Interesting – I worked in a WeWork for a few months and never had this experience, in fact quite the opposite, a large amount of flexibility to squat in rooms even when I hadn’t paid for them. Perhaps for those ‘coffee shop tinkerers’ there might be an even earlier stage model, where it is akin to the foyers that most WeWorks have currently and you don’t even need an official office.
I agree that the risk of trying to monetize all these ancillary tasks is risky as it chases away these young companies who could turn into the longer term ones that they need to reduce some of the risk of holding these long term leases.
They’re definitely helping to remove some of the barriers. On the clustering point, it’s an interesting one, there’s over 20,000 members within the WeWork network at the moment, so they are definitely generating some scale. A couple of potential challenges to doing that: firstly, trying to design the office floor plan with this in mind is a logistical challenge – they do have fixed costs and it’s in their interests to rent out space as quickly as possible. Secondly, I can see how some clustering might be helpful in some business areas, but it could also hinder others – consider freelance accountants and lawyers, the may actually lose out from more of a focus on clustering.
Nice post Patrick – especially having the inside view. As someone that knew the people involved in Clinkle from the start – how predictable was this failure? How was this situation allowed to persist, especially given other tech start ups that were able to oust their founders for the good of the organization? How much do you think this do you think comes back to the broader point we were discussing in class about the volatility in start-ups being in the investors favor?
Farhaz – mpesa is a super interesting case study. Having worked with these systems in Kenya and Uganda, have a couple of questions about their uptake and future. Firstly, mobile money is regularly used as a solution to a lot of financial inclusion issues and has been for a number of years, however mpesa remains an outlier in terms of their penetration and uptake – why do you think it has been so much more successful than some of its competitors? Secondly, you mention that mpesa is relatively cheap but depending on the transaction amount the fees can still be ~5% of the payment – surely this is ripe for further disruption? What might that look like?
Interesting perspective Aner – I always find it interesting to think about the strategic decisions HBS makes with its scarce resource i.e., it’s teachers time. In any other business, they would be considered under-utilized resource – how do you think that might change in the future? Also, the point of tenure seems to create all the wrong incentives and potentially a two-tiered system, do you see that changing to bring it more in-line with a traditional business model?
Michelle – this is a cool post. I’m curious about the decision that they’ve made to enter the online auction space, in art it seems that buying and selling has been dominated by auctioneers and discovery of art by galleries – is it possible to combine these 2 while still retaining the core value proposition to consumers. Also, first movers into these kind of online spaces can quite often get outdone by newer organizations – what do you see as the main risks of this happening for artsy?
Michael – I’m a big Airbnb fan. I have a few questions about how you see the future of Airbnb:
1. On the regulatory point, how effective do you think Airbnb are being in getting ahead of this curve
2. A recent HBS study found that there was discrimination in Airbnb hosts (http://www.bbc.com/news/technology-35077448) – do you think there are things within the operating model that they could change to try to minimize that? Would that break some of the trust between hosts, guests and Airbnb?
3. What do you see as the end goal for Airbnb? Is it to stay as a place where people find somewhere to stay or do you think they can break into more of the travel market than that?
I think there’s a couple of reasons. Firstly, the idea of giving office space month to month is still relatively rare to find – this gives these new organizations the opportunity to trial the office space without a long term commitment. Secondly, the focus on the network is key – other shared office space don’t invest nearly as much on bringing the organizations in their community together, helping to create value to their organizations other than just bringing them the office space they demand. Finally, if you ask people at WeWork what business they’re in – they’ll tell you they are a technology company – this focus on delivering value through different avenues helps to separate WeWork from other shared office space
On the international point, the model can definitely translate to any location where there’s sufficient scale of new start-ups or small organizations. It’s also a new way to add value to the organizations, if you are considering serving a new market, they’ll be able to ask some of those provisional questions to other markets.
You’re right that it’s a high fixed cost business, but their model does favour them – they have the scale to negotiate good rates on their office space, and the organizations they serve actually have very little leverage as there aren’t a ton of other options in such good locations. There is little to stop other organizations coming in and WeWork will have to continue to offer good services to those organizations that set up with them.