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Inside WeWork’s $20B Valuation: Is It Really Worth It?

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In 2010, WeWork opened their first space in New York City. Eight years, and many billions later, WeWork is now the most hyped startup in the world.

By definition, WeWork’s model is ridiculously straightforward. WeWork is an office leasing company…that doesn’t own any properties.

What WeWork does is this:

They take up big commercial leases. They then decorate the space in their signature style with beer and coffee on tap. From there, WeWork rents out the same office space to freelancers, startups and smaller businesses in smaller chunks and month-to-month.

Despite not holding any assets initially (though that’s changing), WeWork has grown at a frenetic pace nonetheless. From nearly $1M in seed funding back in 2011, WeWork jumped to $1.5B three years later before peaking at the huge current $20B valuation.

By comparison, major property owner REIT SL Green — which actually owns real estate — is valued at $8.9B.

This insane level of growth has led to industry chatter that WeWork could be overvalued. In fact, others say their real valuation figure is $3B, based on revenue metrics of competitors like IWG and Regus.

Not to mention this: WeWork isn’t even profitable.

To make some sort of sense of all this, let’s take a look at their model, what they’re up to, and what’s in store for the coworking giant.

Creating efficient ecosystems

No longer a new entrant to the shared office space economy, WeWork aims to be the go-to platform for businesses.

Or as they say, in the WeWork Manifesto: First, Office Space. Next, the World.”

Rather than just offering space, WeWork’s business model enables startups to focus on driving their business through the community of startups in their spaces.

One of its primary goals is to create an ecosystem that provides a range of services—right from free drinks to conference rooms and wireless services.

From the standpoint of managing space, WeWork has an efficiency that would make any slumlord green with envy (and that’s a compliment): WeWork has one workstation for every 50 square feet.

Phenomenal growth

Crammed up space aside—the companies seem to like working side-by-side, WeWork’s disruptive model has played host to over 250,000 members across 22 countries.

Most analysts remain upbeat about its momentum, as well. Especially with its plans to open almost 400 offices across 27 countries in 2019. A move that will double the number of members year-over-year.

Co-working to ‘co-living’

The next business vertical is the co-living one with their WeLive concept. Their first one opened in 2016 right above an existing WeWork office on 110 Wall Street in New York City.

With WeLive, WeWork offers furnished, move-in apartments with a similar ethos to the office space—just show up with your bag and you’re ready to live.

The rents for these apartments will be inclusive of internet connection and cleaning services, with similar short-term month-to-month leases.

The company’s “WeLive” business model can be a high growth segment for WeWork. The co-living vertical might offset any decline in demand from commercial businesses.

But are they profitable, though?!

No. We mentioned that. But they don’t necessarily want to be. And they are hacking their top line revenue substantially.

An increase in occupancy rates has led WeWork to squeeze more revenue out of existing markets. Rapid expansion also played a major role in revenue growth.

Strategic choice or not, WeWork continues to book losses and burn cash. In the first six months of 2018, WeWork posted losses of $723M on revenue of $764M.

This does not concern investors as they are looking at the huge market opportunity available for WeWork. Japan-based Softbank, one of the largest investors in WeWork, has invested a whopping $4.4B in the company.

(That’s another story we will tell another time. Including how CEO Adam Neumann rode with the Softbank boss and signed a $3B investment deal on a digital cocktail napkin right there.)

The money backers expect WeWork’s valuation to reach $35B in the next round of funding.

This would put WeWork above other unicorns including Airbnb ($31B) and SpaceX (approx. $22B), making it the second-most valuable start-up in the United States behind Uber.

ENTREPRENEURS

INFOGRAPHIC: What You Can Learn From Super Investor Warren Buffett

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With a net worth that crosses a whopping $84B, it’s hard to question Warren Buffett’s investment moves.

Here’s how he grew $120 to a massive investment empire, worth tens of billions.

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ENTREPRENEURS

[VIDEO] Tony Robbins: Here’s How To Invest Before You’re 30

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As a millennial in today’s consumer-driven world, budgeting and managing your paychecks can be tricky.

Thinking like a consumer and not the owner of the product can prove to be a big difference to building your investments. Instead of owning the latest Apple device, you’ve got to target owning a part of Apple, and this simple move can be the first step towards becoming a better manager of your wealth.

Here are two incredibly important money habits to foster that millionaire author Tony Robbins banks on (and you cannot afford to miss them).

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BREAKING: WealthLAB Co-Founder Makes Forbes 30 Under 30 List

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Forbes Africa just unveiled its fifth annual “30 under 30” list, highlighting the top young entrepreneurs, innovators and gamechangers.

And guess what: WealthLAB co-founder Odunayo Eweniyi is on it. See the full Forbes list here.

Alongside co-founders Joshua Chibueze, 26, and Somto Ifezue, 28, Odunayo built PiggyVest, a fintech app that’s helped over 230,000 African Millennials invest and save over $15M. 

“PiggyVest was born out of the need to help people create a sustainable means of saving,” Odunayo told Forbes. PiggyVest users currently earn 10-13% on savings.

Just last May, PiggyVest—then known as Piggybank—closed a seed round, raising $1.1M. In doing so, Odunayo became one of under 30 Black women to raise over $1M in startup capital.

While the app started as a digital piggy bank for savers, Odunayo told TechCrunch the goal was to become a “financial warehouse” where other financial providers “can plug in their services for [PiggyVest] users.”

That vision recently came to life with the launch a new investment feature called “Investify,” which pays around 25% depending on the investment opportunity.

The Forbes distinction comes on the heels of an impressive recent run of awards for the young entrepreneur.

In March, Odunayo earned an award from Forbes as one of the top young “wealth creators” in Africa. Shortly after, Odunayo was named 2019 SME Entrepreneur of the Year in Wealth and Society in West Africa.

Prior to founding PiggyVest, Odunayo co-founded PushCV, the largest job database in Africa.

“I’ve always wanted to make an impact. I didn’t know how I would do it, but i felt a compulsion to.”Odunayo told Black Enterprise in a recent interview.

In addition to PiggyVest, Odunayo’s co-founded WealthLAB (yes, this WealthLAB) with NYC-based investor-entrepreneur Philip Michael. The two also invest in women —and minority run startups in the US.

Forbes Africa named 120 entrepreneurs across four categories: trade, technology, innovation, and sport. “I’m honored but I’m just ready to work,” Odunayo said when asked about the award. “I’m already thinking about what’s next.”

Well, alright then. Hit her up and congratulate her on IG here! 

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