If you have been off the planet and missed a couple of big announcements this week let me help you get up to speed.
WeWork Rolls Out New, Cheaper Office Services for Midsize Tenants. Source-Commercial Observer
Compass Launches Commercial Brokerage. Source-The Real Deal
You may also remember WeWork just announced a few weeks back that they were going to offer brokerage services and I commented on that by saying So, WeWork Is Going Into Brokerage…I Told You So…But…?
The reactions have been varied and all over the place from, “they only have a few people, they are a tech company, not a brokerage, it’s a Ponzi scheme” and all the way to “what makes them think they can do what we do?”
Stop for a second and look up at the title of this article. Just look at the numbers. Compass has raised just over $800 million and that in just a few short years. Do I even need to spell out the billions that WeWork has?
For reference, if you have not read my previous article, Cush Wake is going for an IPO and targeting just over $800 million.
Let’s cut to the chase, how many resumes do you think WeWork and Compass received on the days of the announcements?
What’s their business models again? Don’t know, you might want to refresh your memory.
They are just tech companies, right? Not traditional brokerages so by that simple logic you are safe.
How much did your brokerage spend on R&D last year? If you point to one of the accelerators and or minor tech investments as an R&D spend how delusional of a statement is that?
By the way the “on the street” tagline for Compass “they pay brokers what they are really worth.” Which in my interpretation says “you make more money with us doing the same deals.”
Of course, you may say that it’s all been done before. Nothing new, nothing different, nothing innovative about it.
Just in case you missed this also, Compass has a goal as a company. They want to have a 20% market share in 20 major US market by 2020.
What’s 20% of the top 20 major #CRE markets in the US? Better yet what’s 20% of your market?
Let me help you with some math, 2020 is less than 2 years away. (You’re welcome)
How do you reach that goal? Recruiting!
The startup mantra for every CEO. 1. Sell the vision. 2. Keep money in the bank. 3. Recruit.
Put a few billion behind that and what do you get?
Just a bad brokerage with some tech around it or a bad tech company with some brokerage pieces around it too?
I have a question, what does Amazon sell? Books yea, books that’s what they sell.
What is WeWork selling? Desks for kids with no real jobs?
What is Compass selling? Houses, just houses?
You know what’s coming, they are both selling space as a service just like you.
Wait, you don’t sell space as a service, you sell relationships and complicated processes with hidden data.
Do me a favor and go back through my archives. I have been screaming this is some way shape or form for at least 5 or 6 years and do you know why? It’s fucking hard to miss. I can’t be the only one. Hell, I know I’m not.
To make another point. If you asked me ten years ago if I saw this coming I would have probably said it had a 50-50 chance of happening. If you asked me five years ago I would have said it had a 95% chance.
And here it is today, funded out the ASS!
Ten years out it’s hard to predict, five years out it’s not hard to see at all.
So do you want my five-year prediction? Of course, you do.
Will WeWork and Compass be on top? NO, they will not.
The company that is trading #CRE like it a commodity. Think NASDAQ.
Will WeWork and Compass still be around? Of course, they will. I think they will gobble up just about everybody and leave maybe three major global #CRE brokerage players total. Bank on that!
Of course, that’s just crazy thinking right?
Want to know how they are doing it now and will continue until they are on top?
This is an excerpt from a brokers email and this is their take after having done several deals with WeWork. (Name withheld by request.)
“For the non-millennial generation, WeWork is not a real estate company… they are building a real-life physical Facebook (social network)…thru a channel known as co-working, what better way to connect people, than where they spend half of their day, (at work), WeWork is building a social network that takes place daily in person, Instead over the internet. That is what SoftBank is investing billions in… NOT, the fact they sublease space at a higher margin than they lease it for. Don’t lose me here, Space which they occupy is the physical internet to them. Their app that connects their members worldwide is worth more than the income they generate off of renting Space. 90% of we work members do business with one another.”
Yea, that’s all there is to it.
What do you do all day again? Deals, yes, I know do deals. But only big deals not little deals. Did you miss the links above about WeWork and Compass providing commercial real estate brokerage services?
Let me give you a bit of insight into the mentality of a startup. It’s all about market share or in startup up slang “a land grab.” Ironic don’t you think? Your service is a commodity and all your competition needs to do is take away deals and what happens? They win!
Compass is out buying market share. That’s how they’re doing it in residential and they have started to do the same in commercial.
WeWork is doing what again? “WeWork is building a social network that takes place daily in person, Instead over the internet.”
With BILLIONS! I said BILLIONS!
And between you and I, it’s about MF TIME!
So, What’s $800 Million Here And A Few Billion There Really Mean To #CRE?
Maybe You Should Ask Compass And WeWork or maybe you should freshen up your resume, but then again those startups don’t really hire the kind of people………
+1 Where is the company that will dwarf WeWork and Compass? They are out there NOW! And it probably does not look like what you think it should look like ….yet! Did I mention trading and NASDAQ?