Business Model of WeWork
Have you heard about shared workspace? If yes, I am sure you have heard about WeWork as well. If not, don't worry, I will tell you all about it in this article. This article will tell you about the business model of WeWork and will try to make you understand why WeWork is valued at $47 bn, the fourth most valuable startup.
|WeWork Business Model|
WeWork was found by Miguel McKelvey and Adam Neumann in 2010. It offers shared workspaces for technology startup subculture communities, and services for entrepreneurs, freelancers, startups, small businesses and large enterprises. WeWork basically offers Real estate as a service. We work operates in 125 cities, 6 of them are in India( Bangalore, Gurugram, Hyderabad, Mumbai, Noida, and Pune). We work is funded by several investors, Softbank, Honey Capital and legend holding are most prominent of them.
Here is the detailed analysis of the business model of WeWork.
1. The target customer segments of WeWork are
- Startups who want functional working space without investing a lot of money in real estate
- Entrepreneurs who seek working space and guidance for refining their ideas and help their startup fly
- Established organisations which want to expand their capacity, or want to move into a new geography
2. The Value Proposition
- Accessibility enhancement
- Cost reduction for new startups
- Convenience: You get all the amenities
- Most refreshing Working space with excellent office amenities
- Office space on demand
- Chilling Space at work
- Flexibility in multiple aspects
3. How WeWork and customers get in touch with each other: Channels
- WeWork Communicates with the customers via Website and social media for awareness
- Details of distinctive offerings are available on the Website, and one can get more information on a call with customer care
- One "can check all the plans on the website, and you have to select a time to visit the workspace as WeWork believes "WeWork is best experienced in person."
4. Customer Relationships
- Currently, We Work business model is new in India, and their goal is customer acquisition as of now. The startup culture is developing in the country, and this is the best time for customer acquisition
- WeWork gives personal assistance in the sales process. They help customer online, on call as well as in person.
- WeWork offers entrepreneurs to join communities where learning can be done, the experts are there to help budding startups
5. Wherefrom WeWork makes money: Revenue Streams
- WeWork's revenue stream is Recurring revenue stream because they charge customers monthly. So each of the retained customers keeps paying them rental to avail the services.
- The revenue comes mainly in the form of the usage fee, subscription fee, and renting fees.
- The customer has to pay rent prima-facie to avail any of the services. The rents for space are charged based on the location of the office in the city, the size of office space, personal space, shared space, fixed space, the amenities available in the office building, etc.
- Other sources of revenue are usage fees, WeWork offers conference rooms, meeting rooms, and mailing services. These services are chargeable, and some usage of these services are given free of cost or as a bundle in the renting fees, but after your free usage is over, you can avail these services by paying a usage fee.
- All the pricing used by WeWork is fixed menu pricing, everything has predefined price. The prices are product feature dependent, so prices change according to the quality of workspace and quantity of workspace required.
6. Key Resources
- It is a capital intensive business. The physical resources needed is very high for WeWork's business model.
- The physical resource includes Office Buildings, office stationery and equipment
- Office spaces are purchased in the most exquisite location in the city, and these spaces are costly. The buildings are rethought and redesigned to meet the requirements of modern startup culture.
- WeWork does not require a lot of Human Resource's to run its business model
7. Key Activities to keep the business running
- Designing the workplace using technology to get the best layout
- Leasing the buildings, renovating, providing workspace as per the need of customers
- Problem-solving activities are major activities. WeWork leases or buys buildings and create awesome workspaces in those buildings. Sell these workspaces on a subscription basis.
8. Key Partnerships
- Brokers, Landlords, and designers
- Multinational organisations who want the coolest workspace designs they become WeWok's enterprise clients. Some partners are Adidas, Microsoft, Facebook, Black Rock, Samsung etc.
- Event Planners partner with WeWork to organise events at the most happening workspace with lots of energetic people
9. Cost Structure
- The cost structure is of WeWork is value-driven, they are focusing on delivering the best workspaces at the best locations. Currently, WeWork is not much worried about the cost implications and is focusing on value creation.
- Primarily real estate costs are the major costs
- Designing and maintaining the workspace cost consuming activities
This was the business model of WeWork as analysed by Business Gamut. We hope you understood how one of the most popular startups is doing the business and is staying the apple of the eyes of big investors.
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