Authored by Laurent Dhollande, CEO of Pacific Workplaces and outgoing CEO of CloudVO.
We sold CloudVO to Yardi on June 1st, 2023. I already shared our reasons with CloudVO partners, which I will summarize in this post.
If You Can’t Fight Them, Join Them
In a recently released blog article “Yardi and its Internet Listing Sites are Changing the Service Provider Landscape in the Coworking Industry,” and in a couple of webinars with CloudVO partners, I explained my views on the consolidation taking place with service providers centered around The Instant Group and Yardi. The Instant Group, which has historically been the leading web broker went through an acquisition spree last year with marketing sites like DaVinci, Easy Offices, Rovva, and Coworker. Yardi has opened its 7 commercial real estate internet listing sites to coworking listings, and is improving its understanding of our industry with the CloudVO acquisition. The coming of age of these two major marketing powers might squeeze out the smaller players because of lack of scale and resources. That was the case for CloudVO. It became clear that we could not do it on our own and that Yardi, and its seven online listing sites, was positioned to bridge supply and demand for coworking services better than anyone else.
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Scale Matters
Yardi’s listing service network includes sites such as CommercialCafé, CommercialSearch and PropertyShark, who have established prominent positions in the commercial real estate space. While CoworkingCafé is dedicated to promoting coworking services, all Yardi listing sites share the same database. Listing with one is listing with all, giving operators more exposure to folks looking for office space and coworking services than any other option. The Yardi listing network generates over 20,000 leads per month to participating commercial property owners and coworking operators, ~15% of which are specifically relevant to coworking. The Yardi sites’ volume of visitors dwarfs any of the other coworking listing sites. On the graph below that shows the monthly volume of visitors on the Y-axis, only WeWork and Regus can pretend to be close. PropertyShark, a Yardi-owned listing site, stands clearly above the crowd. All other service providers on this chart have a hard time keeping their head over water. Furthermore, visitors find the Yardi sites extremely relevant to their searches, with more than 10 minutes spent on average on PropertyShark (X-axis on the graph).
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To approach that volume of visitors requires a formidable amount of investment in Pay-per-Click and SEO, which CloudVO could not keep up with.
Although coworking services can be found on PropertyShark and the other Yardi listing sites, CoworkingCafé, the most recent addition to the family, is dedicated to coworking services. The site was only launched last year and is not generating as many visits as its siblings, but is probably only weeks or a few months away from being the dominant site for coworking leads and transactions. This is why Regus, WeWork, 25N, and Pacific Workplaces have already listed with CoworkingCafé, and you should do it too.
Another benefit of using good technology at scale is operating efficiency. This is why Yardi is able to charge 10% commission for most products whose provisioning and delivery are automated on the platform, when other service providers have to keep 30% or 50% of the transaction revenue to survive on Virtual Office Plan sales or meeting room bookings. Most service providers, including CloudVO, just don’t have the scale to make it work with a 10% margin. It does not make sense anymore for operators to share 30% of revenue -let alone 50%- with any lead generator, when some players like Yardi can make it work at 10%, and bring more leads. At CloudVO, we experienced a very low turnover of operators, and we are thankful for their loyalty and support over the years. But we could see that our value proposition became weaker as Yardi continued to grow in our market.
Developing a Good Integrated Software Platform is Difficult
Any operator can list on CoworkingCafé, whether or not they use Yardi KUBE as their operation management software. If you are using the Yardi software (Voyager and KUBE), the additional benefit is that it integrates all the important functions all of us need: SEO-SEM (via CoworkingCafé), Lead Generation, E-commerce, Proposal Management, CRM, Space Management, Data Management, Invoicing, or Financial reporting, to mention some of the critical back-end functions performed by Yardi. And let’s not forget AI!
This native integration of the various pieces, that does not rely on APIs, eliminates redundant entry of information and makes for an efficient, time-saving, comprehensive system, but it is extremely difficult to develop, in a way that is stable, secure, and reasonably user friendly. Good software development is not easy. Because software is where they come from, Yardi is able to pull this off better than most.
Reliability and Perennity
One of the issues CloudVO faced is that after having massively invested in technology and having a sophisticated platform that finally worked (and could integrate with Yardi via API), we lost critical people in our outsourced development team. Like many start-ups, we were extremely dependent on a small team of really good developers. It can be extremely disruptive when they leave. This is not going to be an issue with Yardi. Based in Santa Barbara, CA, they are generating close to $2 billion in sales, growing at a 20% annual pace, with 9,000 employees, including 1,500 developers, and they will be a solid partner for years to come.
If you have any questions, feel free to reach out at [email protected].