WeWork business model, claims to leverage on the space-as-as-service membership. It consists of a set of services meant to sustain the growth of the companies part of the membership model, consisting of four primary tiers: standard, configured, on-demand and Powered by We (Custom).

This model helps WeWork achieve its vision and mission.

How the WeWork Platform is structured around the space-as-a-service model, where members get access to a set of services that space from Insurance, to Education, Technology, Lifestyle and more. (Source: WeWork S-1)

In other words, beyond the physical locations offered by the company, WeWork also offers a set of services meant to enable members to scale their teams.

Thus, WeWork presumably leverages on technology to build a platform able to offer a set of services to deliver what the company claims as “a premium experience to our members at a lower price relative to traditional alternatives.”

Thus, the core of the revenue model is a membership, and on top of that a set of ancillary, value-added products and services.

WeWork claimed savings for its members, (Source: WeWork S-1 form)

As the company might leverage a growing number of members, it will be able to develop a set of products and services on top of those memberships. Thus, using the membership as an entry point for customers to build on top of it a sort of add-on model with more and more services.

The membership model WeWork launched revolves around four primary membership tiers:

• Standard
• Configured
• On-demand
• Powered by We (custom)

WeWork members’ tiers based on its space as a service model (Source: WeWork S-1 form)

KPIs for WeWork space-as-a-service model

WeWork membership revenues (Source: WeWork S-1 form)

As the WeWork space-as-a-service model is based on a subscription, membership, which implies a continuous relationship with its customers, that implies also a set of metrics that enable the company to track, on the one hand, its ability to reach the full capability of the buildings.

And on the other hand to measure and track the members’ growth and sustainability.

Workstation Capacity

As specified by WeWork “workstation capacity represents the estimated number of workstations available at open WeWork locations.“

This metric helps the company asses the capacity to sell membership on the platform.

Memberships

As specified by WeWork “memberships are the cumulative number of WeWork memberships and on-demand memberships.” Powered by We service is comprised within the other revenues, as explained below.

Quick glance at Powered by We offering

Powered by We is a tier which comprises a set of customized services around the core membership, such as:

• Design services
• Construction and delivery capabilities
• Cost savings in the supply chain, from furniture to supplies;  
• Onsite community team to energize work environments;
• Enterprise-ready technologies, comprising also workplace insights dashboards

Enterprise Membership Percentage

Enterprise memberships represent memberships attributable to enterprise members, which are organizations with 500 or more full-time employees.

As of June 1, 2019, that represented 40 % of WeWork memberships revenues.

Those enterprise members are extremely important because they sign agreements with longer-term commitments for multiple solutions across our global platform, which enhances our revenue visibility.

Run-Rate Revenue

Run-rate revenue for a given period represents our revenue recognized in accordance with GAAP for the last month of such period multiplied by 12. We view run-rate revenue as an operating metric, and it is not intended to be and should not be used as a replacement for or forecast of revenue reported in accordance with GAAP.

Committed Revenue Backlog

Committed revenue backlog as of a given date represents total non-cancelable contractual commitments, net of discounts, remaining under agreements entered into as of such date, which we expect will be recognized as revenue subsequent to such date.

Contribution Margin

We define “contribution margin including non-cash GAAP straight-line lease cost” as membership and service revenue less location operating expenses (both as determined and reported in accordance with GAAP), adjusted to exclude non-cash stock-based compensation expense included in location operating expenses.

Key takeaways

WeWork pioneered a model called space-as-a-service. Where the traditional real estate management company offers basic services for common area maintenance and a few other things.

WeWork leverages on its platform business model to offer a set of services which range from healthcare to lifestyle to help the organizations part of its membership program to scale while keeping the real estate costs relatively low.

Business resources:

• What Is a Business Model? 30 Successful Types of Business Models You Need to Know
• The Complete Guide To Business Development
• Business Strategy: Definition, Examples, And Case Studies
• What Is a Business Model Canvas? Business Model Canvas Explained
• Blitzscaling Business Model Innovation Canvas In A Nutshell
• What Is a Value Proposition? Value Proposition Canvas Explained
• What Is a Lean Startup Canvas? Lean Startup Canvas Explained
• What Is Market Segmentation? the Ultimate Guide to Market Segmentation
• Marketing Strategy: Definition, Types, And Examples
• Marketing vs. Sales: How to Use Sales Processes to Grow Your Business
• How To Write A Mission Statement
• What is Growth Hacking?
• Growth Hacking Canvas: A Glance At The Tools To Generate Growth Ideas

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