WeWork has spent 2017 riding a rocket.
The co-working company leases buildings, renovates them to be luxe Silicon Valley-style offices, and then rents out those offices one desk or a conference room at a time. Just within 2017, WeWork raised $4.4 billion from SoftBank’s Vision Fund. As of October, it had 172 locations in 18 countries, used by more than 150,000 members. WeWork itself employs over 3,000 people. And it has capped the year by buying Meetup, the social network designed to bring people together in their off-duty hours.
To sum it up: WeWork, founded in 2010, wants to cash in on the ongoing seismic shift in how workplaces are organized. Built for the “move fast and break things” world, WeWork serves a new kind of company, one that is willing to pay a little extra to avoid commitment. WeWork is particularly ideal for early-stage startups that want to be able to expand rapidly as they succeed, while capping the downside in case they need to shrink. The company’s facilities also host many remote teams in small quasi-offices, or even single remote employees at individual desks.
This year, WeWork started offering logistics and office-management tools as a bundled service. Essentially, you can WeWork-ify your entire headquarters. “That’s not something that we had originally set out to do, but over time we got such an overwhelming amount of demand from larger companies,” says Josh Emig, WeWork’s head of research. The move isn’t a pivot, but rather an expansion, with enterprise offerings growing 370 percent this past year.
What does it actually mean to WeWork-ify your headquarters, exactly? Good question. “I rarely come across people outside the company who have a really solid understanding of what it is that we do,” Emig says, “and especially [they] don’t have an understanding [that] technology is a huge component of that.”
WeWork insists that its operational prowess is something that competitors can’t replicate. The company has developed in-house logistics software to coordinate every aspect of building and managing its locations. WeWork is also seeking to automate office functions like access control with custom hardware. There are even standing desks that remember your height preferences.
That may be why WeWork has a tech-level valuation of $20 billion — though skeptics question whether it should be treated like a tech company, given that real estate is so integral to its main product. (WeWork also dabbles in communal housing, early education, and — bafflingly — a wave pool business.) The valuation is higher than that of real estate investment trust Boston Properties, which is valued at roughly $19 billion and actually owns the buildings it rents. Fellow co-working company Regus offers nearly the same services as WeWork (minus the gratis beer) and its market cap tops out under $2 billion.
For its part, WeWork wants to be considered a services company — one whose key differentiator is an ability to create office culture in its myriad co-working spaces. “Our valuation and size today are much more based on our energy and spirituality than it is on a multiple of revenue,” co-founder and CEO Adam Neumann told Forbes in October (a statement that was immediately mocked).
Ribbing aside, it may be more accurate to think of WeWork as a B2B version of Starbucks, with its market cap of almost $80 billion, rather than measly Regus. You don’t go to Starbucks just for the sake of the coffee — you go for the warm brown interiors, the indie music, and the comforting seasonal flavours that you know will be at every location. WeWork is doing the same thing for office space. Sure, you show up because of the desks and Wi-Fi, but you keep coming back for the funky decor, the free fruit water, and the “colleagues” you can grab a drink with after work.
As WeWork expands around the world, making sure its many locations strike the right blend of high-tech and cozy won’t be easy. “WeWork has grown extraordinarily fast, so we’ve had to learn how to be our own global logistics company while we’re growing and operating these locations,” Emig says. “That speed is one of our hallmarks and it’s also one of our challenges.”