WeWork Signals The Downfall Of Traditional Facilities Management
WeWork began as a provider of shared working spaces in 2010. Founded and headquartered in New York, the firm has expanded to 21 countries across Central, North and South America, Europe and the Asia Pacific. The privately held company was valued at $20 billion in 2017. The firm, not content with shared working spaces, has embarked on an ambitious plan to develop a market for Space-as-a-Service (SPaaS) – and will force traditional facilities management firms to adapt or fail in the process.
WeWork is developing the concept of SPaaS through five key strategic moves. The firm has:
Expanded its client focus to include enterprise customers. WeWork’s initial customer based revolved heavily around providing shared workspaces for entrepreneurs, freelancers, startups and small businesses. Since 2016, the firm has begun to court large enterprise customers such as Microsoft, whose New York-based sales staff is now provided with WeWork space and membership benefits. WeWork defines enterprise customers as firms with over 1,000 customers. This demographic now comprises 20% of WeWork’s membership and up to 30% of its monthly revenue. Other enterprise companies include firms such as Bank of America, HSBC and Salesforce.
Launched a facilities management service for large enterprise customers. In April 2017, WeWork announced that it will provide design, build and management services to large enterprise clients who want WeWork spaces, but don’t want to share the spaces with other firms. Clients will get the full WeWork experience, such as community activity managers and free fruit water and coffee – just in a private office setting that has been designed, built and will be run according to the WeWork culture.
Begun to provide members with a software services store to improve business management. Also in April 2017, WeWork launched its WeWork Services store. The take on the app store provides members with access to office software suites at a discount. The Services store launched with over 100 software and services partners such as Amazon Web Services, Expensify, Hive, Lyft, Office 365, Salesforce and Slack.
Partnered with AirBnB to provide office space to business travelers. The partnership, announced in October 2017 enables business travelers to reserve workspace in one of the 135 WeWork offices that may be at their destination.
Acquired community building firm MeetUp. In December 2017, WeWork announced its acquisition of MeetUp – a website known for facilitating the development and management of interest group communities. The two firms have collaborated in the past with several WeWork facilities hosting MeetUp groups. WeWork members can now expect this collaboration to expand and to potentially open up stronger community building activities.
And that is what all of these strategic moves add up to – proactive community building. WeWork is not just providing a transactional service to customers, based on old service models, that are costly and increasingly ineffective. In today’s millennial-focused atmosphere, it is creating a community that organizations want to be a part of – this is counter to traditional facilities management and will be a disrupting factor.
Traditional facility management firms, such as CBRE, Cushman & Wakefield and JLL should be asking themselves what WeWork will do next. Given WeWork’s expanded strategy, is a partnership with a space management firm such as FM systems or Serraview on the horizon – or possibly an IWMS firm such as Planon or Trimble? Also on this list we have firms such as iOffice who has a strong focus on employee engagement.
To see what else is in store for the real estate and facilities management markets in 2018, sign up for Verdantix’s upcoming webinar Real Estate, Energy and Facility Optimization Technologies: Predictions for 2018.