At a time when China’s zero-COVID policy continues to disrupt offline work and in-person interactions, Dominic Penalosa, former head of innovation and technology at WeWork China, introduced a bold idea—on-demand work booths in public locations—and succeeded quickly raise capital for the business.
Penaloza named her new venture Peace in hopes of improving the mental health of those who use the company’s quiet space, which is primarily to avoid crowded offices and noisy coffee shops. Peace announced this week that it has raised a seven-figure round of funding from a group of business partners and entrepreneurs.
Peace is the latest iteration of Penaloza’s ongoing experiment with flexible working. In 2019, the CEO spearheaded an internal project to propose payment spaces at WeWork China. A year later, he moved on and founded his own proptech-focused startup studio, which incubated a similar on-demand workspace service, but eavesdropping on third-party landlords.
Seven-month-old Peace launched its first batch of portable pods last week in three luxury malls and two office buildings in the heart of Shanghai. It aims to deploy 1,000 of them across the metropolis next year, Penalosa said in a video call from one of the mall’s pods.
“We sell privacy on demand,” the founder said when I asked if the cabins would be equipped with security cameras, an infrastructure that is ubiquitous in China and often raises privacy concerns.
“We don’t plan to put cameras… I think it’s more important to make our users feel that this is really a 100% private space. No one can hear what they are saying. And of course, no one can see their screen or them.”
Each Peace pod is 35 square meters with a meeting table that seats four people. The portable box comes with an app-enabled lock, power outlets, WiFi, soundproof walls and ventilation fans. It also includes COVID-19 prevention technology provided by a startup called LumenLabs which uses the new far UVC method to inactivate viruses and bacteria.
The long list of equipment explains the high cost of the capsules — in the mid-tens of thousands of yuan (1 USD = 7.16 yuan at the time of writing) to produce one.
Penaloza believes his team has come up with a sustainable revenue model. Each capsule costs 11.25 yuan for 15 minutes, but this is a reference price, the founder said, and in the future the price may vary depending on location and real-time supply and demand. It’s not cheap – an Americano costs about 25 yuan in an average cafe in China’s biggest cities like Shanghai and Shenzhen, but if four people have to share the price of 45 yuan, plus the advantages that a capsule brings – privacy and stable internet — and if Peace reaches meaningful density, it could be a viable business.
Peace has also found a sweet spot in its relationships with landlords, including retail spaces, office building lobbies, urban renewable spaces, transportation hubs, exhibition centers and residential buildings.
“We’re not renting the space,” Penalosa explained. “Our formula for working with real estate companies is one of our best secret sauces because that hardware, in landlord parlance, is actually an asset improvement. It should be part of the renovation budget that they have from year to year to make the building better and keep it competitive, so the Peace pods will attract white-collar people to spend more time in a building.”
“Even when we put it in an office lobby, even though everyone has an office upstairs, people still use it, especially in China, where hybrid working is not yet popular because small meeting rooms in offices are often fully used and everyone needs some peace and quiet every now and then,” the founder added.
Working with landlords also helps Peace save on maintenance costs. Following the outbreak of COVID, the Chinese government began requiring operators of confined spaces to clean their facilities after use. Peace’s technology platform automatically alerts the property manager at the end of each booking and a cleaning agent will be sent to the pod, a process that can be as quick as spraying surfaces with disinfectant and wiping them down.
Investors in Peace consists primarily of entrepreneurs, including Joachim Poylo and Francois Ammand of Aden Group, Chris Brooke of Brooke Husband, Pablo Fernandez of CleanAir Spaces, Patrick Berbon of CM Venture, Hei Ming Cheng of Kailong, Wei Cao of Lumenlabs, Penaloza himself , and Panda Eagle Group.