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What's your business model?

16340

How does WeWork make money?

The coworking company rents out desk space (and now living space) to its members

Innovation series by Ronny Kerr
October 21, 2016
Short URL: http://vator.tv/n/47b8

Editor's note: Our Post Seed VC event is coming up on Dec. 1 in San Francisco. We'll have Chamath Palihapitiya (Founder of Social Capital), Aydin Senkut (Felicis), Jeff Lawson (Founder & CEO, Twilio) and more. Check out the full lineup and register for tickets before they jump! Post Seed is brought to you by Vator, Bullpen Capital, and Haystack.

Capitalizing on the rise of freelancers, entrepreneurs, and other less traditional worker-types, WeWork offers hip, furnished office space to people who sign up for the monthly membership.

Generally, WeWork inks long-term leases for a couple floors of commercial space in buildings, though it has purchased one of its locations outright. It then essentially sub-leases the spaces to tenants, or members, who can access desks and a wide variety of amenities in the spaces.

Amenities include everything from the essential (including Ethernet and WiFi, desks and chairs, printers) to the nice-to-have (including free coffee, snacks, and beer). Community managers at each of the spaces also actively plan social events like happy hours and professional lectures.

Here are the four plans offered:

  • We Membership ($45 per month): This entry-level plan gives the member two credits per month that can be used to book conference rooms or workspaces for a day. Accessing locations costs $50 per day under this plan.
  • Hot Desk (starting at $220 per month): This plan allows the member to access any available desk in a common area at a single location on a first come, first served basis. To access desks at a different location, this member pays $25 per day.
  • Dedicated Desk (starting at $350 per month): This plan grants the member their own desk, chair, and lockable filing cabinet at a shared space in one location. As in the previous plan, the member would pay $25 per day to access other locations.
  • Private Office (starting at $450 per month): This top-tier plan provides a fully furnished, private, lockable office space to the member. As in the previous plans, the member pays $25 per day to access other locations.

There are other minor differences between the plans. For example, the top two tiers come with access to printers and also offer a higher number of credits, which can be used for reserving conference rooms, or workspaces.

Earlier this year, WeWork expanded from its core business of renting out office space to also renting out living spaces. The new service, called WeLive, offers housing on a month-to-month basis. Inspired by the WeWork model, the units available are set within communal and collaborative living environments, including shared living rooms, kitchens, and bathrooms.

At the Lower Manhattan location in New York City, private bedrooms start at $1,900 per person while studios start at $3,050. At the Crystal City location in Washington, D.C., private bedrooms start at $1,200 per person while studios start at $1,640.

WeWork has ascended as one of the top ten most valuable private companies worldwide and the fith most valuable based in the U.S. The company has raised approximately $1.7 billion and is now valued at $16.9 billion, according to CB Insights.

As of its last funding round—a $260 million Series F secured earlier this month—WeWork operates 98 co-working spaces in 32 cities across the U.S., Israel, the U.K., and a dozen other countries.


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