At first glance, it looks like just another high-tech incubator.
WeWork’s Tel Aviv center on Dubnov Street is full of simple desks, each sporting an identical ensemble of swivel chair, laptop and desk lamp, some cordoned off by glass partitions, others in a big common room. There are lots of sofas for informal meetings and conference rooms for more formal ones. Coffee and beer is available 24 hours a day. The building itself, once a headquarters for the Bnai Akiva religious youth movement, is smartly decked out with a small library of religious books where the aron kodesh once stood.
WeWork isn’t a high-tech company or incubator, although many of its tenants — or members, as it prefers to call them — are startups or even veteran tech companies. It’s not even high-tech office space. Rather, WeWork says it is doing for the workplace what Airbnb has done for vacationers and Uber for taxi passengers.
“All three of us are riding the same trend — the sharing economy,” Adam Neumann, one of three partners in WeWork, told TheMarker. He was in Israel last week for the opening of the company’s first Israeli site.
WeWork’s beachhead in Israel is small compared to its U.S. and European facilities, with only 430 desks and 2,500 square meters of floor space. But the company, founded just four years ago, is expanding at a breakneck pace. The Dubnov property is due to complemented by a second, in Herzilya, by the beginning of January and a third, in Tel Aviv, before the end of the first quarter.
Neumann says more sites will follow, probably in Jerusalem and Haifa, although no timetable has been set yet.
WeWork works on a relatively simple model. Tenants or members take space on a month-by-month basis for as little as 700 shekels ($178) a month for a “hot” desk, that is, whatever desk in the common room is available. A regular desk in the common area costs 1,000 shekels, while each desk in a cordoned-off office runs 2,000 a month. Members are paying for more than space, however: WeWork provides lounges, meeting rooms, Jem’s beer and kitchen as well as Internet and standard utilities.
It also provides an Internet network, with members having access to desk and conference rooms at any of 23 WeWork locations abroad. A rooftop garden provides a venue for bigger events, many of them likely to be organized by the members themselves rather than management.
In the United States, where health insurance is such a complicated and expensive business, We Work even provides a health plan with 800 people enrolled to date.
For a cash-strapped startup, it sounds like an ideal arrangement: No long-term lease commitments, no capital costs and a place full of other budding entrepreneurs to share ideas and maybe form partnerships.
But many established companies have also become members of WeWork Tel Aviv, including Uber Israel and the Israel-based genealogy website MyHeritage.com. Accounting firms and journalists also rent desks or offices.
“Although we don’t consider ourselves an incubator, our effect is better — we have more diversity,” says WeWork Israel director Benjy Singer. “Being around startups is not as valuable as working around all kinds of businesses.”
For older, more established businesses, the logic for using WeWork is that it creates a “cool” environment in the heart of Tel Aviv for younger employees who might not want to travel out to company headquarters in Yavneh or Yokne’am. The company doesn’t have to deal with renovations, buying furniture or the arnona municipal tax bill.
But Neumann says WeWork is mostly about the community it creates. “The true story is that millennials are willing to share things to have better experiences .... That’s a major shift in how people do business and how they interacts with each other,” he says.
An Israeli, Neumann says he learned his first lesson about group effort while living at Kibbutz Nir Am as a young teenager. He moved to the United States after his army service, and after being involved in several other business ventures he developed the first incarnation of WeWork, Green Desk, with his WeWork partner Miguel McKelvey.
WeWork has since developed into a self-styled business empire. It will gross in the area of $150 million this year, with operating margins of 30%. The aim is to reach revenues of $400 million in 2015, with 10 other sites in development, not including Israel. The U.S. media magnate Mortimer Zuckerman and Benchmark Capital are among its investors, in a deal that valued the company at $1.5 billion.
That kind of valuation sounds more like a fast-growing startup, Uber say, than a real-estate company, which is exactly how Nuemann sees WeWork. “It’s the farthest thing from the real estate business,” he says. “If it was the real estate business it would be worth $150 million, not $1.5 billion.”