Entrepreneurs
Inside WeWork’s $20B Valuation: Is It Really Worth It?
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.
A recession can be a challenging time, but it can also present opportunities for investors to make smart investment decisions.
During a recession, certain industries tend to perform better than others, and identifying these opportunities can be the key to success.
Here are the top 10 investment opportunities to capitalize on during a recession:
1. Defensive Stocks
Defensive stocks are those that tend to perform well EVEN during economic downturns.
These include companies that provide essential goods and services, such as healthcare, utilities, and consumer staples.
Defensive stocks may not offer the highest returns, but they can provide stability and protection during a recession.
Defensive stocks include Johnson & Johnson, Procter & Gamble, PepsiCo, and Walmart, among others. (You can buy them all inside the NYCE app.)
2. Gold
Gold is often seen as a safe haven during times of economic uncertainty.
As a tangible asset, it can provide a hedge against inflation and currency fluctuations. During a recession, the price of gold may rise as investors seek a safe haven for their money.
READ: 3 Ways To Invest In Gold (In 3 Minutes Or Less)
3. Real Estate
Real estate can be a good investment opportunity during a recession. Especially if you are looking for a long-term investment. (Hence why NYCE exists.)
While property values may dip during a recession, they tend to recover over time. In addition, rental properties can provide a steady stream of income, even during a recession.
After all: Real estate has created more millionaires than any other asset class.
4. High-Quality Bonds
High-quality bonds, such as U.S. Treasury bonds, can be a safe investment during a recession.
These bonds are backed by the full faith and credit of the U.S. government, which makes them less risky than other types of bonds. (Though this has become less safe today than in the past.)
They may not offer the highest returns, but they can provide stability and protection during a recession.
5. Consumer Discretionary Stocks
Consumer discretionary stocks are those that are tied to consumer spending, such as retail, travel, and entertainment companies.
During a recession, these stocks may suffer as consumers cut back on non-essential spending.
However, if you believe that the economy will recover, investing in consumer discretionary stocks can be a good bet.
6. Healthcare Stocks
Healthcare stocks tend to perform well even during economic downturns, as people still need healthcare services regardless of the state of the economy.
In addition, the aging population in many countries is driving demand for healthcare services, which can provide long-term growth opportunities for investors.
7. Technology Stocks
Technology stocks can be a good investment opportunity during a recession, as many companies in this sector have strong balance sheets and cash reserves.
In addition, the shift towards remote work and online shopping during the pandemic has increased demand for technology products and services.
8. Emerging Markets
Emerging markets can be a good investment opportunity during a recession, as these countries may be less affected by the economic downturn than developed countries.
In addition, emerging markets often have higher growth rates than developed countries, which can provide long-term growth opportunities for investors.
9. Dividend Stocks
Dividend stocks can be a good investment opportunity during a recession, as they provide a steady stream of income even during tough economic times.
Look for companies with a history of paying dividends and a strong balance sheet.
10. Cash
Finally, cash can be a good investment during a recession, as it provides flexibility and liquidity. Having cash on hand can allow you to take advantage of investment opportunities as they arise.
In conclusion, while a recession can be a challenging time for investors, it can also present opportunities for smart investment decisions.
By identifying the top investment opportunities during a recession, you can position yourself for long-term success.
Entrepreneurs
From Zero to Millionaire: How 9-5 Marketing Guy Made A Fortune Selling Pet Rocks As A Joke (1)
No BS—this is actually a real story.
The pet rock—a seemingly ridiculous idea—became a sensation and made its creator, Gary Dahl, a millionaire in the 1970s.
Dahl, a marketing executive, came up with the idea as a joke during a conversation with friends.
He packaged rocks in a cardboard box with holes and called them “pet rocks,” complete with an instruction manual on how to care for them.
There was virtually no upfront investment, as the rocks themselves were free, and the packaging was inexpensive.
“It was a joke,” Dahl told ABC News years later. “It was a satire. It was fun. And it became an overnight success.”
The pet rocks became an instant hit, with Dahl selling over a million of them in six months.
LEARN: How to build a $100K side hustle in 1 hour.
He appeared on popular TV shows and even wrote a book about his success. The pet rock craze died down after a year, but Dahl had already made his fortune.
After the pet rock craze died down, Gary Dahl continued to work in marketing and advertising.
He also tried to launch other novelty products, such as “sand-breeding kits” and “mood rings,” but none of them achieved the same level of success as the pet rock.
“I think that’s one of the things that is wrong with business today. People are so serious, they forget to have fun,” Gary Dahl said.
The success of the pet rock shows that sometimes the most unconventional ideas can lead to great success.
Case Study: How A $49 Investment Could Make You $100K+ In 6 Months
Why Gary’s story matters to you…
The story of Gary Dahl and his pet rock is a testament to the power of thinking outside the box. Sometimes, it’s the seemingly ridiculous ideas that can lead to the biggest successes.
Dahl’s story is not only inspiring, but it’s also a reminder to keep a sense of humor and not take ourselves too seriously.
In business, it’s easy to get bogged down in strategy and analysis, but we should never forget the importance of creativity and fun.
The success of the pet rock is also a lesson in the power of marketing.
Dahl’s packaging and instruction manual turned a simple rock into a desirable product. It’s a reminder that sometimes it’s not the product itself that’s important, but how it’s presented to the world.
So if you’re feeling stuck in your business or just need a little inspiration, take a cue from Gary Dahl and his pet rock.
Keep an open mind, don’t be afraid to take risks, and don’t forget to have a little fun along the way.
Who knows…you might just come up with the next big thing.
About author:
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