Masa Son & friends build a $34B city in the middle of nowhere, what’s ahead for the WeWork of China

Jan.January 17, 2020 05:00 PM
Softbank CEO Masayoshi Son and Oyo CEO Ritesh Agarwal (Credit: Getty Images)

Softbank CEO Masayoshi Son and Oyo CEO Ritesh Agarwal (Credit: Getty Images)

Oy! at Oyo

After an aggressive expansion effort, Indian hospitality startup Oyo is laying off workers and making major cuts to its service. More than 2,000 employees around the world are reportedly getting the pink slip, according to The New York Times. Since October, the startup has reportedly lost about 65,000 of their rooms in India (about a quarter of its total), and won’t sell rooms in 200 smaller Indian cities. It also ended its rental business in Osaka and Nagoya, Japan. Oyo is under pressure from SoftBank to tighten up losses and work toward turning a profit.

A Saudi housing boom

SoftBank-fueled construction startup Katerra just closed a deal with Saudi Arabia to build 8,000 homes in the kingdom. The $650 million contract is part of a much bigger $40 billion non-binding agreement the company signed with the government in 2018 to build hundreds of thousands of houses using their pre-fab parts in the country. But the startup has an iffy track record delivering projects in the U.S. and finished out 2019 with job cuts and a closed factory. Make sure to read TRD’s in-depth examination of Katerra.

WeWork loses another one
iOffice just swooped in to buy fellow office related software company Teem from WeWork. It’s unclear how much WeWork sold it for. Both iOffice and Teem aim to make office life easier through software: iOffice lets users do things like find a co-worker’s desk via app and Teem helps office workers book meeting rooms. So they’re a natural fit. After the IPO Disaster of 2019, WeWork began putting many of its acquisitions up for sale, including Meetup and Managed by Q.

Stat of the Week

$100 Million

That’s how much WeWork paid for Teem back in the (relative) halcyon days of September 2018 when, you know, they could actually afford pricey acquisitions.

Bringing the joys of Bloomberg Terminal to real estate
Real estate data startup Lightbox just bought CRE customer management software company ClientLook, adding to its growing collection of acquisitions. Backed by private equity firm Silver Lake Partners, the company is trying to create the next Bloomberg Terminal with a focus on real estate data. They’ve been on a bit of a buying spree in the past year to try and make that happen, gobbling up four companies including data firm EDR. Terms of the deal were not disclosed, but those who follow the real estate data space might recognize one particular name: ClientLook founder Michael Griffin held roles at both CoStar and Xceligent.

A Series D over your head

It’s 2020 and home buying platforms are having a moment. Late last week, Roofstock scored $50 million in a Series D round led by SVB Capital. On its digital marketplace, users buy and sell rental homes, many of which have tenants already living in them. The idea is for buyers to be able to earn rent money from day one and tenants don’t have to move out. Roofstock wasn’t the only home buying platform to nab sizable funds last week. Orchard, formally known as Perch, closed a $36 million equity round led by real estate geared VC firm Navitas Capital.

Startup Spotlight

Startup Spotlight

The WeWork of China

With WeWork scrambling to cut losses after a monumental IPO collapse last year, their co-working competitor in China may be going down the same path. Ucommune claims it’s China’s largest co-working company, with 200 locations across 44 cities. As with their competitor, the startup frames themselves as a tech platform, touting facial recognition and cloud computing at workstations. Ucommune raised $200 million in a private fundraising round in November 2018, giving it a valuation of $2.6 billion.

The startup filed plans to go public on the New York Stock Exchange last month in a bid that feels all too similar to that of WeWork. The original underwriters, Credit Suisse and Citi walked away from the IPO after balking at the high valuation and express timeline. Sound familiar? Now, New York-based brokerage Benchmark Company will reportedly be underwriting along with a group of Chinese brokerages. But what’s unclear is if a business so similar to WeWork actually can pull this off.

Empire building in the jungles of Indonesia

You’d think with layoffs at Oyo this week, SoftBank would keep a low profile. But no, Masa Son’s apparently getting involved with… building a city from scratch. According to the Associated Press, Abu Dhabi’s crown prince has agreed to lead a committee that will oversee the construction of a new capital city for Indonesia that is estimated to cost $34 billion. SoftBank will help fund the developments. Committee members include Masa and former British Prime Minister Tony Blair. Anyway, Jakarta is sinking and Indonesia plans to build a new smart city in East Kalimantan, a relatively depopulated area that was once full of jungle. This actually wouldn’t be SoftBank’s first time backing smart city tech. The company invested in Dublin City Council’s Smart City program way back in 2018.

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