August 28, 2018 / 10:10 AM / 3 months ago

WeWork's Flatiron School acquires Chicago design school Designation

SAN FRANCISCO (Reuters) - WeWork’s Flatiron School, the coding boot camp purchased last year by the $40 billion co-working startup, has acquired Designation, a Chicago-based, for-profit design education school, the company told Reuters on Tuesday.

A logo of U.S. co-working firm WeWork is pictured during a signing ceremony in Shanghai, China April 12, 2018. Picture taken April 12, 2018. Jackal Pan via REUTERS

The deal is WeWork’s latest expansion into education as the New York-based coworking company continues to broaden its offerings beyond office space.

The decision to acquire Designation was driven by a growing demand for digital designers, Flatiron Chief Executive Adam Enbar told Reuters. Terms of the deal were not disclosed.

“Design is becoming the competitive advantage within companies,” Enbar said. “We see that trend continuing.”

Designation, which has a team of eight and has been bootstrapped since its founding in early 2014, will continue to operate out of WeWork’s Chicago State Street location, offering classes in person and online. Designation will also maintain its own brand for the foreseeable future.

Flatiron School will over time announce how Designation’s services will be offered to WeWork members, Enbar said.

“We’re really excited to join the Flatiron team and the greater, larger WeWork family,” Designation CEO Aaron Fazulak told Reuters.

The acquisition of Designation comes as consolidation increases among coding boot camps. Last month Denver-based Galvanize acquired San Francisco’s Hack Reactor.

WeWork purchased Flatiron School last October in a mostly stock deal worth more than $40 million at the time, a source familiar with the matter told Reuters. WeWork and Flatiron declined to comment on the deal size.

Since then, Flatiron has added branches in Atlanta, Houston, Washington and London. WeWork has given Flatiron the time and space to grow at a pace that works for the coding boot camp, Enbar said.

“That’s why this partnership with WeWork and Flatiron has been so successful, and we’re hoping to do the same with Designation,” he said.

WeWork is an eight-year-old, venture-backed startup that leases commercial office space to companies in 77 cities on a month-to-month basis.

The company this month disclosed its financial results for the first time, saying it had more than doubled revenue from $198.3 million during the second quarter of 2017 to $421.6 million for the same period in 2018. Net losses, however, hit $723 million for the first half of this year compared with $154 million in the year-ago period.

“You can see how thematically they are out there seeking out new revenue opportunities because they have to,” said Johnny Won, founder of Hyperstop, a tech consultancy firm.

WeWork members receive 50 percent discounts on Flatiron’s $3,500, 10-week, on-campus courses while Flatiron online students have WeWork desk memberships included in their tuitions.

Flatiron School’s expansion showcases WeWork’s long-term strategy of making itself the one-stop shop for startup services, said Ilan Nass, chief strategist of Taktical Digital, a tech consulting firm that has previously worked with WeWork.

“They see themselves as the all encompassing company for entrepreneurship,” Nass said. “Imagine being able to send your employee to coding school right inside of your office building.”

Reporting by Salvador Rodriguez in San Francisco; editing by Greg Mitchell and G Crosse

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