By now we all know the story of the rise and fall of WeWork. The company’s valuation got pushed higher and higher due to its brand and the promise that it could somehow become the center for startup innovation around the world. Now, the troubles that WeWork faced had nothing to do with its product. Co-working has continued to grow. The problem was the false pretense that a global brand would dominate flexible office spaces. Today, WeWork seems to be back on track to grow, albeit nowhere near the pace that it saw before its disastrous decision to go public. Growing even faster than WeWork is the co-working market itself. There are some other large competitors, most notably Industrious which just took over CBRE’s co-working concept Hana. But most of the co-working locations that are springing up around the country and the world are not global brands, they are local businesses and I, for one, think they are better that way.
One of WeWork’s appeals is that it has offices all over the world. For an additional fee clients can choose an all-access membership that lets them choose to work at any of their locations (as long as there is space available). This benefit is likely mostly used by larger corporations, a big driver of growth in co-working recently. My guess is that people who book individual memberships probably just work from their hotel room, a cafe, or (pro tip) the hotel lobby for the time that they are away from their home workspace.
The other aspect of a global co-working powerhouse that WeWork sold us on is the power of the brand. But does brand really matter? Sure, knowing that it will be nicely adorned because it is a WeWork or professional because it is a Regus can help ease someone’s mind (and therefore pocketbook) but there are plenty of review sites that would be happy to Yelp with that. Another possible benefit of a big brand is the ease of booking. A large company can be that one interface where people know they can find what they want. But WeWork will never own enough of the supply to be that. A number of booking portals have sprouted up recently for local co-working shops. Eventually, there will likely be a FastPass or a Booking.com of co-working just like there are for gyms and hotels.
The final pitch that WeWork sold the world (or at least the venture investment community) on was that it could be a hub for innovation. “Find your next co-founder here.” Again, I don’t really see an advantage of scale. Unless WeWork was going to try to create a community online, like with a Slack or LunchClub competitor, they will only be able to facilitate connections with others in the same location. Any good community manager with a small budget can do that.
As more co-working locations come online the competitions will heat up and I don’t think a global footprint will be much of a competitive advantage. More important will be how the space is able to market locally, cultivate relationships with clients, and make personal introductions. Why wouldn’t a local co-working company sponsor a local Little League team or be active in the chamber of commerce? The kind of community marketing that is effective for so many other local businesses. If you think about it, a good co-working proprietor would be a lot like a local real estate agent. That is because, obviously, co-working is local real estate.
There are certainly places where a global footprint will help. Large companies that want to outsource their entire flexible office portfolio, for example. But at the end of the day co-working is just real estate and so location still rules supreme. Would a company rather find a WeWork in the same neighborhood or just make an arrangement with the co-working location that is in their same building? It sounds great for a co-working company to say that they have a global footprint but that might not help them compete with the mom-and-pops next door.
WeWork has a map of all of its locations here. They have done a really good job of being in the center of most major industrious cities in the world. One thing that struck me is that, except for two locations in UAE, there are none in the Muslim world.
Despite the headlines, there is data that shows the comeback of the office market in many locations.
The car market has seen its ups and downs but it looks like time is numbered for inner-city car dealerships as they struggle to justify the cost of their real estate. (New York Times)
More workers are worried that they might be fired for working remotely, and they might be right. (Fortune)
Bjark Ingel’s Group has just completed construction of their new skyscraper in Singapore which is host to over 80,000 plants. (Architectural Digest)