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Is coworking really the future? | CNBC Explains - YouTube
Channel: CNBC International
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If I’m an entrepreneur trying to market
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and sell my new product to get my
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startup off the ground
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I could work from home
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I could rent a small office
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or there’s a third option.
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And if it takes a village to raise a child,
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maybe it takes a coworking space
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to grow a startup.
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You can see why it’s appealing.
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I have my morning cup of coffee ready
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for me when I walk in the door.
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I’m part of a community that
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helps serve my needs.
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I can serendipitously bump
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into my PR agency,
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meet my graphic designer through referral
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and meet my web developer
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by sitting right next to him.
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Take 24-year-old Maria Trujillo.
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She started her own graphic design firm in 2016.
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By choosing a coworking space, she pays
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$315 per month for her membership.
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One year after starting out,
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most of her clients
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are coworking peers that she’s met entirely
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through the space, referrals
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or just near the beer tap.
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Then there’s Erin Padilla.
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She expanded a consulting business into a
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new market in 2007.
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To set up the office at the time, she had
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to go through the process of searching for
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real estate, signing a lease, buying furniture,
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hiring someone to do her I.T. and that's just
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the upfront cost.
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She then had to pay extra for things like
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insurance, cleaning, pantry supplies and utilities.
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That means in their first year of business,
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Erin spent tens of thousands of dollars more
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than Maria, than she would have today had
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she used a coworking space.
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Different types of spaces are popping up around
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the world and they range from minimal and
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boot-strapped to high-end and luxurious.
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WeWork’s explosive growth is one key
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example of the demand.
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The American company opened its first location
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in 2010 and it’s still growing fast.
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In February 2017, it had 125 locations.
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By August, that shot up to 163 locations.
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And now, the company is valued at $20 billion,
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making it the seventh most valuable privately
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held company in the world.
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It now has its eyes on Asia for a large part
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of its future growth and for good reason.
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The demand in the region for coworking spaces
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is expected to grow at an average rate of
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10 to 15% annually.
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WeWork is putting $500 million into expanding
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in Southeast Asia and South Korea.
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Meanwhile, in China, the company announced
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a standalone WeWork China business
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which will aggressively expand its locations
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beyond Shanghai and Beijing
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after it received a $500 million backing.
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WeWork’s CEO Adam Neumman says
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it now generates one billion dollars
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a year in revenue and will eventually
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launch an initial public offering.
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A growing number of corporations are also
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getting into the game.
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At WeWork alone, Deutsche Bank,
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Bank of America, Dell, IBM and Microsoft
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have all set up in some capacity.
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Take HSBC, which is, like other banks,
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increasingly having to compete
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with tech companies to recruit top talent.
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It recently signed a major deal
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to house three floors
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of its staff at a WeWork in Hong Kong.
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And it makes sense.
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Companies want to promote entrepreneurial
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and innovative thinking.
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They need to attract top talent
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in an increasingly competitive market.
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They want to keep an ear to the ground
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when it comes to potential disruptions
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in their industry.
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And they also need to closely monitor
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potential acquisition targets.
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Coworking spaces help them tick all of those boxes.
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But while these corporates are going into
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coworking spaces, one is creating its very own.
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Take a look at global consumer goods
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conglomerate, Unilever.
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Inside their corporate office,
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they’ve created their very own coworking space,
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called Level 3.
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It's not an incubator but a coworking space
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which is open to entrepreneurs
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outside of the company
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to apply and pay for their own workspace.
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It can provide a huge opportunity for a startup
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wanting to get noticed by a major company.
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And in turn, Unilever has sprinkled some of
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its portfolio brands throughout the space
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like Ben & Jerry’s, so its own employees
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can be exposed to disruptive thinkers.
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It’s a win for Unilever, which suddenly
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has access to entrepreneurs
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and for minimal cost.
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While the growth of coworking spaces have
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proven their benefits, critics argue an inherent
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downside of working in the same space as a
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potential competitor.
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And of course, many offices and coworking spaces
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are now being designed as open office environments.
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But studies are showing that it's actually
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awful for productivity.
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One study showed open office environments
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create a 32% drop in workers’ well-being
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and a 15% reduction in productivity.
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And another found office workers are losing
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86 minutes a day due to distractions.
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These factors, though, are hardly slowing
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down the fast-moving trend.
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So for now, forget the stuffy suit and cubicle,
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show me the bean bag and beer.
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Hey guys, thanks for watching.
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Check out more of our videos.
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