From Wired:
Believe It: Co-Working Space Startup WeWork Is Now Worth $5B
WeWork, the New York City-based startup that rents office space to entrepreneurs across the country, has just raised a $355 million round of funding. The deal values the company at a whopping $5 billion, according to The Wall Street Journal.
It’s a steep price for what is essentially an office leasing company. But WeWork’s business model, which combines real estate with technology, plays into the “sharing economy” trend that has captivated investors in recent years, thanks to hit companies like Uber and Airbnb. Both companies infused established industries (car services and vacation rentals) with a high tech touch, and as a result, both companies have garnered valuations far beyond their established predecessors (taxi and limo services and hotels). And so it goes with WeWork.
In addition to its massive physical footprint, which includes spaces in eight cities, across three countries, with more on the way, WeWork also recently debuted its own social network, called WeWork Commons. It’s similar to LinkedIn, in that it’s a business networking site, but it focuses on people in the earliest stages of business, offering members additional perks like access to office space, discounted services, and local events.
As Kakul Srivastava, WeWork’s chief product officer, told WIRED when WeWork Commons launched, the goal is to accommodate all the people who fill up the waiting lists for WeWork’s co-working spaces. “We literally cannot build our physical space fast enough,” she said. “We got the feeling that there is much larger demand than we could possibly serve doing business as usual.”
Now, however, WeWork has a lot more money to build a lot more office space too. “We happen to need buildings just like Uber happens to need cars, just like Airbnb happens to need apartments,” WeWork co-founder Adam Neumann told the Journal.
But WeWork’s approach is substantially riskier than Uber’s or Airbnb’s. Unlike either of those companies, which essentially act as marketplaces for independent drivers and home owners, WeWork leases all the physical space, itself, and for now, that’s working out well for the company. Thanks to a cushy investing environment for startups, many of the entrepreneurs who occupy WeWork’s spaces are capable of raising the money to afford these high end office spaces....MORE
