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McKinsey Easy Profitability

WeShare

#Real Estate #Commercial Real Estate #Flexible Workspace #Shared Office Space
ProHub Comment

This is a classic profitability case in the flex workspace industry, testing the candidate's ability to diagnose why a high-revenue company with strong historical growth is unprofitable. The case requires analyzing both revenue dynamics (pricing, volume, customer mix) and cost structure (rent arbitrage, operational expenses). The pandemic context creates a compelling external factor that forces candidates to think about occupancy rates and demand volatility.

Estimated Time 15 minutes
Difficulty Easy
Source PeterK
50 / 100
Your client is a shared office space provider – WeShare. WeShare offers office spaces to freelancers, entrepreneurs, and companies in 10 major cities across the U.S. and has 25k members. The company generates $160M in sales annually but is unprofitable. They hired your team to help them break-even in 18 months.

Clarifying Information

  1. Before the pandemic the client aggressively grew, pushing its top-line (sales) by 50% every year. In 2020 though its sales decreased
  2. Most of revenue comes from renting out flex working space. The client also offers office management services (e.g. room booking system, office supply management) and office design consulting
  3. The client doesn’t plan to expand outside of the U.S.
  4. Top-5 players in this space capture 71% of the market (incl. WeWork that controls 47%). The client isn’t part of top-5