any stage, and can be one more weapon in the capital market.
Zhang Ye: The last question, in addition to the relationship between investors and entrepreneurs, we have another relationship, are all alumni of Cornell University, Cornell University's momentum of entrepreneurship in China or the enthusiasm for entrepreneurship is not particularly high, can you say something to cornell alumni and alumni who are ready to start a business?
Randy: Come on ~ I think the road to entrepreneurship is very difficult, but in fact, Cornell alumni are very willing to help each other, in the capital circle, the entrepreneurial circle is good, although not so much, but Cornell alumni as long as you take the initiative to find them, they must be willing to communicate with you or help, in the whole process, I still encourage everyone, if you choose this road, just cheer up, it is very difficult to take this road, but do not dare to find Cornell alumni to help. Because the strength of our mutual support is still very large.