WeWork wants you (and the government) to know that they aren’t like their startup peers. More specifically the likes of Airbnb, and Uber. WeWork leases out, divides up and then rents out office space to entrepreneurs. Their model is kind of genius if you ask me. I mean, not everyone needs an entire office, so through WeWork you have the opportunity to just rent the space that you require. The company has encountered some pushback from local housing and real estate interests, but it’s not been confronted by the same hostility Uber got from the taxi industry. Or Airbnb from the hoteliers. Which, in a way is good news.
But the system is an easier one for WeWork to navigate. Take Uber for example – the impact is that people aren’t going to take taxis anymore. On one hand, I feel for the taxi industry, but on the other hand, they kind of have a monopoly. At least in my city, they seem to be able to charge whatever they want and people pay the prices. Because, what else are you going to do? Airbnb had to go up against the likes of Mariott or Hilton. Both of these are big battles to fight. So, yes WeWork hasn’t had to fight those fights.
On Friday, Adam Neumann, WeWork CEP argued that WeWork is a company that should be courted, and not feared. WeWork recently became the largest corporate office occupier in central London. Its core business involves taking out leases on large amounts of office space before farming out chunks of it on a short-term, flexible basis to companies ranging from tiny start-ups to global corporations. The company has 207 offices in 65 cities across the world, leasing more than 10m square feet of office space.
The whole concept of WeWork is intriguing to me. It’s not a company that goes into a city for the economic incentives and then leaves a few years later. They’re building a great company that can be expanded. Not only that, but the model that they’re developing can also be used by other entrepreneurs.
What makes this model work? Well, there’s the impression that they’re giving back to the little guy, in a way. While they’re not directly giving small startups money, they are giving them the opportunity to work within their own budgets. Rather than having to rent out a huge office, they can rent out 2 or 3 cubicles where they can get work done, while at the same time building their own business and brand.
WeWork claims that this kind of model will actually be beneficial to the economy. Meaning that every person that uses WeWork means that one additional new job is being created. I’m not sure that it actually works out to be that lucrative, but I can definitely see the incentives from an economic standpoint. Now, Uber and Airbnb have likely made these same arguments, but the difference is, which I said earlier – is they aren’t competing with large industries. Will this work for them? That remains to be seen, but we will keep on top of any developments coming out of Washington.