By Ed McLaughlin and Wyn Lydecker
Eyebrows rose recently when it was announced that WeWork, which is basically an office leasing company, was valued at a whopping $5B. The valuation was set when the company raised $355 million in Series A funding last December. The reason the four-year-old company, which divvies up rented office space and sublets largely to startups is so valuable, is that it’s taking advantage of the new “sharing economy.” It is not a straight forward traditional real estate venture – if it were viewed that way, WeWork’s valuation wouldn’t be nearly as rich, according to Adam Neumann, Co-Founder and CEO. Instead investors see it as a force for upending small-business office rentals with a new model.
WeWork is actually a hybrid that combines real estate with technology, the trend that has captivated investors in recent years. It brings together entrepreneurs who share space, office services, furniture, WiFi and ideas. It provides entrepreneurs an office and a community for $350 a month, eliminating the need for young companies to make large investments on office space that they may quickly grow out of. It also provides an incubator-like community complete with coffee and other perks, along with access to investors.
The Unlimited Potential of the Sharing Economy
The truth is that the ideas behind the sharing economy were born from the technology industry. The sharing concept has taken root in the U.S. entrepreneurial ecosystem. Thanks to Uber, the rideshare app from your mobile phone, and Airbnb, a leading platform for booking accommodations, everyone is talking about the sharing economy. Sharing marketplaces are experiencing tremendous growth, and today anyone who can rent out a room in their home, share their car, or even leverage their free time running errands can become a micro-entrepreneur. The sharing economy’s growth is attributed to increased connectivity of people, aided by smartphones, tablets and iWatches, and a desire to become more efficient and sustainable.
Ed McLaughlin is currently co-writing the book “The Purpose Is Profit” The Truth about Starting and Building Your Own Business, with Wyn Lydecker and Paul McLaughlin.
Copyright © 2015 by Ed McLaughlin All rights reserved.