WeWork, a New York based startup, is growing at a rapid pace
WeWork is a growing New York-based startup that provides shared workspaces and services for entrepreneurs, startups, small businesses and large enterprises. In recent years, it has expanded to over 20 countries and attracted over 200,000 members. In only eight years, WeWork has built a network of 212 co-working spaces worldwide, but that is not the only goal of the company. Adam Neumann, WeWork’s chief executive and co-founder, wants his company to fundamentally change people’s working, living and playing habits.
“How do you change the world?” Neumann asked in a recent interview, according to The New York Times. “Bring people together. Where is the easiest big place to bring people together? In the work environment.”
Currently, Dock 72, a large-scale project from WeWork, is the most prominent example of this idea. According to The New York Times, if the project is completed later this year, it will include “an enormous co-working space, a luxury spa and large offices, for other companies like IBM and Verizon, that are designed and run by WeWork.”
In other words, it will be an all-encompassing space, one which workers will enjoy and will not have to leave until they need to go to sleep. But even that may change soon, as WeWork balloons out into other ventures. WeWork has WeLive, a residential offering in which people can rent furnished apartments for months at a time. It has Rise by We, a gym open to both existing WeWork members and non-members. For those who are not already a member of the WeWork system, a Rise by We membership confers access to WeWork’s digital member network and two credits per month to book conference rooms or workspaces in select WeWork locations, according to Business Insider.
The company recently acquired Meetup, a social network meant to help organize events centered around interests, such as technology or sports, and the Flatiron School, a coding academy. Soon, it plans to open WeGrow, a for-profit elementary school for kindergarteners. A company that started out as a co-working, space-sharing gig now has yoga instructors, software engineers and teachers on its payroll. This is all part of WeWork’s goal of unifying people. It seeks to be an ecosystem that can handle one’s workspace, living space, gym space and child’s early education space, among other things.
One could compare it to the Apple ecosystem, where consumers can purchase Apple smartphones, tablets, desktops, laptops, earbuds, portable music players, speakers, music, videos and ringtones, just to name a few. The only difference between the two is their scope; WeWork wants to be the ecosystem for one’s entire life.
In addition to providing shared co-working spaces, WeWork is trying to position itself as the company with the most valuable knowledge about these spaces. Since its founding, the company has collected data about how people work, where they are most productive, what they need to feel good and how much space they require, according to WIRED.
Besides applying this knowledge to its own locations, WeWork has experimented with ways to turn that data into new products for enterprise customers, including building custom office interiors, licensing software that companies can use to book conference rooms and analyzing data on how those people are using those conference rooms.
Large companies like JPMorgan Chase & Co and Siemens are signing on as WeWork’s tenants, and its revenues are growing, with an estimated figure of $2.3 billion this year. SoftBank Group Corp., the Japanese technology group headed by the billionaire Masayoshi Son, invested $4.4 billion into WeWork, which allowed the company to buy the Lord & Taylor building on Fifth Avenue in Manhattan and renovate it as its new headquarters. The company has attained a valuation of $20 billion, putting it among Palantir and SpaceX as the most highly valued private U.S. tech startup after Airbnb and Uber.
However, WeWork has received numerous questions regarding the sustainability of its business model and its potentially lofty valuation. Critics have argued that the company does not do much else other than corporate real estate arbitrage, where one leases a space, cleans it up and subleases it out to other tenants. Since the company owns few properties, it lacks hard assets.
Additionally, the company’s growth projects seem unattainable to many, and it has failed to meet them before. The type of business that WeWork is involved in has a low barrier for entry, and it has other competitors as a result. There is also the potential that WeWork may not get paid for subleasing, since many of its tenants are startups that could easily fail.
International Workplace Group is the most noticeable of WeWork’s competitors. It is a publicly traded co-working company that has both more members and more real estate than WeWork, yet IWG is only valued at $2 billion — a 10th of WeWork’s valuation.