All WeWork And No Play : Planet Money Co-working spaces might just be the future of work. Take WeWork. It's been cropping up in cities all over the world--borrowing billions to fuel its growth. Now, it's planning to go public.
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All WeWork And No Play

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All WeWork And No Play

All WeWork And No Play

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STACEY VANEK SMITH, HOST:

Check, check, check, check.

CARDIFF GARCIA, HOST:

How are our levels?

VANEK SMITH: Our levels look good.

GARCIA: All right, let's do this. This is THE INDICATOR FROM PLANET MONEY. I'm Cardiff Garcia.

VANEK SMITH: And I'm Stacey Vanek Smith. And we are - well...

GARCIA: Not at the office.

VANEK SMITH: We're not at the office.

GARCIA: No.

VANEK SMITH: That is why we're talking a little lower than usual.

GARCIA: Yeah. We're at a remote location today. We're at a WeWork in Manhattan.

VANEK SMITH: Yeah, so WeWork is a coworking space.

GARCIA: Yeah. And a lot of people think this is the future of work or part of it.

VANEK SMITH: And WeWork specifically has gotten huge. They're in cities all over the U.S. and all over the world.

GARCIA: Yeah. They're kind of known for being, like, hip and cool. And they've got beer on tap all the time. They've got cold brew. Sometimes, DJs come through, although not today, sadly. And soon, you will be able to buy a piece of WeWork. The company is going public this year.

VANEK SMITH: And so the whole team is at a WeWork today, looking around this kind of brave, new world of office space. And today on the show, we look at the business of coworking spaces. And we WeWork.

GARCIA: We try to work at WeWork. I don't know if we actually work.

(SOUNDBITE OF MUSIC)

GARCIA: Today's indicator is 30%. Next decade, about a third of us will be working in so-called flexible spaces. That's according to an estimate by JLL, a commercial real estate company that I really hope is wrong.

VANEK SMITH: (Laughter) Now, flexible spaces mean everything from home offices to public libraries to places like WeWork, coworking spaces.

GARCIA: Scott Homa is the director of office research at JLL. And he says the concept of coworking spaces is not new. It's been around for decades, but the business has never seen anything remotely on the scale of WeWork.

SCOTT HOMA: WeWork is the largest private-sector occupier of real estate in New York, Washington, D.C., London, soon to be San Francisco.

VANEK SMITH: Really?

HOMA: Yeah.

VANEK SMITH: WeWork doubled in size in 2017 and again in 2018. Now, that kind of growth does not come cheap. WeWork has been burning through cash and venture capital to expand at that pace. It spent nearly $2.5 billion last year on leases and renovations and other expenses. It is expected to spend $4 billion this year.

GARCIA: And WeWork wants to keep up that crazy pace. So in order to do that, it is planning to go public later this year. Critics say this spending is reckless, and WeWork is getting way ahead of itself.

VANEK SMITH: I mean, there is, like - here's where things can kind of sometimes get tricky with startups. There's, like, venture-capital-fueled growth and, like, actual customers. I mean, are there a lot of actual customers?

HOMA: Absolutely. I mean, their top-line revenue growth really speaks for itself. It's been doubling annually on a consistent basis and for the last couple of years, so it really is staggering growth.

GARCIA: Scott says this growth has come from a couple of places. WeWork offices are sleekly designed. They project hipness, and that has really been appealing to the booming startup economy.

VANEK SMITH: Right. Like, if you want to start a company but you don't want to sign a 9-year commercial lease and spend thousands of dollars on desks and couches and a cleaning crew and coffee makers and receptionists and Wi-Fi installation, you can just rent an office inside if WeWork, where all of that is taken care of.

GARCIA: Yeah. Our own company, NPR, has a WeWork presence.

CAROLINA GUERRERO: My name is Carolina Guerrero. I'm the CEO of Radio Ambulante. We are a Spanish language podcast distributed by NPR (laughter).

GARCIA: Radio Ambulante has employees all over the world. And Carolina says WeWork is perfect for them.

GUERRERO: I love this place, actually. Like, it's very convenient, very easy. Everybody is responsive.

GARCIA: Carolina travels a lot for work. And she has used her membership to work at WeWorks in Colombia, Italy, France, Chile and all over the U.S. She says it's really seamless because a WeWork in Bogota and a WeWork in Paris look really similar.

GUERRERO: Everything looks the same, like, crazy the same. Do you want to go around?

VANEK SMITH: Carolina took us through the area where her office is. It's like a glass maze winding through dozens of people all hunched over keyboards in identical, little glass offices.

GUERRERO: These are small offices. And then these are, like, bigger offices.

VANEK SMITH: There's, like, a university and, like, a magazine.

There was also a health food company, and the Armenian government had rented out an office. And the spaces all looked really cramped. The desks are all super close together. And the one-person offices were so tiny that it looked like you could touch all of the walls if you stood in the middle.

GARCIA: Yeah. What's not small, though - the price tag. According to the website, those tiny, individual offices cost $1,100 per month and more if you want a window. And if you can't afford a whole office, you can just pay to use the loungey (ph) common room area for $500 a month or 550 if you want your mail sent there.

VANEK SMITH: And if you want to rent out a conference room, change out your furniture - all of that costs extra. Now, prices are much lower in other cities, but it's always pretty pricey. In fact, WeWork says it makes a 30% profit on the spaces it leases out. It says it can charge these prices because they are still much lower than the cost of opening an office. And even a lot of big, wealthy companies seem to agree.

GARCIA: Carolina says one of the tenants in her WeWork location is Microsoft. She says they rent out a giant office that always seems to be empty. Scott Homa says a lot of big companies are joining coworking spaces now and using them for overflow space or to have a presence in a city where they don't want to open an actual office. He says a big part of the new growth in coworking spaces is coming from big, multi-billion-dollar companies. They are the new tenants.

HOMA: Which is what makes these sorts of flexible space arrangements so compelling to those Fortune 500 groups. It's not a matter of not having the capital. It's a matter of spending the capital efficiently.

VANEK SMITH: That's interesting. I mean, have you ever worked in a WeWork?

HOMA: I have. I have.

VANEK SMITH: Yeah.

HOMA: Yeah.

VANEK SMITH: How was it? (Laughter) How...

HOMA: It's...

VANEK SMITH: (Laughter).

HOMA: I think that this is where things probably get a little bit personal...

VANEK SMITH: Sure.

HOMA: ...And maybe TMI. But, you know, I'm married with kids. And the fact of the matter is that it's a great social experience to be within these flexible-space environments.

VANEK SMITH: So...

GARCIA: Yeah, he didn't mention getting anything done.

VANEK SMITH: (Laughter). Yeah, that sounds - I am just reading a lot between the lines here. But I'm sort of guessing that Scott Homa was miserable. But he did not say that. What he did say was that WeWork is a really great place to network. They have lots of after-hours mixers and workshops on things like branding yourself and building a website. You can make important business connections if you're a business owner. But what if you're not a business owner? You know, like, what if you're just a worker? What if you don't want to go to networking mixers or brand yourself? What if you just want to earn your paycheck and go home?

GARCIA: That's called WeWork not WeNetwork (ph), all right?

VANEK SMITH: Right.

GARCIA: So to check this out, THE INDICATOR spent the day at WeWork - just access to the common room. And we snagged a long table near the kitchen, which had that free beer and the free cold-brew coffee on tap. There were neon signs, couches, coffee table books, plants and a piano. And we took our producer, Constanza Gallardo, and our interns, Willa Rubin and Emily Lang. At the end of the day, we checked in about how we experienced it.

CONSTANZA GALLARDO, BYLINE: I like the lights, the colors. Like, the environment is really nice and soothing and very chill. But there was a lot of noise in the space where we were. And I was just like, I can't do it (laughter).

WILLA RUBIN, BYLINE: I feel like it's like working at an Urban Outfitters. Like, everyone kind of looks the same.

GALLARDO: But it was, you know - it's, like, good. They got coffee (laughter) and cold brew.

EMILY LANG, BYLINE: They had an excellent cold brew.

RUBIN: Very good cold brew.

GALLARDO: I would not mind having an NPR WeWork office.

GARCIA: Truthfully, I thought there'd be giraffes in the background running around. I thought there'd be hippos and stuff like that.

VANEK SMITH: You thought it was going to be like the Serengeti.

GARCIA: I really did, and it was calmer than that. I'd say I got about half the work done that I wanted to get done today, which is actually more than I expected (laughter).

VANEK SMITH: I got, like, not even a fraction of it done. I just kept getting so distracted. And I loved it at first. I got some cold brew and some coffee and some water. And I think I just had way too much caffeine, but, like, I can't get anything done. And it's terrible. I - like, the visual distractions are the worst. I can't work. I'm so upset.

GARCIA: (Laughter) Are you in a bad mood? Are you cranky? You're a little cranky.

VANEK SMITH: (Laughter) I'm so cranky right now.

GARCIA: You're late-afternoon cranky.

VANEK SMITH: Oh. If this is the future of work, I am doomed.

GARCIA: It's really unclear whether WeWork's aggressive spending and its expansion will pay off, how big it can get after it goes public or if it's just overshooting with all the global growth and spending and, someday, will just implode.

VANEK SMITH: But even if it does implode, another coworking giant will probably just rise up in its place. If our indicator is correct, in 10 years, nearly a third of us will be here at long, communal tables under hip, neon slogans drinking free cold brews and trying to use our $300 noise-canceling headphones to filter out all the chatter and the piano. There was a piano.

(SOUNDBITE OF MUSIC)

VANEK SMITH: This episode was produced by Constanza Gallardo, fact-checked by Emily Lang and edited by Paddy Hirsch. THE INDICATOR is a production of NPR.

(SOUNDBITE OF MUSIC)

GUERRERO: Bravo, bravo.

RUBIN: Beautiful.

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