Co-working — Ideology or Big Business?

(Part 2 of 3, series on co-working)

Co-working Ideology

In 2012 when co-working started to take on a life of its own, the driving force behind it was collaboration and the strongly held belief that ideas happen as a result of human collisions (see Steven Johnson’s TED talk.) In 2012, the publisher of Co-working News, Felix Schurholzm, predicted that

“no-charge access is the next, inevitable evolution of the co-working movement.”

In an article from the same time period entitled Free Coworking growing rapidly fueled by open collaboration, one respondent explains that with free co-working individuals

“are forced to use alternative forms of currency like time or social capital. It is great, because it removes money from the conversation allowing transactions/interactions to be based on deeper more meaningful/human elements.”

From the same article another respondent describes why she loves co-working

“It’s humble. It isn’t pretentious. It feels real and it feels right in the heart of everyone who comes back and becomes our friends. It’s a small, kind of quiet little thing that anybody can do.”

It might be tempting to dismiss co-working as an ideological experiment if it wasn’t for the huge sums of investment money pouring into the industry worldwide and that word “disruption” being tossed around. It isn’t stemming from the 2012 co-working vision. The Real Estate industry isn’t worried about being disrupted by socialist freelancers. Currently, the percentage of office space going to co-working facilities is about 1–3% but predictions are now being made that in the near future that could rise to 30%; and that’s just the beginning. Co-working is taking a big bite out of commercial leasing.

What happened to “free” co-working?

Some facilities allow for a limited number of spots to go to applicants willing to put in quantified “sweat equity,” but the only repeated reference to “free” I found was free coffee, free beer, free fruit infused water and, of course, free trial periods. In a 2017 article entitled The Top Free Coworking Spaces in London for Startup Entrepreneurs the number one option was the London Libraries.

Co-working Business

Faster, Higher, Stronger

Comparing the 2012 idea of co-working (humble, unpretentious and small) to the industry it is becoming today is like comparing a horse and cart to a self-driving car. The industry is being dominated by global chains claiming space worldwide. In recent weeks, Amsterdam co-working leader Spaces expanded to Manhattan; Asia’s fastest growing co-working company, Campfire is opening in Australia; and co-working giant WeWork, with locations in 20 different countries, announced their largest location ever in Shanghai. The new location, set to open in 2018, will span 10 stories and cover 290,625 square feet.

WeWork is one of the leaders driving this industry frenzy with market speed and cross industry integration. It is now one of the most valuable startup companies in the world with a valuation of $20 billion. They recently acquired meetup.com (and its 35 million membership.) They are also expanding their brand to include wellness centres and elementary schools (private kindergarten focused on entrepreneurship) as well as rental living spaces above their workspace.

The Basics

The basic common elements of co-working facilities include a variety of space options from hot desks (desks and/or seating areas shared communally amongst a group of members) to dedicated offices, Internet, conference rooms, lounges, and kitchens. Some co-working facilities are open specific days and hours but the larger ones are working on a 24/7 model. WeWork is even installing facial recognition turnstiles and optional card-less entry into their office space.

Payment structures range from yearly/monthly/daily/hourly plans as well as apps with hours that can be used at various locations. Some co-working spaces are even experimenting with free snacks, drinks, Internet, facility usage — but you’re charged by the minute for your time in the facility. A co-working company in India is one of the first to play in the cryptocurrency space and accept bitcoin as payment.

With each new provider, co-working businesses are upping the ante with targeted amenities.

  • The Assemblage caters is a new age workspace where you can meditate between meetings in crystal-laden rooms and take courses in “consciousness hacking” Their tagline is “coworking to a higher consciousness”
  • Neuehouse in LA in the old CBS Radio building on Sunset Blvd holds private listening parties for upcoming indie albums
  • Berlin’s Factory has created a “business club” with an elite speaker series of Startup CEO’s like Air BnB and Soundcloud. It’s described as “burning man meets silicon valley”

Coworking spaces are becoming more about services and hospitality — competing with each other on everything from yoga and meditation to bootcamps and classes.

How can this be bad for consumers?

It isn’t … (yet.)

Startups and freelance workers can now bypass the traditional office setup with growth speculation, long-term lease negotiations and equipment and furnishing expenses. They can truly scale with little risk. They not only have access to the best tools and technology but the best minds as well. Collaboration, mentorship and specialized service access (legal, accounting, marketing etc.) are core components of most co-working spaces. The convenience of being able to travel around the world and access the same services and office space makes doing global business easier than ever before.

For all of these reasons, large companies have jumped into the co-working arena — not as owners of co-working space but as customers of co-working businesses. In fact, WeWork’s fastest growing segment is companies with more than 1000 workers. It accounts for more than 20% of its current membership.

  • IBM signed a membership deal for all of the desks in one of WeWorks’ locations
  • Microsoft leases co-working spaces for 1000 employees in its research and development dept
  • Amazon expanded its Greater Boston presence by opening in a WeWork
  • Other corporate co-working clients include lululemon and the
     Discovery Channel

Aside from the practical reasons for co-working, many are attracted to the rallying cry of “community” and work/life blending. Notice that I said “blending” and not “balance.” The distinction is important. Co-working convenience is set to expand into all other areas of the co-worker’s life. The business model is dependent on erasing that line between work life and personal life. In a case study article, presented at the 2017 Co-working Unconference, (examining the economics behind co-working) vertical integration of services was identified as one of the most successful co-working business models. Essentially, co-working companies want a piece of everything you spend money on in a day. At one point the author visited a co-working space/hotel in Tokyo that provided every convenience possible to ensure that all needs were met under one roof (lounges, massages, restaurants, and even sleeping pods or capsules) He was surprised to realize that he had spent three entire days and nights there working without ever leaving the facility.

The problem I see is that we are trading convenience for living a life of our own. Never leaving the college campus becomes a real option for millennials. Many of the large chains are investing in co-living additions so that everything we need throughout our day (including a bed) is in the same building. WeWork is even starting a private kindergarten on their campuses so that young parents (members) can be close to their children. These are still early days for me to be making cautionary literary references, so I won’t, but I do think that it’s important that we look ahead as consumers and realize that corporations have, and are, crafting brilliant business funnels from our ideology. Blending work and personal life is a corporate metric. The work/life balance question may be more relevant than ever as we consider what defines “our life.”

Ideology IS Big Business.

In Part three of this series, I’ll be exploring smaller, independent co-working spaces and some of the ecosystems that have developed around them as well as options for rural communities worldwide.

Are you living Rural on Purpose?

This story is published in The Startup, Medium’s largest entrepreneurship publication followed by 276,798+ people.

Subscribe to receive our top stories here.