What if Revolut buys WeWork next week?
Why might buying WeWork be a good move for Revolut (and Softbank)?
WeWork has lost over 95% of its valuation — from $47 billion in 2019, the capitalization has recently fallen to $361 million (on Friday — $431 million). On Thursday, rumors began to circulate vigorously in the media that WeWork might not be able to cope and may file for bankruptcy, and on Friday I and other WeWork clients received an (excellent and honest) letter from President&COO Anthony Yazbek, in which he warns customers that WeWork may not survive this difficult period, but he himself and his team will do everything possible to serve clients to the end.
Revolut ranks №2 in the number of negative news around the company in recent months — but in relation to both the bank and the co-working spaces, in my opinion, the hysteria is greatly exaggerated, while the value of both companies is greatly underestimated.
If I were in Nik Storonsky’s place (and Anthony Yazbek, and even Masayoshi Son), I would preempt the market — I would offer to buy WeWork, not defend against criticism, but go on the offensive with a new, more global and aggressive strategy:
- Revolut, as an online bank, may move into offline — but without branches, and with co-working spaces (as a new format for bank showrooms). In recent years, the trend of online players moving offline (O2O) is no longer surprising — starting with e-commerce (Shopify, Etsy, Alibaba), showrooms are actively being developed by Apple, Tesla, and other players who make their main sales online, but need offline as a reduction in marketing costs, “embodiment” of the brand (it can be seen and “touched”, convey the spirit, sound, and smell), creation of education and training centers, and also consultation on complex products.
- (not only the Italian CheBanca!, but also) the large Polish bank IdeaBank has already carried out such a (successful) experiment: it turned its extensive branch network into co-working spaces, itself only took small stands (corners) for banking operations inside, and offered its clients to work and hold meetings in these co-workings. A number of specialists have already drawn attention to the success of this experiment — and called on large offline banks (especially in the USA) to follow the example of IdeaBank.
- Through the purchase of WeWork, Revolut could not only bring its brand offline, reduce marketing expenses, and create consultation, education, and sales points for complex financial products but also strengthen its position in the USA (a market that has been elusive for Revolut and where WeWork has the strongest presence), and differentiate itself from competitors there.
- Moreover, WeWork operates in more countries overall than Revolut — this creates a good platform for the bank’s expansion into these countries as well.
- Softbank owns 56% of WeWork and 10% of Revolut — they wouldn’t have to write off one asset, and could strengthen the other. Revolut wouldn’t have to spend cash on the purchase — the deal could likely be done through a share swap.
- If Revolut doesn’t decide to delist WeWork — then it might, on the contrary, get itself listed on the stock exchange in such a way: as if through a SPAC.
- Btw, Having WeWork would allow Revolut to apply for an industrial bank license in the USA (like Square) — obtaining its own license has also not been achievable (so far) for Revolut in the American market.
- Imagine that instead of magnetic cards for entry to WeWork, you could apply Revolut cards to the door: being a Revolut client, you will always know that you can work or hold a meeting in any WeWork co-working space.
- 600,000 WeWork clients may not make a big difference to Revolut’s customer base, but Revolut could greatly increase revenue for WeWork with its 35 million-strong user base.
- Also, a historically strong bank in the individual client segment will strengthen in the small and medium-sized business segment, and freelancers. With WeWork and Revolut, you can instantly open your company, office, and bank account for it.
- The companies are close in spirit — many Revolut employees already work from WeWork.
- No matter how you look at it, WeWork is an undeniable love-brand, and this will strengthen the Revolut brand. Additionally, WeWork has amazing staff and quality of service — I’m sure these bright folks can be easily trained in banking products as well: and at the WeWork community manager’s desk, get more banking service consultations.
- Such a bold move will change the narrative and rhetoric surrounding skepticism around (WeWork and) Revolut. Revolut has outgrown itself: it is more than banking — this will be a good move beyond the borders by which people are accustomed to judging Storonsky’s brainchild (and himself): I’m sure that both he and the bank have much greater potential than we can imagine today;
- For example, Revolut could develop a digital identity product (in competition with WorldCoin) — at the very least, the new conditional aka “Global ID” will be accepted by Revolut and WeWork (leaving Sam Altman’s startup far behind in terms of audience reach, compliance quality, and the utility of using/applying this ID).
Despite all the complaints about WeWork (and Revolut) — this company is definitely making the world a better place, supporting startups and entrepreneurship. I, as a client (along with my friends and colleagues), will be very upset if this company no longer exists — it’s not as simple as replacing Uber with Lyft, or WhatsApp with Telegram. WeWork is one of a kind — and it may not be loved (currently) by investors, but it is loved by its clients. And if you are loved by clients — that’s worth a lot. If I were in the shoes of the people who backed the #GameStop stock on #Reddit, I would support WeWork now against all the major funds that want to profit from the downfall of this excellent company.
