WeWork’s Billions – has Coworking Gone Mainstream?

 

WeWork’s Billions – has Coworking Gone Mainstream?

On Monday the Wall Street Journal released an interesting piece of news.  The New York based Coworking company – WeWork was recently valued at roughly 5 Billion Dollars. This astounding bit of information has sent ripples through the coworking world, leaving the internet buzzing with speculation.

So who are they?

WeWork was created in 2010, with the goal to create more than shared office spaces. WeWork operates through a rather unique business plan. They provide the funding and own and operate their own spaces, traditionally catering to startup teams of 4 and more; leasing out all their space to interested individuals. Four years later, with over 25 Coworking spaces in 4 countries (the USA, England, the Netherlands and Israel) and 8 opening up soon, its apparent that this model has been incredibly successful – at least in the short run. Kakul Srivastava, WeWork’s chief product officer, has stated that at the moment demand for these centers greatly exceeds supply; they can’t produce new locations fast enough. Now that they’ve been evaluated at 5 Billion, it seems that the only thing hindering them is time and scalability.

How’d they do it?

How WeWork underwent this amazing transformation is one of the more contentious and interesting aspects about their development. Opinions regarding their growth has been varied, with several individuals questioning the sustainability of their model. The WeWork offices are traditionally more expensive than other Coworking counterparts, or business centers. However, the price tag does come with increased amenities. The unease comes from their primary market, small start up teams with generous seed funding. Several commenters have pointed out that if the estimated value of the start-up market drops, as it potentially may, a huge portion of WeWork’s clientele may evaporate. The focus on Private Offices and group settings does fail to draw in smaller markets. However for now this is speculation, and their growth is still impressive.

WeWork

What does this mean for the community?

There’s a number of interesting conclusions that can be drawn by the recent success of WeWork, and just as important as their own success, it is the attention this success has drawn to the movement.

First and foremost, this is likely to draw a heavy amount of outside attention; investment firms, local governments, and imitators are likely to take notice of the WeWork model and begin to shift their strategies in light of their success. In this regard, WeWork’s growth is good news for all of us in the coworking world; the attention they are gathering will echo throughout the entire field.

WeWork

This however does raise a concern for many Coworking spaces; does the growth of mega-spaces such as this pose a potential risk to smaller, home-grown coworking spaces? It is our opinion that it does not. WeWork poses a threat to Business Centers and companies like Regus, however they are in essence a different product than your traditional Coworking Space. A grocery super-store may sell the same products as a farmers market, however they are to an extent not in direct competition, with each drawing their own unique audience. That is the distinction between places like WeWork and your smaller Coworking spaces: individuals, people with more eclectic tastes, and those who desire a greater sense of community will gravitate towards smaller spaces; while teams and larger businesses with seed funding will likely favor the WeWork model.

We don’t know for sure how the Coworking world will take this revelation; if we’ll see an explosion of larger places similar to WeWork or if the model will fizzle out, no one can be sure. What we do know is that it’s a sign of progress – Coworking in a few short years has gone from an obscure idea that businesses weren’t comfortable associating with to an idea potentially valued at 5 Billion dollars. Whatever the outcome, Coworking is going mainstream. I don’t know about you, but I’m ready for the ride.