WeWork, the startup up behind coworking spaces geared toward millennials, is aiming to show the world it really is a technology concern and not simply a new age real estate company via an acquisition of Teem, the maker of office management software.
Wired, citing two sources close to the deal, reported WeWork is paying $100 million for Salt Lake City, Utah based Teem, which it will add to its consulting unit as it expands beyond securing low-cost leases and releasing them on a subscription basis to individuals and companies looking for workspace.
Critics of WeWork have contended it's not really a data-heavy tech company like it claims but a real estate firm that could be stuck with long-term leases and declining memberships if the economy turns negative. It doesn’t help that as of February it had a valuation of $20 billion. That compares to IWG, the publicly traded co-workspace company that has more customers and more real estate than WeWork but commands a valuation of only around $2 billion. That’s not to say the company isn’t fast growing. According to the New York Times calculations, WeWork is in twenty countries, has around 200,000 members and counts JPMorgan Chase and Siemens as tenants. Revenue is forecast to surpass $2.3 billion in 2018, according to the New York Times.
Teem Gets It Close To Office-as-a-Service Vision
Teem may not be well known but for WeWork it furthers it push toward its office-as-a-service vision in which corporate customers will turn to the likes of WeWork to not only book space but to manage it for them. Teem currently counts Airbnb, GE, and Viacom as customers as well as a handful of tech startups out of Silicon Valley. WeWork will fold Teem into its Powered by We consulting business in which WeWork provides a host of services including not only leasing posh workspaces but redesigning and managing existing offices. It's banking on its eight years of experience and the information it has gleaned on office spaces and productivity to become a vital source of information and advice for corporate America looking to boost productivity. The acquisition of Teem is one way WeWork can try to convince existing customers which include Facebook and Starbucks that they need its consulting services. It’s a bit of an about-face for the startup that grew up providing services to freelancers and startups, not corporate America.
According to Wired Powered by We is off to a good start after launching at the beginning of this year. It currently has 30 customers and projects including building an office for Standard Chartered and working with Expedia at its Chicago office. In July it inked a deal with UBS in which it is redesigning three floors in its U.S. headquarters.
WeWork Wants To Change How We Work, Play
But it's not just consulting and workspaces that is on the minds of executives at WeWork, led by Adam Neumann, the chief executive, and co-founder of the eight-year-old startup. Under Neumann’s charge, WeWork wants to change the way people work, live and play and is working on that via a development project at the Brooklyn Navy Yard in New York. Known as Dock 72, when it is completed it will be home to a huge co-working space, spa, large offices for rent, a gym, outdoor basketballs courts, restaurants and potentially other services such as dry cleaning and a barber shop. The idea is to create a space that you don’t need to leave other than to sleep. And if you do need to sleep there’s a rental apartment building owned by WeWork being developed down the block.