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NEW YORK, July 22 – With its free coffee, sofas and glbad partitions, the WeWork shared workspace startup has turned office culture and commercial real estate upside down.
Pushing the questions on its business model, the New York group shows no signs of slowing down and is now preparing for its debut on Wall Street to raise new capital.
As recently as this month, WeWork sought to leverage US $ 4 billion (RMB 16.45 billion) in credit markets to expand its presence in the co-working market, according to The Wall Street Journal.
When the French startup CybelAngel wanted to open an office in New York, WeWork was an obvious choice.
With only basic furniture, their current space overlooks Manhattan's 5th Avenue, with a corner office next to a small conference room.
"It's not cheaper" than a traditional office lease, said Jocelyne Attal, head of operations at CybelAngel in New York.
"But we do not have to make a three-year commitment."
She added: "There is security, a reception desk, building codes are respected, there is a housekeeping. We have nothing to do. "
Monday's free breakfasts and Thursday drinks do not hurt either.
When the company first appeared on the scene in 2010, the concept of coworking was only beginning to gain ground thanks to new technologies allowing professionals to work remotely.
And the global financial crisis has really helped businesses, as it has pushed financial and creative professionals to launch their own startups.
"WeWork was the first to really appeal to all the demands of entrepreneurs and small businesses," said Alex Cohen, vice president of Compbad Real Estate in New York.
In the WeWork spaces, all office supplies and utilities are provided, including Internet connections and printers. And the decoration, mixture of bright colors and industrial themes, seduces the millennia.
But the company has also aroused the interest of big companies such as Microsoft, HSBC and Facebook.
Companies with more than 500 employees now represent 40% of WeWork's customer base.
Officially renamed We Company in January, the company now operates 485 sites in 28 countries – often whole floors divided into offices, common spaces and individual workspaces provided and subleased by WeWork.
Losses or investments?
"Per square foot, it costs a lot more than a typical workplace," said Cohen of Compbad.
But for a small business, the benefits per person add up.
"You sit in a room with four or five other people, and the office space includes the possibility of using conference rooms to enjoy the lounge, the pantry."
But not everyone welcomes the rise of the company.
"There has been a reluctance on the part of homeowners to rent premises, given that WeWork tenants are relatively short-term," he said.
In times of recession, tenants will tend to empty.
Real estate market players remember the misadventures of a company called Regus, now an office space and co-collaborator known as IWG, which nearly went bankrupt in the aftermath of the 2001 technology crash.
And questions remain about whether WeWork's business model is sustainable.
According to the latest estimates, the company would value 47 billion USD, even if it continues to burn money: losses of 1.9 billion USD last year and revenues of 1.8 billion USD.
IWG revenues were almost twice as high last year. It is also profitable and has a market capitalization of 4 billion US dollars.
Meanwhile, WeWork has ventured into new areas such as residential apartments and education, and tells investors that they should see its quarterly losses as investments.
"We really want to focus on the difference between losing money and investing money," said Artie Minson, chief financial officer, at CNBC.
"At the end of the quarter, we have these cash flow generating badets."
Some initiatives by co-founder Adam Neumann, such as the personal investment in real estate before renting it to WeWork, have also made people cringe.
Nevertheless, according to Cohen, collaborative work has spurred demand for commercial real estate in major urban markets over the last five years.
"Many homeowners, despite some reluctance or reluctance from their lenders, had to accept WeWork as a good opportunity for them," he said. – AFP
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