Table of Contents Our locations have distinct revenue, expense and capital cost profiles through each phase of their lifecycle. First, we incur growth and new market development expenses associated with our real estate team that is responsible for finding new locations and negotiating lease terms. Once we take possession of a space, we incur growth and new market development expenses associated with our design and construction teams as well as capital costs related to building out our spaces. In this phase, we also begin our efforts to fill our spaces, and we incur sales and marketing expenses associated with our sales teams, advertising campaigns and fees paid to brokers who sell memberships, particularly to enterprise organizations. After a location opens, we begin generating revenue and contribution margin as we further fill and run the spaces. Once a location has been open to members for more than 24 months, occupancy is generally stable and the location typically generates a recurring stream of cash flows. As we build and open more locations in existing and new markets, we create additional workstation capacity that lays the foundation for incremental revenue and future profits. As a space-as-a-service platform, we compare the lifetime value we can create from incremental capacity to the cost of creating that incremental capacity. We estimate that with every $1 billion in net capital expenditures we invest in opening new workspaces, we can create workstation capacity of approximately 273,000 workstations, based on our net capex per workstation added for projects completed in the first half of 2019. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Capital Expenditures and Tenant Improvement Allowances” for an explanation of net capex per workstation added and see the “Build” section below for a calculation of net capex per workstation added in the first half of 2019. 79