As WeWork stumbles, this Indonesian co-working firm soars

With WeWork’s recent implosion comes a nagging question: Is co-working a flawed business model?

For Indonesia’s GoWork, the answer is simply that it isn’t – if you’re able to execute the concept right.

WeWork shelved its initial public offering in September after investors were put off by the company’s whopping losses and concerns about its corporate governance and future viability. Without new funds to bankroll what has been a rapid expansion to the world’s biggest cities, WeWork was said to be just weeks from running out of cash, forcing parent SoftBank to bail it out. The saga has seen a dramatic cut in the embattled company’s valuation to as little as US$8 billion from US$47 billion in January.

Among the red flags for investors was the way WeWork signed long-term leases with landlords and sublet the space to members under short-term contracts, leaving it vulnerable to economic downturns.

But co-working companies like GoWork, one of the top players in Indonesia, function differently.

“We come in as an operator for landlords,” co-founder and CEO Vanessa Hendriadi tells Tech in Asia.

Photo credit: GoWork

That means instead of renting space outright, GoWork operates it on behalf of its landlord, and both parties split the capital expenditures required for sprucing up the space as well as the revenue earned. This way, GoWork is insulated once the economy slows and it becomes harder to land tenants.

Humble beginnings

GoWork is the result of a 2018 merger between its predecessor of the same name – founded by entrepreneurs Richard Lim and Donny Tandianus, now chief financial officer and chief technology officer of the merged entity, respectively – and ReWork, which Hendriadi launched in 2016.

Ironically, Hendriadi was inspired to start her own company after seeing one of WeWork’s locations during a trip to the US in 2015.

“At the time, I was very impressed with WeWork, with the way they designed their office space, made work fun, and helped people connect through community events – from networking to workshops,” she fondly recalls.

“I realized that this was an industry that wasn’t properly groomed in Indonesia so I decided to do something similar. There was probably only two or three co-working locations in Indonesia at the time, and they were very small.”

ReWork’s first location was a 130-square meter space in an apartment building in Jakarta that it was able to fully lease out to members within two months from launch.

That validated there was indeed a strong local demand for flexible office spaces, mainly from a growing tribe of digital nomads and startups. Many liked the idea of scaling up without the need to fork out large sums for designing offices and not getting locked in long-term leases, in case their business fails.

Fierce competitors

Profits over growth