Major office space provider IWG has started adopting the franchisor model, pioneered by fast-food company McDonald’s, in its effort to edge further away from WeWork.
Is WeWork Truly Sustainable?
WeWork released its financial results of 2018 and revealed that, while it doubled its revenues to $1.8 billion, it also had a net loss of $1.9 billion. Now, investors may have to wait even longer to actually see positive cash flow from the unicorn.
WeWork has been backed by numerous venture capitalists that hoped to see the startup grow immensely and profitably. Ten years on, and some investors are wondering whether the company is at risk when the coworking bubble will inevitably burst.
The company operates on a model where it leases buildings from landlords, then gains revenue from its memberships who work out of the space. Most of the time, these members include startups and freelancers, but major companies have also been known to join WeWork.
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This could mean that in the event of a recession, as capital tends to hold off on riskier investments, WeWork’s membership may dwindle down. Even SoftBank, the company’s biggest backer, cut its planned $16 billion investment down to $2 billion, leading many other investors to question their involvement with WeWork.
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