Please ensure Javascript is enabled for purposes of website accessibility

What 2U's Partnership With WeWork Means for Investors

By Brian Withers - Feb 10, 2018 at 9:00AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Find out why CEO Chip Paucek is calling this a triple win for the company.

In January, 2U (TWOU 4.08%) announced a strategic partnership with WeWork that takes advantage of the strengths of both companies. Online graduate and short-course provider 2U knows that getting a degree or taking classes while working full time is difficult.

However, pairing up with WeWork -- the $20 billion leader in shared workspaces with properties all over the globe -- should make it just a little bit easier.

The deal's components

The "multiyear, global, exclusive partnership" between WeWork and 2U basically allows their customers to have access to both company's products and services. There are four components:

  • WeWork will provide 2U's current graduate students a Global Access Membership that allows entry to its over 200 physical shared work locations around the globe.
  • 2U will make $5 million in scholarships available to WeWork's clients for the company's growing list of programs over the next three years.
  • 2U will have access to the Flatiron School online learning platform via a licensing agreement with WeWork.
  • The companies will work together to open a Future of Learning and Work center in 2019.

Each company's customers can enjoy the new benefits at no additional cost. For 2U's prospective students who might be concerned about where they will study for an online program, this might be the push that makes them comfortable enough to go with a virtual classroom experience. 

Student sitting at a table in a with a book, headphones, and a laptop.

Image source: Getty images.

A physical "classroom" for a virtual student

WeWork provides its members with workspaces and caters to remote workers, freelancers, and small companies up to 500 people. The entry-level plan is a "hot desk" at $220 per month that provides all the amenities a remote employee would need to work: power, high speed internet access, private phone rooms, access to office supplies, printers, coffee, and even "craft [beer] on draft". More expensive plans range from a dedicated desk or private office to a custom build-out.

While the Global Access Membership being provided to 2U's students was not defined, I imagine it will be a limited-access membership to cater to the virtual student. Even though I'm not taking classes, as a freelance writer, I often find myself looking for a place to work when I'm away from home. With limited hours for libraries and Starbucks' constant flow of customers and limited seating, there really aren't great options for an extended working session. WeWork locations would be an effective alternative for those occasions during the semester when students need a quiet place outside the home to focus on their studies.

A number of people working at computers in a large open room with beverages on a table in the foreground.

WeWork's Meatpacking district office in Manhattan. Image source: WeWork.

The long-term benefits

WeWork has over 175,000 members around the globe who pay for access to its properties for each month. With 2U providing scholarships to WeWork's members, the partnership also exposes the virtual university to potential new students. WeWork members can tap into one of 2U's 49 graduate programs or the short courses it offers in new tech trends, such as blockchain strategy, which may be more suited to these freelance and remote workers.

A benefit for 2U that may be lost in the bigger announcement is licensing of the Flatiron learning platform. This platform was set up to allow people to gain the skills required to start a career in the fast-growing field of web development. There are several free introductory classes for students to determine if the program is for them, a 15 week in-person immersive software engineering program, or several other self-paced online offerings. Flatiron is a great complement to 2U's current programs and courses, and having this additional learning platform and student base will only help the company grow.

Chip Paucek, 2U's CEO and co-founder, said the partnership is a "transformational collaboration" for the company and highlighted the key benefits in the announcement:

This partnership is a unique opportunity and will drive innovation and value for both WeWork and 2U. Evolving our technology platform, offering our degree programs and short courses to the WeWork community, and providing students in our degree programs global access to WeWork spaces is a win, win, win.

While there might not be immediate financial benefits for 2U, as a shareholder, I like this partnership and the benefits it should bring the company for years to come.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

2U, Inc. Stock Quote
2U, Inc.
TWOU
$10.21 (4.08%) $0.40

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
336%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.