If I’m an entrepreneur trying to market
and sell my new product to get my
startup off the ground
I could work from home
I could rent a small office
or there’s a third option.
And if it takes a village to raise a child,
maybe it takes a coworking space
to grow a startup.
You can see why it’s appealing.
I have my morning cup of coffee ready
for me when I walk in the door.
I’m part of a community that
helps serve my needs.
I can serendipitously bump
into my PR agency,
meet my graphic designer through referral
and meet my web developer
by sitting right next to him.
Take 24-year-old Maria Trujillo.
She started her own graphic design firm in 2016.
By choosing a coworking space, she pays
$315 per month for her membership.
One year after starting out,
most of her clients
are coworking peers that she’s met entirely
through the space, referrals
or just near the beer tap.
Then there’s Erin Padilla.
She expanded a consulting business into a
new market in 2007.
To set up the office at the time, she had
to go through the process of searching for
real estate, signing a lease, buying furniture,
hiring someone to do her I.T. and that's just
the upfront cost.
She then had to pay extra for things like
insurance, cleaning, pantry supplies and utilities.
That means in their first year of business,
Erin spent tens of thousands of dollars more
than Maria, than she would have today had
she used a coworking space.
Different types of spaces are popping up around
the world and they range from minimal and
boot-strapped to high-end and luxurious.
WeWork’s explosive growth is one key
example of the demand.
The American company opened its first location
in 2010 and it’s still growing fast.
In February 2017, it had 125 locations.
By August, that shot up to 163 locations.
And now, the company is valued at $20 billion,
making it the seventh most valuable privately
held company in the world.
It now has its eyes on Asia for a large part
of its future growth and for good reason.
The demand in the region for coworking spaces
is expected to grow at an average rate of
10 to 15% annually.
WeWork is putting $500 million into expanding
in Southeast Asia and South Korea.
Meanwhile, in China, the company announced
a standalone WeWork China business
which will aggressively expand its locations
beyond Shanghai and Beijing
after it received a $500 million backing.
WeWork’s CEO Adam Neumman says
it now generates one billion dollars
a year in revenue and will eventually
launch an initial public offering.
A growing number of corporations are also
getting into the game.
At WeWork alone, Deutsche Bank,
Bank of America, Dell, IBM and Microsoft
have all set up in some capacity.
Take HSBC, which is, like other banks,
increasingly having to compete
with tech companies to recruit top talent.
It recently signed a major deal
to house three floors
of its staff at a WeWork in Hong Kong.
And it makes sense.
Companies want to promote entrepreneurial
and innovative thinking.
They need to attract top talent
in an increasingly competitive market.
They want to keep an ear to the ground
when it comes to potential disruptions
in their industry.
And they also need to closely monitor
potential acquisition targets.
Coworking spaces help them tick all of those boxes.
But while these corporates are going into
coworking spaces, one is creating its very own.
Take a look at global consumer goods
conglomerate, Unilever.
Inside their corporate office,
they’ve created their very own coworking space,
called Level 3.
It's not an incubator but a coworking space
which is open to entrepreneurs
outside of the company
to apply and pay for their own workspace.
It can provide a huge opportunity for a startup
wanting to get noticed by a major company.
And in turn, Unilever has sprinkled some of
its portfolio brands throughout the space
like Ben & Jerry’s, so its own employees
can be exposed to disruptive thinkers.
It’s a win for Unilever, which suddenly
has access to entrepreneurs
and for minimal cost.
While the growth of coworking spaces have
proven their benefits, critics argue an inherent
downside of working in the same space as a
potential competitor.
And of course, many offices and coworking spaces
are now being designed as open office environments.
But studies are showing that it's actually
awful for productivity.
One study showed open office environments
create a 32% drop in workers’ well-being
and a 15% reduction in productivity.
And another found office workers are losing
86 minutes a day due to distractions.
These factors, though, are hardly slowing
down the fast-moving trend.
So for now, forget the stuffy suit and cubicle,
show me the bean bag and beer.
Hey guys, thanks for watching.
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