Problem: Co-working businesses require participants to pay per access for each individual location that they pop into. What would unlimited access platforms look like?
Subscribe here to get access to the first 500 ideas from our blog. For just one coffee a month, you can have access to more than $500 billion dollars of ideas. What's not to love?
Solution: During the month of May, June, and July I’m taking a “revenge spending” & “reconnecting with friends” trip across the United States: traveling from Denver to Miami to Boston to New York and more than 8 other cities. While taking advantage of the “post-vaccine, pre-office” gap, I have started working as a true digital nomad: utilizing cell-phone hotspots, AirBnb Wifi, and WeWork Offices to conduct business globally in every timezone. One of my first questions in every city is “Where should my 3rd place be?”
Perhaps the most fascinating business attempting to answer this question in WeWork. As they describe on their website:
After many months, it’s become clear that most employees want to return to the office, at least for part of the week. Still, they don’t necessarily want to make the long commute to office headquarters on crowded subways, or to give up the flexibility they enjoyed while working from home.
WeWork created WeWork All Access to solve these challenges.
WeWork All Access is your passport to hundreds of locations across 150 cities worldwide. Whether you’re in Sao Paulo, Toronto, London, or Los Angeles, you’ll never be far from a WeWork location where you can access reliable Wi-Fi, conference rooms, quiet workspaces, clean bathrooms, and micro-roasted coffee.
So far, it’s been phenomenal. WeWork seems to have offices in cities and locations were I never would have even guessed (maybe that’s happen when you receive Softbank money and a $3 billion valuation).
Before WeWork, the undisputed leader of the third place was Starbucks. In fact, they even have a “Third Place Policy.” At just 500 words, the policy is an homage to how and why Starbucks wants to be the go-to spot for communing away from home and away from work (the “third place”). As they write, the goal of this policy centers around, “Creating a truly welcoming space, where people can come together with understanding, respect and compassion, and where diverse backgrounds and life experiences are embraced, is fundamental to our role and responsibility as a company. These principles will continue to guide Starbucks and we will hold ourselves accountable to them. Together, we can create and maintain a welcoming third place environment, where every individual is treated with humanity, dignity and respect.”
The rivalry between WeWork and Starbucks globally is well-founded: some argue that “the flexible workspaces market is estimated to be $26 billion. Up until 2022, the number of coworking spaces is expected to grow at an annual rate of 6% in the U.S. and 13% elsewhere.” It’s a billion-dollar market where even 5% dominance can yield a unicorn.
Unfortunately, one problem with this market is that most freelances are not willing to pay for coworking spaces and those that are may not pay enough to offset the cost of design, rent, and perks that business and landlords spend to maintain and acquire the property. As described by Peter Fabor,
In these instances, I seem to always find they [co-working companies] have followed the same simple playbook:
Rent a space
Create a community
Profit
The problem is, this playbook doesn’t work in most cases.
In reality, it’s extremely hard to make money from a small coworking space unless you have different motivations (you own the property, you want to rent unused space in your own office, or you are trying to attract prospects for your consulting business, etc.).
And perhaps the most desperate thing I see all the time? Paid Facebook Ads that attempt to educate the market: “Don’t work from home, come to work from our coworking space”.
The margins in this business are just too small to acquire customers in such an expensive way.
This isn’t helped by the fact that there are so many free substitutes.
Perhaps the solution, then, is what ThePointsGuy calls “destination coworking.” This business would specialize in developing an AirBnb-like platform that connects users to co-working spaces near them: WeWorks, hotel lobbies, coffee shops, and more. Additionally, it would track how many open seats are in each location and provide perks for users who help populate the database by “checking in” when they arrive at a location. Is this what the future of work might look like?
Monetization: Either a pay-as-you-go model or a subscription model for users.
Contributed by: Michael Bervell (Billion Dollar Startup Ideas)