Ahead of Its IPO, WeWork Acquires Spacious to Boost On-Demand Bookings
WeWork shows no signs of slowing down in their quest to dominate the coworking and flexible workspace industry. What does their latest acquisition of Spacious mean for the future of work?
WeWork, now known as The We Company, announced earlier this week that it has acquired the smaller coworking company (and previous rival) Spacious.
Spacious, a New York-based startup that allows workers to rent out workspace in restaurants during the hours before they open, was founded in 2016. The company’s goal was to make the most of under-utilized spaces, including empty restaurants and abandoned retail stores, for the benefit of the coworking community.
Since their founding, Spacious has converted dozens of restaurants in both New York City and San Francisco into weekday flexible workspaces. The restaurants benefit from the arrangement by gaining a new revenue stream and attracting new customers. Moreover, customers enjoy Spacious’s workspace offer because it’s more affordable than WeWork and presents a hard stop to their workday, as the restaurants have to open for business.
Now, Spacious’s lineup of workspaces will now be brought to WeWork.
“Spacious’s team and real estate and operational expertise will help enable WeWork to continue to give our members access to the work space they want, when they need it,” said WeWork Chief Product Officer Chris Hill in a statement. “We’re thrilled to welcome Spacious to WeWork.”
Terms of the deal were not disclosed, though Spacious was last valued at $29.1 million in May 2018 and has raised just over $9 million from investors, including August Capital, BoxGroup, Lerer Hippeau, and MetaProp NYC.
According to Spacious CEO Preston Pesek in his official announcement, joining WeWork allows both companies to take the next step in providing easy access to on-demand workspaces across the world.
“In WeWork, we have found much natural alignment across our visions for the integration of work, technology, and physical space,” said Pesek in a statement. “We’re thrilled for the opportunity to continue to serve our members at Spacious today as part of the greater WeWork community.”
The Future of (We)Work
For years, WeWork has been on an acquisition spree, acquiring numerous companies like the Chinese coworking company Naked Hub in 2018, Singapore’s Spacemob in 2017, and the seemingly off-brand acquisitions of digital marketing company Conductor in 2018 and social group organizer Meetup in 2017.
This year alone, WeWork acquired data platform Euclid, mobile access platform Waltz, and real estate management platform SpaceIQ—to name a few. With 71 percent of the market share, WeWork is by far the most dominant coworking operator in the flexible workspace sector, and their industry-wide consolidation isn’t likely to stop anytime soon.
Still, The We Company’s recently-released S-1 raised many eyebrows on Wall Street as a result of the hefty liabilities the company was taking despite major losses. In order to be successful in future years and continue expansion, WeWork will need to stay on top of these losses and better manage growth.
Nevertheless, this latest acquisition of Spacious aligns with WeWork’s overall strategy for growing their portfolio.
“What did investors think they were going to do with the money? They were going to expand their growth organically … or … acquire smaller companies that do the same thing and bring them into the same organization,” D.A. Davidson’s Barry Oxford told Fortune. “Imagine what WeWork will be able to do as far as marketing this and rolling this out on a huge scale.”
Only time will tell if The We Company’s latest acquisitions will ultimately benefit or detract from the coworking-centric mission of the company. For other coworking operators, it is still difficult to gauge the effects these acquisitions will have on the industry at large.