Commercial real estate startup WeWork has attracted some attention recently after being Softbank’s latest multi-billion dollar deal, raising $4.4 billion at an estimated $20 billion valuation. WeWork is by far the largest shared workspace startup, but is a $20 billion price tag justified? Such valuation makes WeWork the 3rd highest valued American startup after Uber and Airbnb, but also raises some questions in light of the criticism over Softbank’s policy of investment resulting in extremely high valuations for its newby portfolio companies.
In order to answer this question, we used Zirra’s company analysis automation technology that helps get the fuller picture about every company in question. First, we asked Emmet, a company analysis bot on Zirra’s homepage, to analyze WeWork’s risk and success criteria:
**Try Emmet the company analysis bot here**
Emmet is a first of its kind AI-powered analysis bot that understands simple English and answers high-level company analysis insights within seconds. Emmet uses Zirra’s company analysis technology, aggregating data from a myriad of public and private information sources. It then utilizes Natural Language Processing (NLP) techniques to process large volumes of unstructured text, to detect companies and their semantic context, model their interrelationships, and derive dynamic indicators.
Emmet’s output gave us a few interesting points to think about when analyzing WeWork. Emmet confirmed some of the indicators we already sensed about WeWork: the company is well-funded, it has raised much more than its average competitor, and it has created many partnerships, including its most recent partnership with Airbnb, in which business travelers will be offered spots at WeWork locations.
However, Emmet also shows that it’s not all rosy in WeWork’s kingdom, despite the massive PR the company attracts. The company had to cut 7% of its staff last year, it suffers from a certain level of competition, it lacks IP (while holding many trademarks), and it suffers from some legal issues.
Let’s tackle the legal concerns. After learning about their existence from Emmet, let’s go to Zirra’s automatic company report about WeWork, accessible to anyone from Zirra’s homepage. In the section ‘latest events’ we will look for recent legal problems and then click on one of the articles offered.
One of the articles describes WeWork’s recent legal battle against UrWork, a Chinese competitor, over a trademark infringement. According to WeWork, UrWork copied a part of its name and its logo. The lawsuit is also in context with other problems Emmet has raised such as the growing competition and the lack of IP: on the one hand, WeWork cannot register a patent over shared working space, on the other, it competes over global domination, just as Uber in the automotive space, especially in Asia-Pacific, where UrWork is a strong player.
While UrWork expanded into Singapore and invested in an Indonesia-based rival, WeWork bought Singapore-based SpaceMob. UrWork, which is funded by Sequoia and Jack Ma, also announced it plans to expand into the US and UK. In fact, a part of the financial round led by Softbank was dedicated to WeWork’s expansion in Asia.
According to analytics service SimilarWeb, WeWork’s traffic mainly originates in the US, followed by the UK, Brazil, Canada, and Japan. The recent Softbank round was a part of WeWork’s effort to penetrate into Asia-Pacific.
**Try Emmet the company analysis bot here**
Emmet also raised an HR issue. Checking WeWork’s LinkedIn employee and job opening count reveals an interesting angle. September 2017 was the first month in which WeWork significantly reduced its growth to almost none. Also, according to the company’s job openings chart, WeWork is now reducing its operations efforts in favor of marketing and engineering.
So how much is WeWork really worth? Despite raising a few risk criteria, Zirra’s company analysis algorithms forecasts a bright future for the shared workspace company known for their free beer kegs.
Zirra values WeWork even higher than the valuation given by Softbank last August. WeWork’s worth is estimated at about $25-$26 billion. In the case that the company chooses an exit strategy, most likely to go to an IPO, it can ask for almost $39 billion in valuation. According to Zirra, WeWork can go public within 2-3 years, at a probability of 60%-70%.