Optimizing space itself with WeWork's Adam Neumann | Disrupt NY 2017 | Summary and Q&A

Summary

In this video, the speaker interviews Adam Neumann, the founder of WeWork, to get answers to questions about the company. They discuss various topics, including the company's business lines, the concept of privacy in WeWork spaces, the enterprise business, the WeOS operating system, partnerships, funding and valuation, and preparing for a recession.

Questions & Answers

Q: How many employees and customers does WeWork have?

WeWork has around 2,200 employees, with approximately 800 of them based in New York. They have over 130,000 customers, referred to as members, with about 60% of them in the US.

Q: Is WeWork primarily a co-working space or a real estate company or a technology company?

WeWork doesn't view itself as just one of those categories. They consider themselves a community company, continuously striving to find the best way to serve their members and make a meaningful difference in their lives.

Q: How does WeWork utilize the lack of privacy in their spaces as a competitive advantage?

While it might seem that the lack of privacy is a challenge, WeWork actually offers a lot of common spaces and amenities in their buildings, such as kitchens, bars, libraries, and quiet rooms. They believe that being part of a like-minded community inspires people to work harder, stay longer, and enjoy the experience.

Q: What percentage of WeWork's office space is open space?

Contrary to popular belief, only 10% of WeWork's office space is open space, while the remaining 90% consists of private offices. However, they also provide a lot of common areas that foster community and collaboration.

Q: Are WeWork's membership fees and profit margins consistent across different regions?

The average membership fee for WeWork in the US is around $8,000 per year, with profit margins of about 40%. However, these numbers can differ in other regions such as China, India, and Latin America.

Q: What is the annual revenue run rate for WeWork?

The speaker estimates that WeWork's annual revenue run rate is currently around 800 million, but Neumann confirms that they are on track to reach a billion-dollar run rate by the end of the year.

Q: Is WeWork profitable?

WeWork is not currently focused on being profitable because of their high growth stage. They aim to remain around breakeven but still have the ability to choose when they want to become profitable.

Q: How does WeWork's partnership and revenue-sharing model with property owners work?

Initially, WeWork used to lease properties and then sublease them to their members. However, as they grew and proved their value to landlords, more property owners started approaching them with management deals. These management agreements involve splitting the profits 50/50 and the property owner covering the build-out costs.

Q: What are WeWork's plans for expansion into new regions like India?

WeWork is set to open its first location in India on July 1st, with plans to open in Mumbai, New Delhi, and Bengaluru by the end of the year. They have been working on this expansion for over a year and have entered several management agreements in India.

Q: How long does it typically take for WeWork to open a new location from signing the lease?

WeWork has the ability to move quickly when opening new locations. While it could take as long as nine months, they have managed to open spaces in as little as four months. They are continuously working to reduce the time it takes to open new spaces.

Q: Can you explain WeWork's growing enterprise business?

WeWork has seen an increase in enterprise customers over the past two years. Companies are requesting WeWork's energy and culture in their own spaces, so WeWork is deploying their operating system for commercial space to meet these demands. The enterprise business now accounts for 30% of their new business.

Q: What is We Membership and WeOS?

We Membership is a plan that gives members access to all physical WeWork spaces and the services offered. WeOS is the operating system of the physical spaces, allowing members to book conference rooms, register guests, and control various interactions within the space.

Q: What is the Service Store and what services does it offer?

The Service Store is a curated collection of services provided by WeWork for their members, especially smaller businesses. It offers discounts on various services, such as Slack, Salesforce, and Microsoft, and provides flexibility in terms of commitment duration.

Q: Does WeWork have partnerships with on-demand service providers like Lyft or Airbnb?

WeWork is open to partnerships with various service providers, including on-demand platforms like Lyft, Uber, and Airbnb. They are actively exploring these types of partnerships and aim to provide the best services to their members.

Q: How does WeWork plan to maintain its culture as it expands and partners with larger enterprises?

WeWork acknowledges the importance of maintaining its culture as it grows and partners with larger enterprises. They are focused on finding employees and departments within enterprise companies that align with WeWork's values and culture. By selecting like-minded individuals, they believe they can preserve their unique culture.

Q: How does WeWork prepare for a potential recession?

WeWork believes that serving a real need for customers doesn't go away in a recession; instead, it may require adaptation. They have plans in place to support their community during challenging economic times, such as asking members to focus on internal business before external opportunities and providing flexibility in their membership agreements.

Q: How does WeWork view itself in terms of being valued as a real estate company or a technology company?

WeWork doesn't consider itself solely as a real estate or a technology company. They aim to incorporate the best practices from both sectors and set an example for other companies. They focus on delivering what their members need and making a difference in the world, not fitting a specific category.

Q: Can you comment on the reported $3 billion funding round from SoftBank?

Neumann cannot comment on specific funding reports, but he does mention that WeWork is open to exploring possibilities that benefit their employees and culture.

Q: What is WeWork's approach to secondary offerings for employees?

WeWork acknowledges the importance of rewarding employees who have shown dedication to the company. They are open to exploring options, such as secondary offerings, to provide benefits to employees and ensure that they feel invested in WeWork's success.

Q: How much square footage does WeWork manage in total?

The amount of square footage managed by WeWork varies, but it is approximately 20 million square feet, depending on factors like the Loss Factor used in New York.

Q: How does WeWork balance its focus on culture, partnerships, and maintaining profitability?

WeWork believes that focusing on culture is crucial, and they aim to set an example for other companies. They consider partnerships with companies like Salesforce as mutually beneficial, allowing them to better serve their members. While profitability is a consideration, their priority is to provide an amazing experience to their members.

Q: How does WeWork protect itself in a potential downside scenario or recession?

WeWork believes that if they serve a genuine need and have a loyal customer base, those customers will stay with them even during difficult times. They plan to assist their members during a recession and will adjust their focus accordingly. Additionally, WeWork views a recession as an opportunity for growth and expansion.

Takeaways

In this interview, Adam Neumann, the founder of WeWork, provides insights into the company's business lines, culture, partnerships, and preparations for a potential recession. WeWork sees itself as a community company, focused on making a meaningful difference in the lives of its members. They believe that serving a real need and fostering a loyal customer base will help them navigate through challenges and seize opportunities. As they continue to grow, WeWork prioritizes maintaining their unique culture and setting an example for other companies.