WeWork is diving more aggressively into software sales.
Just six months after spending $100 million in cash on Teem, a Salt Lake City-based office management startup, the company has acquired Euclid, a data platform that tracks the identity and behavior of people in the physical world.
WeWork isn’t saying what it’s paying for the nine-year-old, Bay Area-based company, which raised $43.6 million over the years and whose brand will be put to rest. But the deal is clearly an effort to move WeWork further away from merely selling memberships to its coworking spaces – – a risky business model in a sour economy — and instead also become a software-as-a-service provider.
So how will WeWork put Euclid’s technology to work, along with its 24 employees? According to WeWork’s chief product officer, Shiva Rajaraman, the platform and its team will become integrated into what WeWork is calling, “workplace insights,” a software analytics package that WeWork plans to sell to companies that aren’t renting WeWork space but want to WeWork-ify their own offices.
The idea is to bundle Teem’s technology, which lets customers know when a conference room is being booked (and how often it is booked), with Euclid’s technology, which can let that same customer know how many people showed up to the meeting.
“We’re moving toward a Google analytics for space and making sure rooms are used the right way,” says Rajaraman, who uses event planning as one example. “A lot of companies do happy hours on Thursdays, but they might learn that more people show up to an afternoon tea time or other type of session that changes participation. Companies can run tests in their own space.”
While it’s easy to understand why WeWork wants to sell booking software combined with WiFi-based analytics to monitor the movement of people inside a building, the question begged is whether employees will feel comfortable — or they’ll feel surveilled.
Asked if individuals can be identified through the technology that WeWork is buying in Euclid, Rajaraman does not say no, stressing instead that the focus is on clustered information. “We’re committed to respecting the privacy of our members and these employees,” he tells us. “We’re looking at the aggregate level to understand how space is being used. We’re less interested in the individual. If I throw a large party, I’m interested in knowing why 40 people showed up versus 100; it’s not as interesting to see who individually showed up.”
As if to underscore his point, Rajaraman says that WeWork itself if testing out the technology before it begins selling it. “Internally, we’d like to understand how enterprises will use it, and if we look at our larger campuses, we have teams right now in Shanghai, Tel Aviv, New York, and San Francisco that are all growing fast and have their own concerns about space. if we can solve our own problems, we can help others figure out theirs.”
Industry observers have long wondered whether WeWork an overvalued real estate company or else a misunderstood full-stack business. Investors don’t seem so certain, either. To wit, SoftBank’s massive Vision Fund had reportedly discussed a potential $16 billion additional investment in WeWork late last year after buying up an earlier stake in the company. But the Vision Fund’s anchor investors, Saudi Arabia’s Public Investment Fund, and Abu Dhabi’s Mubadala Investment Co,. were said to push back as both are already heavily invested in real estate.
In the end, SoftBank agreed to invest another $2 billion in WeWork at a post-money valuation of $47 billion. It has invested $10 billion in the company altogether.
The funding may have given WeWork more runway. Still, its biggest challenge may ultimately be convincing public market investors that it’s a data-driven company whose growing spate of offerings make it a smart bet over time, despite its already lofty valuation.
In addition to Teem and to Euclid — which we’d guess didn’t cost an arm and a leg (it raised its last round three years ago) — WeWork has made 10 other acquisitions in recent years. One of these was Flatiron School, a coding education platform that it picked up in 2017. Another is MeetUp, a site for organizing group trips and events for which WeWork paid a reported $200 million in 2017.
Its bets are spread out by design, and the company looks to continue moving in that direction. Indeed, just last month, WeWork rebranded as The We Company, with cofounder and CEO Adam Neumann explaining in a prepared statement that The We Co. is now a holding company for WeWork, its co-working arm; WeLive, which is a co-living offshoot that rents furnished apartments on a monthly basis; and WeGrow, which is its own elementary school in the Chelsea neighborhood of New York. (Its focus is on “conscious entrepreneurship.”)
WeWork remains the big money-maker for the company. According to a spokesperson, WeWork now has more than 400,000 members at 425 locations in 100 cities across 27 countries. And enterprises like Facebook and Microsoft now make up 30 percent of WeWork’s membership base.
Yet the fastest-growing part of WeWork’s business, it says, are those customers outside of WeWork spaces that want some of its mojo and are willing to pay for it. If things go as planned, this newest acquisition will make that offering even more compelling.