Over the last 3 years, many huge co-working space and co-living space giants emerged. The most famous of them all was WeWork (and their co-living brand, WeLive), and WeWork is now also infamously mired in debt and have commenced huge suits against their largest backers, Softbank.
What WeWork did very well was to repackage the old and staid real estate industry’s serviced offices, into a vibrant, beer-flowing, hip culture and lifestyle, and it was this repackaging that managed to capture the investment managers’ imagination to start climbing the venture capital and private equity Series A and up ladder, culminating in Softbank coming into the picture and leading them into the dizzying heights of 11-12 digit valuations. 2 main differences between WeWork and the traditional serviced office vendors like Regus and Servcorp was that WeWork usually didn’t own the real estate that they were operating from, and primarily sold hot-desk memberships instead of fixed office spaces, so WeWork could grow much faster (lower capital outlay), and could technically sell unlimited memberships for their popular locations like gym and club memberships since there would always be people who sign up but don’t utilise the services that they signed up for.
Practically every country now has a few large international co-working space players, as well as several local equivalents. Many of these players also climbed their own valuation series and attracted more and more capital, racing to get more floor space added onto their portfolio, and to sign up more members.
WeWork eventually collapsed when they prepared for a staggering 12 digit IPO valuation, that dropped to mid-high 11 digits, and finally got dropped when their investment bankers were advising that it was more likely to be a low 11 digits valuation, as their corporate disclosures about their real numbers and their large numbers of conflicts and lack of corporate governance started to alarm the public.
One very attractive feature about international co-working brands like WeWork, Regus, Servcorp etc, iss that members can drop-in to any outlet while travelling, and utilise hot-desks at those office spaces with minimal hassle. Flexible membership plans such as monthly or quarterly packages also make utilisation of such spaces very easy decisions for entrepreneurs and digital nomads. The world shifting to a gig-based economy gradually over the years, also makes these co-working services a compelling proposition for members.
What can be even more attractive about co-working space services, is if members can access even more business services such as corporate secretarial, legal, digital marketing, finance, administrative, etc services, that can help reduce back office staff costs and headcount, whilst entrepreneurs focus on Product Development, Research & Development, and Sales – the real core of any business. Non-core functions of businesses like the earlier mentioned back office functions can essentially be outsourced to others, and what better than having these services supplied by your space provider as well? Right now, co-working and serviced office spaces only provide some basic printing, scanning, wifi, and meeting room booking services. However, all businesses have some level of back office requirements, but most businesses do not need dedicated headcount to perform these functions as there is significant wastage.
With a global shift towards telecommuting, a gig-economy, and the rise of digital nomads, reducing the friction between these elements, with an internal settlement method and one-stop-shop solution would be a huge boon to globalised digital nomads and technology savvy entrepreneurs and employees.
Over the last few years, this writer travelled extensively, and one particular series of meetings and flights gave pause for thought. Over a course of 3 days, to attend meetings in Korea and Malaysia, this writer boarded a plane from Singapore to Seoul, attended some meetings in Seoul at Starbucks, some co-working spaces and his hotel lobby, then boarded a plane to Kuala Lumpur for another business meeting, picked up another Starbucks coffee at the airport and then later in the city area whilst having business meetings again at Starbucks, some co-working spaces and his hotel lobby, and finally boarding the return flight to Singapore where upon landing, he again purchased a coffee from the airport in Singapore. During this whole time, 3 currencies were being transacted in – Korean Won, Malaysian Ringgit, and Singaporean Dollars, and there was no argument or consideration for using a credit card to pay for such purchases. Significant fees were added by service providers for forex conversions and use of a Visa credit card, and these are significant as business expense wastage and costs.
Having an internationally accepted Digital Token (much like airline miles or office credits) that can be used to pay for services and consumptions like coffee, would be a great boon to people who travel extensively or have multiple locations for business, since there would be a standardised cost structure and no transactional and administrative fees to take care of the friction between currencies and payment methods.
Flexible ramp-up and ramp-down options for business owners and entrepreneurs who are dealing with an increasingly uncertain world would help tremendously in cost savings and the ability to react to dramatic market shifts such as the global Covid-19 pandemic. Most businesses that lease their premises on a traditional 24 month to 36 month schedule, and have permanent headcount handling their various business functions are now unable to react, and facing financial crisis. If their arrangements had been organised to be flexible, and pay as you consume, instead of locked-in long term contracts, entrepreneurs and business owners would be much better able to deal with changing situations.
The world is changing as we speak, and a flexible new business environment and business model is very arguably an immensely attractive and needed “new normal”.