managing rapid growth, takeaways from top to bottom

MANAGE RAPID GROWTH FROM TOP TO BOTTOM

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• World’s largest provider of flexible workplaces

• More than 1.5m customers benefit from broad global footprint

• 2,000 locations, 750 cities, 100 countries • Top quality workspaces wherever you

need to be • Globally consistent quality and standards • Used by nearly 60% of Fortune 500 • Value propositions:

• Reduce under-utilized office space • Increase employee productivity • Increase flexibility & speed to market

INTRO Who is Regus?

What Regus provides INTRO

• Offices • Business Lounges • Video Conferencing • Meeting and Training Rooms • Board Rooms • Virtual Offices • IT and Full Infrastructure • On Demand Services/Support

• Professional Reception

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INTRO Center Growth and Overhead Cost Management

• North America center growth similar shape as global

• North America has managed overhead aggressively during this same period

To Discuss Today: • Our experiences • Lessons learned 3 Topic Areas: • Organizational / Planning • Market / Deal • Cost Management

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ORGANIZATIONAL / PLANNING OBSERVATIONS

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• Very simply, be clear on your growth goals

• Put pressure early on what you want, on the right people, insist and measure

• Location mix (new vs. existing market) • Deal type mix • Building quality / price points

• Mindset: Growth is good

• Don’t let “growth mantra” overwhelm

ORGANIZATIONAL / PLANNING OBSERVATIONS

Gain Conviction on Your Growth Plan and Follow It

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• Primary efforts to speed growth can be thwarted by secondary activities

• Construction / vendor processes

• Deal modeling (standard, simple)

• Legal / deal negotiation handoffs

ORGANIZATIONAL / PLANNING OBSERVATIONS

Address Squeaky Wheels

Align Your Incentive Structures Appropriately ORGANIZATIONAL / PLANNING OBSERVATIONS

Center Growth

Center Performance

Development Team

Field / Ops Team

Center Growth

Center Performance

Primary Purposes Bonus Element

• Development Team vs. Field Ops Team

• Then vs. Now

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ORGANIZATIONAL / PLANNING OBSERVATIONS

Watch Your Leaders, at All Levels

• Watch your field leaders as growth comes

• Pressure of growth can reveal both strengths and weaknesses

• Stars of the past may not shine so brightly in the new environment, but others may surprise you

MARKET AND DEAL OBSERVATIONS

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ORGANIZATIONAL / PLANNING OBSERVATIONS

Investment Cases: A Means to an End

• It’s tempting as Finance people to try and manage to line item goals

• Growth is not a perfect science, we have to deal with realities

• Get the big things right, absorb the smaller pluses and minuses

• Example, staffing a new center:

• 2 months early is better than one month late

• Don’t be penny wise / pound foolish

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• Slower ramp-up time in new markets vs. existing ones

• Product mix usage often not consistent with mature sites

MARKET AND DEAL OBSERVATIONS

Understand Translation of Historical Assumptions into Higher-Growth Environments

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• Bottom line question: In hi-growth mode, self-cannibalization may occur short term, but avoid it long term

• Unhealthy: Saturate too quickly or imbalanced locations

• Healthy: When you lock down a great venue even if “nearby”

• Judgment calls: exceptional exceptions

MARKET AND DEAL OBSERVATIONS Deal With Risk of Self-Cannibalization

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MARKET AND DEAL OBSERVATIONS

• 33 locations

• Heavy in Addison, North Dallas, Las Colinas

• Optimal?

• Cumulative effect of acquisitions

DFW Market: Dec 2012

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MARKET AND DEAL OBSERVATIONS

• 43 locations • Expanded outward • More balance • Able to better

serve more clients’ needs

Blue: 2012 existing Green: 2013 adds

DFW Market: Dec 2013

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MARKET AND DEAL OBSERVATIONS

• Some natural “settling”

• But current clients happier and reaching new ones

Blue: Las Colinas Green: Grapevine and Southlake adds

Example: Las Colinas vs. Grapevine / Southlake

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• Small / medium university towns: variable or low-investment deal vs. conventional

• Entering “micro markets” - population 50,000 or less

• Aggressively seek out re-use space • Variable rent structure

• Bottom line, tailor deals based on your

market knowledge your risk profile for that market

MARKET AND DEAL OBSERVATIONS

Tailor Deal Structure According to Your Target Market

COST MANAGEMENT OBSERVATIONS

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• Yes, even in high growth periods

• Fund operating losses of start-up sites

• Fund some additional overheads to support growth

COST MANAGEMENT OBSERVATIONS

Cost Management Focus

Shared office space in Yaletown, Vancouver, British Columbia

Business Lounge at 747 3rd Avenue in New York City

Gamer’s Testing Lounge at Playa Jefferson in Los Angeles, CA

Meeting Room at Republic Center in downtown Dallas

Business Lounge at Cedar Ridge in Southlake, TX

Coworking at Penn Plaza in New York City

Shared office space at the Norton Building in Seattle, WA

Video Conferencing at Arroyo Crossing in Las Vegas, NV

Business Lounge at 555 Madison Ave in New York City

Meeting Room at 111 W. Jackson St in Chicago, IL

Office space at Diamond View in San Diego, CA