WeWork has grown rapidly ever since its establishment,making it one of the largest and most visible coworking chains in the world.here are some strategy how they made it BIG
What is WeWork?
WeWork was founded in New York in 2010 with a goal to offer coworking spaces to entrepreneurs, startup companies, freelancers and even larger enterprises. It now has more than 5,000 employees and nearly 600 locations worldwide, including outposts in dozens of U.S. cities and 32 countries, like Brazil, Germany, and Thailand
WeWork Business Model
WeWork provides co-working facilities, and various business services to a variety of consumers the corporate rents office space and hot-desk space to 2 principal customer segments:
- Individuals, comprising freelancers, independent professionals, and solo entrepreneurs; and
- Enterprises, comprising small and medium-sized businesses, tech start-ups, also as larger enterprises.
WeWork provides a fanatical service to larger enterprises, providing a variety of office solutions – including private and custom offices, satellite offices, and conference rooms – to multinational corporations and their remote workers. The Company’s enterprise customers include high-profile companies, particularly tech businesses, like Microsoft, Pinterest, BuzzFeed, IBM, Dell, KPMG, and Spotify
WeWork’s principal market is its native US, where it serves customers across a network of major cities, including NY , l. a. , Detroit, Chicago, San Francisco , Portland, and Miami. the corporate additionally serves customers within the UK, Australia, Canada, China, Germany, France, India, Mexico, Israel, Hong Kong, Netherlands , and South Korea .
WeWork has also recently launched a WeLive unit which provides flexible stay co-living rentals to general consumers seeking flexible and affordable living solutions.
WeWork provides value to its customers within the following ways:
- Its competitive and versatile pricing model, with the corporate providing workspace and bigger office spaces to customers at competitive monthly rental prices, offering flexible rental contracts which will be renewed
- The quality of its facilities and provision of amenities, with the corporate operating high-quality, modern office locations, with a variety of supplemental amenities like free internet, free refreshments, office equipment, and personal phone booths
- Its international reach, with the corporate operating an in depth international network of office locations across North America, Europe, and Asia Pacific, including within the UK, Australia, China, India, the US, and Mexico;
- Its community atmosphere, with the Company’s office locations fostering a community atmosphere and organising networking events, that allow customers to interact with each other , provide feedback, and share ideas; and
- Its service partnerships, with the corporate providing various discounted services to its customers through its network of partners, including lower costs on healthcare and HR solutions, payment processing services, and shipping and distribution solutions.
WeWork operates an internet site at www.wework.com, through which it provides information on its services, locations, and amenities. Potential customers are ready to schedule site visits and make inquiries directly through the WeWork website. the corporate also operates a web customer portal, which enables customers to manage their accounts and make payments online. Similar functionality is out there through the Company’s mobile app.
WeWork operates an in-house sales and repair team which sells services and provides support on to customers. It also operates a fanatical Corporate sales division , which works closely with its larger enterprise customers, like Microsoft, IBM, and Dell. Additionally, the corporate operates team of on-site support and repair personnel that are ready to provide assistance to customers in-person and in real time.
In addition to its WeWork office locations, the corporate also operates WeLive co-living developments in ny and Washington DC.
WeWork provides services on a largely self-service basis. This includes the Company’s website, which allows potential customers to rearrange office viewings, also as its dedicated online customer portal, which allows customers to form payments, manage account details, and access other services without interacting directly with members of the Company’s sales and marketing teams.
WeWork provides services on to its customers through its sales teams, notably its dedicated corporate sales personnel, which affect the Company’s larger enterprise clients. This includes specialist account management teams that are available to supply a private service to WeWork’s corporate customers. WeWork also provides personalised service to customers through its on-site staff, who are available to customers to supply tailored assistance with enquiries and complaints.
Alternatively, customers can contact WeWork’s support teams over the phone or via post, and may leave messages with the corporate via a web contact form. Customers also are ready to interact with the corporate directly through its social media accounts with Facebook, Twitter, LinkedIn, and Instagram.
WeWork operates as a true estate developer and property manager. It principally provides various consulting, office rental, and other business services to a variety of consumers , primarily freelance workers, small businesses, start-ups, and enormous enterprises.
The Company offers shared office space reciprocally for a monthly fee. Its facilities accompany a variety of amenities included, like high speed internet, private telephone company , mail handling, free refreshments, and other amenities.
The Company features a range of office locations across the US, including altogether major cities, like ny , l. a. , San Francisco , and Chicago. serves customers worldwide. Additionally, WeWork operates a WeLive business that gives co-living solutions to customers within the US.
WeWork works in conjunction with a variety of companies and business so as to supply its customers with the simplest possible services and amenities.
- These partners are often categorised broadly as:
- Broker and Referral Partners, comprising a variety of internet sites and corporations that assist within the marketing of the Company’s services, operating primarily as affiliates that earn commissions when introducing new clients to the Company;
- Real Estate Partners, principally comprising property developers with which the corporate collaborates on the event of office locations;
- Supplier and repair Partners, comprising suppliers of kit , tools, technologies, and resources across the Company’s international network of offices, and providers of varied services that support the Company’s operations and activities; and
- Strategic and Alliance Partners, comprising a variety of companies and organisations, with which the corporate shares resources and collaborates on joint projects.
- WeWork features a number of service partnerships. This includes a banking partnerships with Chase Bank, a distribution and delivery partnerships with UPS, a person’s resources partnership with TriNet, and accounting partnership with inDinero.
WeWork’s key resources are its network of office locations and related equipment, its IT and communications infrastructure, its partnerships and repair providers, and its personnel. The Company’s most vital resource is its portfolio of owned and leased properties, at which it rents space to customers.
This includes office locations in additional than 30 cities across North America, Europe, and Asia Pacific – including in London, Seoul, Amsterdam, Hong Kong, Berlin, Montreal, and Shanghai – also as WeLive co-living spaces in ny and Washington DC.
WeWork incurs costs in relation to the development of its property portfolio – including the lease and acquisition of properties and the development of new buildings, the maintenance of its IT and communications infrastructure, the management of its partnerships, the payment of professional services fees, and the retention of its personnel.
With WeWork’s major costs relating to property rental and lease fees and the payment of salaries and benefits to its workforce, it principally has fixed costs.
WeWork primarily generates revenue through the rental of office space. The Company’s business model is to rent office space at a cheap rate, via long-term lease contracts, which it then re-rents to small businesses, start-ups, and individuals at higher rates under a flexible renting model.
WeWork’s rates vary considerably across its various properties, with We Membership plans starting at $45 per month, Hot Desk rental starting at $220 per month, Dedicated Desk rental starting at $350 per month, and Private Office rental starting at $450 per month. Additionally, the Company derives revenue from its WeLive co-living unit, which operates under a similar model.
WeWork remains a privately-owned company and as such does not publish its financial performance figures. Reports, however, suggest that the Company initially expected to bring in $620 million in revenue for 2016, but revised this number down to $532 million.
How Does WeWork Make Money?
WeWork earns money by renting out the leased spaces via various types of memberships.
WeWork offers various types of membership options catering to almost every sector, be it entrepreneurs, startup companies, freelancers and even large companies.
The company currently offers the following membership options:
This is their lowest-value offering that starts from around $190 a month and can reach upwards of $700. The working spaces are managed by WeWork, with amenities like cleaning, maintenance, IT, and utilities handled by WeWork staff.
WeWork offers three desk spaces plans-
- Hot Desks
- Dedicated Desks
- Labs Desk
Private Offices are where WeWork’s model gets into high gear and provides for enterprise clients such as Microsoft, Facebook, Adidas, and Salesforce. The standard private offices are intended for small teams, remote workers, and small companies, with prices starting from $410 a month for a single person to upwards of $1,200 based on your configuration.
For enterprise clients, WeWork carries over the Standard Private Office features mentioned above along with the option to have WeWork design and build out a completely custom office and let them manage the operations in the same way as it would at typical WeWork locations.
WeWork offers four private offices plans-
- Standard Private Office Suites
- Office Suites
- Headquarters by WeWork
- Custom Build-Out
Apart from making money from rent, WeWork also provides additional services for a fee, such as partnerships with local businesses, and car rentals.
- Global Access: Allows businesses to buy memberships for their employees to access WeWorks around the world.
- We Membership: Members receive credits for booking from any of their Desk Space offerings or Event Spaces.
- Event Space: Provides venue for all kinds of events.
But, how did this company reach a $20 billion valuation just by subletting to others? How did they attract so much funding following just this model alone? The reason why WeWork was able to do so and be so much more successful is that WeWork has mastered the art of telling a story
Why does WeWork work?
Not forgetting corporations and enterprises, WeWork understood the millennial crowd. In 2010, he stopped the startup and the sudden growth of freelancing culture.
Here’s what’s happening to them:
- Brand: A brand as a user, the webwork community calls it, where you can meet like-minded people and network. This aspect makes them more attractive than their rivals and they have managed to differentiate themselves from specific office space providers.
- Flexibility: Be it a group of small companies, individuals, digital nomads, freelancers, startups or a large multinational corporation, they have something for everyone.
- Data: They also obtain useful data where people work, when they are most productive, and so on, which they can use to redesign and optimize buildings. This data can help them make decisions, for example, how many conference rooms they can create based on which they will be used. This is worth thousands of dollars a month because if they make extra room they are wasting space that a desk cannot.
More recently, he has also introduced diversity into other areas that are well admired with his “community” ethos.
Who are the investors behind WeWork?
WeWork’s investors include variety of worldwide entities, including holding conglomerate SoftBank, private equity firm Hony Capital, and land developer Greenland Holdings. In August 2017, SoftBank and its founder, Masayoshi Son, poured a huge $4.4 billion investment into WeWork. This included $3 billion for WeWork itself, namely through primary investment and therefore the purchase of existing shares, and $1.4 billion dedicated to WeWork’s expansion into the Asian market: WeWork China, WeWork Japan and WeWork Pacific. In August 2018, WeWork announced yet one more $1 billion in funds from SoftBank.
As of 2019, WeWork had raised nearly $47 billion in private-equity and risk capital funding within the years since its founding. The immense interest by Asian companies like Hony Capital, Legend Holdings and China Oceanwide represents WeWork’s promising expansion into Eastern markets. aside from its Asian investors, Western companies like Goldman Sachs, J.P. Morgan and T. Rowe Price have also invested within the Manhattan-based WeWork.
CEO Adam Neumann Steps Down
On September 24, 2019, Adam Neumann, the company’s founder and chief executive officer, stepped down as CEO after weeks of scrutiny over his leadership style, the peculiar arrangement he had with the company wherein he would lease office space to WeWork from properties he had purchased using loans against his equity stake, and mounting losses.2 In a statement released to the press, Neumann said, “While our business has never been stronger, in recent weeks, the scrutiny directed toward me has become a significant distraction, and I have decided that it is in the best interest of the company to step down as chief executive.”3 He was replaced by senior executives Arthur Minson and Sebastian Gunningham, who will act as co-CEOs.