The $20 billion startup just bought a giant department store in New York. Pixie dust? Or the future of work?
We have been writing about coworking for a long time on TreeHugger. We originally saw it as part of the sharing economy, where you rented a desk and the equipment that you need when you need it. Ten years ago we quoted a definition: "It's like this: start with a shared office and add cafe culture, which is the opposite of most modern cafes." Another writer wrote: "Co-working as a whole is generally defined by four major values: collaboration, openness, community and sustainability."
How things have changed. Coworking has evolved into WeWork, described in the Wall Street Journal as one of the world's richest startups. And now it has bought the historic Lord and Taylor department store on Fifth Avenue as its headquarters, as well as the top two floors of the Hudson's Bay Store in Toronto.
It is the intersection of the rise of WeWork and the decline of the traditional department store. Richard Baker, who owns both stores, says, "I think we are in a moment of absolute transition. All of us have to spend our time thinking about how to reinvent, how to reactivate, and how to win.” According to Marc Bain in Quartz:
Baker also noted that WeWork appeals to a young demographic, which could help it revitalize its customer base in the locations where it has WeWork offices. “We will drive all of those millennial customers through all of our entrances in the middle of the store, and create a tremendous amount of excitement and interest in our retail locations,” he said.
WeWork markets itself as coworking, claiming it "transforms buildings into beautiful, collaborative workspaces. Get the space, community, and services you need to make a life, not just a living." And there is no question that it has done a great job of revitalizing old warehouse and office buildings and, no doubt, will do the same with the old department stores. It's a great place for people to start a business and many companies are using it instead of setting up their own office space.
But it is such a leap from some of the beautiful little spaces, the "intentional communities" that Kim has shown us. (See lots of them in related links below). It's now huge, with 237 buildings in 56 cities around the world. Some think it is too huge, and little more than an over-valued real estate play. The Wall Street Journal recently ran an article titled WeWork: A $20 Billion Startup Fueled by Silicon Valley Pixie Dust:
The company’s well-crafted image belies the mundane nature of its business. WeWork takes on long-term leases for raw office space and builds out the interior with flexible spaces and modern design that it then subleases for terms as short as a month.
It is not the first to try this; in the dot-com days there was Regus, which in the bust got caught with lots of expensive leases and few tenants, and went bankrupt. “WeWork is nothing but Regus with a paint job—it’s newer, cooler,” said Frank Cottle, chairman of Alliance Business Centers, a large network of serviced offices.
Perhaps it shouldn't be considered coworking at all anymore. Kim has described what we thought of as a "movement":
...there's more to coworking than just "sharing desks". To make a coworking space actually work, there has to be a common vision, a shared identity of sorts, allowing for deeper connections between its members to happen, and a desire to develop an underlying support system that keeps people engaged and makes them feel like they belong.
You might find good coffee and beer at a WeWork, but you probably won't find that.