For as long as WeWork has been selling memberships to its coworking spaces, investors and analysts have quibbled about whether it’s an overvalued real estate company or a misunderstood tech company. Chalk one up for tech: The coworking outfit is about to start selling its first software product. Today, WeWork announced it will acquire a Salt Lake City–based office management startup called Teem.
Unless you’re in charge of figuring out how conference rooms are booked for your employer, you probably haven’t heard of Teem. But the company, which WeWork paid $100 million for, according to two sources close to the deal, is a significant step toward the office-as-a-service future WeWork envisions for itself. Its customers include Airbnb, GE, and Viacom alongside a number of the buzzier Silicon Valley startups. Over the past year, WeWork has barrelled toward this diffuse business model as it has built up an enterprise consulting business: Maybe you’re a Fortune 500 company with a corporate campus that you already own, and you have no desire to move your employees into a millennial-filled coworking space with go-get-em slogans and beer on tap. WeWork still has something to sell you.
Maybe you’re a Fortune 500 company with a corporate campus that you already own. WeWork still has something to sell you.
WeWork's argument that it’s a data-driven tech company, capable of selling a range of products and services beyond desk space, could become the ultimate hedge against the uncertain future of real estate. There are plenty of skeptics who say WeWork can’t possibly be worth more than the coworking stalwart IWG plc, which is valued at $2.1 billion in the public markets—about a tenth of WeWork’s current valuation. These analysts and investors suggest the company is just a middleman, securing large low-cost leases and re-leasing the space in the form of short-term memberships. They worry that if the economy turns suddenly, the company will be locked into numerous long-term leases while its membership numbers fall.
Teem will become part of WeWork’s fast-growing Powered by We consulting business, which aims to introduce WeWork as an office manager, able not just to provide millennial-chic coworking digs but also to redesign and manage existing offices. Through its coworking business over the past eight years, WeWork has amassed a huge amount of office space and studied how thousands of different businesses operate within it. WeWork’s bet is that it can position itself as the company with the most valuable firsthand knowledge about how jobs get done best.
It’s got an automatic set of potential customers: Right now, a quarter of WeWork’s memberships are held by large Fortune 500 companies like Facebook, Starbucks, and Microsoft. Over time, WeWork will try to sell them on the idea that it can do much more than offer them desks for their satellite offices and remote workers; it can rework those offices—and their main locations—into more efficient, data-driven spaces.
Since it launched at the start of 2018, Powered by We has amassed 30 customers. It has built out an office for the British bank Standard Chartered in Hong Kong and worked with Expedia’s Chicago office. In July, in its largest engagement so far, WeWork announced it will redesign three floors of the US headquarters for investment bank UBS, which houses 4,400 employees, in Weehawken, New Jersey.
It’s too soon to suggest that Powered by We will catapult WeWork into the kind of profit engine that would justify its valuation. There are myriad companies that sell advice about how to make employees more productive by making offices more efficient, including design consultancies like one run by furniture maker Steelcase and services offered by the large real estate firm CBRE. WeWork’s advantage is that its core business—268,000 members in 287 locations in 23 countries around the world—allows the company to turn the information about how people use space into real-time recommendations about how companies can get more out of their offices for less, along with what amenities make employees happier, and thus less likely to leave. To the extent that companies want it, WeWork can tack on its branding pixie dust, which it says appeals to younger demographics.
WeWork’s advantage is that its core business allows the company to turn the information about how people use space into real-time recommendations
But in the event of an economic downturn, Fortune 500 companies will also feel the burn, and many may begin an aggressive search for ways to cut costs. Through Powered by We, WeWork promises companies it can do more with less by fitting more people into smaller spaces and using those small spaces flexibly. Last year, WeWork vice president Doug Chambers told me that the amount of space companies allocate to their workers is shrinking, and will likely continue to do so. WeWork, he explained, could help companies “make better decisions about what space to not have anymore.” If WeWork succeeds, employees will draw job satisfaction from other aspects of office life beyond the vacuous conference room, like shared health clubs or regular happy hours or simply having private space when they need it.
Once the acquisition is complete, Teem will be among the products Powered by We clients can buy. The company will remain in Salt Lake City, where WeWork hopes to bulk up its staff. Just as with earlier acquisitions, like the Flatiron School and Meetup, Teem will continue to grow on its own—with a significant influx of resources from its acquirer. Customers like Box or Airbnb will have the option to continue paying monthly for Teem’s software, which lets people book conference rooms or notifies employees that they have visitors.
Meanwhile, WeWork will continue its attempts to sell clients on the promise that the data it’s collecting about how people work—information that will expand with this latest acquisition—is crucial. More important, even, than the leases it built its name on.
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