Posted on Wednesday, Jun 1st 2016
About 80% US consumers are expected to be using the sharing economy by 2017 and about 40% people are expected to be freelancers by 2020. These factors coupled with the surge in VC funding for sharing economy startups are driving up the value of shared-office company WeWork, which is among the top ten Billion Dollar Unicorns.
Founded in 2010 by Adam Neumann and Miguel McKelvey in New York, WeWork provides its online network of members with shared office space, a sense of a community, and services. It generally rents space from landlords, turns it into a sleek, well-designed workspace with a communal atmosphere, and rents it out month-by-month at higher prices to companies, small businesses, startups, entrepreneurs, and freelancers.
Today the company has grown to 91 rent-your-office locations in seven countries and has about 50,000 members. It charges its members a basic membership fee of $45 per month for access to events, benefits, and its digital app that allows access to its member network. For $220 per month, a user can access a Hot Desk or any available desk in the common area of a Hot Desk Location. For $350 per month, it offers a dedicated desk. Services offered by WeWork include super-fast Internet, business class printers, private booths for phone calls, conference rooms, mail and package handling, online community managers, cleaning service, spacious and unique common areas, and other freebies like free beer, coffee, tea, and fruit water.
For $450 per month, WeWork offers fully furnished office spaces that can accommodate teams of up to 100 people. Its Private Office service is used by large companies like American Express, Business Insider, and Merck.
The WeWork model is typically used by people looking at a temporary workspace or small businesses that do not want to sign expensive 5- to 10-year leases. It is also popular with freelancers who like the work culture and the sense of community that it offers.
WeWork has now expanded its shared work space offering to shared living spaces. In April this year, it launched its WeLive apartments where you can forego signing a long-term lease in favor of serviced, furnished, shared living spaces. For $1,750 a month, you get Murphy beds that come out of the wall of a shared living space while the price for a private unit can go up to $2,550. It also offers an app that connects the WeLive dwellers to request services or plan activities with other WeLive guests. WeWork estimates WeLive will provide the company with 21% of its revenue by 2018.
WeWork does not disclose its financials, but some reports peg its annual revenue rate at $150 million based on its 2014 performance. According to a five-year WeWork forecast, it expected revenue of $74.6 million and operating profit of $4.2 million by 2014. By 2018, the company predicted operating profit of $941.6 million on revenue of $2.86 billion. Its co-working members were expected to grow from 16,279 to 260,000 by 2018. However, these are just projections that can very well go wrong. It currently has just 50,000 members but hopes to increase it to 1 million by the end of the year.
WeWork is venture funded and has raised $1.43 billion from investors including Fidelity Investments, T. Rowe Price, Benchmark Capital, Aleph, Goldman Sachs, Harvard Management, Hony Capital, J.P. Morgan Chase, Legend Holdings, and Wellington Management. Its latest round of funding held in March 2016 when it raised $430 million at a valuation of $16 billion, up from its earlier valuation of $10 billion.
There is much criticism about its business model and its high valuation. Critics are concerned about its high fixed rents to landlords and its ability to keep up rapid growth. While it controls about 5 million square feet of space, its competitor Regus controls 40 million square feet and has a valuation of about $4 billion.
While there is an emerging trend where businesses and people want to use space more efficiently, it remains to be seen if it will be able to justify this gargantuan valuation.
More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. Unicorns will also be discussed with some special guests during our 1M/1M Roundtable programs over the next few weeks. To be a part of the conversation, please register here. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.
Photo credit: Jambounce Music/Flickr.com.
This segment is a part in the series : Billion Dollar Unicorns
. How Marketo Is Faring In The Public Market . Workday's Ramp to Multi-Billion Valuation . Gaurav Dhillon, Founder of Informatica and SnapLogic (Part 1) . ServiceNow's Expanding Market Opportunity . Gaurav Dhillon, Founder of Informatica and SnapLogic (Part 2) . Gaurav Dhillon, Founder of Informatica and SnapLogic (Part 3) . Gaurav Dhillon, Founder of Informatica and SnapLogic (Part 4) . Tableau's Valuation Increases to $6 Billion . A Rare Media Venture Called Vice . Gaurav Dhillon, Founder of Informatica and SnapLogic (Part 5)More »» . Gaurav Dhillon, Founder of Informatica and SnapLogic (Part 6) . Gaurav Dhillon, Founder of Informatica and SnapLogic (Part 7) . Will Box Implode Post IPO? . Net-a-Porter Cracks The Luxury Fashion Market . Outbrain Prepares for an IPO . Palantir's Skyrocketing Valuation May Be Justified . Online Education Player Lynda.com . Pluralsight's Impressive Rise . Snapchat Explores Revenue Generating Options . Analysts Project Revenue for Pinterest . The Market Awaits Etsy's IPO . Taboola's Content Marketing Growth . Egnyte Eyes IPO in 18 Months . Web 3.0 and E-Commerce Investment Thesis of 3 VCs . Cleversafe's Unique IP Strategy . Cloud Investment Thesis of 5 VCs . GoDaddy Shying Away from IPO, Yet Again . Can Square Sustain Its Valuation? . Zulily Tumbles . MuleSoft Will Be Joining Soon . Bootstrap First, Raise Money Later . ShopClues in India Shows Unicorn Characteristics . What Have You Learned? . ASOS Shines From London . Xiaomi Overtakes Samsung in China . eClinicalWorks Bootstraps With A Paycheck . Strategies From 5 Entrepreneurs . Lending Club Focuses on Growth Post IPO . Slack Speeds Its Way To The Mark . Eventbrite Shies Away from an IPO . Meituan Leads China's Group Buying Market . Gilt Groupe Delays IPO . Veeam Wants To Stay Private . Nextdoor's Valuation Skyrocketing With No Sign of Revenues . Stripe Exploring Tie-Ups for Growth . HubSpot Sustains Solid Growth Post IPO . Shazam Makes it to the Club . OnDeck Scoring in Small Businesses Instant Loans . Fat Startup Adaptive Insights Leading in Cloud CPM . Cloudera Leverages Open-Source Hadoop to Create a Multi-Billion Dollar Business . Evernote Cracks the Freemium Model . Rocket Fuel Crashes on Results . MongoDB Rises High on NoSQL Databases . Shopify Preparing for an IPO . JustFab Getting Ready for an IPO . Kabam to Stay Private? . Adyen Bootstraps to Multi-Billion Valuations . RetailMeNot Worries About Mobile Monetization . Elance-oDesk Taking on the Freelance World . Farfetch Connecting Designers with Consumers . The Impressive Story of Airpush . athenahealth Enters the EHR Market . Privalia Dominates the Latin America Markets . Niche E-Commerce Works for Fanatics . Powa Puts London on the Map . RealReal Shows How to Consign Luxury Products . Vancl On A Roller Coaster Ride . Didi Dache is China's Uber . Dafiti Leading E-Commerce in Latin America . ServiceNow Expands Addressable Market . Flipboard Focuses on Monetization . Hootsuite Eyes an IPO . GoodData Riding High on Big Data Analytics Market Growth . Cheetah Mobile Part Of Chinese Contingent . Hortonworks Needs To Deliver Results . Clarabridge Wins by Analyzing Customer Sentiment . Tableau Continues its Precise Execution . Will Cloudera Sustain $5 Billion Valuation Post IPO? . Freshdesk is a Prospect . InMobi Wants to IPO in India . Zendesk Targets the Live Chat Market . New Relic Getting Ready to Battle with Microsoft . Twilio is Revolutionizing Telecommunications . Funding Circle is UK's Latest Entry to the Club . Luxury Retailer Moda Operandi on the Club's Runway . Splunk is Now Targeting the SMB Segment . Capital-Efficient StartApp Is A Prospect . AppNexus In The IPO 2015 Pipeline . Druva Poised to Produce an Indian Unicorn . MapR Readies IPO . Lookout Getting Ready for an IPO . Anaplan Gets Ready to Enter the Club . Blue Apron Simplifies DIY Gourmet Cooking . GoFundMe Bootstraps till the Half-Way Point . Containers Gives Docker Entry into the Club . Can Kaltura Be A Public Unicorn? . The Ride-Sharing Industry Continues to Deliver Unjustifiable Valuations . MarkLogic Making Waves in Enterprise NoSQL . CloudFlare Offers Website Security over the Cloud . Mixpanel Provides Advanced Analytics for SMBs . Spotify Gearing up to Face Apple Music . Auction.com in Expansion Mode . Nutanix Gives VMWare Tough Competition . Houzz Bootstraps in a Niche Space to Join the Club . Rapid7 Delivers a Successful IPO . Coinbase Tries To Capitalize on BitCoins . Expect Acquisitions From ServiceNow . Zendesk and Freshdesk in Expansion Mode . Zulily Attempts to Make a Turnaround . Etsy Continues to Fumble . Lufax May be Risky, But Valuations Remain Lofty . Will IBM Acquire FireEye? . Mode Media Takes on Video Streaming . New Relic Moves Deeper into Enterprise . Delivery Hero Gets Multi-Billion Dollar Valuation for Food Delivery . Splunk Beefs Up Cyber Security . Garena Secures Singapore's Entry to the Club . Dianping is Thriving in China with its Local Reviews Business . Box Struggles in its Public Avatar . Coupang Raises the Banner for South Korea . InsideSales.com Bootstraps First, Raises Money Later . Pinterest Eyes E-Commerce . Klarna Takes the Risk out of E-Commerce . VNG Grows While Remaining Focused on Vietnam . Good, Bad and Ugly . Sprinklr Rolls up Social Media Management Software Before IPO . ContextLogic Marries Wish Lists to Vendors . Beepi Disintermediates Used Car Dealerships . Snapchat Experiments With Revenues . Tanium Simplifies Cyber Security . Avant is Revolutionizing Consumer Credit . Adyen is on a Roll . Apttus Ready for IPO . ZScaler Takes Security to the Cloud . Bullhorn is in the Making . Sogou a Unicorn, But Yet to Find its Mojo . Evernote Trying to Recover Lost Ground . Modernizing Medicine Is A Prospect . Instacart Looks Shaky . Mogujie's E-Commerce Pivot Pays Off . Zalando Takes the Lead in European Etail . BlaBlaCar Expands Internationally with Acquisitions . Square Files for IPO Below Last Round of Financing . Secretive Infinidat Makes its Way to the Club . FanDuel Creates a Billion Dollar Company out of Fantasy Sports . Kabbage Latest Unicorn in Slowing Online Lending Sector . Atlassian Now Prepping for a US Listing . Match.com Looking to Court the Stock Market Now . Ele.Me Shows Online-2-Offline Works . Alteryx is a Prospect . Machine Zone Translates Multi-Player Games to Multi-Billion Valuation . ZocDoc Should Be Able To Withstand Public Market Scrutiny . Thumbtack Joins the Ranks . Beibei the Baby of the Club . Online Lender SoFi Puts Off IPO Plans . Warby Parker Joins the Club . DraftKings Looks Worried as Fantasy Sports Come Under Scrutiny . Tujia Offers Vacation Rentals in China . Hortonworks Struggles to Stay in the Club . Atlassian, A Legitimate One, Delivers A Great IPO . Reconsider Your Aspirations . Will Docker Sustain? . Veeva Delivers Strong Fundamentals . OfferUp Still Needs to Figure out Revenue Model . Mozido Delivers Mobile Payment to Non-Banking Customers . SimpliVity a Prospect . WePiao Succeeds in Online Ticketing in China . Uptake Joins the Club . For Magic Leap, Unicorn Status No Longer Virtual . Udacity Leans on Industry Giants for Monetization . ForeScout Does Not Want To Go Public Yet . ShopClues Joins the Club . Age of Learning Monetizing in Educational Apps . Square Post Its IPO . Decolar is the Latin American Entry to the Club . Japan's Mercari Joins the Club . Yello Mobile Acquires its Way into the Club . TutorGroup Enters the Club . Souq.com the Middle East Entry to the Club . WeWork Riding the Sharing Economy Wave . Moderna Therapeutics A Promising, Unproven Bet . GitHub Faces Growing Pains . Africa Internet Group the First African Entry to the Club . Paytm Plans Rapid Expansion . Oscar Plans to Expand Its Network . Razer Leads the Gaming Accessory Market . GuaHao Targets China's Healthcare . AUTO1 Group Plans International Expansion . TransferWise Makes Money Transfer Simpler and Cheaper . Ping An Good Doctor Is Largest Chinese Healthcare Unicorn . MindMaze Channels Virtual Reality into Healing . Driverless Car Startup Zoox Joins The Club . Cylance Uses Machine Learning as Cyber Security Tool . SMS Assist Brings a Lackluster Industry to the Club . Unity Technologies a Strong VR Gaming Bet . Square Eyeing Large Sellers . Airbnb Continues to Soar . Xiaohongshu Leverages Social Commerce to Join the Club . iCarbonX Wants to Create a Digital You . Liepin, China's Homegrown Recruitment Platform . Hike is the Latest Entrant from India . Go-Jek Hails its Way into the Club . Quanergy Rides Into the Club . Aiwujiwu Rides High on Chinese Real Estate Sector . Zeta Interactive Counts on Inorganic Growth . Line Delivers a Successful IPO . Grab from Singapore is the Next Big One . Didi Chuxing Monopolizing Chinese Ride-Sharing Market? . Blippar Bets on Its Visual Browser . Two Years Post the IPO, Globant Continues to Soar . Nutanix Delivers a Strong Performance in the First Week of Listing . Coupa Has a Successful IPO . Online-to-Offline Focus Helps Huimin Enter the Club . Real Estate Platform Compass Joins the Club . LeSports Cashes in on Niche Video Streaming . Flipkart's Valuation Bodes Unsteady Future . Russian Avito Gearing up to go Public . Guazi Leading the Chinese Online Used Car Market . Slack Delays IPO to Next Year . Sprinklr Acquiring to take on Big Brands . Infor Accumulates ERP Providers to Build an Empire . Royole Corporation Flexes its Way into the Club . Rong360.com Joins the Club . Stripe’s Skyrocketing Valuation . Hulu Gears up to Stream Cable . Nutanix Delivers Upbeat Performance, Stock Still Down . Procore Joins the Club . JetSmarter Flies Into the Club . Opendoor Labs Opens the Door to the Club . Neo Technology Takes Databases to the Next Level . Kabam Struggles to Stay Alive . Careem is the Latest Middle East Unicorn . Huochebang is the Uber of Trucks in China . SimpliVity Exits in HPE's Arms . Kendra Scott Shows that Women CAN Build Unicorns . Zhihu Imitates Quora to Build a Valuation Without Revenue Company . Putting Flipkart's Struggles in Perspective . BlackLine Continues to Grow Post IPO . Global Switch Wants to be Leader in Data Centers . AppDynamics Sold Before IPO