As the market for coworking space continues to grow, the flexible workspace provider WeWork has been courting large corporations to sell them a workplace solution more commonly associated with startups and freelancers. At the same time, however, a group of former WeWork executives are working on a project to disrupt that market by upending their former employer’s business model, Sarah Kessler reports at Fast Company:
WeWork’s basic business model is simple: The company rents large chunks of office space, breaks up that space into tiny offices and communal work spaces, sprinkles in good design and community features, and then subleases it to tenants at a huge mark-up. Landlords could make more money if they skipped the lease with WeWork and directly subleased to tenants, but typically, they don’t want to deal with all of the hassle involved in running a coworking space. “At the end of the day, it’s enormously human-labor intensive and operationally intensive,” says Bryan Woo, the director of acquisitions at real estate developer Young Woo. “[It’s like saying to a landlord], ‘Why don’t you operate the hotel?’”
The former WeWork employees’ new company, which does not yet have a name, removes some of this hassle by offering what Mark Kennedy, a partner on the project who has a background in private equity and real estate, has called “coworking in a box.” …
Kennedy and his two cofounders (both of whom, Kennedy says, asked not to be named because of their relationship with WeWork) will work as project managers to coordinate the construction, design, and engineering of coworking spaces. They have also partnered with service providers, such as cleaning and security companies, that will help operate the spaces. Landlords will have the option of managing the premises themselves, asking the startup to operate it under a profit-sharing agreement, or partnering with a third-party operator (which could, Kennedy says, be another coworking brand).
The new, yet-to-be-named company has also partnered with corporations who want to incorporate some version of “coworking” into their own offices rather than rent space in a company like WeWork. One, a large pharmaceutical company, is building a 40,000-square-foot office building in which workers have no assigned seating. They come in every day and sit where they want, and the company plans to open up the extra desks to outside entrepreneurs.