11 ms·

Comparing WeWork to traditional office landlord is like comparing Starbucks to Dunkin' Donut. Please don't go to Starbucks because its coffee is better or cheap

• neaden 9y ago
  Your metaphor is ridiculous. Plenty of people prefer Starbucks coffee to DD, claiming that going to Starbucks is a "lifestyle choice" in 2017 is absurd. People go to Starbucks because it has products they like, primarily a variety of coffee drinks that include milk, cream, sugar, or other flavorings. Comparing Starbucks to DD is a perfectly appropriate thing to do, as is comparing WeWork to Boston Properties is a reasonable thing to do.
  • optimuspaul 9y ago
    Coffee in general is a lifestyle choice. Not disagreeing with you just saying that in my opinion everything about coffee is lifestyle.
    • pfisch 9y ago
      To a point I agree. Nespresso machines are about 100x better than Keurigs. They just are and no amount of lifestyle marketing is going to change that.
    • fitzroy 9y ago
      Afternoon coffee is lifestyle; morning coffee is survival.
      • polyomino 9y ago
        survival is lifestyle ;)
  • bluntfang 9y ago
    Dunkin Donuts has those same sugary milky drinks. Starbucks vs Dunkin is white collar vs blue collar.
• santaclaus 9y ago
  > Please don't go to Starbucks because its coffee is better or cheaper (it's neither), but as a lifestyle choice Try telling a Bostonian that Dunks isn't a lifestyle choice...
• nugget 9y ago
  I went to WeWork just because I needed a few month-to-month desks quickly. WeWork has excellent execution but I don't think of them as a lifestyle or luxury brand. If someone else can provide me the same ballpark product for 20% less then I would likely switch. There's a lot of room for competitors to move into the market.
  • madaxe_again 9y ago
    It's called working from home, and it's a lot more than 20% less.
    • eyko 9y ago
      Not if you regularly have clients come around for meetings or colleagues for a chat. WeWork provides a good enough atmosphere to work and socialise with work related people (it's not just the desk you're paying for).
      • lloyd-christmas 9y ago
        Half my business comes from other companies in the wework network. I also regularly contract out work to people in the network.
        • madaxe_again 9y ago
          So you're saying you've built a business 50% dependent on someone else's business. That's fragile.
          • lloyd-christmas 9y ago
            That's some piss poor logic. Half my current business comes from a network I belong to. That doesn't mean that it's DEPENDENT on that network. If I go to the same restaurant everyday but that restaurant goes out of business, do I starve? I just go to the place next door.
          • 9y ago
• nradov 9y ago
  Actually stock analysts do compare Starbucks to Dunkin' Donuts, as well as other fast food chains.
• madaxe_again 9y ago
  Indeed, they go there for the foosball, table tennis, coffee and self-congratulation. Sure, sure, physical proximity to other startups, mentorship, etc. - but frankly the impression I've got from each wework location I've been to has been of people wanting the "startup lifestyle" rather than wanting to build a business. The actual startup lifestyle is sweating in a cheap grotty office, rice, and sleeping under your desk - but I suppose that's not a palatable option for most. Yeah, I'm contemptuous - but I'd sooner invest in a frugal scrappy business than one that thinks it needs mahogany desks for its team. And yes, of course, I write this as one who did it the scrappy way, and had a reasonably successful exit.
  • csomar 9y ago
    People want to feel trendy. They are not running "Startups" because they want to build stuff that scales. They are running mostly failed businesses that look trendy/cool, so that they can "fit in". Selling emotions is a big business. Lots of brands are relying on it.
    • madaxe_again 9y ago
      Yep - hell, most businesses sell on emotion - it's a much more secure attachment than ration, and even when it comes to b2b, more often than not the decision comes down to who they like more/who gives a better vibe. That said when things go south, they really go south, as an emotional buy allows for betrayal and an emotional fall-out. Which is why I think wework is grossly overvalued and likely to follow a parabolic trajectory.
      • mcny 9y ago
        > Which is why I think wework is grossly overvalued and likely to follow a parabolic trajectory. I still think the same way about dropbox but thankfully for YCombinator as well as Drew, Arash et al reality does not follow my train of thought. (I am ashamed of the way I reacted to the original news about Dropbox and I bring it up not to shame dropbox but to caution myself from saying something like that again. The world is... weird. I mean the top story at the moment is mongo db valuation https://news.ycombinator.com/item?id=15508507 https://news.ycombinator.com/item?id=15508507 https://archive.fo/hxHW4 https://archive.fo/hxHW4 ) Edit: name
• rgbrenner 9y ago
  And yet if you compare SBUX and DNKN, they have nearly identical PE and EPS. SBUX only has a larger market cap because they have more revenue than DNKN. At the end of the day, WeWork uses X sqft per desk, has an average occupancy rate, etc. So one way to look at their business is revenue/sqft.. which is very similar to a traditional landlord. The only real difference is that WeWork can improve their revenue/sqft by adding desks without tearing down walls or remodeling the building; and they can increase prices at a faster rate than a traditional landlord who has a longer lease term. But on the downside, they have shorter lease terms, which makes their earnings less stable and more responsive to market conditions (ie: it's easier to stop paying WeWork during a market downturn that it is for a traditional landlord). The question is, are WeWork properties similar to Boston's properties, and does WeWork generate 5x the revenue/sqft as Boston on similar properties.
  • mbesto 9y ago
    > and they can increase prices at a faster rate than a traditional landlord who has a longer lease term. They can also lose clients much quicker than a landlord that has longer lease terms. The only thing realistically driving WeWork's valuation (outside of the "SV pixie dust") is the potential for WeWork to sell direct or become a marketplace for ancillary services (e.g. business software, legal services, etc).
    • yourapostasy 9y ago
      > The only thing realistically driving WeWork's valuation (outside of the "SV pixie dust") is the potential for WeWork to sell direct or become a marketplace for ancillary services (e.g. business software, legal services, etc). The way they go about doing that looks like an ad-ish model. "Here's a bunch of vendors that were willing to pay our vigorish to be shoved in front of you." That's tough to build a premium around if you don't scale the ads, or have a compelling story for the advertisers on how much more effectively WeWork converts their co-working renters than, say, Google AdWords. An A-B test WeWork might carry out is put in an AdWords campaign side-by-side with a WeWork-based campaign for as many vendor types they can think of, and measure the results between the two on an ( ad-spend : sales_expenses - revenue ) ratio basis, and tweak their strategy model from there. If I'm one of the vendors WeWork is trying to pitch to their co-working renters, then I'd immediately be thinking, "they reach a smaller audience than my AdWords purchases (or whatever other marketing channel I'm comparing to), but supposedly more targeted, so if I put some spend there does it really perform?" If you are a new startup, then there is a lot of bullshit in the business world that wastes a lot of your time because you simply don't know better on what to spend your limited time upon. Having a SCORES-like concierge/advisor service on tap (for a fee after an initial time of trying it out, perhaps) might be another way for WeWork to build premium value. But not scalable. If the premium on-site staff is highly attuned into their renters' concerns, etc., that might be a way to add value by using that information as a development input. But that's very non-scalable. Their core value proposition seems to run right into competing against Google on an efficiency basis, so I must be missing something the investors didn't.
• incomplete 9y ago
  actually, i beg to differ. my wife has a 90% remote job and has a desk @ wework in berkeley. i've met a ton of her weworkmates and while a large percentage are entrepreneurs, many are remote workers or self-employed. even the small amount of infrastructure that wework provides to it's members is incredibly useful: wifi that always works, coffee, lounge area, meeting/phone rooms and generally a quiet place to focus and get work done.
  • pcsanwald 9y ago
    I agree. I wonder if most people in this thread saying that renting your own space is cheaper has ever really done this. I have, a bunch, and keeping the lights on is not free in terms of time/money. At a small company, this means either you hire someone to handle all this stuff, or make the employees do it. Either way, running an office yourself ends up being expensive.
    • eldavido 9y ago
      I pay $400/month for an office for four. Probably another 100-200/month for random services like Internet access via an ISP, general commercial liability insurance I'm required to carry by my landlord, and other random stuff like, idk, paper. You absolutely can get a much cheaper office than WeWork. Maybe not if you focus is MEGA GROWTH and you're going to hire 100 people in the 5 days it takes to get a basic network setup going (calendar time, not wall clock - ISPs take time). But that's not the game I'm playing, been there done that, and the place I worked just got bought for about 1/5th of the capital it raised, so I'm kinda over it.
      • pcsanwald 9y ago
        yeah, I guess my point is that maintaining internet and general office stuff is not "free", in that it's costing you your time or money. I don't spend much time on office stuff, but if the office is just software engineers, it's actually pretty expensive for anyone to spend any time on office stuff. I am not saying it's more expensive than wework, but it is damn sure more expensive than just looking at rent + monthly bills.
• untog 9y ago
  > Similarly, people don't go to WeWork because they need a desk. Err, yes they do. I don't doubt that WeWork has an above average number of startup entrepreneurs in their office spaces, but every WeWork I've been in also has a lot of self-employed people who just want a small office space to work in.
• bluntfang 9y ago
  starbucks and dunkin donuts are similarly priced in pretty much all areas. They both have regular coffee at similar price points. They both have fancy sugary drinks at similar price points. They both have food at similar price points.