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From London to New York to Berlin, China to Costa Rica to Iceland - there is no official standard that defines what constitutes a coworking space. They come in all shapes and sizes, each with its own unique atmosphere. Nevertheless, the sharing economy and growth of freelancers, digital nomads, start-ups and remote teams have driven demand for flexible, collaborative workspace solutions that can be accessed on a pay-as-you-go basis over the last several years. In response, the global coworking industry has been growing rapidly and provides many differentiated options.
While there are a number of large, international shared workspace operators, such as WeWork and Regus, the vast majority of coworking spaces are still small, local businesses. For example a 2017 report by Emergent Research found that 78% of coworking spaces worldwide are independently owned and operated.
To understand coworking one has to understand where this phenomenon first came from. And no, it didn't start with WeWork!! The concept of coworking has been around for a long time. The first example of what we now call coworking was the C-Base, created in 1995 by computer science professionals in Berlin, Germany. The idea behind the C-Base was to work collaboratively and share resources and experiences.
The modern coworking movement as we know it kicked off in 2006 when a man named Brad Neuberg decided to start working from home in San Fransisco, US, but found it to be lonely. He then began coworking out of a coffee shop and inviting others to hot desk beside him, and the rest is history.
From that point on, a lot of places started popping up independently in locations all over the world, driven by disruptors with the same desire to create solutions against isolated home working and expensive, lengthy rentals agreements for office space that many freelancers and entrepreneurs face. Many came up with the idea of building an easy-access collective space for freelancers, start-ups, distributed employees and small teams to work, meet and connect - affordably and in a communal setting. From betahaus in Berlin, Germany; Impact Hub in London, UK; Brooklyn in New York, US; even to Xindanwei in Shanghai, China - buildings started to become hubs. As this movement grew and individuals and employees alike appreciated the values of coworking communities which made them more than just a workspace, the term coworking began to gain traction.
In contrast to many previous coworking spaces WeWork was one of the first that set out to become a global brand. Enter a man named Adam Neumann. He as CEO along with his co-founder Miguel McKelvey, were inspired by the idea of creating a community of creative professionals who could access desk and office space, but with more of a focus on collaborating and sharing ideas than in traditional office structures. WeWork first started in 2010 as a way to provide shared office space for entrepreneurs and small businesses in New York.
WeWork has experienced rapid growth since it was founded in 2010. In 2011, the company had just one location and about 1,000 members. Currently WeWork has 600,000 members in over 750 locations around the world.
What has driven this company growth? There are several factors at play.
First, they offer free beer on tap to attract customers. Just kidding! Although they do do that, it's not the key to their company success. WeWork has been able to tap into the growing demand for coworking. According to a report by Global Coworking Survey, the number of people working from coworking spaces worldwide is expected to grow from 1.7 million in 2017 to 5.1 million by 2022. This growth is being driven by the increasing popularity of freelancing, the rise of the digital nomad lifestyle, move to a more distributed workforce, and employees everywhere seeking more flexibility in work and less requirement to be in the office every day. Many an employee will no longer agree to settle for such strict terms of workplace location like attending offices every day (and how many meetings could just be an e mail?!). Wise companies are seeking flexible office space solutions to retain their talent.
Second, WeWork has been successful in marketing its brand and products to a wide range of customers. The company has been able to attract both small businesses and large corporations alike with its shared office space solutions and other amenities such as events programs, meeting rooms, and wellness programs. Lastly, WeWork is a company that has been able to raise significant amounts of capital investment, which it has used to expand rapidly into new markets. In 2019 alone, WeWork was able to obtain $4 billion in new funding, valuating the company at $20 billion. This large war chest gives WeWork a competitive advantage over smaller independents who may not have the same resources to scale their company rapidly.
WeWork was on top of the world in 2020. The company had successfully established itself as the leading global operator of coworking spaces, with a network of locations in dozens of cities around the world.
However, things began to unravel for WeWork later that year. A series of missteps by the company leadership led to massive financial losses, a dramatic drop in WeWork stock just ahead of their ipo, and by the end of 2020 the company was on the verge of bankruptcy with many investors pulling out.
The downfall of WeWork was a wake-up call for the coworking industry, and it soon became clear that the WeWork model, of rapid growth across multiple locations simultaneously, was not sustainable in the long term. As a result, many other operators began to rethink their operating models, and the global coworking industry entered into a period of consolidation.
The difference between WeWork and a local space can be best described using the analogy of Starbucks and a local coffee shop. WeWork is a global brand, with uniform features in their global locations; find a WeWork anywhere and you have a pretty good idea of what to expect (for better or worse). This means you can expect a similar experience, set-up, branding, amenities, range of solutions, amount to pay and decor at WeWork spaces all around the world - from London to New York, Costa Rica to China. Whereas local coworking spaces are typically independent, unique small businesses differing in size, which obviously all have their own character, style, vibe and features unique to them and their locations.
WeWork has significantly more resources than local operators, which allows it to expand rapidly into new markets. WeWork can also often offer a wider range of services, solutions and amenities than local operators, which can appeal to a larger number of customers. Lastly, WeWork can provide a uniformity of experience across their spaces and offices that appeals to many people when they are travelling or working in a new location, and appreciate the consistency, reliability and ease of dropping in to a familiar environment.
So what are the benefits of using a global coworking operator like WeWork?
Here are a few:
Here are a few reasons why you might want to use a local operator:
So how do you decide which type of coworking operator is right for your business? Here are a few factors to consider:
In the end, it really depends on what you are looking for in a coworking space. If you want to be part of a larger, but perhaps less-connected, global community and have access to a wide range of resources and amenities, or to set-up your company offices, then signing up with one of the big international operators like WeWork might be the best option for you. However, if you prefer to support local businesses and build closer relationships with your coworkers, then going with a small, independently-owned space is probably your best bet. Whichever route you decide to go to find flexibility in your work life, One Coworking can help you find the perfect coworking space to meet your needs. For you, or your teams of any size. Sign-up today and try a few spaces out, risk free! Or get in touch by e mail if you want some more info: help@onecoworking.com
