Reinvention and Disruption
Start-up culture and the rise of the gig economy feed each other, creating new jobs and a demand for workers with new kinds of skills, as well as driving social change, all in a self-generating cycle. I've shared stats on the gig economy in this blog before, here. The top line highlights are these: one in five Americans currently derives their primary income – if not simply their extra discretionary monies – from freelance, part-time, self-generated, or on-demand work. By 2020 that number is projected to be one in four. The impact is felt not only in the fabric of our daily lives but also in the nature of new businesses that are created and their purpose.
WeWork is notable as both a "best practices" of reinvention and disruption, and as an example of how our new economy can serve the very needs it creates. WeWork is, to put it simply, a real estate play expressly conceived to provide working space to freelancers, consultants, independents, and start-ups, essentially re-creating the environment and amenities these people would have via full-time work in a traditional company.
We may be in the midst of a cultural, economic and technological revolution, but we still crave community around the water cooler, we still need the accoutrements of adult life, and we still crave a snack bar. WeWork is to office space what Starbucks is to coffee: you're not just leasing desk space or enjoying over-roasted beans. You're paying to be out-of-the-house and in community. You're paying to belong somewhere. Norm had Cheers. Independents have WeWork.
What makes WeWork even more intellectually delicious is the circularity of its existence. Put simply, it's a start-up that caters to start-ups. It's a growing business, enmeshed in its own start-up culture, that offers its employees a vibe-y, benefits-filled workplace. And its product-service is renting, guess what, vibe-y benefits- and features-filled workplaces to start-ups and myriad other independents.
The result is that through heavily marked-up real estate, attention to interior design, and a kibbutz-like holistic focus on health and wellness, WeWork is creating what good architecture, responsible city planning, and Main Street business were always hoping to create: a sense of belonging to a place and to the people in it. The WeWork model – or perhaps more accurately the people who engage with it – are living a grass roots and not directly intentional effort to re-create the cities, communities, and experiences Jane Jacobs advocated. (Jacobs is an activist and author of The Death and Life of Great American Cities). Ms. Jacobs championed walkable sidewalks and setbacks and mixed-use environments that allowed for human activity and interaction throughout the course of a day; a livable city where people could grow up / grow old and stay in one place long enough to meet each other and build and sustain relationships.
I'll segue for a moment here to bring up the other side effect of the gig economy – which is a both a by-product of all kinds of social and economic changes and a driving force of those same changes – and that is the profound mental and emotional unease Americans across all levels of the economic and social landscape are experiencing. From an article in The Guardian
"These material conditions are met with what Richard Eckersley calls a 'western cultural crisis' – a breakdown of communal structures that are important for our mental wellbeing. Whether it is the commercialisation of public space or increasing working hours that reduce time for social activity, we live in a society in which we are all increasingly socially isolated and lonely, destroying one of the key mechanisms available to protect against mental anguish."
To return to WeWork and to understand the extent of WeWork's ambition – in the context of understanding how well it has identified and capitalized on the demands of the gig economy – I've summarized some stats from an article Sara Kessler wrote in Fast Company in March 2016.
WeWork was founded in 2010 and is now in every major and mid-major metropolitan area in the U.S., as well as multiple international cities (from London to Berkeley, Miami to BeerSheba). There are 26 offices in NYC alone. WeWork expects ALL its cities to grow at that rate within the next 2 to 3 years. They currently have 77 locations and more than 50,000 members.
In February 2014, WeWork’s backers valued the company at $1.5 billion; by March 2016 its valuation had jumped to $16 billion, making WeWork, on paper, the world’s 6th most valuable private startup. (I've written on start-ups and valuation here.)
"Every modern generation has sought to remake the workplace. . . . Now members of the generation that would rather make a job than take a job are embracing co-working environments where they can operate independently while still drawing support and networking opportunities from peers. Neumann [WeWork founder Adam Neumann] calls these people the We Generation, which, he says, 'cares about the world, actually wants to do cool things, and loves working.'"
WeWork envisions itself as more than a real estate company in the way that – to paraphrase Kessler again – an Android is an operating system that makes a smartphone more than mere glass and metal. This is a critical metaphor, in that it lays out the critical value proposition that allows WeWork to transcend commodity and enter the realm of promise, emotion, and visceral connection with its audience. (I've written about strategy and value propositions here.) As Neumann says, "Real estate is just a tool. . . . People are gonna wanna be next to other people."
As WeWork grows, it intends to offer services such as shipping, software, credit cards, travel, payroll, banking, health care, and training. Eventually, members might join for these benefits alone, without any physical access whatsoever.
The takeaway here is recognizing some key truths to strategy and execution, which are really key truths to human behavior: What does your customer need, not simply what does he/she want? How can you think about the product you offer and transform it into the serving-feeling your customer needs? WeWork subleases real estate for 2 to 3 times what they've paid for it because they fulfill a deeper need. They've reinvented and disrupted the commercial real estate market in much the same way Uber disrupted the taxi business and Netflix et al disrupted the video rental business. They each identified a delivery mechanism, a payment process, or a "packaging" solution that wildly reimagined and outperformed what the industry was accustomed to offering.
Finding your space to reimagine is where you too can reinvent and disrupt.