But their value chain integration doesn’t only apply to the lower part of the chain, but the upper too. The company is pushing hard beyond the coworking space. One of their early moves was to set up their service platform, WeWork Store
. It’s their App Store version for the WeWork family. More locations, more customers. The more substantial their customer base, the better deals and offerings they can give at their store. The better deals they offer, the more customers they attract. Thus building a powerful virtuous cycle that speaks of their aggregation power
The store was the first natural step. Let’s equip our residents with better tools to do their job. What else does someone need to be happy at work? Easy, personal growth
. WeWork is investing heavily in education for their members. They recently bought FlatIron School
, a world-class coding academy, and partnered up with 2U, an online education platform. Want to change careers? The company will give you the tools to do it from your office space. Are you under a crushing debt from school? Don’t worry, WeWork has your back with their partnership with SoFi
The message is clear. Come to WeWork, work with us, and we can help you grow and develop your career path. Aligned with that is their offering of startup accelerator-like services under WeLabs.
There are four things someone needs to be happy at work. A great space (check), access to useful tools (check), education (check) and inspiration from others (check).
The company is doubling down on their vision of what work should look like. They’re providing all the elements that Millennials value from their job.
Amazon Web Service style horizontal integration
WeWork though operates with plenty of risks. Their business model isn’t disruptive, as it’s the same play as Regus. They make money on the arbitrage between what they pay the landlords and what they charge their tenants (2x).
The company has been hard at work to mitigate their risk. One of their best plays has been what they call ‘Power By We.’ It’s their real-estate as a service offering for corporates. Now that they’ve automated most of the value chain, they can offer these same benefits to other landlords. Corporations save on rents thanks to the operational excellence and know-how from WeWork. The company makes money but diminishes their risk as they don’t own or operate these white-labeled spaces.
In other words, they’ve built a horizontal integration mimicking Amazon Web Services (AWS). They can know leverage their initial investment and scale infinitely, keeping their costs down while diminishing their risk.
WeWork isn’t a coworking; they are the data service company for the Real Estate at large.