WeWork is now valued at $10bn
WeWork, a startup that leases office space to other startups, is now worth $10bn, but a leaked investor presentation suggests the company is betting heavily on its new co-living venture, WeLive, and that its long-term financial situation may not be as secure as investors may like. BuzzFeed reports that in the presentation, WeWork estimates WeLive will provide the company with 21% of its revenue by 2018. WeLive is expected to launch later this year, and WeWork expects it to produce $605.9m in annual revenue just three years later, BuzzFeed reports.

Startups don’t turn into unicorns — the buzzword for companies valued at a billion dollars or more — without a good story attached. For WeWork — which leases office space, divvies it up into desk-sized chunks, and rents it out month to month, largely in fashionable cities like San Francisco and New York — the narrative revolves around catering to a new generation of young workers who want to be creators and collaborators, not office drones. It’s that promise of personal fulfillment that allows CEO Adam Neumann to claim that his company’s short-term subleases are "changing the way people work.” Business is going so well that soon, the five-year-old company expects to change the way people live, too, by offering shared residential micro-apartments under the brand name WeLive.

Investors are bullish on the tale. The company has raised $1 billion in less than half a decade, and its valuation has grown commensurately. In February 2014, WeWork’s financiers said it was worth $1.5 billion. In December 2014, a new set of financiers pumped that number up to $5 billion. Half a year later, most of those same investors injected another round of funding that doubled WeWork's valuation to $10 billion. At that price, WeWork is one of the most valuable startups to emerge from the tech boom, more valuable on paper than Slack, Draft Kings, Lyft, 23andMe, and Warby Parker combined.

Even in a technology cycle whose “defining characteristic” is mega-financing rounds — where investors pour hundreds of millions in funding into a company on the chance that it will be worth billions — WeWork's rapidly multiplying valuation (an appraisal of a company's worth by its investors) has perplexed and alarmed observers. The New York Times, the Wall Street Journal, and even random bystanders on Medium have scratched their heads wondering how free beer and flexibility could add up to a $10 billion business model. “Believe It” read Wired’s dubious headline about the company’s $5 billion valuation last year. Writing in the Commercial Observer last month, Charles Clinton, CEO of the real estate investing company EquityMultiple, called it “perhaps the most polarizing recent valuation … many [real estate] industry insiders find the gaudy valuation to be completely insane.” CompStak, the commercial real estate database, said it felt compelled to investigate WeWork’s margins, because “[l]ike many in the CRE industry, we were curious to understand the math behind WeWork’s fast growth.”

Neumann likes to present WeWork as a star of the sharing economy, a technology platform that connects consumers to office space, just like Uber and Airbnb connect them to cars and homes, respectively. But how can an infrastructure-dependent real estate venture scale like a low-overhead software startup? How can a company that signs 15-year leases — but sells monthly memberships — expect to survive a downturn? How can an entity that doesn’t own its own real estate be “worth” more than three times as much as the New York Yankees? Why does WeWork’s future look so bright when it sits smack in the middle of two bubbling markets (that is, tech and commercial real estate)? Why would a business model that drove one high-profile dot-com darling promising “the office of the future” into bankruptcy succeed this time around?

October 2014 fundraising documents obtained by BuzzFeed News reveal how Neumann answers those questions behind closed doors. The material was shared with BuzzFeed by someone familiar with the company, on the condition of anonymity, and independently verified. WeWork would only comment on a couple of aspects of its fundraising pitch. It includes a five-year financial forecast and a slide presentation (also known as a pitch deck), both embedded below, as well as a company overview. After reading these documents, investors such as Goldman Sachs, Harvard University, and JPMorgan handed WeWork $355 million in funding, along with the $5 billion valuation, as part of its Series D funding round in December 2014.