It is in no way a judgment on whether the WeWork business model is viable. That only time can tell.
WeWork, at first sight, might seem a real estate company which primarily makes money by arbitraging from the spaces it rents from the landlord and what it charges to its tenants.
However, WeWork defines itself as space-as-a-service platform.
Source: WeWork Financial Statements
We have spent the last nine years building a founder-led, community company and executing on our vision of providing a better day at work for less.
More for less value proposition
The vision moves around a key long term goal of “providing a better day at work for less.”
Source: Claimed results delivered by WeWork to its members
When a new player comes to an existing industry, rather than playing according to existing rules, it can try to redefine them by expanding the boundaries of an existing industry. This is called a blue ocean strategy.
The aim of a blue ocean strategy is to create an uncontested market where competition is made irrelevant. In WeWork case, the company claims to move beyond the boundaries of a traditional real estate company.
Indeed, WeWork is neither a real estate company nor a service company or a co-working space.
That is a hybrid between those two industries and it tries to leverage on a platform business model.
The company highlighted:
We envision a future in which our global platform is a one-stop shop where members have access to all of the products and services they need to enable them to work, live and grow.
Three concepts that jump right away from the articulation of its vision:
- And community
Let me explain why those are important concepts and what they imply from the business modeling standpoint.
First, when WeWork highlights the concept “platform” the company is claiming to be way more than a real estate company and it is claiming to be able to use technology and data to enhance its business model.
Indeed, platform business models are most of all driven by three things:
- Users’ data or any sort of data which the platform can capture which is proprietary
- A technology able to analyze, and leverage that data to create a competitive advantage for itself or for its members
- Network effects, as usually, this implies strong scalability. Even for a company that relies mostly on managing physical spaces, claiming to build a platform business model makes it prone to scalability
From the business standpoint claiming to have a platform business model is also a way to enhance its valuation. In fact, today investors and venture capitalists mostly finance platform businesses, that have high growth potential.
The meaning of “members” to understand the revenue generation model
And to make this model work out, the company had to build a set of services and products around this subscription model, which should enable the companies that rent space with WeWork to have a sutained advantage.
Thus, in theory, a member which becomes part of WeWork is not just buying real estate space, but it is about a set of additional services that justify a membership model.
As WeWork highlighted in its financial statements:
Our global platform provides members with flexible access to beautiful spaces, a culture of inclusivity and the energy of an inspired community, all connected by our extensive technology infrastructure.
WeWork has to leverage its platform business model to provide “beautiful spaces” to help members build communities.
WeWork is a community-building company that might leverage data and technology, rather than a real estate company.
As WeWork explained further in its financial statements:
We have begun to build a suite of We Company offerings and develop a network of third-party partners to address our members’ needs.
With the support of our global footprint, our partners are presented with a unique opportunity to reach new customers and efficiently expand their businesses to new markets. While we are in the early stages of our platform journey, we are excited by the initial results and inspired by the potential.
The company highlights how the physical spaces are just a foundation to a business model that leverages on community building and a set of services for companies part of their network:
Our physical spaces are the foundation of our global platform and allow us to deliver differentiated products and services as we scale, further realizing our vision to deliver a better day at work for less.
WeWork mission statement dissected
We are a community company committed to maximum global impact.
Beyond the buzz, we can extract a few key concepts which help us emphasize its business model.
First, “elevate the world’s consciousness” which might sound more like a religious credo, rather than the foundation of a company worth billions.
That can be justified by the fact that WeWork is navigating in unknown waters.
Therefore, it is trying to create a culture around its business model. Sounding more like a company looking to proselytize than a business trying to make money.
Yet do not be fooled, WeWork is a business and as such it has to make sense from the financial standpoint.
Value proposition from the customers’ standpoint
From WeWork S-1 form, we can extract some of the case studies showcased, that in some way can help us understand what members value about WeWork platform.
It is important to highlight that those cases are cherry-picked, thus not representative of all the customers that the company has. However, it might be a useful exercise to understand some of the elements that members find valuable. And the WeWork identifies with.
I’ve selected three examples.
Source: WeWork S-1 Form
One common theme that seems to come up from these case studies is the flexibility of the solution that enables companies that are investing in growing quickly their teams to rely on WeWork as a partner that helps them keep their flexibility.
This means those members are looking for cheaper ways to scale while trying to manage the culture of their growing organization.
On the one hand, vision and mission help founders and key stakeholders to align around the same objectives and they help create a unique identity. Thus, working as the propeller for the company’s culture.
In WeWork’s case, it is interesting to notice how the mission seems to be plenty of buzzwords and grandiose claims. That might be justified by the fact that the company is indeed trying to open up a new market space, as as such it is trying more to proselytize.
On the other hand, WeWork is a business and a company which at the time of this writing is valued billions. If WeWork business model will prove viable that is something we’ll see in the coming years.
For now, we analyzed its vision and mission to emphasize how from those simple statements you can understand the perception that a company has of itself. The kind of identifies that it is trying to create internally. And also how the company wants to be perceived by outsiders.
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