There's also a TON of rent-a-desk places.
The big questions are:
- What's the benefit to a large corporation doing this instead of lots of small companies? (The economies of scale need to outweigh the large corporate overhead.)
- What's WeWork's secret sauce or first mover advantage?
I like this way of thinking. WeWork isn't doing anything "new" - coworking spaces have existed for years. What's the upside of having a giant corporation owning all coworking spaces, versus having many small and independent small businesses running and operating independent coworking spaces? The answer to this question isn't obvious to me.
WeWork is also very similar to Uber in the sense that you also need a very effective "on the ground" team managing operations of each individual location, doing tours for prospective renters, managing upkeep + maintenance for the space, etc.
Advantage to customers? Likely minimal.
Advantage to the company itself: economies of scale and, likely more importantly, lack of competition allowing them to increase prices.
The very clear trend across all sectors is that companies trend towards giant monopolistic behemoths unless some very strong regulatory force prevents it. People act like healthy, competitive, transparent markets just appear out of thin air, but they are an artificial creation of government.
Sadly WeWork do not appear to offer this option (or didn't last time I looked).
Yes, that's right, the free AMEX WeWork plan is significantly better than any WeWork plan you can buy. That's start-up logic for you. I stopped paying WeWork after 1-2 years as a paying customer because their free plan was better.
I live in London and I can choose from any of 36 WeWork London locations for tomorrow along with anywhere else in the world. It's nice living off of VC money.
... Assuming any true competition is still in business in a year.
Are there any limits to how much you can make use of this offer or the kinds of spaces available?
_Surely_ they won't let you just camp an entire private office in SF all year round when it's supposed to cost upwards of $1000 per month?
Many of the benefits only apply to US-issued cards.
Is someone can write more about it it would be nice.
There is so much commercial real estate that it's hard to imagine them in any kind of a monopoly situation.
Consistency of branding can't be overstated too. People turn to trust when times are hard.
I’m not sure exactly how all of those contracts look with landlords, but someone is going to need money to spend to maintain them. If not, the person with brand new build outs is going to look more attractive.
Now, maybe I’m wrong and run down office spaces don’t matter. Uber drivers all used to wear suits and their cars were pristine. Even UberBlack cars have holes in the seats and transmissions in poor condition. Uber is vastly largely today than it used to be. So that could be the trick, WeWork at scale but more as a necessity than anything else. If that is the case, then it is more a question of how much extra space other sorts of businesses, like coffee shops, want to keep free for customers.
And no competition in the real estate market? Please.
Thanks for this insightful comment. I never fully considered it, but yes - all healthy, competitive markets exist as a result of a government that fosters them.
Its the reverse. All healthy, competitive markets exist as the result of a lack of government intervention.
Lack of a competitive market is the result of government intervention.
Smaller company would need a smaller team but even a single salary on the books just to comply is a large expense for a small business. Multiply this by other areas now such as licensing, insurance, etc. Just ensuring your every day work is not breaking the law becomes financially prohibitive.
So the economics of scale (supposed that is a relevant factor) could provide WeWork with a higher profit margin, but to become dominant, they have to take a cut to this margin.
Say you're a pretty large company and suddenly decide you want to open a dozen 'offices' in a dozen different countries. You just have to deal with one provider, one set of infrastructure etc. Plus if you decide you then want to consolidate to half-a dozen offices, it's easier to scale some up and some down.
However companies like Regus have existed for ages - so not quite sure what WeWork brings, aside from being able spaff away profits to get you in the door.
Probably, but that knife does cut both ways. I know a number of people (including myself) who wouldn't be willing to use a WeWork facility again.
Among the people I know who dislike WeWork, there are two main things that they complain about: the surveillance, and the actual environment.
I think it's down to the customer. There's a post below about somebody being reassured "it's a We Work" office they'll be in.
When I've looked for a job, it's never entered by head to ask who manages the office (my assumption is that it's my employer and if I'm not happy, I'll take it up with my employer).
I can see if you've often worked in offices not run by your employer, you might have learnt to ask - but would think that's a small pool of people working frequently in shared spaces, having worked their frequently enough to have a preference.
Back to the OP - it's not a "hypothesis", this stuff's been going on for decades. e.g. ~2000 I was working in Paris and visited our local guy in his local office on the prestigious "Champs Elysee" no less. I went down the "Champs Elysee", then through a small door behind two shops, then walked back a couple of hundred meters, then through a warren of rooms, then in a room off a room, there was a desk... and that was our office. Hundreds of people all working at this prestigious address - we must have been silver-class as we had our own physical desk.
If you went right back to the entrance door, there was a receptionist you could specifically pay to 'represent you for the hour' and a set of very swish/generic meeting rooms you could pretend were yours to visitors.
And on-the-ground ops just require intuitive software to enforce standard operating procedures. The last two coworking spaces I've worked at both used different SaaS solutions for coworking-space management, with customer portals and all. I'm almost certain WeWork's edge has been commoditized.
An advantage I see as a customer is that I can go to any WeWork across the country and get a desk/coffee/etc for the day. I can get that from a few other coworking places, but I don't think any have the number of locations that WeWork does.
Sure, there's probably some need for temporary surge office space like a insurance company setting up after a disaster. But that seems a pretty small niche to build a billion dollar business on.
Existing coworking spaces already make lots of money off of people who don't fully utilize their membership (which isn't necessarily a bad thing). WeWork is no different.
I don’t know how much that impacts their profitability or value as a company, but it feels like a very cloud computing model of work space where you get what you need where you need it, so that you can have local employees in cities across the country to serve customers there.
In comparison Regus Virtual Offices has more than 2500 locations.
Softbank $$$
And that not so much anymore. All they had was a cannabilized version of Meetup.com for doing reservations.
Same answer in case of gyms. Your advertising overhead does not scale linearly as you grow. Once you build a brand. Customer acquisition costs go down. For moving workforces - entrepreneurs, sales, executives - it becomes more affordable to use one brand rather than plenty of smaller brands.
From what I understand, WeWork is structured as many small companies, so they can negotiate favorable terms with long-term leases on office space and the smaller company can fail without leaving WeWork on the hook for the rest of the lease.