Susan Freeman
Hi, I’m Susan Freeman, welcome back to our Propertyshe Podcast series brought to you by Mishcon de Reya in association with the London Real Estate Forum where I get to interview some of the key influencers in the amazing world of real estate and the built environment.
Today, I am really delighted to welcome Mark Dixon. Mark is the CEO and Founder of listed company International Workplace Group (IWG) formerly known as Regis which provides flexible office space for businesses in 3,000 centres across more than 900 cities in 120 countries worldwide. Mark is one of Europe’s best known entrepreneurs since founding the Regis Group in 1989 he has achieved a formidable reputation for leadership and innovation. Prior to Regis and IWG he established businesses in the retail and wholesale food industries. A recipient of several awards for enterprise, Mark has revolutionised the way business approaches its property needs with his vision of the future of work. He also somehow finds time to run business producing wine from his vineyards in the South of France and the UK. So now we are going to hear from Mark Dixon, the man who effectively invented flexible working 30 years ago on the essence of entrepreneurship and how the world of flexible working has evolved. Welcome to the studio.
Mark Dixon
Thanks very much, thank you. Thanks Susan.
Susan Freeman
So you founded IWG formerly known as Regis 30 years ago in, in 1989. You now provide flexible work space for businesses in more than 120 countries worldwide. How come you were so ahead of your time?
Mark Dixon
Why were we ahead of our time? Well to me it seemed even then and that was at a time before mobile phones and the internet, that the whole property industry was not very efficient, not very customer focussed and that was the opportunity. It was the opportunity to actually convert property into a product that people would want to use.
Susan Freeman
I remember you coming in to give us a presentation at Mishcon de Reya and it was certainly over 20 years ago, probably about 24 years ago and you were talking about the way working practices were going to change and that people weren’t going to be commuting into an office but that they would be able to plug in at a workspace and that really seemed pretty revolutionary at the time and you’ve just reminded me that we probably didn’t even have mobile phones then so what actually gave you the idea to do that?
Mark Dixon
Well again it’s just I tend to, IWG Regis is my eighth business and I’ve always done businesses that have been slightly different. There has always been a different angle. Trying to find opportunities that were pioneering in some way so it is just not, I don’t like to do normal businesses. So in this one I you know, it seemed to me to be practical and again as a person that didn’t come from the real estate industry as a person that previous to me starting this business I had never even had an office, I’d only ever had factories. It just seemed to me and when I did start to look for an office that there was a really big gap in the market and that gap was one about really the rentalisation of the whole product turning it into a product and being able to use it easily - number 1. Number 2 – that in the future people would want to work closer to where they lived and that there would be a future where many of the reasons for many people going into an office would not be there anymore i.e. people were going into offices to use computer systems or to use phone systems or to use printing support, typists in a few very old fashioned companies and so on and that you know those days of all of those things would go and you know, I didn’t envision at the time, you do it all on your mobile phone but certainly in those days on a, on a laptop. You know all of these things would be possible, the internet has got so much better, mobile phones have got so much better so you know, you can just do it from anywhere. When you are on holiday, when you are in the bath, when you are out running. As irritating as it may be, you can work from anywhere, anytime and so that technological revolution is what’s really made the company, our industry grow so much further and it’s what people want. All of my businesses that I have done have always been around what I think people want. Not what businesses provide, but what does the customer, what does the individual want and if you can provide that then you will go far.
Susan Freeman
That’s interesting because I remember when I was going to London Business School to do an MBA and I told you about it and you said ‘what, you know, what an earth are you doing that for?’ and you said that you had learnt what you needed to learn about business working I think in a sandwich bar, working in your various businesses. What actually equipped you to just go, because you left school at 16, I think and just went and started a business. I mean how, how did you do that?
Mark Dixon
Well just to be clear I think it is great if you can get into London Business School as well. You are going to learn that way as well. It depends if you are good at learning. I am not very good at learning so I am not very good in classroom situations put it that way and that’s for me, I absorb information in a completely different way. Everything that is around me, I learn from people, I learn from things, I learn from reading and so I have a different way of learning. So education for me didn’t work. I found it way too sort of slow and boring so that’s why you know education doesn’t suit everyone. But I’ve made it my purpose in life to continue to develop and to try and understand things and I suppose in a way me not going on to do further education I sort in my younger life was very, very focussed on ensuring that I could get to the same or similar place at the same time. From a business point of view but also from a knowledge point of view. So I sort of tried to learn from others but also teach myself. I did a lot of reading so it’s a question of purpose in life you know, that’s… my life is about purpose, it’s about doing things, it’s about understanding where the gaps are and trying to do something about it. I am sitting here today so many years later, I am still learning and you know have had a marvellous journey along the way and met so many great people you know, am I the finished article, no. I learned more this morning and I am sure I am going to learn more this afternoon.
Susan Freeman
Well it is interesting because you mentioned customer service and how you know, that’s been key to all your businesses and that really was for me the key learning from Business School so I think it is sort of different ways of you know, of arriving at the same place and I know when I came out of Business School and I looked at the property industry then and I thought ‘does anybody know who the customer is?’ so I can see that it was right for some sort of revolution. IWG I think includes five different brands for sort of five very different businesses and in fact I was intrigued to see that one of them is Number 18 Members Club which I don’t know and I think you are due to open at Battersea Power Station next to Apple…
Mark Dixon
Yeah.
Susan Freeman
…which sounds pretty good and it is more of a members club than some of your other brands. So are you planning to role that out in the UK are there…?
Mark Dixon
Yes there’s another one opening next to Liverpool Street Station as an example and we, the first one in America opened up a week ago, two weeks ago in Atlanta but look this is high end, this is Soho House. Good food, good coffee, different type of community, it’s more leather, more luxury. It is sort of the top end of the scale of brands is Number 18 and you know, it does very well. It’s a smaller market at the top but for those people that are looking for sort of something slightly more business-like, Soho House, that’s what Number 18 is.
Susan Freeman
Have you thought about opening in Holborn? I think would go down quite well in Holborn.
Mark Dixon
Yeah, we haven’t yet got round to Holborn but you think that would go well, yeah. Well with the new railway line then perhaps yes.
Susan Freeman
Yes coming soon. Crossrail.
Mark Dixon
Yes, well not soon enough.
Susan Freeman
So on your website you say the flexible workspace sector has reached tipping point and following many years of continuous growth, global demand for temporary offices, meeting rooms and co-working areas, is set to explode and I just wondered you know, after 30 years why, why now?
Mark Dixon
Well now is because you know, digital changes everything and in the digital world companies have to be so much more agile than they did before and so what we provide which is a… it’s a product you can pick up, you can use it and you can put it down afterwards, it’s outsourced, it’s easy to use, there is no hassle, that’s what companies want in a digital world and more and more companies can find it on digital platforms so you know we have two and a half million people using us, they’re all using an app, it’s super-efficient for them, it’s efficient for us as well and you know, we don’t have enough people if we had to deal with all of the two and a half million people individually. All of this is facilitated by modern digital platforms. You know, we know a huge amount about our customers today that we can only dream about even three or four years ago and we can provide our customers with many, many more digital services that help their productivity in their offices that we couldn’t do three or four years ago. It is the whole world of digital. There is also more competition in the marketplace, you know people ask me is it more competitive and I said ‘well not really’ you know I’ve been doing this 30 years and it’s always been competitive. Is it more competitive? No. There is just more competitors but it is a growing market and so with more people in the market and a bigger industry there is more money spent on market, more people know about it and it starts to become the norm not the exception. That’s also fuelling the growth and the demand. It is just more people finding out about it and saying ‘why is my company not doing this?’. It works.
Susan Freeman
Yes and it seems that the big corporates are now looking at it whereas before they weren’t necessarily looking at it and I know at MIPIM you mentioned this new accounting standard.
Mark Dixon
IFRS16.
Susan Freeman
Yep which requires leases over 12 months to be on the balance sheet and is that something that’s affecting people? Yeah. So…
Mark Dixon
Absolutely it just cuts a big hole in your credit rating. Look just to correct you, corporates have always used us right from the beginning, probably from year 4/5 we’ve been doing corporate business they, what larger corporates want is the reliability, they want a good partner but they want to know that what they are promised is actually delivered and we do that in more than 120 countries. IFRS16 which forces companies to realise liabilities that hitherto were a note on the balance sheet, they are now right up on the PNL and so they have an effect of increasing leverage so companies systematically now are seeking to reduce that leverage. It is not just, you reduce it by just having shorter leases, you don’t count ones that are less than 12 months but you know a 3 year lease is better than a 10 year lease. So it will transform the property industry over time because before you took a lease it was trans… you couldn’t see it. Now it is absolutely transparent.
Susan Freeman
Okay so when leases come up for renewal, people will you know consider all that as part of the…
Mark Dixon
They will do certainly.
Susan Freeman
Do you know what percentage of the global workspace square footage is actually flexible? I mean is there a percentage?
Mark Dixon
Yes at the moment it is you know maybe 1½% but it is small single digits. Where will it go to? It will go to probably 30% you know there is many studies on this; JAL did one, I think Cushman in Wakefield did one and we certainly feel 30%, it’s about a third of all office space will become some kind of finished product because that’s what the customer wants. The customer just doesn’t want to be involved in the real estate industry and dealing with you know fifteen different suppliers to put together an office, agents and advisors and rating specialists and a designer and then got to buy…. It’s just too much you know. Business is hard enough. If you can avoid all of that, unless of course your business is one that is very, very particular about what they need, you know most companies want to avoid it for small space but also for large space so we are seeing a lot more business today where companies ask us to just come and run their space for them and offer them a complete product. That’s the driver overall what companies want is something that’s easy, ready to use, if it’s what their workers, what their team members want as well, then that’s a double benefit and then if that’s all reasonably priced you know, those are three things that really, really drive the growth.
Susan Freeman
So there is room for growth if you can see it going up to 30%.
Mark Dixon
Absolutely yeah.
Susan Freeman
And at the moment what percentage does IWG have of this flexible working?
Mark Dixon
I don’t know, we have a small part of it. What is our market share? 10% maybe.
Susan Freeman
But you are largest…?
Mark Dixon
Yeah, yeah. There is lots of people doing it I mean it’s yeah, it’s a challenging business. It’s not… lots of people start it, I am not sure that everyone that started will finish.
Susan Freeman
Interesting and there are yes, all sorts of, all sorts of different, different offers and a number of the property companies and agents are now offering their own bespoke product. What… do you have any thoughts on that?
Mark Dixon
Look it’s… look I am sure it is a fantastic thing of course and the market is big enough for everyone. In the end though it depends why you are doing it. Is this a marketing thing or is this something you want to actually… is this a commercial thing because you know what I know is that the need for scale is huge and it is very hard to be subscale in our industry. It is an industry about efficiency, it’s an industry about coverage, you know, today’s modern company doesn’t just want to have an office in one place, they want an office all over the country or all over Europe so there’s a place for all of these offers but it’s you know, the economics are harder at small scale level.
Susan Freeman
You’ve recently sold your Japanese operation and done a franchising deal which I think you described as the biggest reinvention of your business since the float in 2001. And is that something you see rolling out…
Mark Dixon
Yeah.
Susan Freeman
…over other parts of the business?
Mark Dixon
Yeah we think it’s a 2 to 3 year programme where we are partnering because you know, we didn’t sell our business, we sold the operating business. We partnered with a very strong national Japanese company. We’ve done other smaller countries in the meantime and we’ve done lots of partnering with building owners, with a franchise, segments of markets. We are working on more country, much more significant partnerships that will come through in the next couple of years. Our business has been growing at about 15% a year and this is about increasing the growth rate through partnering. Because you know again we believe coverage is the most important thing. For us to do it on our own with our balance sheet, our balance sheet is very strong but to do the whole world it’s a slow process, you need to partner. We’ve been partnering for a while, we’ve been doing it probably for the last 15 years but what we’ve done is accelerated the quantum of partnering. So it will give us more growth and we will need less capital to get that growth.
Susan Freeman
Do you anticipate any difficulty in maintaining consistency of brand because that must be, I mean pretty important, brands are so well known.
Mark Dixon
Yeah but no difficulty. I mean look this is… there are many businesses that are franchised, McDonald’s, Starbucks. Most fast food, anything with a chain is franchised. There is lots of other businesses, you know car rental, there’s lots of other businesses that are franchised. You have to invest in quality control, it is not something that happens automatically. Much of the service is done centrally anyway, it is a very highly digitally intensive management programme that means that the far end is really about you know, it’s about good coffee, clean centres, smiling people. It’s not, you know, we don’t have… there’s not the same level of expertise needed at the centre level as 5 years ago.
Susan Freeman
So have you been at all attracted by the co-living model to run alongside the flexible working or is that not something that’s of interest?
Mark Dixon
I used to do it.
Susan Freeman
Did you?
Mark Dixon
29 years ago.
Susan Freeman
In fact that was what you were going to do when you started Regis wasn’t it?
Mark Dixon
No actually I did before Regis.
Susan Freeman
Okay.
Mark Dixon
But I had one 29 years ago. I had one in Brussels when I had the first ones. I also had a co-living thing, that was a long time ago but yeah, tough one co-living. Great business but lots, you need a lot of capital, you know again, it’s a lot slower burn, lots of attraction though. It is a good business model so yes we’ve looked at it recently but we are busy at the moment, we can’t do everything. But I think people do well with it if it’s well designed and if the places, again you know, again this is scale. If you don’t get it big enough and you don’t get it scaled up it is a tough one to actually, you have to beat the return that you would make by another use by just simply leasing out those apartments or more intensive management because you are providing more central services, you’ve got a better common area so you are halfway between a hotel and sort of an apartment building, a bit more management intensive as a result. But it’s the right way to go, better use of shared space, right way to go.
Susan Freeman
There certainly seem to be synergies because people are so keen to be able to work near where they live.
Mark Dixon
No they don’t want to do that.
Susan Freeman
No?
Mark Dixon
No. Myth. Yeah. We’ve had that. We’ve, I don’t know how many buildings I mean overall I’ve done about 5,000 buildings now. We have 3,500 but I’ve done many over the years in different places and all the ones we’ve ever done with a work/live, they don’t work very well because actually people, human beings actually want to, they don’t want to work in the same place that they live. That makes you know, life a bit boring. They just, they don’t want to work too far away but they’d like to come out of where they live, walk 100, 200 metres, grab a coffee on the way and go into work and then come home again.
Susan Freeman
So it is proximity rather than…
Mark Dixon
It’s proximity yeah. It’s when you never see the light of day people get pale and don’t work very well.
Susan Freeman
So with businesses in 120 countries and counting, do you spend a lot of time travelling?
Mark Dixon
Yes. Yes. Look I’ve got a great team so I tend to travel more to our regional hubs than I would go… I try and do field visits I don’t know five times a year but it’s more focussed on regional hubs where I am getting people together and doing workshops and things like that but we’ve got a great management team so there is just not the need. I only go places where I am pretty sure I am going to add some value. Otherwise there is no point. You know, I certainly don’t travel for fun so after setting this thing up over all these years I only travel when it is absolutely necessary.
Susan Freeman
That’s useful to know. I am very lucky to have you here today. So as well as IWG I know you find time to operate a wine business and I was quite surprised when I came to visit Chateau Du Berne to find that it was quite a large wine producing operation. I think you have also got a vineyard in the UK?
Mark Dixon
Yeah.
Susan Freeman
You must be one of the largest sort of wine producers certainly in the South of France.
Mark Dixon
In Cul de Provence.
Susan Freeman
And the rose I have to say is terrific. Is that a business you are planning to expand or is it just something you do in your spare time?
Mark Dixon
It’s a business I shouldn’t be doing because I don’t have any spare time. But no, again this is, I’ve got a great management team. I’ve got one management team in France, another management team in the UK. The France thing was a sort of weekend place that got a bit out of control because I started to get interested in it which is always a dangerous thing. It’s been an interesting journey. I sometimes wish that I could just finish my IWG work and then go and drink a glass of rose without thinking about where it came from but it is work so it is like a Saturday job. A great management team and you know I’ve learnt a lot about agriculture and frankly there is a lot of cross over between what you do on a farm and how you run your business and it is certainly a very different time outlook with farms, especially vineyards where you are planting to get a product in 3 or 4 years’ time and you are dealing with nature and so on so it’s even though it’s a bit more work it is sometimes good to do something different.
Susan Freeman
Well I was impressed with out automated the production seems to be in the South of France. I mean incredible machinery that you’ve got there.
Mark Dixon
We can’t afford to employ anyone. So it’s all robotic, everything is robots and that part’s fascinating. I am interested in that. The latest thing coming now is all drone equipment which starts to change the way you think about tractors. Tractors are expensive and they do a lot of damage and they are quite clumsy vehicles, efficient but clumsy. New drones coming in are doing some of the work, they are all prototypes at the moment but prototypes I think will become mainline soon and so just amazing drone technology being used in agriculture on vines so that’s going to be the next stage now. All of the automation actually doesn’t just keep your labour costs under control, it actually helps you make a better product so we know every vine we have logged, it is all GPS logged, we know if it’s got enough water, we know if it’s got enough nutrients. We are all organic so it is quite important that they have enough but not too much because you don’t want to waste if you are organic it is regulated how much fertiliser you can use. You use organic fertiliser but you can’t use very much so it is very important that you are spreading it on to parts of your land as you need it, not parts that don’t need it. So it is all helping with efficiency and especially when you are organic you have to be efficient because the costs are higher on organic.
Susan Freeman
So I was going to ask you and I know you’ve said that in life you’ve got to go for it but you need some luck so do you think you’ve been, you’ve been lucky or have you made your own luck?
Mark Dixon
It is an average thing.
Susan Freeman
Okay. Sometimes lucky, sometimes not.
Mark Dixon
Yeah. You try and be a bit more lucky than… yeah of course I’ve had some luck. Right place, right time. I remember when I did the IPO bad luck, timing but we had to delay the first and then went back a year later, I mean the bad news was we had to delay, the good news was a year later we got double the value. Yeah all of those things you say well everything looks good with the benefit of hindsight generally speaking.
Susan Freeman
I think you’ve got five, you have five children? Is that right?
Mark Dixon
Yeah.
Susan Freeman
And in terms of life lessons for them, is there any sort of one key thing that you’ve told them?
Mark Dixon
There is not one thing, I mean you are assuming that they listen to me.
Susan Freeman
Yes.
Mark Dixon
All the things I got really wrong which means trying to keep your life in balance you know, don’t work you know you’ve got to try and get a balance between your personal life and your work life and spend enough time with your family and all these very sensible rules that I did not follow. But you know overall it is about taking your opportunities and about doing things, you know, don’t talk to me about box sets, don’t talk to me about Love Island is absolutely prohibited because by you telling me that you watch this I know that you wasted whatever time it takes to watch it, half an hour of your life, and you’ve got to… you have to go out and do something and sort of try and get some variety in life. So I told them and I hope they listened.
Susan Freeman
So what advice would you give now to a sort of young, aspiring entrepreneur? I mean do you still think an MBA is not as good an option as actually just going there, starting a business, trying to make it work and learning as you go?
Mark Dixon
It depends who you are. An MBA is fantastic of course, any type of… it’s training, it’s good as long as it is quick and it doesn’t take too much of your career away while you are doing it. These things tend to be, they are designed to take a long – in my view – they are designed to take a long time so if you are going to do an MBA no problem but try and do a couple of other things at the same time. Get a job in a restaurant, or do something. The question is doing things and sometimes people pontificate too much and they have the, if you have the ability get on with it, you know, just start, you know, get going. If you find that you are limited in something, partner with someone or something and get going but don’t pontificate. Otherwise get a job, you can get a job you don’t have to worry but no education is good for some people. The best of all is to do both. Probably the best of all things though is if you are working with some great people, you will learn more than any other circumstance.
Susan Freeman
And has there been anybody who has been a role model to you along the way?
Mark Dixon
Lots of people.
Susan Freeman
No one person?
Mark Dixon
No one person. They could never be. So you know I am a great student of biographies I mean I used to… I’ve read a lot of biographies and I am inspired by reading what people do in their lives. You know, the first thing I read on my online Times every day is the Register to you know, unfortunately people pass away but you can see what you know, what value did they add in their lives and there are just some amazing people.
Susan Freeman
You are right you do see, you come across some extraordinary people you just didn’t know…
Mark Dixon
Yeah absolutely.
Susan Freeman
…didn’t know existed.
Mark Dixon
On doing things that you didn’t know even existed and that’s what makes the world that we live in so you know, this is not just something about business and that’s another thing I say to my kids, it doesn’t really matter what you do, as long as you are making a difference, your life had some purpose and you, you know, money is sort of low down on the scale, it’s very useful stuff of course and if you are going to be a business person it is your stock in trade, you need it but you know it doesn’t really… two of my daughters are teachers, they are very you know, it is a very fulfilling thing, tough but fulfilling. No problem, that’s if you, if you are making a difference to people’s lives that’s… there’s nothing wrong with that, you don’t you know, money is just one thing. Achievement I think and purpose is the most important thing.
Susan Freeman
Mark that’s terrific, I think that’s a pretty good place to end so thank you, thank you very much for your time today.
Mark Dixon
It’s a pleasure. Thanks very much Susan.
Susan Freeman
How fantastic to hear from Mark Dixon on how 30 years ago he somehow foresaw the change in our working patterns and the rise and rise of flexible working and it was also brilliant to hear a bit about what motivates him and drives his success. That’s it for now, I really hope you enjoyed today’s conversation, I certainly did. Please join us for the next Propertyshe podcast interview coming very shortly.
The Propertyshe podcast is brought to you by Mishcon de Reya in association with the London Real Estate Forum and can be found at mishcon.com/Propertyshe along with all our interviews and programme notes. The podcasts are also available to download on your Apple podcast app, the purple button on your iPhone and on Spotify and whatever podcast app you use. And please do continue to let us have your feedback and comments and most importantly, suggestions for future guests and, of course, you can also follow me on Twitter @Propertyshe for a very regular commentary on all things real estate, proptech and the built environment.