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WeWork’s utopian vision of your future life—in the office

Mar 05, 2015

Using an office at WeWork feels a lot like checking in at a swank hotel. Indie music plays softly in the reception area. Young professionals with laptops sprawl across couches, beanbag chairs, and even pillow-covered stacks of wooden pallets, sipping artisanal coffee or lemon-accented water. Depending on the day, help yourself to a waffle brunch, or sign up for a $1-per-minute massage in a conference room.

Despite the relaxing vibe, though, WeWork’s chain of coworking spaces—where workers from different firms rent desks and small offices but share Wi-Fi, copy machines, water coolers and the like—are all about doing business. Founded by two guys who never had traditional office jobs of their own, WeWork was imagined as a sort of entrepreneurial, anti-establishment utopia: delivering Googleplex-type perks (from video games to health insurance discounts) to small startups that couldn’t otherwise afford them. “The line that we see between work and play is really blurring, and we try to make this the best work environment possible,” says WeWork co-founder and CEO Adam Neumann. Passing by a WeWorker curled up on a windowsill in view of New York’s Freedom Tower, computer on his outstretched legs, Neumann paused to snap a picture for his designers: “I’m going to point out that windows can be seats.”

The WeWork model has proved incredibly attractive to today’s increasingly independent workforce. Started in 2010 with just one office in Manhattan’s Soho neighborhood, WeWork has grown into a $5 billion business with 29 locations in U.S. major cities and abroad, from London to Tel Aviv. It plans to double that number by the end of this year. Indeed, demand is so high that many WeWork locations book up within a few days of opening their doors; the office in New York’s Meatpacking District has had people on its wait list for two years.

And lately, Fortune 500 companies have also come knocking: Merck (mrk), American Express (axp), and Microsoft (msft) now lease desks at WeWork, in addition to their own corporate offices. In fact, WeWork turns many big firms away, limiting them to just 20% of overall membership. “If we had opened our doors, this place would become corporate America,” Neumann says. “We’re able to give them a corporate culture and feeling that are a little more relevant and of today’s time.” Merck, for example, has employees alternating between company headquarters and its four WeWork outposts in New York, in order to get exposure to the “innovation ecosystem.”

Coworking spaces themselves are far from unique to WeWork: The amount in the U.S. grew from just one in 2005, to 781 in 2013, according to a recent report by NAIOP, the commercial real estate development association. “It was revolutionary: The fact that it’s even more about the people and the programming than it is about the desks and the design, or the bricks and mortar,” says Andrea Foertsch, a commercial real estate development advisor whose workplace consulting firm Disruptive Space specializes in the coworking industry. “People are constantly telling me how it’s increased their productivity, whom they’ve met through doing this, and how they changed their business model, how it formed their partnerships. How they’ll never go back to working from home. How it’s just kept ideas from dying slow deaths.”

Many of WeWork’s offices offer creative distractions. Courtesy of WeWork 

But while many coworking setups are one-off operations offering standards like Internet and ping-pong, WeWork is arguably the first in the U.S. to scale the concept, and to galvanize its own brand of workspace that is as much, if not more, about the social scene as it is about the space itself. On-site happy hours and events happen several times a week, publicized by WeWork’s members-only mobile app, and floors are purposely laid out so that workers are more likely to bump into each other on their way to the fridge or a meeting. “Convenience is not our No. 1 priority,” says co-founder and chief creative officer Miguel McKelvey.

The “magic sauce,” says Neumann, includes elements of his own dream office (free beer), nuts-and-bolts conveniences (a robust janitorial staff and mouthwash dispensers in the restrooms), as well as big-picture intangibles where “you can’t actually pinpoint why everything feels right, but it just does,” as though in a cleverly designed restaurant. “Even if we had a bad night, a tough morning or whatever it is, we want to walk into the space and it’s like, I want to change the world,” he says.

While companies of all sizes have been shifting to open, shared office layouts to cut costs, WeWork’s memberships, averaging $400 to $650 a person per month, can actually be more expensive than leasing a comparable amount of commercial space elsewhere. But WeWork says it more than makes up for it, saving workers 25% annually by covering expenses like furniture and cleaning—not to mention the beer kegs on every floor—as well as by fostering business relationships and partnerships between members. In many cases, members are upgrading from their couch to an actual desk, and paying a premium for access to WeWork’s network of coworkers. “For us, it’s not about reducing footprint; arguably we’re increasing footprint,” says Mark Gallagher, senior market manager for Silicon Valley Bank, which recently took up residence in WeWork’s Boston, San Francisco, and New York locations, as well as at other coworking spaces in different cities. “It’s about a different work style,” Gallagher says.

The aim was to mingle more with the bank’s entrepreneur clientele, and increase the possibility of “serendipitous” encounters, Gallagher says. So far it’s working: Gallagher’s team is taking additional suites at WeWork, and signing a multi-year lease—more permanent than WeWork’s typical month-to-month contracts, but still more flexible than a standard 10-year corporate lease. “It also helps us transition away from the traditional cube and office environment,” Gallagher adds. “It’s about how are we utilizing space to the best effect that meets our corporate and cultural goals as well as our clients’?”

A shorter version of this story appeared in the March 15, 2015 issue of Fortune.

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