this week on case studies with the biz
doc it’s we work the twenty billion
dollar work space sharing company you’ve
probably never heard of where do they
come from and how did they get there
this week we work I’m gonna do three
things this week on the case study the
first I’m gonna take you on a walk
through the history where did they come
from
second I’m gonna show you where they’re
going at least what they say and what I
think by the way along the way if you’ve
got some thoughts leave them in the
comments I love to read them and
understand what you’re thinking and also
if you get ideas or future case studies
let me know that too and the third thing
I’m gonna go to i’m gonna go to why it
works and lessons for you you don’t have
to be a twenty billion startup to get
some really important lessons from the
guys that we work let’s dive in it
starts in 2008 in new york city Adam
Newman opens a baby clothes company he
had served time in the Israeli military
and the Navy as a matter of fact and it
come to New York to start a business
he’s in a building that had a lot of
vacancy in it apparently and he runs
into McGill McKelvey and McGill was an
architect together they get together and
they’re thinking about this vacant space
how they could do some sort of sharing
with it and they were conceiving
business ideas the bright idea would be
green desk that they founded in 2008 to
share well a couple years later the name
changes do we work and they’re off and
running and once they’re off and running
and they knew they had something going
what do you do you raise money from
qualified investors it started with a
million dollars that was raised toward
the end of 2012 and they had about four
of these fledgling locations in New York
City now shortly thereafter they raised
about six point nine and this was all
the seed round now I have a hard time
cowan six point nine million dollars
seed but what it means is some people
that had money were really believing in
this and even though it wasn’t the
official first venture capital round
people thought this was going to go and
they had four locations up and running
to prove it and where do people need
space places like LA in San Francisco
where you have little startup companies
little production companies and media a
lot of people that need office space for
a short time but they’re really not into
paying some of the larger office space
companies the kind of dollars per square
foot well we work was focusing in the
kind
spaces it would be tailored to those
people so it’s a beautiful marriage of
price market and concept they open one
in LA one in San Francisco in the
beginning and guess what San Francisco’s
down the street from a lot of money in
Silicon Valley and they raised seventeen
million dollars series a and we work is
officially off and running they began to
fill these locations and one year later
they raised forty million dollars to
open in Seattle now what’s interesting
here you say gosh how’d they go from
raising this to raising this I mean
that’s like over double the amount of
money what it was showing you is it was
scaling and it was working and in the
real-estate business you need capital to
start and so capital is what they were
raising a year later they raised a
hundred and fifty million dollars now
what this is a clear sign to me and
everything I’ve read in the research
I’ve done on it shows that the venture
capital community was like this is
really working this is working and a
half and when you think about things
that scale and I’m gonna get back to
this in a minute simple concept scale
and they tend to scale fast but you have
to go fast because simple concept means
your defense ability is also low in
other words I could go out and copy you
if I had enough money started buying
buildings and doing things like you so
you have to work fast to entrench your
brand and start getting market share and
that takes money to go fast but the
venture capital community like with
Airbnb and uber and why don’t you go
down and look at the links below and
check out those old case studies and you
will see how those simple concepts also
scaled very very quickly
anyway they raised a hundred and fifty
million dollars 2014 comes along and
they’re opening in DC and in London this
tells you that this is scaling not just
in the US but in the tech hubs and the
startup hubs that didn’t have to be
fully tech how fast was momentum
building up well by the end of fourteen
they raised another three hundred and
fifty five million dollars now what
happens along the way now you’ve got
these two guys that came from baby
clothes and an architect and Israeli
military smart guys with good
disciplines but the money that’s
investing in them is serious and big
money they’re looking for adults to be
in the room that’s not to offend you
founders and CEOs but there’s time soon
you need to go out and get adults
especially when you’re
talking nine-digit fundraising well who
did they go get they went out and got
the CFO of Time Warner he came on as
president and CEO Oh
now the investment money says we’ve got
founders we’ve got a president who
really is experienced he was a CFO of
Time Warner a multi-billion dollar
company and now we work is about to
become a multi-billion dollar company in
terms of its own valuation so those are
the milestones you have to look out for
as an entrepreneur and sometimes it’s
time to bring in an outsider you can
trust because it makes the investors
happy and actually it’s going to help
you go fast too
shortly after bringing on the CFO they
hit 54 locations now they have more than
50 locations that’s a lot of leases and
a lot of property to be keeping track of
and again they’ve strengthened their
team to do so so much so that in the
spring of 2016 they raised 434 million
dollars at a 16 billion dollar valuation
now hang on a second that’s from 2010
2008 to 2016 that’s barely six to eight
years and you already have a 16 billion
dollar valuation which makes you more
valuable than Twitter on the stock
market today and there’s only one word
for that and that is damn that is a big
valuation in a short amount of time but
it shows you the momentum that was going
but guess what we work is just getting
warmed up
at the end of 17 they raise another 690
million and who shows up next
Softbank and Masayoshi Son the
incredible investor from the mammoth
mammoth Bank private equity firm that is
Softbank they invested 4.4 billion
dollars 3 billion was pretty much direct
into Softbank along with purchasing some
shares from some early investors and
then 1.4 billion was to set up we work
Japan and we work China and they’ve set
up some corporate structures and some
jayvees there but this is now truly a
global play with one of the preeminent
global investors on the planet
Masayoshi Son all of that brings us to
today we are exactly halfway through
2018 and this year they raised a debt
line of 700 million dollars now don’t be
too alarmed by that because once you’ve
raised this kind of capital you’re
usually driving things it
that you can afford to pay the interest
and the payments on that debt and last
year at the end of 17 they had nine
hundred million dollars in revenue
two hundred thousand members those are
people like you and me the total number
of bodies that are inside their rented
workspaces and two hundred buildings in
the United States that is pretty amazing
and so you can see people investing in
this valuation this is not Twitter
without a business model this is a
company with a real business model
that’s incredibly simple building people
temporary rent build the workspace out
and put things in place so that you and
I can use the workspace and focus on
startups and companies that want to use
a little bit more styled location than
just a bland basic office but scaling is
important but let’s take a look at
what’s happening scaling is as you get
bigger you drive your costs down let’s
see where that is showing up in facts
and figures now they don’t like to talk
about their financials much so we have
to just pull out of them what we can but
at the early part of 2016 they indicated
they were spending about fourteen point
one thousand dollars per desk in other
words that was their investment per desk
that would show up in one of their
locations a year later they said that
they had driven that down to ninety five
hundred dollars per desk
so is there driving the cost down their
driving scale into the business so as
they continue to get large this is one
of the metrics that if they think about
an IPO that I’m going to be looking at
what’s your cost per desk you presented
some figures that were pretty compelling
were those true and where are you today
if you can continue to drive this now
you’re scaling the business additionally
they got together a Zen desk we all know
at Zen desk is very helpful set of tools
they made a deal with Zen desk where we
work services would be a little
subsidiary that would resell Zen decks
products additionally there was another
small venture that they built which was
we live New York which is kind of a live
and work space so they’re focusing on
the kind of things that the services
that the startups are going to need
workspace places to live and services
through Zendesk
that are
be right in front of you so where are
they headed well one of the things to
look at a business like this is it’s
very capital intensive that’s why
there’s such large numbers that begin
with a B that have been invested in the
business it said based on things that
the company said these are the best
estimates we have that they’re running
about a two billion dollar a year
expense clip on 18 billion dollars of
total lease value in other words they’ve
signed leases that are gonna cost them
18 billion dollars over the next so many
years that’s averaging out at about 2
billion a year
in rent expenses well remember you have
to get a building you have to dress it
up you have to put the facilities in
place before the first startup with 10
guys or girls can come walking in and
rent it so it is capital intensive on
the front end but the model has shown
that it’s work and again if it’s really
simple you can scale it but it also can
be replicated by others so you have to
go fast and stake your claim to the
market share however they’re saying that
they’re gonna be able to convert on the
revenue remember I mentioned that they
had two hundred thousand total members
right now well they’re saying by the end
of 2019 they hope to have four hundred
thousand total members in place working
at their locations and be running at
about a two point three billion dollar
clip at the end of 2019 that’s not two
point three billion dollars of revenue
in 2019 that is a run rate of two point
three billion dollars as of the end of
nineteen meaning going forward in 2020
they think that run rate and the revenue
is going to be in the mid-to billion
dollar range that’s phenomenal growth
when you think of where they came from
now let’s go take a look at why it works
and why it’s grown so fast
uber and Airbnb were simple concepts
just like we work a simple concept
except that we work has to dress up the
location ooh BRR and Airbnb don’t here’s
my house this is what it looks like you
can rent it for a day here’s my car I
qualify get inspected by uber it’s clean
it’s in good condition it qualifies I’m
a good driver I can now rent my car by
making myself available in the uber app
find out where you are pick you up take
you to where you’re going we trade some
money and a revenue share to uber very
similar to how it works with Airbnb
now what you have with we work you do
have to invest that money and it’s where
I talked about that they have very
positive effects of scaling and the
amount of dollars are spending first
they have to lease everything then they
have to outfit it then they rent it to
you and me but really it’s amazingly
simple concept so you don’t have to
invent the next high tech company to
find a really great concept that can
have some legs and go forward something
simple that scales like we work and you
could be off and running I happen to
like this company and I’m rooting for
them because I think some of the other
office sharing and office rental
companies they don’t get what startups
need open spaces good facilities things
that have a vibe to them we work gets it
and makes great space for startups
because they are a start-up they may be
eight years old but they’re sticking
with their youthful roots and they know
where they’re going speaking of going in
the right direction go to my Instagram
account and please look for the poll and
let us know what company you think we
should cover next
I love taking suggestions for case
studies it doesn’t have to be tech it
can be something simple like renting out
off the space but I want to know what
you think leave a comment below check
out that pole over on Instagram I’m
listening to you remember here at value
teaming we’re on a mission to a million
subscribers and when we get there it’ll
be the first annual value tainment
conference featuring Patrick bet David
yours truly the biz doc and other people
to make you better your company better
and the people that you touch with that
company better still until next time I’m
Tom Miller with the biz doc and I hope I left you better than I found you
doc it’s we work the twenty billion
dollar work space sharing company you’ve
probably never heard of where do they
come from and how did they get there
this week we work I’m gonna do three
things this week on the case study the
first I’m gonna take you on a walk
through the history where did they come
from
second I’m gonna show you where they’re
going at least what they say and what I
think by the way along the way if you’ve
got some thoughts leave them in the
comments I love to read them and
understand what you’re thinking and also
if you get ideas or future case studies
let me know that too and the third thing
I’m gonna go to i’m gonna go to why it
works and lessons for you you don’t have
to be a twenty billion startup to get
some really important lessons from the
guys that we work let’s dive in it
starts in 2008 in new york city Adam
Newman opens a baby clothes company he
had served time in the Israeli military
and the Navy as a matter of fact and it
come to New York to start a business
he’s in a building that had a lot of
vacancy in it apparently and he runs
into McGill McKelvey and McGill was an
architect together they get together and
they’re thinking about this vacant space
how they could do some sort of sharing
with it and they were conceiving
business ideas the bright idea would be
green desk that they founded in 2008 to
share well a couple years later the name
changes do we work and they’re off and
running and once they’re off and running
and they knew they had something going
what do you do you raise money from
qualified investors it started with a
million dollars that was raised toward
the end of 2012 and they had about four
of these fledgling locations in New York
City now shortly thereafter they raised
about six point nine and this was all
the seed round now I have a hard time
cowan six point nine million dollars
seed but what it means is some people
that had money were really believing in
this and even though it wasn’t the
official first venture capital round
people thought this was going to go and
they had four locations up and running
to prove it and where do people need
space places like LA in San Francisco
where you have little startup companies
little production companies and media a
lot of people that need office space for
a short time but they’re really not into
paying some of the larger office space
companies the kind of dollars per square
foot well we work was focusing in the
kind
spaces it would be tailored to those
people so it’s a beautiful marriage of
price market and concept they open one
in LA one in San Francisco in the
beginning and guess what San Francisco’s
down the street from a lot of money in
Silicon Valley and they raised seventeen
million dollars series a and we work is
officially off and running they began to
fill these locations and one year later
they raised forty million dollars to
open in Seattle now what’s interesting
here you say gosh how’d they go from
raising this to raising this I mean
that’s like over double the amount of
money what it was showing you is it was
scaling and it was working and in the
real-estate business you need capital to
start and so capital is what they were
raising a year later they raised a
hundred and fifty million dollars now
what this is a clear sign to me and
everything I’ve read in the research
I’ve done on it shows that the venture
capital community was like this is
really working this is working and a
half and when you think about things
that scale and I’m gonna get back to
this in a minute simple concept scale
and they tend to scale fast but you have
to go fast because simple concept means
your defense ability is also low in
other words I could go out and copy you
if I had enough money started buying
buildings and doing things like you so
you have to work fast to entrench your
brand and start getting market share and
that takes money to go fast but the
venture capital community like with
Airbnb and uber and why don’t you go
down and look at the links below and
check out those old case studies and you
will see how those simple concepts also
scaled very very quickly
anyway they raised a hundred and fifty
million dollars 2014 comes along and
they’re opening in DC and in London this
tells you that this is scaling not just
in the US but in the tech hubs and the
startup hubs that didn’t have to be
fully tech how fast was momentum
building up well by the end of fourteen
they raised another three hundred and
fifty five million dollars now what
happens along the way now you’ve got
these two guys that came from baby
clothes and an architect and Israeli
military smart guys with good
disciplines but the money that’s
investing in them is serious and big
money they’re looking for adults to be
in the room that’s not to offend you
founders and CEOs but there’s time soon
you need to go out and get adults
especially when you’re
talking nine-digit fundraising well who
did they go get they went out and got
the CFO of Time Warner he came on as
president and CEO Oh
now the investment money says we’ve got
founders we’ve got a president who
really is experienced he was a CFO of
Time Warner a multi-billion dollar
company and now we work is about to
become a multi-billion dollar company in
terms of its own valuation so those are
the milestones you have to look out for
as an entrepreneur and sometimes it’s
time to bring in an outsider you can
trust because it makes the investors
happy and actually it’s going to help
you go fast too
shortly after bringing on the CFO they
hit 54 locations now they have more than
50 locations that’s a lot of leases and
a lot of property to be keeping track of
and again they’ve strengthened their
team to do so so much so that in the
spring of 2016 they raised 434 million
dollars at a 16 billion dollar valuation
now hang on a second that’s from 2010
2008 to 2016 that’s barely six to eight
years and you already have a 16 billion
dollar valuation which makes you more
valuable than Twitter on the stock
market today and there’s only one word
for that and that is damn that is a big
valuation in a short amount of time but
it shows you the momentum that was going
but guess what we work is just getting
warmed up
at the end of 17 they raise another 690
million and who shows up next
Softbank and Masayoshi Son the
incredible investor from the mammoth
mammoth Bank private equity firm that is
Softbank they invested 4.4 billion
dollars 3 billion was pretty much direct
into Softbank along with purchasing some
shares from some early investors and
then 1.4 billion was to set up we work
Japan and we work China and they’ve set
up some corporate structures and some
jayvees there but this is now truly a
global play with one of the preeminent
global investors on the planet
Masayoshi Son all of that brings us to
today we are exactly halfway through
2018 and this year they raised a debt
line of 700 million dollars now don’t be
too alarmed by that because once you’ve
raised this kind of capital you’re
usually driving things it
that you can afford to pay the interest
and the payments on that debt and last
year at the end of 17 they had nine
hundred million dollars in revenue
two hundred thousand members those are
people like you and me the total number
of bodies that are inside their rented
workspaces and two hundred buildings in
the United States that is pretty amazing
and so you can see people investing in
this valuation this is not Twitter
without a business model this is a
company with a real business model
that’s incredibly simple building people
temporary rent build the workspace out
and put things in place so that you and
I can use the workspace and focus on
startups and companies that want to use
a little bit more styled location than
just a bland basic office but scaling is
important but let’s take a look at
what’s happening scaling is as you get
bigger you drive your costs down let’s
see where that is showing up in facts
and figures now they don’t like to talk
about their financials much so we have
to just pull out of them what we can but
at the early part of 2016 they indicated
they were spending about fourteen point
one thousand dollars per desk in other
words that was their investment per desk
that would show up in one of their
locations a year later they said that
they had driven that down to ninety five
hundred dollars per desk
so is there driving the cost down their
driving scale into the business so as
they continue to get large this is one
of the metrics that if they think about
an IPO that I’m going to be looking at
what’s your cost per desk you presented
some figures that were pretty compelling
were those true and where are you today
if you can continue to drive this now
you’re scaling the business additionally
they got together a Zen desk we all know
at Zen desk is very helpful set of tools
they made a deal with Zen desk where we
work services would be a little
subsidiary that would resell Zen decks
products additionally there was another
small venture that they built which was
we live New York which is kind of a live
and work space so they’re focusing on
the kind of things that the services
that the startups are going to need
workspace places to live and services
through Zendesk
that are
be right in front of you so where are
they headed well one of the things to
look at a business like this is it’s
very capital intensive that’s why
there’s such large numbers that begin
with a B that have been invested in the
business it said based on things that
the company said these are the best
estimates we have that they’re running
about a two billion dollar a year
expense clip on 18 billion dollars of
total lease value in other words they’ve
signed leases that are gonna cost them
18 billion dollars over the next so many
years that’s averaging out at about 2
billion a year
in rent expenses well remember you have
to get a building you have to dress it
up you have to put the facilities in
place before the first startup with 10
guys or girls can come walking in and
rent it so it is capital intensive on
the front end but the model has shown
that it’s work and again if it’s really
simple you can scale it but it also can
be replicated by others so you have to
go fast and stake your claim to the
market share however they’re saying that
they’re gonna be able to convert on the
revenue remember I mentioned that they
had two hundred thousand total members
right now well they’re saying by the end
of 2019 they hope to have four hundred
thousand total members in place working
at their locations and be running at
about a two point three billion dollar
clip at the end of 2019 that’s not two
point three billion dollars of revenue
in 2019 that is a run rate of two point
three billion dollars as of the end of
nineteen meaning going forward in 2020
they think that run rate and the revenue
is going to be in the mid-to billion
dollar range that’s phenomenal growth
when you think of where they came from
now let’s go take a look at why it works
and why it’s grown so fast
uber and Airbnb were simple concepts
just like we work a simple concept
except that we work has to dress up the
location ooh BRR and Airbnb don’t here’s
my house this is what it looks like you
can rent it for a day here’s my car I
qualify get inspected by uber it’s clean
it’s in good condition it qualifies I’m
a good driver I can now rent my car by
making myself available in the uber app
find out where you are pick you up take
you to where you’re going we trade some
money and a revenue share to uber very
similar to how it works with Airbnb
now what you have with we work you do
have to invest that money and it’s where
I talked about that they have very
positive effects of scaling and the
amount of dollars are spending first
they have to lease everything then they
have to outfit it then they rent it to
you and me but really it’s amazingly
simple concept so you don’t have to
invent the next high tech company to
find a really great concept that can
have some legs and go forward something
simple that scales like we work and you
could be off and running I happen to
like this company and I’m rooting for
them because I think some of the other
office sharing and office rental
companies they don’t get what startups
need open spaces good facilities things
that have a vibe to them we work gets it
and makes great space for startups
because they are a start-up they may be
eight years old but they’re sticking
with their youthful roots and they know
where they’re going speaking of going in
the right direction go to my Instagram
account and please look for the poll and
let us know what company you think we
should cover next
I love taking suggestions for case
studies it doesn’t have to be tech it
can be something simple like renting out
off the space but I want to know what
you think leave a comment below check
out that pole over on Instagram I’m
listening to you remember here at value
teaming we’re on a mission to a million
subscribers and when we get there it’ll
be the first annual value tainment
conference featuring Patrick bet David
yours truly the biz doc and other people
to make you better your company better
and the people that you touch with that
company better still until next time I’m
Tom Miller with the biz doc and I hope I left you better than I found you
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