Recently, some media have exposed that Sugar Cube Town and Ucommune Workshop have broken up. In October 2018, Ucommune announced the acquisition of Sugar Cube Town, from "hugging for warmth" to "parting ways", which is also a 10-month situation.
Why did Sugar Cube Town "defect" to Ucommune Workshop in the first place, and now for what reason did it choose to leave? How does Sugar Cube Town view Ucommune?
On July 29th, PropTech Workshop interviewed Yang Xuetao, co-founder and COO of Sugar Cube Town.
Yang Xuetao responded to the reasons for the breakup, saying that one is that the two parties have not signed a contract for an enforceable transaction, the second is that the two sides have not agreed on some major terms, and the third is that the two sides have differences in their understanding of the business and the future development of the industry, and Fang Sugar believes that it has found a better path, "so independent development is better."
So why did sugar cube town "defect" to Ucommune Workshop in the first place? Was there something financially wrong with Sugar Cube Last Year?
Yang Xuetao said this is not the case. The reason why Sugar Cube Town "defected" to the Ucommune Workshop at that time was to hold the mentality of everyone collecting firewood and high flames, hoping that everyone would work together to make the scale bigger.
Does the matter involve a "break-up fee"?
Yang Xuetao revealed to the Investment Network -PropTech Workshop that the sugar cube town and Ucommune Workshop only signed a framework agreement, and did not sign a final merger and acquisition contract, and the two sides always maintained independent operation after the contract was signed.
So what do the founders of Sugar Cube Town think of the listing prospects of Ucommune? How did Wan Lijiang and Yang Xuetao "hug" Mao Daqing in the first place? After separation, how will each of them develop?
(Photo: Yang Xuetao, co-founder and COO of Sugar Cube Town)
The following is the transcript of the interview with Yang Xuetao, co-founder and COO of Sugar Cube Town by PropTech Research Agency (partially deleted):
First, talk about the details of the breakup: there are differences in the understanding of the business and the industry
1. Why did Sugar Cube Terminate Cooperation with Ucommune Workshop?
Yang Xuetao: Based on some understanding of the business, including the future development of the industry, it may not be the same as the whole understanding of Ucommune, so the whole look feels like it is enough.
2. Where is your understanding of the industry different, your understanding is exactly what Mao Daqing himself said, why is it suddenly different?
Yang Xuetao: Ucommune Workshop has mentioned many concepts since its inception, and it is difficult to judge which thing is what Ucommune will really adhere to and do for a long time in the future.
3. Is there no consensus within you? I thought you all tacitly accepted that this was a marketing tactic, but you had a consensus on the real business logic and product logic behind it.
Yang Xuetao: There is a general consensus on the general direction, but the path is quite different, and the ability of Ucommune To find resources and find funds is relatively strong, so the possibility of the company is relatively large, and there are more things that we want to do, but sometimes we can't discern what the real path is in the future.
Second, talk about the merger experience: in order to report to the group for warmth
4, before in the industry your reputation is greater, why did you come to the step of choosing to be acquired by others?
Yang Xuetao: It may not be sugar cube's own problem, but a situation in the industry as a whole. Because from 15 years ago (co-working) is actually driven by capital. You look at 15 years, but as long as someone comes out and says he's going to do co-working, he can basically get investment, so it's largely an investment-driven industry.
But then we found that capital is only part of it, and our understanding of this industry still feels that its real estate properties are relatively large, so we say that each outlet is managed as a chain store, I think it may be the real value of this industry. It can't be said that because there is money, everyone is desperately trying to expand the network.
5. Did this thing change when you realized that such a scale expansion was not a matter? If you weren't going to make the decision to be acquired in the heyday of 2015?
Yang Xuetao: Yes, it should be understood in this way.
6. You were short of money for the project at that time? Or is the project going to run into some funding problems right away?
Yang Xuetao: At that time, because Ucommune was doing this, we thought it would be better for everyone to get together, so we chose this. It's not that we're having too much of a problem ourselves, it's that we feel like it's an opportunity.
7. Is this also the case with several other companies that have been acquired by Ucommune?
Yang Xuetao: This is basically the case in several other places. Because Ucommune is not stupid, it will not merge and acquire enterprises with a lot of debt, poor management, and poor brand, and these enterprises will have no value to Ucommune. So in fact, everyone can sit down and talk about mergers and acquisitions are some good companies.
Even we have communicated with the head of the M&A company, and everyone feels that getting together can make this thing bigger and make this thing sound more reasonable. Because Ucommune was acquired by Beijing at that time, Shanghai chose Workingdom and Sugar Cube, and Shenzhen chose Wedo Co-working Space. Ucommune is actually a concept of national layout, and it is selected to be some of the more representative enterprises in local cities. Therefore, we believe that this layout logic is a complementary and reasonable structure in the region.
8, why did sugar cube choose Ucommune, is there still WeWork on the market, and some other players, why choose Ucommune?
Yang Xuetao: WeWork's entire form is actually a little different from the domestic co-working, and its positioning is relatively high-end. Like Shanghai, basically foreign customers have gone to WeWork. Therefore, WeWork later chose the acquisition object, and the only one chose naked society.
9. Did your choice of Ucommune have anything to do with Ucommune's large-scale strategy through acquisitions at that time?
Yang Xuetao: Because Ucommune itself wants to scale, and then also wants to do the first share of the co-working IPO, it is really looking around for acquisition targets, and other peers really don't have the ability to do this thing, because this thing needs funds.
Third, talk about the details of the acquisition: sugar cube to maintain independent operation
10. You said that there are some core clauses that have not been negotiated, so why do you have to talk about them for so long?
Yang Xuetao: At that time, in fact, one of the biggest starting points for everyone was that everyone together could make the company larger, so even if there were some differences in core terms, the two sides still hoped to merge, and they always hoped to reach a consensus, so the time to talk was longer.
11. From the perspective of sugar cube, you have worked hard to start a business, and there is also great uncertainty and risk in the income after being acquired.
Yang Xuetao: For me and CEO Wan Lijiang, in fact, we pay more attention to whether this thing can be done in the end, rather than who will do it. I think if someone does better than us, for example, Ucommune takes the sugar cube, can make it better, and even lead the sugar cube to the market, the final honor is actually a big part of us.
Who will be the CEO of this future group company, who will take care of sugar cubes, this matter was not a particularly important issue for us at that time.
12, like you think about it is not particularly many, other people are m&A more like knowing that this thing can not be done, and throw away the burden?
Yang Xuetao: Maybe everyone's starting point is really different, I really didn't think too much about wan zong at that time, and everyone rushed to say that the brothers together can do this thing well, so the framework agreement was actually signed very quickly. But after signing, including after the opposing party's lawyer began to intervene, you found that there were many details that were problematic and could not be reconciled in the end, so both sides had to give up.
Fourth, talk about Ucommune Workshop: The core task at present is to impact the IPO
13. What do you think Ucommune really thinks?
Yang Xuetao: I understand that the core of Ucommune Factory still wants to IPO, after all, it is the largest, the earliest, the industry is the most well-known, if it can successfully IPO, it is very important for Ucommune Workshop and the entire innovative office field. As for the future business development plan, we don't know much because it is currently in a quiet period.
14. Do you think that in the past one or two years, there are still players in the joint office who can successfully IPO?
Yang Xuetao: I think the IPO depends on where to choose, if you choose nasdaq, in fact, the problem is not big, because the threshold of nasdaq is not high, we have no doubts about whether some people want to go up and whether they can go up. Whether it is the first share of WeWork or the first share of Ucommune, I think it should not be a big problem, the core is to say how to perform after the listing, this is the most important.
15. What if the performance after the listing is very bad?
Yang Xuetao: Of course, it is the best to be able to go public, whether it is to broaden financing channels or for brands, especially like Ucommune, in fact, it has long done an international layout. Then if Ucommune is listed on the NASDAQ, it should bring great convenience to its global layout and in-depth development.
Regarding the performance after the listing, it is indeed worth paying attention to, how to determine the attributes of the co-working industry? Is it a modern service industry? Or real estate? Or the tech industry? Its corresponding PE value and so on are actually completely different. So whether it is WeWork or Ucommune, I think it is a good thing for the entire industry to be listed, and it actually has a relatively large driving effect on our entire industry.
Fifth, the transformation after the breakup: attack the park, manage 30,000 square meters of Ali park
16. What strategic adjustments have been made to Sugar Cube Town since 2019?
Yang Xuetao: The business form of any co-working company you see today is basically completely different from that of 2015, including sugar cube itself. We have actually made a lot of adjustments since 2018, the core is mainly two, the first launched the office system solution - cloud small office, the second is that we launched the 3.0 product AIR Building.
What does AIR Building mean? We will take some of the larger properties, because in the past co-working it was in one building to take one of the floors, co-working it was as a separate, independent format. AIR Building retains the concept of co-working, putting these forms of co-working into the building, but it is no longer a separate product, it serves the entire building and the entire campus.
17. What is the difference between AIR Building and previous products, can you give an example?
Yang Xuetao: For example, the project we worked with Alibaba, it is two buildding, we call T1, T2. Usually, we would take a whole floor in T1 to do co-working, and then basically just serve that whole floor. But we did part of the conference room, roadshow hall on the 6th floor, and shared the entire conference room on the 2nd floor, including the sleeping pod and all other public functions.
The core difference between air building and previous products is that we no longer use it as a separate floor, but as a concept spread across the floors, which is equivalent to it becoming a co-working of the entire building rather than a co-working itself.
The previous product he actually only served the customers of the co-working, it can not serve the entire building, we are now actually serving the entire building, Ali that project is to serve the entire park, and even radiation around. People around can come and use it, including the activities we are doing in it, and we also welcome non-Alibaba or other tenants to come and use it.
18. In the original co-working solution, tenants will pay for these public services, and this price will be included in the cost of each workstation. After you've shared all of these public services, who ultimately pays for the facilities in the common areas?
Yang Xuetao: After we did the AIR Building, in fact, for the tenant, the cost performance of his overall budget was improved, because he did not need to do a conference room in his own space. Some of our other products, including Ali's project in Hangzhou, its public part is paid for by customers, each customer has a certain period of free, and the excess part is charged.
19. What is the profit model of your cooperation project with Alibaba?
Yang Xuetao: In fact, this project is our service output, not direct operation. Our revenue mainly comes from the commission of the investment stage and the operating expenses of the later operation stage, and since we have achieved the investment target in a very short period of time, our income on this project is still good.
20, this model is not what dream plus is doing a long time ago, what is the difference between your model and dream plus?
Yang Xuetao: It's not the same, the previous trustee was still a certain floor or several floors of the office building, but the direct operation of the co-working office was turned into a franchise. Our current hosting objects are the whole building, several buildings or even the entire park, from the park design stage we participate, until the later product design, engineering, investment, operation, and co-working is only a small part of the whole building or the entire park. Like the Alibaba Divine Whale project, our hosting object is not a co-working floor, but two entire buildings of more than 30,000 square meters.
Last month, we also signed two hosting projects, one is the sugar cube car town in West Hongqiao, more than 30,000 square meters, and the other is the rail town in Hunan, more than 40,000 square meters, this volume is completely different from the volume of the co-working era, but the concept of co-working is still used.