Does community have a future after WeWork? Here’s my take on the state of the market, and how community can reinvent itself to become a more permanent catalyst for change.
First published in January 2020.
The flexible office sector has abandoned the community concepts associated with coworking. It now has been given the perfect opportunity to reinvent itself.
The State of the Market
The much vaunted community element of coworking that was thought to differentiate itself from its flexible office predecessors has simply not worked. It did not create the value added relationships and networking expected. Now even the word coworking has been supplanted by the term “flex”, a more accurate description of the sector.
It has been demand for flexibility, born of a desire for more modern ways of working, where mass market appeal has lain for the last decade.
Community did not fail because the concept wasn’t compelling. Rather, it was over-hyped and poorly executed. WeWork’s community oriented brand and culture, brutally exposed in recent months, has epitomised this failure. But the writing had been on the wall for years. The other elements associated with the sector- convenience, flexibility and service- appeal to a much wider market. They align much more easily when deployed at scale; they also do not require as much understanding of their customers and their motivations.
Why WeWork went wrong https://t.co/EGDEwp0tqN— Guardian Business (@BusinessDesk) December 20, 2019
The real, original explosion of interest in coworking ten years ago came about through coworking’s fusion with the tech startup ecosystem. And with that ecosystem a sense of purpose that was fuelled by public interest and excitement at the potential that technology held to challenge the status quo.
Times have changed and, despite how battered and bruised both community and tech may be, their time for redemption is already upon us...
Special Conditions: The Opportunity
December’s election result delivered a Conservative Party with a big majority and an ambitious agenda.
Much like the coalition government did in the wake of the global financial crisis of 2008, the new administration will be energised to support initiatives that can create growth, stimulate the national psyche, and help position UK PLC as a leader in innovation in a brave new post Brexit world.
London’s tech sector provides a natural focal point for this. It has multiplied into over a half dozen sizeable sub sectors including prop tech, sport tech, wellness tech, and ed tech, generating billions of pounds of revenue a year. Tech leaders across these ecosystems will welcome any boost to help stem the tech backlash that has engulfed the industry, eroding public trust and damaging enthusiasm for potential solutions to big pressing cultural and societal problems.
Given the present state of politics, society and the market, physical environments that are able to convene, network and position these influential high growth sector-specific tech ecosystems have a key role to play in channelling this innovation.
At present, the convening power of London’s tech ecosystems is not being properly leveraged: most of the players still do not have well-established physical spaces or locations dedicated to supporting sector unique requirements and goals. Instead, they are being serviced in the main by the old flex principles, with a shallow, generic product offering.
New Business Models: The Response
Whilst there has certainly been innovation in the flex sector around design and service delivery, selling desks remains its only major revenue stream. It is essentially a business model pioneered by Regus in the 1990s, which is still the industry benchmark.
Community has been done with desk arbitrage for 10 years. Even when executed properly in a specific industry ecosystem, there is a limit to how much a customer is going to pay for a desk and, if that’s what the proposition revolves around, there is going to be limited differentiation associated with it.
An examination of other ways to monetise communities in a physical space is overdue. The market now needs to see new concept-driven ideas underpinned by business models that are able to sweat a physical asset to deliver more than a 30% gross margin. This in place of crow-barring concepts into a desk product offering that is no longer fit for purpose.
By focusing on business verticals designed to solve specific industry challenges, USPs can more easily be identified. Talent Garden and Spring Studios – in ed tech and fashion tech respectively – provide great examples of original concepts that are not dependent on selling desks to drive revenues. The shift towards more sustainable business models that prioritise margin over revenue growth – which was so out of fashion until a few months ago – create better conditions for success.
Community Version 2.0?
With community notions down and out along with the unsubstantiated values that WeWork brought to the table- the belief that they will somehow be able to resurrect themselves in any meaningful way may seem fanciful. But in the face of mounting global challenges that need addressing, entrepreneurship and technology still remain best-placed to revive them and give them new meaning.
Physical environments that catalyse vertical industry and market ecosystems and communities are able to add value like never before.
And the timing is right.🔷
Share this article now: