Knotel CEO Pushes Back Against Vacancy Concerns, Predicts Breaking Even This Year
In a conference call with reporters, Sarva gave a prediction that Knotel's cash flow will break even this year. Sarva said he convened the call as a way to fill the information vacuum surrounding the private company.
“In the past, we haven’t been that open, but as our business has increased and interest has gone up, we decided to be more open,” Sarva said on the call.
Sarva characterized Crain's New York's report in November that Knotel had about 800K SF of impending vacancy in its home city as a misconception about its business model.
"The point of our business is not to lock up space for years into the future, it’s to operate a liquid platform for customers that may not want to move, but may want to change their usage and requirements, and we have to be responsive to that,” Sarva said.
Sarva also pushed back against a Commercial Observer report that Knotel had laid off 24 employees at one of its New York offices, saying that it had hired 10 new staffers and elevated some internal positions, so that its February 2020 payroll is the same as it was before the layoffs.
Over the remainder of the call, Sarva laid out a laundry list of milestones and accomplishments to prove Knotel's health, including its projected break-even point this year. Sarva said that the company's New York business will be cash-flow neutral in the first half of this year, and that its San Francisco, London and Paris businesses have already hit that mark.
Other measures of success Sarva listed include:
- Raising about $440M last year, $250M of which comes as part of a joint venture with a "financial partner" and $190M from direct equity investments.
- Closing about $10M per month of new business on average over the past six months in New York.
- Adding 1.1M SF in the past six months, as much as in all of 2018.
- Drawing about 50% of its revenue from newer markets, including one third of its revenue from Europe, while starting its Asian business in Delhi, India and Tokyo.
- Building up about $1B worth of customer demand in its pipeline.
- Doubling its average contract size with customers over the past year.
- Landing enterprise clients including Uber and Mike Bloomberg's 2020 presidential campaign.