Big Companies Start Buying Into WeWork Offices
WeWork Cos. built its brand on the hustling energy of small startups, but the company is finding that boring corporate giants may be finally ready to embrace the idea of renting a desk next to a stranger.
In the last year, WeWork has established a new team that caters to the needs of large companies. The New York startup, which keeps citrus spa water and beer kegs at the ready for its co-working customers, woos them with a hip, bustling workplace crowded with entrepreneurs and inspiration.
WeWork said 14 percent of its 80,000 members are employed by a company with 500 or more employees. The list includes Dell Inc., McKinsey & Co. and Salesforce.com Inc. Of the world's 500 most valuable companies, 52 have employees working out of a WeWork. A year ago, fewer than five did.
Microsoft Corp. is the latest to sample the co-working craze: It will offer WeWork spaces in New York City to 300 employees during the coming months. The group represents 70 percent of Microsoft's marketing and sales teams in the city. The software giant is also moving its 37-person Atlanta-based advertising team into a co-working building. The 41-year-old company is hoping to "feed off the energy at every WeWork location you feel when you walk in," said Matt Donovan, general manager of Office marketing at Microsoft.
At six years old, WeWork is ahead of most kids its age. Investors valued the company at $16 billion this year to fuel an aggressive expansion into Asia. But WeWork must find ways to continue growing at home. The company slashed 2016 profit and revenue forecasts in an April review document and cut about 7 percent of staff in the summer.
Larger companies may make more lucrative—and stable—customers. They're more willing to make long-term commitments than WeWork's traditional base of startups and freelancers. For example, Microsoft agreed to keep its Atlanta space for at least three years, said Dave Fano, the chief product officer at WeWork. He said WeWork offers discounts in exchange for longer contracts. "We still don't want to force commitments," Fano said. "But obviously they are beneficial to us, so we want to provide incentives."
WeWork's focus on larger companies is altering how it approaches new locations. "The way we're starting to program the buildings when we develop them is changing: We're starting to bake in bigger inventory," Fano said. "Buildings are coming online now with 50-person offices, 100-person offices."
(In a previous version, company corrected which New York-based Microsoft teams will use co-working spaces in the fourth paragraph.)