What 2U's Partnership With WeWork Means for Investors

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In January, 2U (NASDAQ: TWOU) 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.

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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.

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.

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:

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.

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Brian Withers owns shares of 2U. The Motley Fool recommends 2U. The Motley Fool has a disclosure policy.

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