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How WeWork Makes Money-J98sYPOZWEs

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How WeWork Makes Money-J98sYPOZWEs

we work wasn’t the first co-working
company when it was founded in 2010 by
Adam Newman and Miguel McKelvey but it
has quickly become one of the biggest
with 528 locations in 111 cities across
29 countries we work as a global success
in the past decade the company has added
over half a million members gobbled up
45 million square feet globally and is
now the largest office space tenant in
Manhattan the company has been valued as
high as 47 billion dollars but many
you’re questioning its worth so how does
we work make its money we work as a
landlord it leases office space parcels
it up and sublet it out at a higher
price through its membership system from
the beginning we works customer base has
been startups freelancers entrepreneurs
and small businesses individuals can
rent a desk or private office and
businesses can rent out Suites or even
entire floors we works closest
competitor is iwg which uses a similar
rental arbitrage model it’s turning a
profit but it’s only valued at 3.7
billion dollars whereas we work isn’t
yet profitable and had a valuation more
than ten times that so what makes we
work stand out since the beginning we
work has thought about branding and
aesthetic its signature look is
instantly recognizable industrial clean
open space with a lot of wood and bright
lights you know the look
it’s that millennial aesthetic the one
that does well on Instagram and that
style has set we work apart from
competitors though some have started to
follow suit but because we work was a
first mover in this space it retains
some sort of brand recognition both
among its members and among kind of the
general working public people know what
we work in a different way than they
know some of its competitors we work has
also try to become more than just a
place people work it wants to be your
way of life in January 2019 we work
change its name to the we company to
move beyond co-working the we company
opened co-living spaces in New York City
in Washington DC a school and a gym
newman would like the company to be an
all-encompassing ecosystem where someone
could work out at a we branded gym in
the morning go to a we work office send
their kids to a we grow elementary
school and then go home to there we live
apartment and while we works main
function is real estate it’s been
justifying its mass evaluation by
calling itself a tech company in its IPO
filing we work says its extensive
technology infrastructure is crucial to
its business and thanks to its massive
scale we work has a lot of data that its
banking on to increase revenue for
example we work he knows a lot about how
people work like when their most
productive and how much space they need
and when but not everyone is convinced
that we work as a tech company in the
end I think most investors will look at
them as a real estate play with some
really good technology incorporated into
what is a real estate company at the end
of the day we works lofty goals and
aggressive expansion don’t come cheap
the company is burning cash though we
work made 1.8 billion dollars in revenue
in 2018 it also lost 1.9 billion it lost
two hundred and nineteen thousand
dollars every hour for a year leading up
to March 2019 but bleeding money didn’t
stop Japanese conglomerate Softbank from
pouring cash into the company Softbank
has invested more than ten billion
dollars in rework giving it a valuation
of forty seven billion dollars in
January 2019 but not everyone is
convinced that we work is worth that
much since releasing its IPO paperwork
in August we were exfoliation has taken
a hit the company reportedly considered
a valuation of ten billion to 12 billion
dollars only about a quarter of its peak
valuation we were delayed the IPO part
of it has to do with the fact that
investors are worried about what would
happen to we work during a recession we
works customer base would be at risk
like what happened to iwg in the early
2000s when the company’s us arm had to
file for bankruptcy during the recession
company struggled and moved out of the
office spaces so iwg was stuck
shouldering the rent and as a result its
u.s. business was losing as much as 4.1
million dollars a month we work has been
trying to safeguard itself by courting
fortune 500 companies enterprise
customers tend to run out spaces for
longer and can be more stable than
startups Lee works efforts have worked
employees of blue chip companies now
make up more than 40% of weworks members
we work also runs powered by Wii which
lets companies outsource office design
and maintenance
Amazon Airbnb IBM and UBS all have we
work run offices and even if there were
a recession CEO Adam Newman says that we
work could benefit saying that
short-term leases could look more
attractive to penny-pinching customers
and a downturn could get we work better
deals on leases but like we were expel
you Asian Newman’s role as CEO has also
come under scrutiny investors are
worried about the amount of control he
has in the week company and some of his
actions like leasing buildings he owns –
we work have raised eyebrows though we
work made changes to the corporate
structure that loosen Newman’s grip they
might not be enough we work desperately
needs to raise more money to continue
expanding at its current pace and
delaying the IPO could mean more time
for the company to convince investors to
get on board it’s an important benchmark
to see if investors do buy into this
concept and then we’ll show how future
IPOs could perform as well it’s an
important benchmark as well for
investors in similar companies so they
can see how their valuations might stack
up against a publicly traded company
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