Co-Work Phenomenon WeWork Shoots the Works With Expansion Plans

The swelling valuation comes despite the fact that earlier iterations of WeWork's basic business model--signing a long-term lease with a landlord and then filling it with companies paying higher rates on monthly leases--have proven highly vulnerable during economic downturns. The two leading companies in the sector tumbled into bankruptcy after the dotcom bust, and WeWork hasn't yet been around for a recession.

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But the rapid growth comes at the very time when a chill has descended over startups and the broader technology sector, potentially stunting a main source of demand and revenue. Meanwhile, office rents--WeWork's main cost--are at their highest levels since 2008.

"Expanding aggressively right now--it's probably a suboptimal time to be doing so," said John Bejjani, a real-estate analyst at Green Street Advisors. "But their business model isn't going to pause for a few years waiting for the real-estate cycle to turn over."

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Executives at the company speak with an aura of inevitability about having one million members, up from about 45,000 today. Mr. Minson declined to comment about when he expected to reach one million members, but said, "That is in the plan."

To get there, the company would likely have to move beyond the startups and freelancers that dominated its early spaces, as the pool of startups is only so deep.

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Its residential arm, WeLive, had a so-called soft-launch in a New York location, 110 Wall St., last month. Pricing is still unclear, but residents get small rooms with shared common spaces.