244. Wayne Berger, Chief Executive Officer, the Americas at Iwg Plc (Regus, Spaces) Recovery, Growth Strategy, and What They’re Selling Most Right Now

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244. Wayne Berger, Chief Executive Officer, the Americas at Iwg Plc (Regus, Spaces) Recovery, Growth Strategy, and What They’re Selling Most Right Now

00:00:01 Welcome to the Everything Coworking podcast, where you learn what you need to know about how the world wants to work. And now your host coworking space owner and trend expert, Jamie Russo Hey there, I wanted to jump in with a quick disclaimer, on the audio quality in this episode, in particular, my audio quality, and as you will soon, see,

00:00:39 we have a couple of very special guests on the podcast. One is Wayne Berger, chief executive officer for the Americas at IWG, which is the parent company of Regis and many other prestigious brands. They are one of the very few public companies in our industry. It was a very special treat to have Wayne on the podcast. I insisted that we use a new recording app called Riverside and have been very excited about that platform because it's a cool studio experience when you're inside much cooler than recording on zoom.

00:01:17 And the video output is very aesthetically appealing, unlike zoom. So at the beginning of the recording, Wayne was like, Hey, I can't hear either of you Giovanni Palavicini was my cohost for this episode. So we made Giovanni logged back out and log back in and then everything seemed completely fine. And then my podcast editor notified me that there were some audio issues with my audio.

00:01:45 So a huge apology to Wayne. And to those of you listening, we are not going to rerecord the episode. We're not going to take more of Wayne and Giovanni's time. Fortunately, Gio and I did some great prep work for the episode, sent Wayne a list of detailed questions that we wanted to cover. And Wayne really went to town without a lot of intervention from myself or from Gio.

00:02:12 So I think the impact of the audio issue is fairly minimal and the conversation, or at least the content covered is super compelling. So excuses, excuses for the, is that a word apologies for the audio quality? We tend to take that very seriously, but again, we don't want to take everyone's time to rerecord this episode and we think that you will enjoy it regardless.

00:02:41 So thanks for hanging with us on this one. And now for our episode, welcome to the Everything Coworking podcast. This is your host, Jamie Russo, you are in for a treat today, as you always are. So my friend Giovanni Palavicini who is with Avison Young, reached out and said, Hey, I talked to Wayne Berger, who's the chief executive officer for the Americas at IWG,

00:03:10 which is the parent company of Regis. And we should have him on the podcast. And I said, let's do it. And we have never had somebody from IWG on the podcast, which is it's long overdue. IWG is a public company with 3,300 locations worldwide. They have a number of brand flags under their umbrella Regis spaces, the wing, the clubhouse check out their website,

00:03:41 you'll see the full list. So Wayne was kind enough to take some time out and chat with us about their recovery, their growth strategy, what they're selling most right now, and what they're really excited about over the next five years. So it was a real treat having Wayne on thank you, Gio for connecting us. Thank you, Wayne, for taking the time to do this.

00:04:03 And without further ado, enjoy our conversation. Welcome. I have two guests with me today and one of them wants to know how we got to episode 250 without interviewing a single person from their organization. And that is a good question to ask. So we are thrilled to have both of our guests today. Giovanni Palavicini is here principal of the flexible office solutions for Avison Young Amber GWA board member,

00:04:33 and Giovanni worked at Regis in their real estate development group from 2012 to 2016, which we'll talk about later. And we have Wayne Berger, chief executive officer of the Americas at IWG, which is the parent company of regions and spaces and a broad portfolio of brands, which we will also get to. So welcome to both of you. Thank you for taking the time to do this, Gio.

00:04:59 So I should set this up. Gio is here. He started my co-host for this one. So Gio jump in any time do you and I were at a board meeting for the global workspace association about a month ago and cut up and chatted and he talked to Wayne and he said, you know, Wayne really wants to get more involved and connect. And so let's do an episode.

00:05:21 So Gio thanks for bringing Wayne into the fold and Wayne, thanks for joining us today. And Jamie, I, I'm proud to say that we can be part of, we can be part of episode two 50, Thanks for having us and thanks to Gio for connecting us. It's excited to be here today. Yeah, it'll be fun. It will be fun.

00:05:45 Okay. Gio, since you're in the middle, where, where are you today? I am actually in Dallas for a dozen the last four weeks. So I'm glad to be home for a few. You've been out and about. I missed you in San Francisco. You hit Seattle. You've been busy. Okay. So, so Wayne, before we dive into our deep list of questions,

00:06:12 now that we have you live and on the air, tell us a little bit, tell us a little bit about you personally, so that we can warm up to, to Wayne. And then about your experience at, IWG kind of your progression through the organization. You've been there for eight years, you mentioned in our prerecording that you're more excited today than ever before.

00:06:33 So we can't wait to hear more about that. So just tell us like where you came from, how'd you get involved in the industry and a little bit about, you know, where you are and, and yeah. Give us the ways of story. So I am, well, number one, I'm currently here in my office at spaces, the junction in Toronto,

00:06:53 Ontario, Canada. So I am Canadian. And then I just was thinking about this, I'm celebrating my 25th year in business, which kind of blows my mind 20 years as a people leader. And my career basically has been broken up into like two halves. I would call it, I spent half my career in the U S living and working for a great company in some phenomenal cities.

00:07:22 And that the other half has been back in Canada, which I was born and raised, went to school and started my career. So the last 10 years have been back here in Toronto. And, and I, and I would say that I've had a really wonderful career. And I'm somebody that truly believes in treating your career as an adventure. There's so much opportunity for individuals to be able to grow,

00:07:48 not just professionally, but personally and socially, depending on where they live and, and the teams, they work with, the organizations that they have a chance to work with and support. So my Mike twenty-five years has been remarkable adventure. I'm looking forward to another 25, but I will tell you, I've been with the company now been with IWG for eight years.

00:08:09 And prior to IWG, I've worked for a fortune 100 company, a really wonderful company, great leadership, great global position in an industry that was a little bit more, probably mature in its economic life cycle. And, and to be honest, I got a phone call one day about eight years ago. And, and it was from an executive recruiter.

00:08:32 And I, you know, when, when you think about sales, I constantly remind people of this. This person was so resilient and so persistent, it wouldn't Call me And email me and said, wait, just, just take a phone call. Let me explain to you. I've got this really unique opportunity. So I called this person back because I was so proud of their persistent.

00:09:00 If anything, your boss needs to know how persistent you are in your craft. You are a student of the game. And if you like, we should at least talk for T for 15 minutes. Those 15 minutes turned into six interviews with IWG of which by the way, none were live and all were taking place in different Coworking facilities with different individuals from around the world.

00:09:26 And next thing you know, I was at a point where I thought, well, this is the next stage of my career. I hadn't, I'm this invested six interviews in and I joined the company and I joined, I joined IWG leading our Canadian business in our community business at the time was 48 locations and under $50 million in revenue, good business overall.

00:09:50 But, but it was amazing to see the opportunity. And when I joined in 2014, I was frankly amazed with the opportunity in front of us in Coworking flex space. And you know, one of the first questions I asked myself was why didn't I think of this? Like this is Every Friday one, can we go that way? Right. Everybody,

00:10:14 except for my boss. Who's the founder of iwi. Didn't think of it. Think of it. Exactly. That's right. And, and 32 years later, he's still incredibly active, involved in the business. And, and I started in this business and it was amazing when I spoke with coworkers. When I spoke with industry friends, business associates, family members,

00:10:39 journalists, the first question out of everybody's mouth back in 2014 was what is this Coworking thing? You always had to explain it. And it's remarkable to see what's taking place in that. And as I mentioned earlier, I'm 25 years in business and I've had an amazing adventure, but my there's an I D a G have electric. And over those eight years,

00:11:02 I've grown from country manager leading our Canadian business. We in fi the first five years, we tripled in size from 48 locations to 130 locations, over 3 million square feet, across 40 cities. I had a chance to support and lead our Latin American business across 25 countries, which was an unbelievable experience, both professionally and personally, helping re, helping redirect that business and,

00:11:27 and, and drive growth in, in Latin America, which is a remarkable place. That's going through urbanization at a faster rate than any other continent and, and question the countries. And then over the last two years, really at the start of a pandemic, I had an opportunity to support our us business, which is our largest business of over a Thousand,

00:11:51 Right. There's a global pandemic taking place. We'd like you to dive in and look after a thousand locations and lead the team and clients through the unknown. It was, I, I will tell you, I, I th so today in Canada, in March, the first day where I said, where vaccine passports are no longer needed, and restaurants just opened up a couple of weeks ago.

00:12:16 So it's really amazing to look back over the last couple of years, especially in the us and across the Americas in how we've had to pivot our business for the, for the short-term to ensure that we were well positioned. And then also continue to focus on accelerating the growth mission. Long-term because what's amazing is even over the last couple of years, the future in flex and Coworking is dramatically,

00:12:46 dramatically bright. And, and even through these last couple of years, which which have been the most challenging that I've experienced in 25 years, I've never been more excited about the future. And, and it's, it's more than just about the business proposition and the opportunity that's taking place within Coworking plus a workspace. It's also the impact we can have on,

00:13:11 on workers and humans. There are 2 billion knowledge-based workers around the world, all that need an amazing place to be frankly, live and work every single bag. And I'm sure we're getting into a number of trends that we're seeing, but, but what's interesting is moving forward at a greater pace than ever before. Flexible workspace in Coworking is going to be the absolute gathering place in home for those 2 billion base workers and more as we continue forward.

00:13:41 So I say to Gio at all the time and, and contemporaries in the industry, I am an absolute ambassador of flexible workspace and Coworking. We're still literally the bottom of the first ending in this industry in this. Oh, I love that analogy. People ask me that all the time. What do you think? Are we in, sometimes I say like,

00:14:00 third, you think bottom of the first we reset, maybe I, I do. I honestly do I look at our business, you know, today we operate 3 million square feet of space just in the us alone. That's fractional, it's free. We could, we could grow 10 X in our, in, in, in, in our industry right now in the U S and that would absorb 1% of commercial real estate.

00:14:29 It is amazing. And for all the financial and structural and, and wellness related, environmental related reasons, we're all moving towards this. So I truly believe we're still in the bottom of the first damning of this actor. And I remind every person, every team member that I support every day, I constantly try to remind them, it's rare for people in their career ever to work in a,

00:14:57 in a business or an industry that frankly is so visionary, right. It's, it's really remarkable. We have a greater mission together, right. And, and it's really incredible, like right down to that payment, they client experience. It's so, so important for our clients and companies, and really for people as they continue to transition and redefine what work and workplace means,

00:15:20 it's really, really remarkable. So I gotta say, like, I am deeply excited about the future and, and my goal is always going to bed on Sunday, excited about Monday. Like that's my goal for everybody to have a chance to work with and partner with and supporting for myself. And I'm even more excited that I went and Sunday hits go and,

00:15:42 but on Monday, get it ready for the next week, because, because it wasn't in front of us, which is opportunity. We talk a lot about the Sunday blues in my headphones. So it's exactly what you do. And I think, yeah, I mean, we, it's great to hear that for me, because I think, I think that's one of the fun reasons to get you on the podcast is the industry.

00:16:04 And a lot of my listeners, the industry has made up a lot of independent folks, right? We've got EEG, we work industrious. And then, you know, lots and lots of small players who are in it for the reasons you just talked about, they want to make an impact. They care about the environment. They care about, you know,

00:16:22 wellbeing. So I just, I like it. It's fun to hear that language from you because we're all different scale, but it for similar reasons, right? Well, you're right. Jamie, if you think about, if you take a look at high growth industries and sectors over decades, if you look at where we are today in flexible workspace and Coworking,

00:16:46 we fit the definition. And so high-growth industries, Hako sectors are traditionally, highly fragmented, lots of entries, right? Looking for ways to build a great business and a great community. So if you look across, let's just talk the us alone today, you have thousands of operators and the average operator, including IWG, we were industrious serendipity, you know,

00:17:12 all the, the let's call them the larger players. The average operator operates 1.3 locations. It's incredible. Right? So, so there's still a deep level of fragmentation. And the reason why there is, is because people, organizations, you know, whether it's private equity firms to VCs right down to individuals looking to diversify their business or, or, or,

00:17:35 or open a new business, they see the opportunity in flex, right? So this is what's happening right now. It's, there's so much fragmentation, but it's going to be interesting to see what happens over the next 10 years. So I think you're gonna see more consolidation. You're gonna see growth within our business, or you're going to see frankly, just new players under as well,

00:17:52 because, because of the shift structurally and how people are working. So let me ask you a question, Wayne. So outside of really the last seven, eight years, the competition was really premiere workspaces, which is relatively small compared to y'all and mom and pops. So how has these larger players that you just mentioned industrious, we work and others, how have they driven you and your brand to new Heights and to continue evolving?

00:18:27 Well, gee, I think it's a really good question. And there's a few ways. One is we've adopted and embraced a diversified brand strategy. That's been a real critical element because if you think about it up until 2015, IWG was known as Regis. We had 3000 locations around the world. They were for the most part 3000 locations, it was the world's largest network of flexible workspace locations.

00:18:51 And then suddenly a new players started popping up, right? I mean, take a look at the WIWORK phenomenon. It suddenly you had this organization that was growing underpinned by billions of dollars of investment from SoftBank and the likes. And they started shifting, they started shifting the vernacular where Coworking became more mainstream. There was this build out who is this transition from a traditional let's call it business center or office setting to more of this emotional connectivity,

00:19:24 this space. And that was really powerful. And we had to take a look at ourselves. Remember, 30 years ago, Regis would have been incredibly, incredibly Vogue and very new right. And, and, and very novel. Right. It's so, so you continue to shift and you build a business over time, you build this global network that will you give companies and people you've of optionality.

00:19:53 That's a real key piece. And also confidence in knowing what you're going to, what you're going to walk into, whether it's in Dubai, Honduras or San Francisco. Right. So, but all of a sudden the sector started changing. And the one thing we learned really quickly was we couldn't design new designs under one consistent brand because the expectation of a brand is already established with their client base.

00:20:20 So People want the region, right? Yeah. Bingo. Oh, Jamie. Yeah, exactly. Right. If we would've opened up spaces and put a Regis logo on those buildings can Absolutely someone had been really interested in thinking about this is like hip and interesting and cool. And others would have said glass instead of drywall. Something's really wrong here. Right.

00:20:44 So, so, so we, we incorporated, and we launched a diversified brand strategy. So we had been acquiring different brands over the years, primarily just on underpin financials, right? So the fundamentals made sense. Let's acquire and let's build a cause we were growing organically and we're going through acquisition. And some of them had these really interesting, cool brands as well.

00:21:04 So we started launching our diverse by brand strategy. In which today we have 20 brands where we really have like five core global brands. And what that does is one, it helped us serve an underrepresented in market that wasn't necessarily driven towards our traditional brands. Hey, I just wanted to jump in really quickly before we continue with our discussion. If you're working on opening a co-working space,

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00:21:54 you can register at Everything. Coworking dot com forward slash masterclass. If you already have a coworking space, I want to make sure you know, about Community Manager, University, Community Manager, University is a training and development platform for community managers. And it can be for owner operators. It has content training resources, templates from day one to general manager.

00:22:20 The platform includes many courses that cover the major buckets of the Community Manager role from community management, operations, sales, and marketing, finance, and leadership. The content is laid out in a graduated learning path. So the Community Manager can identify what content is most relevant to them, depending on their experience and kind of jump in from there. We provide a live brand new training every single month for the Community Manager group.

00:22:48 We also host a live Q and a call every single month so that the community managers can work through any challenges that they're having or opportunities get ideas from other community managers build their own peer network. We also have a private slack group for the group. So if you're interested in learning more, you can go to Everything. Coworking dot com forward slash Community Manager.

00:23:14 So you look at spaces as a great example. We had a chance to acquire spaces roughly about 12 years ago. That brand today is a brand that's brand and a business that is well over a billion dollars in revenue, highly profitable, located across. I think it's close to 80 countries today, hundreds of cities. And that brand continues to grow alongside a brand like Regis,

00:23:41 which frankly is still our fast. It's interesting. It's still the fastest growing brand to location. And so now you have a diversified brand strategy, and then you incorporate brands like H Q signature, the wing clubhouse open office. What that does is it gives our clients our 7 million members choice where they're able to choose the design that they're looking for. They're able to choose location in terms of proximity to their house or other team members or to their clients.

00:24:13 They can choose based on price. They can choose based on amenities as well. So for example, our largest space is location. This space is about the Haas and France is 200,000 square feet. It's loaded with amenities. We have a location. We have a space as queen west here in Toronto, or you look at our spaces, number of spaces in New York,

00:24:35 there's everything from fully functional cafes, right through to rooftop patios, right? There's there, you know, these, these locations are ecosystems that have eight to 10 different working environments where, where people throughout the day can shift where when and how they need to work depending on what's required. Right? So diversified brand strategy gives optionality for our clients. It gives optionality for our enterprise clients as well.

00:25:00 So they can make the right investments depending on the types of teams that they want to place in different space. And then it gives optionality for our partners. So our landlord partners, our franchise partners, individual investors, it gives them optionality because different types of brands have different capital requirements. They have different sides requirements, they have different buildup requirements, right?

00:25:21 So the, and one thing, one last thing about the brand strategy is maybe up until about a month ago, IWG was the only operator in the flex based Coworking industry that had a diversified brand strategy. So this is like the Marriott Bonvoy type of approach, different choice for different people, for different reasons. It's shifting to more of a purpose driven world around work and placed really,

00:25:49 really critical and some major differentiator. So that, that, that I would say was one of the biggest shifts that we've seen overall, Gio. The other big piece was we were a company multi-billion dollars. That was absolutely incredible at industrializing the approach and building the, the approach around the client experience and the team member experience when it came to flexible workspace and Coworking.

00:26:18 But I think over the last five years, we've really assumed a greater thought leadership position as well, because, because we were so busy, we're so focused on our business trying to become better every day. And also just learning from mistakes that happen because it's going to happen in organizations that we started making the shift where we, we, we, we knew that we knew that focus was still really critical,

00:26:41 right? You, it almost goes back to the old good to great book, you know, Fox versus hedgehog. You know, we were a hedgehog focused on driving our core attributes and our core objectives, but we also recognize that this industry is growing fast and what's happening is companies and, and workers, whether it's freelancers, startups, scale ups, or just individual workers everyday who worked for an organization,

00:27:06 they were craving more than just great space. They want a community, they want guidance, they wanted tools. They wanted, they want, they wanted ways to be able to grow the professional network, their social network, and they want to thought leadership. So that became a real critical element for us as well. So those are some ways that we've been trying to shift here over time.

00:27:27 And then lastly, it's also, it's starting to shift from being a location-based business to become a more of a platform based business. It's a really critical, critical piece we have today. We, we have 3,600 locations around the world with, you know, a significant portion of those that are, that are underpinned by, by leaseholds, which makes sense.

00:27:49 It's a great return on that capital business. And, but we also have a fast growing partnership business. And then also we're seeing, as you know, it's interesting, we are commercial real estate is absolutely moving towards this true space as a service. We've all been talking about it for 10 years. We've all been at these, you know, Createch me at conferences and prop tech conferences.

00:28:14 And we've all been, you know, looking at the forecast and what's going to happen. It it's happening now, right? And companies and people, they want to access space as cleanly as through the wrap, right. It's becoming that simple about flexible. So we are absolutely determined to make sure that the platform is in place where it doesn't matter who the provider is and who the client is.

00:28:36 They turn to one platform and access space. And that space, that platform is underpinned by IWG, that's the goal. When you have such a unique perspective globally, of kind of what's happening. I think you've had an interesting experience being in Toronto, which is one of the more conservative. We have a lot of folks from Canada who listen, and I work with a number of operators in Toronto,

00:29:00 and it's just like, wait, you're still, you know, and yet you're exposed to the global, you know, different speed that wish the recovery is happening. But I'm curious when you look at sort of your, your portfolio of brands and, and maybe how, what was on a positive trajectory before COVID what's, is there anything different now? Is there like any consumer behavior shifts that you're seeing,

00:29:28 that's like accelerating, you know, differently than you might've expected, or, you know, any of those brands sitting in that portfolio that you're saying, oh, this, this is going to go, like, take off. I'm curious, like what you're seeing, because you have such a unique perspective. We're w so we're seeing a few things, Jamie,

00:29:47 number one is we're seeing this need for membership grow at a faster pace than we ever had. So what we're seeing right now is we're seeing companies really start to look at space differently. So we're seeing a number of companies rationalize, rationalize their real estate portfolio. So they're looking to say, look, we know we're going to, we know we still need a gathering place.

00:30:09 We know an HQ is important. Then amount of space we need is going to be under question. And also how the space looks. There's gonna be another question. You know, what's funny is we're seeing many organizations start to shift their actual workspace to what a coworking reflect space space the last year for the last number of years, the collaborative space gathering space,

00:30:31 hot desking brainstorming space space that becomes desirable and attractive to go to, you know, it's becoming this more experience-based world. You know, when I think about prior to the pandemic, you know, it was interesting in Canada alone, we hosted 2000 events in 2019, and we're talking everything from networking events to, you know, the breakfast socials to happy hours,

00:30:59 but right through to hosting NATO and the Canadian armed forces at their LGBTQ summit to documentary launches to, and I'm not kidding. We hosted weddings bar mitzvahs, 50th anniversaries at a spaces location who would ever think they'd want to get married in office space World has been just really interesting. So, so we, we were seeing this, you know, fast growth in terms of business.

00:31:30 There's no doubt about that, but what we're seeing now in the last couple of years is, well, number one, we're seeing the shift away from the downtown centricity. Now I do want to make mention I'm a firm believer in the downtown course, this idea that the downtown status is just, it's such a misnomer, right? People want, I live downtown.

00:31:53 I live in an urban market, but what's interesting is I now work for the most part out of a spaces. That's a seven minute drive or bike ride from my house. I can walk there and 15 minutes I can bike in seven minutes and I can admit to all the members on this call, I've biked more to work the last two years than I ever have in my lifetime.

00:32:15 I guess. I think the last time I biked this much was when I was in high school. Right. So it's amazing how, and, and, and I'm on a subway ride away from my, what my traditional downtown office used to be at one of our reaches locations in downtown Toronto. I rarely go downtown. I now go from meetings that require my physical presence,

00:32:35 right? So, so what we're seeing is, is a couple of things we're seeing shift where people are starting to use space very differently. So that what we're seeing now is the typical Workday where part of the day may be spent from home. If it's head down work part of the day or part of the week, frankly, maybe spent at let's call it a corporate headquarters or corporate office,

00:32:59 but then you've got this really the 65 to 75% zone, which is the third place, right? The third place that was, you know, coined maybe what, 30 years ago by Starbucks, you know, this, this place to gather that wasn't home wasn't work, right? The third place is the home for flex space and Coworking, right? And that's become much more relative these days.

00:33:25 So prior, prior to 2020 many of our clients, even though we had a network of 3000, 30, 3500 locations at the time, every IWG member, if they'd had an office in any of our locations, they had access to the globe. They could go to any other location, but rarely did members they actually do in one location. Exactly. But now what's happening now though,

00:33:53 is, is the network is becoming more accessible. So, so we're seeing companies instead of just setting up and signing up for office space, in a different location, in any location, we're now seeing our membership product really start to explode. So we have this product we've had for 30 years and it was used occasionally, but in the last year, that 2 million membership sign up for enterprise membership,

00:34:24 which basically is, is companies signing up like they would a Spotify or an apple radio account and basically paying a standard membership fee it, just giving their team members access to any physical interface. Right? Exactly. It's all access because what's happening now is companies. We're also seeing a big trend where companies are less reliant on hiring people specifically in one city or one location.

00:34:49 Whereas Palo Alto was the place to be. And by the way, it's still, who will be a destination point. Now companies are, are, are opening up roles to remote and hybrid grid before we're seeing people with the ability that will live and work wherever they need, wherever they need to live and work. Right. So if they choose to live in Milwaukee,

00:35:07 but want to work for a company in Miami, it's acceptable, right? And, and companies are now supporting their team members with access to flex space, right? So they're providing them with, with monies or subsidies or signing them up for Coworking membership, et cetera. So, so w we're seeing that type of that type of flexibility when it comes to,

00:35:30 when it comes to hiring practices, it's not just city to city, state to state it's, it's global access of talent. We're seeing this ongoing boom in the suburbs. So I'll give you a couple of a couple of points. You know, we, we we've undertaken a major, major strategic launch around greatly accelerating our network. So our goal is to add a thousand new locations each year,

00:35:56 over the next number of years to absolutely grow the network beyond where we are. You got to go, you don't have time to talk to you. I think we're getting rid of the sign and location of Rockford, Illinois, like this, and forget about this Manhattan. Right? And, but, but the reason why Jamie is because it's bringing flex space To where people are Exactly local economies are growing business.

00:36:23 Business travel is predicted to be reduced by 50%. The focus on the environment is going to be the number one theme over the next 10 years. And people want the ability to be able to really adapt towards the 15 minute, the 15 minute city, which is the ability to be able to live, work and access all their amenities, their coffee shops,

00:36:46 the restaurants, their service providers within a five to 50 minute bike ride. Right? So the commute is transitioning away. I can promise that nothing. I know that you've got kids, I've got three kids. I guarantee you that my 10 month old will one day turn to me and say, dad, tell me about the time that you used to drive 90 minutes each way,

00:37:07 when you lived in Seattle or San Diego or Toronto, why would you be that? I wouldn't say He did. Right. It's just what we did those days are over. So, so those are the types of things we're seeing. We've signed 2 million memberships in the last year because companies are shifting their attitudes towards where people need to work and, and how they work every single day.

00:37:34 Yeah. Wait, and I'm curious to me, that's evidence that there is a little bit of a mindset shift. I feel like, you know, you go to the work techs and, and sort of the corporate real estate. I feel like you see this sort of attitude that stuck in your, either at home or you were at work and that the employee is so happy to your point to,

00:37:55 to not be commuting 90 minutes each way that they're not waving their hand and saying, I need to, I need somewhere else. Right. And I need you to pay for it. Are you seeing that mindset shift? Like the 2 million membership seems like evidence that bigger companies are saying, we don't need you to be only at home or only at the office,

00:38:14 like this recognition of there's something in between? Well, I think there's a few things to, to, to absolutely agree with you, Jamie. So one it's interesting. So Johnson controls released a study back in 2015 that talk about the future work. And they, they, they conducted studies from 1990 to 2015 to look at the last 25 years. And they took that and then applied it to the next 25 years.

00:38:39 And I remember there were a few major trends that they talked about, and it's one of these studies from futurist and around the world that there's some things that you can relate to. And some things you would think there's no way this is going to happen, but like one of them was, for example, you know, the full-time job was completely dead.

00:38:55 Hold on, Joel. Non-existent Right. Everybody will be a free agent. Right, Exactly. That's right. But you know, what's interesting is freelancing now is 47% of the American workforce, like it's growing every single year. So it's one of those seeds you continue to see urbanization is shifting. And one of the key elements that I struggled with in really adapting to back when that study was released was this notion of the greater commitment to health and wellness.

00:39:23 And if you look at what's taking place in the last two years, health and wellness is more paradigm than ever before. You know, we've all talked about the great resignation where looking at what's taking place here with, with what's happening with companies and people in wellness and, and in the environment. And suddenly this is absolutely shifting. So companies are recognizing that the health and wellness of their future employees and current team members is absolutely critical,

00:39:52 not just, not just for their, for the, for the constituents and the team members that they serve, but also for the health of their business. That's a major, major piece. And if you take a look at the stats, only 11% of workers actually want to work from home. Full-time very few people want to work from home every single day because we're social beings by nature,

00:40:14 we value and grade the ability to connect together. And then, but only 21% of workers want to go to an office five days a week, dealing with that commute. It's the, it feels very unpurposeful, you know, here we are connecting via our laptops and our phones, et cetera, on a studio. It's really powerful. It's really engaging.

00:40:35 And the funny thing is you look at technology. We think about technology today as zoom teams. Here's this studio, Riverside technology five years from now is going to be hard. It's going to be immersive for D all those elements that are coming into the mix. Like you look at the latest products from Google and how they're building an immersive environment, where we could feel like we're together in the same room is right around the corner.

00:41:01 So, so when you think about 11% of people who want to actually work from home and only 21% that want to actually go to an office, what, what workers around the world are saying is look choice. And flexibility is what I took from the last two years. We all at a point had to work from home, had the focus on urgency and productivity,

00:41:27 keeping things moving while we battled the pandemic. The reality is that gave us some benefits. It gave us time with our families. It gave us back for some of us two, three hours a day that wasn't stuck, commuting somewhere. It gave us the ability to make some choices in life while frankly many of us worked hard, right? So, but we had a different boundary,

00:41:49 the different types of control that we've never seen before in our schedules. And that is a driving factor in how companies will have to attract and retain talent. So companies are absolutely saying, look, we understand that working from home is not, is not the best situation. And also now that we're starting to transition out, I think there's a greater heightened sense of also understanding security of technology,

00:42:15 right? There's a real commitment on confidentiality, confidentiality, proprietary information. So now it's this notion of really supporting that 15 minute minute concept and giving people the ability to access space and plan their day and their space around their day. S the most progressive companies we're seeing right now are not saying hybrid means come back to the office two days a week. And here's the two days we'd like to see you.

00:42:42 The most progressive companies are saying, look, hybrid is about true flexibility, right? And we want you to be able to work purposefully every single day in spaces ubiquitous. And we want you to be able to come back to an office when there's time for moments of togetherness. Like for example, we want to get together for a one-on-one that makes sense live,

00:43:05 or we want to brainstorm, or there's an opportunity for a town hall or the opportunity to innovate those. Those are elements that are valuable live, right? So it's really becoming more purposeful. The last big piece we're seeing that I think some people are talking about and that companies are absolutely focused on. We talked to her, but we, we worked with them at 83% of the enterprise clients globally.

00:43:31 Every single enterprise client is talking about one of the same things. How do I rationalize my real estate portfolio? Because space today is absolutely looking a lot different than what it was a couple of years ago. And the funny thing is we talked to many of these companies, they are already taking the steps, right? Moving away from this idea of having such a large capital lease intensive real estate portfolio as a,

00:43:58 as a significant capital expense, right? They've, they've seen the value of flexibility, but what's happened now is these last two years has just accelerated it. They know they can access great space, frankly, for something as flexible as even a one day membership, let alone a 10 year or a five-year five-year lease. Right? So that financial savings that hits the bottom line directly,

00:44:21 and it, it's not just the lease costs, it's the build-out costs. It's the capital requirement. Infrastructure is the facilities management costs, the latest study. I just, it was really interesting. He had it demonstrated companies that are moving towards flexible workspace, which are flexible working philosophies, which 80% of companies are. They can see an $11,000 reduction in cost per employee by having their teams work flexibly at least half the week.

00:44:55 Financial savings are remarkable. And that's also going to shift the commercial real estate market to become more amenitized than ever before and seek partners to a greater extent than ever before. Yeah. So I, I love it. You've, you've touched on a bunch of the trends that we've discussed and we see, I mean, obviously the suburban markets are growing and the need to be closer to the 15 minute commute technology and how important that is retention of talent.

00:45:23 And then overall enterprises headed that direction of, of spreading out their portfolio and diversifying it amongst multiple things. In addition to you touched on programming and administration, right? I mean, that's huge. My question for you would be an obviously you don't have to mention names, but can you give us some examples of some of your enterprises that you guys serve,

00:45:43 which is a huge number of kind of how y'all been able to help them pivot their portfolio to serve those needs? Yeah, it's a good question. Obviously. I think we always have to be sensitive towards names and cause for all those reasons you can imagine Gio, if you take a little bit cross sector, w what, actually, this is an interesting trend that we're seeing shift.

00:46:08 So if you think about the largest tech providers, all clients, there are some of our largest clients are certainly some of the largest tech companies around the globe, but then you're starting to see this real shift where government financial services consulting has always been a very large, very large client overall, for all of those reasons that we talked about earlier, we're seeing a lot of movement from client base within that,

00:46:41 but then we're seeing pharmaceuticals. And then also it's interesting manufacturing. Now what's different manufacturing is manufacturing. You, you have a sector where there are, that is a sector where there is a proportion of the workforce that does require to be out of physical location. But what's interesting is there's a whole subset of people like people Ford, for example, Ford recently announced that 76,000 of their team members now have the ability to work flexibly because those are individuals that do not necessarily have to be working in a manufacturing facility,

00:47:18 but traditionally organizations like that looked at their employee base in one definition in a foreign office, right. That's shifting a couple of key names that a woman mentioned for sure is some of these will be global in nature. And these are companies that have started to really embrace the membership program are companies like Dell staples, Nestle standard charter MTT at that group alone,

00:47:45 that group of, of companies have, have signed off for more than 500,000 memberships. So that's just five companies, right? And the number continues to grow. IBM has been shifting quite a bit. It's really interesting. Some of their spinoff businesses, the, I, I hope that helps, but you know, we're seeing that number give tenure to grow.

00:48:08 And now what we're seeing is really, really trying to support that, that next phase of organizations, right, as you know, let's call it the big cats in the scale ups, you know, sometimes make calves and scale ups start thinking about dedicated space for a whole host of reasons. And part of it like nothing's wrong with this is saying like,

00:48:25 we, our space is a demonstration of success, right? It's we have our space now. And this notion of yeah. Of having a, you know, a sign on the building, et cetera. A lot of those companies are starting to take a step back and say, look, you know, what business are we in? Are we in the business of managing space?

00:48:45 No, our businesses core competency, right. That we have to continue to focus on. And we're going to be a stronger business by keeping ourselves flexible. Look at a company like Shopify, which is one of the largest tech companies in the world. Not just be a Canadian company. They've grown exponentially as, as you both now over the last five years till we Lukie,

00:49:04 who's the founder and CEO recently come out saying, you know, net from now on Shopify is a digital by default company. I, every team member a Shopify can work where ever they need to work in order to get the job done, whether that's a Shopify office, whether that's at home, whether that's my flex space, whether that's in a van traveling across the country,

00:49:27 it doesn't matter as long as they achieve their productivity goals. Oh, no. I just said huge, huge shift in mindset. Right. That's a big and right. We'll see others following and even just the, yeah. The choice, the ability to choose where to work. Yeah. Gio jump in and then we'll have to wrap up. Yeah.

00:49:55 How, how is IWG embracing that from a corporate standpoint, are y'all obviously making shifts and transitions. I mean, obviously as Jamie said, I was with bell and at one point we were pushing everyone to move to Dallas. And then obviously there's been a huge shift in transitions, especially in the last two years. So how are you and your team shifting from a corporate standpoint?

00:50:18 At least I think it's a really good question. Do you? I mean, and I think I'm probably a good example of that. You know, I, here I am, but I'm the CEO of a business that is primarily us and U S centric and I live in Toronto. So, so by, by looking at, you know, my region,

00:50:36 for example, I support 1200 locations to $1.2 billion business. We have a team of roughly 3000 people and, and, and the lion's share of that is in the U S and I have an opportunity to support manage that business from, from Toronto Canada. Right. So, and if I look at my direct reports, my direct reports span for the most part,

00:51:03 most of them are in the U S if not in Latin America and south America, I have a handful of direct reports in Canada. Right. That's it. But I'm constantly engaging. We're constantly engaging together via whether it's especially the last two years via technology and we get, and then we get together physically live when it makes sense, right? Like when it's absolutely critical or frankly,

00:51:27 when we need to, or want to, then we gathered, right. So, so at IWG, we, it seems you asked the question, we made the decision to move forward as a mission where every one of our positions that that can be is hybrid. Every one of our positions that are, that are posted, are available for anybody around the world to apply for.

00:51:51 So, so good example, you worked out of our Dallas office at a time. We had, obviously our large IWG direct, which is a large customer service inside sales organization. Traditionally, how was together in, in our call center and balance. And that call center was also replicated other countries around the world because we have 24 7 coverage for our clients.

00:52:11 But, but now most of our IWG agents have the ability to work from home. We've established technology for them, where they are able to work from home or work from a flex based location or work from the office. It's really about choice. We want to make sure that if we're going to tout and if we're going to promote, and if we're going to try to take the leadership on this Renaissance,

00:52:33 and I need, this is a Renaissance for workers that we haven't seen since the last hundred years, if we're going to take a leadership position in that we need to culturally be leaders as well. So for example, we post a position for a marketing role. For example, that positions open. They do not need to be physically based anywhere because we would rather people have the opportunity to live a great life and be a productive member of our team achieving,

00:53:03 exceeding their goals, regardless of where they live in, frankly. It's great because now we have access to global talent pool. So we were trying to live what we try to promote every day. I'm going to sneak in, I'm going to sneak in one last question, you mentioned a thousand new locations a year. What does that growth strategy look like in terms of,

00:53:23 is it lease? Is it acquisition? Is it partnering with landlords? Yes, yes, yes, yes. So, but, but it's, it's exactly that Jamie, so if you things one it's, it's definitely still growing within our conventional leasing business, but, but it's important to know it's only for the most opportunistic only for the most opportunistic locations,

00:53:51 right. It's just really critical. I, I think we're still in the early days of some fundamental shift in what's taking place, congressional bill will say, and I think we're going to see that shadow effect for a number of years in markets going to respond differently than others. So we are as a global company, you know, we're, we do have one of the,

00:54:12 we have the benefit. And also just the challenge of constantly looking to source the best locations that make most sense if we're going to underpin those with capital to invest in both the lease and a build-out right? So that's, that's part of the strategy, but it's the smallest part of the strategy. So that will represent 10% of that growth plan, which is still actually a healthy number.

00:54:38 If you look at it, I look back at, I think it was 2019, we invested over a billion dollars in capital and we still couldn't keep up with the demand by. So the reality is in order to keep up with the demand that that is back, if that surging beyond pre COVID conditions, we're growing with partnerships. So we've got our conventional Reece strategy,

00:55:01 but then we also have, I'd say two very, very important strategies. And that is through our partnerships with landlords. And I think that will drive probably 80% of that thousand location growth. And that's working with a landlord having a chance to establish and activate an amazing IWG flex space, whether it's a Regis, a spaces, a Wayne, a, a,

00:55:23 a signature, and that landlord has the opportunity to invest the capital. We have a chance to partner together and they drive a premium on their product and, and frankly, drive a premium on what a conventional lease would have paid out, right? So that way there's risk and reward for both parties, right? So, and we'll manage that as part of the brand,

00:55:44 we'll fill it up, we'll drive and activate over an amazing location. And that gives the landlord an opportunity to expand that from one building across a number of buildings in the portfolio. So there's that. So there's a landlord partnership program, and then there's also our franchise program as well. We're seeing, we're seeing accelerated interest on franchise. And interestingly enough,

00:56:09 from large institutional groups and sophisticated franchise operators who have, who have invested, are continuing to invest in, in other industries like restaurant fitness hotel, you know, those three, this reason sectors have seen a significant amount of impact over the last couple of years with the pandemic. And what we're seeing now are these investors starting to look to say, okay,

00:56:33 I want to continue to grow. I've got capital to invest. I need to diversify my, I need the bird rivers, my, my, my, my investment. And, and they're looking at flex space. You know, we've all, we've all talked about. The JLL numbers. You know, the fact that we anticipate flex to be 30% of corporate real estate portfolios by 2030,

00:56:52 or if you think about it today, we're 1.9. Like we talked about earlier, we could add, and we will add 6,000 locations in the U S over the next six years, it will happen. And, and if it doesn't, let's get back on the podcast, we can talk about what happens, but I'm just getting, we will add 6,000 locations over the next six years,

00:57:14 and that will ink, that will increase absorption rates by 1%. So, so the franchise offering has been growing exponentially because franchise investors are looking to, to, to, to really start to invest in a high growth industry. That's going to give them great return. So partnerships, franchise conventional lease for the most opportunistic lease opportunities that are out there. And then also M and a mergers and acquisitions.

00:57:42 I mean, this, as we talked about earlier on, this is an industry that's growing at a hyper fast pace, which is amazing and exciting and electric, and is also representative of that, of a highly fragmented industry. So I think there's some interesting opportunities to start looking at consolidation. And the last piece I'm going to make mention is we're really starting to shift towards this platform.

00:58:11 You know, what's happening now is this used to be a location centric business at which you establish a great community. You built a big, great business model, and then you scaled, and we've done that for 32 years. What's happening now though, is it's really starting to move towards this platform. It's really starting to shift towards PropTech or really this Uberization or Airbnb of flex space,

00:58:39 right? We, we, as you know, we, as people are starting to see, you know, this behavioral shift that we have around how we select our vacations, how we select, you know, our, our, our day to day choice, right. Work platform is playing the key role as the aggregator. So we're focusing on really becoming that aggregator of choice more so than anything else.

00:59:03 It isn't just about IWG space. It's frankly, it's about aggregating all space and giving people ultimate choice and ultimate flexibility based on the requirements that they have for that day or that year. Right? So I think that aggregation of a network and really shifting towards a platform business that drives services beyond just space is a major focus for us over the next number of years.

00:59:30 We could probably do a whole podcast episode on that. So we're going to wrap up because we are over, we're cutting into the next hour of your calendar. And Wayne at the beginning said, what should we do? Like 30 minutes now? I was like, that's not going to happen. I could go another hour Gio and I are both probably have our list of questions.

00:59:50 We'd love to ask them, but Wayne, we'll let you go for this time. And we'll, we'll invite you back to do a part two or part three. So thank you for taking the time and kind of digging in high level around IWG portfolio and what you're excited about in the future. And just getting to know you, which is great because yeah,

01:00:10 you're, we're, we're all part of the same exciting opportunity right now. So it's great to hear your perspective and, and we'd love to have you back in and dive in into more detail. So thank you and have a good rest of your day. Thanks for co-hosting. We'll we'll collaborate on part two. Thank you, Jamie. Thanks for having me and all of us.

01:00:34 It's been an absolute, sincere pleasure and look forward to continuing our conversation and look forward to 2022 and all the events in front of us. Amen. Hey there, thanks for sticking with us through the end of the episode, don't forget to subscribe on your favorite podcast player. And if you were enjoying the podcast, please go leave us a review. It helps other folks find the podcast who are thinking about starting a coworking space or already operating a coworking space and are looking to stay up to speed on tips and trends.

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