Can Competition Derail WeWork’s Growth?

WeWork is undisputedly the fastest growing company in the co-working industry. This start-up which was valued at $20 billion at its most recent round of funding by Softbank (2017) doubled its members between 2016-2017 and is expecting another 100% increase in value this year. With this rapid paced growth, the company expects to generate revenues of $2.3 billion, doubling its 2017 figure. The “Future of Work” will see many changes in the evolving habits of workers.  Microsoft, IBM, Google will all help people become more efficient and perhaps, gain time to do more work in a day. Changing habits of where and how people work will continue to evolve and WeWork is banking on this change to drive its growth. (Read Here’s How The Future Of Work Can Drive Revenues For WeWork).

WeWork’s lofty $20 billion valuation depends largely on its ability to continue to grow at a rapid pace as the company offers trendy offices to start-ups, freelancers, and enterprises who are looking to move away from facilities and real estate management. Our interactive dashboard for WeWork’s Growth analyzes WeWork’s valuation and its key drivers.

Acquiring Regional Players To Keep Competition Away

While WeWork’s global network and size (workspaces in 400 buildings around 83 cities in 27 countries by the end of 2018) is formidable, it can face competition in each region it operates in from local players. One such fierce competitor, Naked Hub in China, was recently acquired by WeWork. This deal comes after the acquisition of SpaceMob a Singapore-based competitor. With its deep pockets, the company appears to be adopting an acquisitive strategy to keep strong competition away.

Established player Regus no longer appears to be a strong competitor for WeWork, as its growth is stagnating and WeWork’s trendy offices are finding favor among young users. However, Regus is looking to modify its workstations and innovate in this segment to develop a competitive edge.

Several other new entrants in the industry such as Industrious, Galvanise, TechSpace, and Serendipity Labs are looking to attract co-working space users. Industrious is pitching itself as a premium workspace provider, targeting the older generation. It recently launched the first ever outdoor co-working space encouraging users to spend more time among nature.

Apart from these players, WeWork also faces competition from restaurants who are offering their space during downtimes to co-workers. Hooters in Tokyo is one such example.

However, all these players are unlikely to be able to compete with WeWork’s size, technological expertise leading to its enterprise appeal, and do not appear to be a real threat to the company.

Effective Use Of Technology, Economies Of Scale Key Competitive Advantages

WeWork is investing significantly in technology to stay ahead of competitors. The company is using its huge data repository to identify office locations and using software to optimize layouts. It is offering the advantage of this technology to the enterprises for which it is managing the office space. WeWork’s two key acquisitions of Case Inc and Field Lens in the architecture and construction segment have allowed the company to optimize the space it leases to generate maximum revenues.  Increased space efficiency is a key to drive revenues and with the use of technology WeWork is achieving this for all its buildings and spaces. Further the company is using machine learning to optimize its spaces.

With its sheer size, WeWork is able to invest in technology to create efficiencies and offer savings to its users (especially enterprises). This is a huge advantage, unlikely to be threatened by competition in the near future.

While regional players can impact WeWork’s growth, its deep pockets, technological advantage, and ability to attract enterprises through efficiencies give WeWork a huge competitive advantage which is unlikely to be impacted in the short term.