Workspace hub Knotel thinks it’s solved Wework’s business model problems
Wework’s ill-fated initial public offering (IPO) will have only a “limited” impact on the fortunes of flexible workspace rival Knotel, the firm’s boss has said.
Tom Dugarin, Knotel’s UK general manager, played down concerns about Wework’s troubled listing, saying his company had a more sustainable business model.
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“Wework is a very good business at what it does, which is coworking,” he told City PM “I think it really has limited knock-on to our business.”
Wework has been forced to pull its eagerly-anticipated IPO after a frosty reception from investors, forcing chief executive Adam Neumann to step down.
But Dugarin insisted that Knotel had set itself apart from its larger rival by focusing on flexible offices for larger businesses, rather than coworking spaces for startups and freelancers.
“We’ve always focused on this product and, if anything, they [Wework] have pivoted their business more towards ours, which is the larger enterprise business – it’s always been our bread and butter,” he said.
He also said that his firm had been more disciplined with its spending than Wework, which has splashed out $2 for every $1 it generates in revenue.
Knotel, which achieved unicorn status after a funding round last month, launched in the UK in 2016 and now operates more than 360,000 square feet of space in the UK across more than 22 buildings.
The New York-based firm’s rapid expansion mirrors that of Wework, but Dugarin dismissed concerns that a string of hefty valuations for loss-making companies may have created a tech bubble.
Analysts have also raised concerns about the flexible workspace model, which sees companies take out long-term leases on properties but only rent to clients on a short-term basis.
Dugarin admitted that this model could leave Knotel exposed if clients dried up, but said the firm’s average rent term of 27 months made it more stable than its rival.
“We think we’ve cracked the formula and we think we can bring the benefits of what we do to lots of different global customers in different global geographies,” he said. “Where there are large global office markets, there is a need for a Knotel-type product.”
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Knotel last week signed a deal with property developer Great Portland Estates to take over 82,000 square feet of office space in Moorgate, while also securing further London sites in St Paul’s, Farringdon, Old Street and Holborn.
Dugarin said the company would continue to grow its presence in the capital, and expected to hold roughly 500,000 square feet of space by the end of the year.
Main image credit: Knotel