Product-to-platform (Part VI): WeWork, Room.com and Zoomescaper
In this post, we apply our three methods for turning products into platforms (open the door to 3rd parties, connect customers or attract customers’ customers) to discuss the platform potential of three different providers of workspace solutions: WeWork, Room.com and Zoomescaper. We purposefully chose two brick-and-mortar products/services (WeWork and Room.com) in order to illustrate that product-to-platform transformations are not just useful for software companies.
WeWork has been the target of many (entirely deserved) criticisms and jokes for pitching itself as not just a real-estate company, but a tech company and even a “state of consciousness.” Back in 2017, the company’s co-founder Adam Neumann claimed it was a “physical social network” and a “platform—like a computer operating system—from which it can sell other services such as insurance or software". Ultimately, his reality distortion field didn’t wash with investors, and WeWork’s 2019 planned IPO was cancelled. With its second attempt at an IPO due any day now (via a rumored $9 billion SPAC), we couldn’t resist the chance to discuss the prospects WeWork has to truly transform itself into a platform business. Now that its valuation has come back to Earth (from the $47 billion high reached in 2019), seeking to become a platform makes perfect sense in order to shore up its defensibility and grow.
In terms of opening the doors to third parties, there are several different ways WeWork could do this. One is to create a marketplace for third-party suppliers of various services to WeWork tenants: training, insurance, technical equipment rental, moving services, catering, contractors, designers, HR benefits, and so on. Some of these services could be offered to tenants online (via the WeWork website or app), whereas others could be offered in person. WeWork seems to have moved in this direction recently, with some partnerships and a store for third-party product providers to offer discounts to WeWork members, although their current offerings seem very limited still (a grand total of 22 listed products at the time we looked).
Another possible application of opening the doors to third parties is to invite third-party landlords to list their own locations with WeWork. WeWork could help such landlords attract tenants, manage their bookings and payments, and possibly work with them to upgrade their spaces, while not taking the financial risk of holding the leases on the underlying real estate. Such a marketplace for space would be especially useful in locations where WeWork doesn’t already have excess supply. While there are existing marketplaces that do this (Gable, Liquidspace, Peerspace, Splacer etc), none has the brand recognition and reach of WeWork in terms of being able to attract clients looking for workspace. WeWork might be reticent about using third-party landlords because their spaces don’t conform to the look and feel of WeWork sites, thereby affecting its brand, but obviously it could decide which sites to include, and if necessary, enable contractors (from their other newly created marketplace noted above) to work with landlords to get their sites WeWork-ready. With the shift towards remote work and the massive amount of underutilized office space available right now, there is certainly an opportunity for WeWork to become the go-to marketplace for flexible office space.
We think the above two applications are the most promising possibilities for WeWork to turn itself into a platform business. We are less bullish on using our two other methods for becoming a platform in WeWork’s case. For connecting customers, one could resurrect the concept of “a physical social/professional network” of WeWork tenants envisioned by Adam Neumann. This could allow WeWork tenants (e.g. entrepreneurs) to connect with each other for meetups, advice, business relationships, booking shared facilities, etc. Some of this already happens organically, and it is not clear how much value WeWork can add in enabling such connections, especially given the wide heterogeneity of WeWork businesses.
The reaching customers’ customers strategy is even harder to apply here, again because of the diversity of use cases provided by WeWork tenants. WeWork’s service is not a natural lynchpin for connecting businesses with their customers like Shopify or Substack are.
Our second example of turning a workspace solution into a platform is Room.com, which provides office phone booths and pods. These sound-proofed wooden booths provide quiet spaces for people to work or take calls and virtual meetings in noisy environments. Such booths have traditionally been used in open office environments, although recently they’ve started popping up for rental at shopping malls. Obviously, defensibility is a key problem for Room’s products, and the company (which raised a $12.5 million series A in August 2020) faces a multitude of competitors, a few of which are listed here. In this context, turning its booth products into a platform could help Room create some defensibility and boost growth.
Like advertising in and on taxis and buses, Room can allow advertisers to place ads on or inside the booths, thereby creating a new revenue stream and being able to lower the upfront cost to users. If Room knew where all its booths were, and whenever someone was inside them, there would be the opportunity to charge per impression and collect analytics relevant to advertisers. Along similar lines, Room could offer the opportunity for third-party designers to connect with potential users to customize their booths with unique designs (as it did with Calm.com) or complementary accessories (e.g. offering a high quality camera and mic setup for soundproof podcasting). For instance, Room’s competitor Framery is pitching itself as offering the first connected booth (the Framery One) aimed at those using it for video calls.
In our view, the most promising way to turn Room into a platform business involves reaching out to customers’ customers. It would involve creating an app that allows users to find nearby establishments (e.g. malls, cafes, restaurants, libraries, shops, offices) with a Room booth inside and book the booth. This could become an additional customer acquisition channel for Room’s customers (the establishments who have bought Room booths) because consumers that come to use the Room booth for a conference call might end up buying something (food, coffee, a book, etc.) while on the premises. For underutilized offices, by doing this with Room’s booths and pods, this could also be a way to monetize that space, with Room potentially sharing in the revenue. In the end, this would be rather similar to the WeWork marketplace for space discussed above, but with a focus on individuals or small groups of users, looking for quiet spaces for short periods. If successful, Room would be in a position to either restrict the marketplace to only listing Room’s booths, thereby giving customers an additional reason to buy a Room booth over rival offerings, or open up to listing booths from all brands and thereby growing its marketplace for finding and booking such booths.
A final, and fun example of product-to-platform strategy that could improve the productivity of modern-day workspaces (at least from our perspective), is Zoomescaper. This is described by its founder, Sam Lavigne, as “a tool to help you escape Zoom meetings and other videoconferencing scenarios. It allows you to self-sabotage your audio stream, making your presence unbearable to others.” This could become a platform if Sam created a marketplace where third-parties could offer other uniquely disruptive add-on sounds and effects that users could install and personalize. The existing range includes an echo, bad connection, upset baby, construction, and dogs barking. But clearly there are many others that people might like to use, including leaf blowers, lawn mowers, fire alarms going off, birds chirping loudly, and various distortion effects applied to one’s voice. One could add video options, like the image breaking up or becoming garbled, the audio and video being out of sync, a lag in the video feed, or projecting blinding flashes of light. When appropriately used, users may be requested to turn off their video and mic for the call, which would free them from having to actively participate in the call – the ultimate goal of the Zoomescaper. We are hoping Zoomescaper can achieve its full platform potential, although not when it comes to our own students and anyone attending Zoom calls initiated by us.