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wework WeWork Companies, Inc. Company Overview COctober2014 1. Business Overview ‘WeWork (the Company”) creates high energy: inherenly collaborative oie and residential communities that ave responsive tothe productivity needs and stylistic preferences of today’s mobile, creative workforce. [nation wellappointed physial space, the Company provides services, events and technologies designed #0 conn ‘members within the WeWVork ecosystem and to empower the to lad more satistying and successful lives. WeWerke ‘The WeWork business model is built upon on theee matully- reinforcing pillars: Space, Services and Community Space, As of October 2014, WeWork operates 20 physical locations in seven matkets: New York, San Francisco, Los ‘Angeles, Washington D.C, Boston, Seattle and London. Bach location is populated with ‘members, who pay a monty fee to acess the WeWork platform, “To establish its locations, WeWork enters into long-term lease agreements for cenrally-located commercial ofce space, and outs the space with elements that enteepreneuil individuals an small businesses ~ the Companys target market — need 10 conduct business, WeWork locations consist primarily ofsingle- and mult-person private spaces and open desk rea, as well a thoughtfully designed kitchens, lounges and meeting spaces that ae shard mang members, WeWork locations also feature highspeed internet, printers and copiers, meeting rooms, ofce supplies, coffe an bee = all included with membership, ‘Wevork membership offers both size and term Aleit allowing for moliple use cases, WeWork offices are utd fs classrooms, music sii, product showrooms, and most typically as taditonsl offices for companies ranging from one to 20 employees, Membership is dynamically priced with an average membership fee of 600 per member per month. Services. WeWork partners with establishes service providers to offer its members access to essential business Ina typical service partership, WoWork wll everage the size ofits community to negotiate below-market rates er members while also securing @ revenue or profit sharing arrangement with the service provider. WeWork’s bpealthare and human resources partnership with TriNet (FNET] is such a case: in exchange or marketing TiNets healtheare and HR services to its members and offering sign-ups through the WeWork enable platform, WeWork receives one-time lea generation fe of $125, plus 15% of lifetime revenue generated from the mensber compen, This structure lustrativeof existing and future pertnerships) benefits al participant: Members receive high-quality Services at preferred prices: service providers gain a powerful distibution channel to the highly ragmented SME market; and WeWork earns revere while offering substantial value to its members without the challenges of product development, inventory or overhead Partnership arrangements currently exist in ealthcare andl HR (TriNet), premium food delivery (Momofuk) and electronic food order processing (MyCheck). The Company plans o significantly increase its service offering through partnerships in fture quarter Community. The Company holds firm belie that collaboration among individuals and busineses leads to greater productivity, creativity and stcess. This bli is evident in the design ofthe Company's spaces, event and digital tools, which are designed to fciltate member conaections in natural a frictionless way. ‘WeWork hosts hundreds of events each month, including product demos, member panes guest speakers and happy hours. Each summer, the Company produces and hosts "WeWork Summer Camp" ~a member rete that attracts 1,500 attendees who participate in eam sports networking events and fiteside chats with high-profile speakers all ina mosic festival tke atmosphere designed to inspire fesh thinking and meaningful connections Actos its current locations, WeWork has cultivated a highly engaged community of more than 15,000 members (up from $200 at December 31, 20:3), which becomes inereasngly valuable asi grows. A recent WeWork survey fond {hat over 90% of member comzanies use the WeWork mobile application to connect with ather members and more than 35% of member companies have collaborated with other members on business matters, As the WeWork platform grows, community value increases. Members routinely source talent projets, referrals ideas and inspiration fom the WeWork sconystem, and therefor, have a vest interest in ts size and quality. The resulting wort of mouth has created accelerating demand forthe WeWork product, despite negligible ew customer acquisition spend (ess than 1% of revenues) WeWork Everywhere In Q42014, the Company will launch its Weber: Eeerusere product flexible membership ofering with ala carte acces to its spaces and services, as well s exclusive membership tothe online member network. WeWork believes, this offering will appeal to lage subseyments ofthe workforce, including independent workers (estimated to be 40% of the workforce by 2020) not living in close proximity to a WeWork location, and sales and business development professionals who frequently travel fo major US, and international cities for busines ‘The WeWark Everywhere product offering help illustrate WeWork’s broader, long-range vision of empowering ‘people everywhere todo whatthey love by providing valuable resources and a supportive community. Welive In addition to the WeWork ard WeWork Everywhere concepts, the Company has developed a residential brand ‘extension, WeL ve to farther leverage the Company’s existing relationships, community and brand, ‘Welive locations wil consis of fuly-seeviedsingle- and mult-person apartments alongside high-qualty,sharst amenitiessuch asktchens, dining res, rooftop lounges, swimming pools, screening rooms and fitness centers. Lice WeWWork, Welive will offer space, services and community in a way that is integrate, flexible and digitally enhanced Wetive will eater to the same demographic as WeWork, and the Company expects significant overlap in membership. As such, each Welive location willbe in close proximity to one or more WeWrk locations, allowing. ‘thememters ofeach to benefit fom greter amenities and network effets, As of October 204, two WeL.velcatios are under construction - one it Washington D.C. al one in New Yerk City --and will open for business in Q42015, 2. Market Opportunity “The WeWork market opportunity is primarily driven by the following facto: The ising generation has new needs and belevors which are fundamentally changing the way people consume, le and work Empowers by technology, the younger generation's consumption decisions ar increasingly driven by convenietce, value an experince (Ue, Aiba). They prefer acces over ownership Spotfy, Net). They value ‘urban amenities an! real-world opportunities to connect with peers (SXSW, Burning Man). The Company beievas ‘these macro tren wil drive higher levels of demand ani usage for its differentiated platform, Entrepreneurship, freelancing and small business formation is surging. People are becoming increasingly drain ‘owant extepreneurship due to recent developments in technology, unprecedented access to funding ard Liminishol corporate appeal Starting » busines has never been easier or more sccally esteemed a recent stirvey conductes by Kauffman Foundation found that 4% of Millenvals want to start or have already stated their own businesses and that 470,000 businesses are launchad inthe US. each month. The Company believes new businesses and their employees will be drawn to WeWYork locations for the convenience, community and services they offer, hich colectively will make dele work simpler and more falling Certain regions are becoming millennial magnets, resulting bx highly-concentated clusters of eeative and talent people, nnovative individuals and companies tend to cluster bacause they value proximity to intellectual ard financial capita. They enjoy proximity to one another and to urban amenities such as feod, culture ard cntertainment, This trend has accelerated in recent years ands cresting geographic “spikes” of economic activity throughout the work, WeWork is focused on providing workspaces that are responsive to this macro-trend, in the markets where ts most pronounced Existing space solutions are fundamentally unfit forthe new workforce, Curent commercial rel estate solutions oguie significant capital and time commitment, have limited spatial lebilty, and are self-contained with Limited access to services, amenities, or professional networking. The WeWVork model bridges the gap between the modezn ‘workforceand an outdated realestate model, creating temendous value for both growing businesses and property Comporatereal estate usage is shrinking For many large businesses, realestate isthe most significant fixed cost. With streamlining, downsizing, outsourcing, and increasing levels of telecommuting, corporations are reducing office space at unprecedented levels. According to a CortNet Gobal sty conducts in 2014, the average company in the US. now provides 150 square fet of oie space per empleyce, a significant decrease fom an average of 250 square feet in 208, Without substantial economic growth to backill excess inventory, this trend will result in a glut of commercial office space that will nee fo be reimagined, which wll in tua allow WeWork to secure favorable ters fom landlords, Additionally, WeWork stands to captre significant business rom large established businesses, who will employ an increasingly mobile and contingent workforce, The market is massive, WeWork assumes tht within industries that utilize office space, ll employees at companies sized 1-100, and 20% of employees of companies sized 100 are potential members. Using this framework, the Company estimates that there ae 12 milion potential members in the top 25 US, markets, For WeWark, each V% of penetration ofthis marke (120000 individuals) will generate SI billon in annual revenues 3. Strengths First mover. WeWorkisthe oly focused global competitor in theshared workspace busines and has commanding first mover advantage, While one-off shared workspace locations are emerging around the world lo meet rapidly rowing demand, WeWork has the largest space portfolio, member base, and balance sheet bya large and widening ‘margin Ir business that enjoys substantial economies of sale and network effects, WeWork hes achieved critical mass and has clear path to dominating this compeling market opportunity Thriving ecosystem with powerful network effects, WeWork has cultivated a community of more tha 15,00 active members who ace leveraging the WeWork platform for inspiration, projets, talent and capital. As the member ‘marketplace grows in depth an breadth, a lywhee eect iscreated in which increased demand and increased value are mutually-reinfocing. Additionally, the scale and vitality of WeWork membership allows the Company to achieve significant economies of scale reducing cost of rel estat, construction sales and operations Powerfi brand, WeWVork has become a recognize and trusted brand, particularly in key gateway markets such as [New York, San Francisco, Boston, Washington DC, Seattle and Los Angeles, where the Company enjoys postive wont-ofmouth advocacy and referrals from existing members. Adaitionally, WeWork as a tenant has created significant realestate value for property owners by activating and rebranding assets and neighborhoods, allowing the Company to enter nto more tenant-avorable lease agreements. Proven, profitable business model. Mature WeWork locations consistently operate near 100% occupancy with average unit margins of 40% and ROI in excess of 50%. This proven business model has allowed the Company to ‘access substantial debt and equity capital to further refine its ofering, expand is platform, invest in research and development, and attract top talent. Scatabte and capita efficient, Song relationships with leading realestate owners (driven by the Company's strong business model and value-added tenancy) have led to partnerships which reduce WeWork’s upelront capital ‘expense, This shift towards “Asset Light” expansion meaningfully increases project ROI and has allowed the ‘Company to scale more quickly and efficiently Digitally-enhanced, WeWork has developed proprietary internal software to streamline the design, development and management ofits location as well as an externaly-facing member network wo facilitate member collaboration snd drive meaningful network effects. These intelligent tools help the Company scale while hamestng system-wide ata to further develop and optimize its offering Leadership and Vision. WeWVork’s leadership team consists of seasoned! entrepreneurs and executives with deep ‘expertise in hospitality, rel estate, technology, people operations and entrepreneurship. The Executive Test includes former executives from Google, Yahoo! Morgans Hotel Group and Uber, and the WeWork Board has attracts! experienced leaders from Silcon Valley (Bruce Dunlevie, Benchmark Capital, Wall Steet Steven Langman, Rhone Capital) and major publicly-traded companies (Lew Franklort, Coach). WeWrk co-founders ‘Adam Neumann (CEO) and Miguet Melvey (Chief Creative Officer) continue to lead the Company, around its founding mission: To empower people everywhere to do what they love 4. Strategies Spc Stes Leverage value-added tenancy to achieve forable economics. By creating energy and economic activity in and aroun the assets it occupies, WeWork ras established track record fo increasing property values. AS a result when negotiating leases with landlords the Company is well positioned to achieve tenant-avorable economics, ‘Typleallanord concessions may include preferted presence within an asset (dedicated entrance/elevator, exterior signage etc) reduced hase rent, reduce security deposit increased fee rent pried, increased tenant improvement allowances ora combination af al the above, Reduce risk and capital ouflows through proven profitability. Duc to its established, profitable business model ‘Webvork sable to structure leases ina way that mitigates both market risk ad capital outflows, Under an “Asset Light” lease structure, landlords will contribute “80% of te reyuieed up-front capital in exchange for an ongoing prot share. By entering into a greater proportion of such leases, WeWork is able to scale more quickly and capital ‘ficiently, while also mitigating eal esta risk by aligning interests with established landlords LUitizetecknology asa competitioe advantage, WeWork has built proprietary software that makes laborintensive but crucial tasks highly steal and efficent. Each step ofthe new location development proces has been digitize, trom sourcing and pipeline management (Stargate); to architectural design (Revit) to sales leads and salt racking (Charlo) to bllingcollstone and epace management (paceMan} to Membr Support (WeWork mobile app). As result, WeWork sabe to grow faster, manage ts business more elfectvely, and leverage data to beter measure and optimize business pricesses. Leverage expansion / scale to drive adlitional profits n addition to landlords, WeWor’s expansion benefits ‘commercial real estate brokers, who sand to peoit greatly from WeWork transactions (a typical brokerage “commission on a WeWork lease transaction is approximately $50,00). Because the Company i highly involved in the sourcing. underwriting, negotiation, and closing of lease transactions - effectively acting sin internal brokerage “house -the Company shares in commissions eared. In 2014, WeWork will collect more'than $19 milion in eal estate ‘Conmaity Stratis ‘Create and leverage critical mass, economies of scale and network effects. By concentrating its locations in key “markets, WeWork is able to create both meaningfal community benefits and financial savings. When concentrated, ‘WeWWork members enjoy greater marketplace depth, larger and better events, more professional and social ‘connections, and greater breadth of physi space options. Concentrated operations also deve costeficiencies across ‘construction, warehousing, leasing staffing cleaning travel and marketing, The combined result isa more valuable product offered at uniquely affordable price — which in turn dives a powerful ycle of more growth, greater member ‘value and increased economies scale Enhance community value withsofeare. WeWork spaces and evens are designe to create frictionless connections ano fellow members, a process which is amplified by intuitive, mobile technology. The WelVork app serves as 3 professional marketplace, knowledge hank ant recommendation engine for in-demand services. By placing this functionality alongside productivity tools such a conference room ooking abil: paying, WeWork enhances the visibility and discovery of potential connections, and dives meaningful community value that transcends the physical boundaries of single cation. The Companys newest membership category, WeWork Everywhere, offers 2:05 o this virtual network o individuals and businesses that do not resuice Full-time acess to space, Grow the size and value ofthe community with large members. Though inially conceptualized 1 serve very small companies the WeWork platform has evolved to attract companis of all shapes and sizes, Today, moe than 15% of all WeWWork members work for companies larger than 20 people, up from 5% on December 31,2013 (some notable members include Coca-Cola, Micosoft, Uber and Silicon Valley Bank). This segment hasbeen attracted to WeWork for the collaborative space design established commit, and important, ts highly compeling vale proposition. (On a total occupancy cost per employee basis, WeWork membership is priced 25% lower than a comparable «commercial office lease. WeWork plans to actively target this market segment, and anticipates large companies will constitute 30% of otal WeWork members by 2015, Series Strategies Leverage sale to create value for members and service providers. WeWork leverages the si of ts community to negotiate with established serve providers to secure below-market rates for ts members, Under this structure, members receive high-quality services at prefered prices service providers gain a powerful distibation channel to the highly fragmented SMB market: and WeWork wars revenue while offering substantial value to ts members Expand the breadth of services efeings In adit to conference room booking, teleplone services, an! printing and copying services, parinersip arrangements curently exis in healthcare and HK (TeiNet), premium food {elivery(Momofuku), an electronic fod order processing (MyChhck). The Company plans to significantly increase 1s sevice offering through addtional partnerships, targeting small business services such as education, payment processing, gym memberships, legal and accounting service, and cloud and IT services. By layering a holistic Services offering ontop of a apilly growing platform, WeWork is creating an increasingly valuable protic while Arivng new, high-margin sources of revenue. WeWork’s Sustainable Competitive Advantages ‘Wetvork enjoys anumber of busines sdvantges which provide longterm insulation frm existing and ature competitors © Established nal etate and opt elatonships give WelVork un ability to scale quikly and fen. '& oonomies ofSae the ulin, market an corporate vel) ve WeWork wer com strate than its competitor. + Proprietary software tos make the design and management of WeWork lations highly da even an flv. '® ‘The Welvork reais wellestainhe, partly okey US. mikes tracing thehighest oat companies as membes 1 ‘These of the WeWVor community cee owveral etork fect, ineasing val for members 2st grows 1 ESTABLISHED RELATIONSHIPS el Ete 1+ Hoving cee sigan al sate value though it tenancy, WelNork hs established ceil among ands ‘Asn reat the Company has developed le basnes relationships with the ling propery cnners in hey U.S, amt Invernacnal muskets, snclading Vormaso Realty Tut, Bonen Properties, Run Management, Dive West, Te Harvard Management Company, Tishman Speyer The Blackstone Group Beacon Capital, Brtish and Liber Adler, Invesco ay The Kasher Companies Collestvely, these lanlonts contol substantial proportion u the quality ral ‘state in nojor meropatan rasa st asy supple of Week primary inp 1+ These lanllonds are investing siticant capital to ring WelNor to thi ase, faciaing the Company's by Ses an many have ist ety the Company Hae (ecluding Verna Realty Trt, Baton Properties, Ruan “Manspemen,DivCo West and Horvaed Management. Ax sich, thee oraniatons have a vested inet nthe rg term sucesso the Wear lator (andan sheen dientve tows competitors) Any new entrant wile ford tocompe vith inte support rom tse ey gatekeepers opt +The Company has substantial nancial becking trom some ofthe ages an mostrespecte nvesnent groups mn Sion Vay and Wall Sweet Equity investors incase Becheark Capital, |P. Morgan Aust Management, The Harvard Management Company, tres and the Rhone Group. 1+ The Company aso has aces to a $125man reveling crs facility le by JPMorgan Chase, with commitments om Silicon Valey Bank Bonk Hapostim, Bank Len an Sterling Nain! Bank. Ass real, WeWNork’scet of capitalist below ta efcurent and ature als, lowing WeWork to further soli ts leadership poston by investing in ree lection, products and alent. 2), ECONOMIESOF SCALE “+ Wetvorkbeations are approximately 50,0 square ft on average, comp wit the average coworking locaton 3f 7.000 square et and the average executive suite of 18000 gure feet. Laer lato allow WeWork to achive beer lease terms an gain elficinces across desig, constuction, tain nd operating costs, Company esearch india that induseyide gross mags flan les han 20 square feet ae 15% compared with WeWVork nari fos, The sie o the WeWiork community gives WelWork significant leverage when gots with busines servi providers including TriNet. Chase, Memafaku and General Assembly. These personal an busines servis Alierntite and ah value to WeWovk membership, 1 As WelWork adds lations, the Company becomes more profitable due the even of orprateoveshoad an high lunievel contribution margins. Increased pratablity allows for peter access tapi iereased capacity for ‘nvesmentn propriety ehonlogy, bring initatvesand RAD. 2) PROPRIETARY SOFTWARE 1 Weork has developed and integrated propritary safe to stealth sourcing design a development of new Tocaors, eceleratng te leat pipeline and ving the new locaton design process ren months fo weeks +The Company has dowloped bulttosui ale and space management software, making field employees and ‘management more contact and data driven than is es sophisticated competitors productivity. This conc creates saat eter alu for members vin community ings ad arb member sles marketlace that woul! eu subsont tine and capital replat ‘+ Asa results customised, proprietary softwar, WeWork if able to row ater, manage its busines morse, an leverage data to bets mea and opinize business process fo. rater dope Hants competiors 4) POWERFUL BRAND ‘+ Cultvatt over five yor, WeWvork has become the mont ecogrize ad tus bran in the collaborative worse industry, ara stands for qual, creatvy, value and sce, Members are pro! Yo announce tele WeWVork rmemieship~ to profesional acquaintance, oth mui ad on sil networks esting pomertul word of mouth stoic. 4+ Wels quality, scale and global presence has tract the intrest of number fetal organization such ae Coca-Cola, MeKiney & Compuny, Andresen Horowitz, News Corp, and several ae universes WeWVork as ‘eared the usta thee nganiations, an! hs the ste to develop thee lationship nto meaning malt- et real etate partnerships 1+ WeWvor designs are den by dete, proprietary and stands whichave ben develope shout by leveraging the Company's extensive experience i creating productive, proftabte workspaces. As + resi, WeWVork spaces succesfully balance asthe appeal, member preductity and pf animation 5) NETWORK EFFECTS 1+ As the Welork platorm grows, community value increases du oa bros physical platiom fom which members «an conduct business ans deeper member network rom which mer anid support +The "WeWork Ee” coats unigue value for all cnstiuents- members, lands and WeWork, The nung Aye! wil coninualyimprove WeWorscompettive prospect ais momentum bull Downturn Resilience Welter’ versed membership represents «massive and growing market © Duetoity unique offering oad use cases and cro tends, dean fr th WelVork pdt is cychougnontic. 1 Weltork’ usin models inherent arb, fice fone an pital making i high rein oeesion ‘© Weltork employs several knitting realestate strates to insult the Company rom el estate al mavet rik 1. MASSIVE, DIVERSIFIED POTENTIAL MEMBER BASE ‘+ Welles addressable marke is mass the Company etme thee are 12 milion potent members in its op 25 US. markets alone, Each 1% marketshare represents nylon a revenue to WeWork ‘+ Wettbrk membership highly diversied semose age groups, indusies an company sizes. Technology companies reprennt just 20% of revenue ad the argeat 2 member companies combined coapree sppronmately 1% of eer This