When WeWork opened our first location in 2010, our members were mostly small businesses that needed a desk or an office. Pricing was straightforward, using the same approach as the rest of the real estate industry.
Nine years later, our members include some of the largest companies in the world, and they’re often looking for offices in several different cities or access to WeWork locations for their workforce. Suddenly the price isn’t so easy to calculate.
That’s where Jiwon Seo and her team come in. The six-person revenue-optimization analytics team has been tasked with using the knowledge WeWork has built up as a tech company to innovate our pricing model. Her team is using real-time data to make pricing as easy as clicking a button.
When Seo started at WeWork two years ago, pricing involved weeks poring over data, talking with local experts, and making some educated guesses.
“But it was super-manual,” she says. “It wasn’t data-driven. And it wasn’t scalable. We knew we could make this into a platform that can grow along with us.”
And with WeWork regularly opening more than a dozen locations every month, scalability has become more and more important.
“Being a tech company, our challenge was thinking about how to upgrade our model,” Seo says. “Did that mean enriching the current system with more sophisticated data or coming up with a more data-driven approach?”
They opted for the latter, building software from the ground up that completely automates the process. It uses sophisticated modeling and data from a variety of outside sources.
WeWork’s traditional pricing model didn’t take into account things like demand. If one building in a city is nearly full and another less so, the new software recognizes that and gives members a lower price. It can also look at changes in a neighborhood—say, a Starbucks opening nearby—and potentially factor that into the pricing.
Another aspect is being able to reward members who make longer-term commitments.
“Essentially, we were offering everyone the same month-to-month contract,” Seo says. “But now we’re able to offer different pricing to enterprise members who want the security of committing to longer leases.”
Besides pricing for traditional WeWork locations, Seo’s team has tackled pricing for WeWork’s newer offerings, like space for enterprise companies. The new software can calculate the price if a major corporation wants to take an entire floor of a building.
Seo has lots of experience with dynamic pricing: She worked for three years at Starwood, now part of the hotel group Marriott International. In the travel industry, dynamic pricing raises rates for airline seats and hotel rooms when there’s higher demand.
“We think of it a little differently,” she says. “Our mission is to provide the right price to the right member at the right time—with a focus on building community.” Seo says that means providing them with the space and services that they need for a reasonable price.
Seo—who received her bachelor’s from Seoul’s Yonsei University and a master’s from Washington University in St. Louis—initially came to the U.S. to pursue a doctorate in economics.
“I decided I wanted to work instead of staying in academia so that I could apply the modeling techniques I learned to solve business problems,” she says.
The next challenge she wants to undertake? Putting a numerical value on WeWork’s less tangible offerings.
“One of the things that makes WeWork different from other companies is community,” she says. “How you quantify that? How do you come with metrics for that? It’s something we’re just starting to think about.”