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I don't really understand the WeWork valuation of $20 billion. I guess they buy all their properties so they greatly profit from the rising property prizes in

I don't really understand the WeWork valuation of $20 billion. I guess they buy all their properties so they greatly profit from the rising property prizes in capitals around their world. I work a lot in coworking spaces and they usually don't seem like a cash cow for the owners. Now WeWork seems to target the B2B and luxury segment of coworking with prices 1,5x-3x of the competitors'. Interesting strategy. So is the coworking just a vehicle for the appreciating property prices? Or are they much more popular than I thought? Or am I missing something else?

prawn 9y ago
I've co-owned a small co-working space for about a year now. It's been a good decision, financially. Nothing extravagant, but I certainly have no regrets and I'd invest in another if the opportunity came up. One thing that I think helps is that historically, consulting rooms have been a big desk in a 4x4m room with 1-2 client chairs facing the tenant. In a co-working space, you could accommodate 3-4 desks/tenants in the same area, especially if you're open plan. Generally speaking, you can charge 3-4 people for a desk more than you can charge a single user for a room. More business than ever is online, and shared boardrooms suffice for meetings, private client calls, etc. Most people now get by without loads of filing and other storage space so a fairly standard desk (smaller than what we used 10-20 years ago) does the job.
- sah2ed 9y ago
  May I ask where your space is located?
  - prawn 9y ago
    In South Australia (links to it via personal site linked in my profile). 13 desks total, but we're currently fully tenanted.
puranjay 9y ago
I gave up on coworking early this month. I've been using a coworking space for nearly 2 years, tested out various spaces and realized that they're just bad for productivity. Far too many people at coworking spaces seem to be there for networking, or are simply not serious enough about work. I moved to a 'business center' (like Regus) which has a much quieter and more professional environment. Couldn't be happier.
- hellofunk 9y ago
  I have found that a really good library is typically a much better work environment than these coworking spaces, and at 100% less the cost. I tried Regus for a couple days, but it felt no different to me than a coworking space. Maybe it was that particular Regus location.
  - The_DaveG 9y ago
    Libraries are great places to work from! Typically quiet, good internet, nice people, and many larger ones have rooms you can sign out or rent for meetings.
  - lostcolony 9y ago
    Yes! Whenever my wife and I have spent large amount of time at her mother's (where there's effectively no internet due to being so far out in the boonies), I'd drive the 10 minutes to a nearby library in town that actually had a decent connection, and would work from there. Only issue was the dearth of areas to take calls, but even that was only mildly inconvenient, since I'm usually on mute, and could duck outside for those.
    - jldugger 9y ago
      Every library I've been in has had a few small spaces available for reservation for maybe 2 hour blocks. They're sometimes kinda hidden though, and sometimes first come first serve, so not always what you need.
  - puranjay 9y ago
meddlepal 9y ago
I don't think they buy all their property. In Boston they have four locations and are planning a fifth but they're all rented / leased from property mgmt firms.
solatic 9y ago
Recall how McDonald's is more of a real estate company than a restaurant company. Owning the land which is then leased out to franchisees isolates failure with the franchise's owner while funneling franchise fees into buying more real estate, which creates a positive spiral whereby the value of McDonald's is always growing because the it keeps adding more and more lands as assets. If WeWork buys real estate to operate co-working quasi-franchises on that real estate, and uses the profits to fund further asset acquisition, then that's a pretty similar model.
- CPLX 9y ago
  This comes up every time WeWork is mentioned, but their model is literally the opposite. They take leases on commercial space long term and then arbitrage short term. Meaning they lose out on massive gains but are totally exposed to a downturn in demand for the kind of space they provide.
  - roguecoder 9y ago
    They are riding the current bubble, and momentum investing is solid cash. It seems like they want to be Levi's, using this gold rush to do rapid customer experimentation and then commercialize those gains over the long-term. Diversifying the possible uses of their space via MeetUp is at least a step in that direction.

prawn 9y ago

I've co-owned a small co-working space for about a year now. It's been a good decision, financially. Nothing extravagant, but I certainly have no regrets and I'd invest in another if the opportunity came up. One thing that I think helps is that historically, consulting rooms have been a big desk in a 4x4m room with 1-2 client chairs facing the tenant. In a co-working space, you could accommodate 3-4 desks/tenants in the same area, especially if you're open plan. Generally speaking, you can charge 3-4 people for a desk more than you can charge a single user for a room. More business than ever is online, and shared boardrooms suffice for meetings, private client calls, etc. Most people now get by without loads of filing and other storage space so a fairly standard desk (smaller than what we used 10-20 years ago) does the job.

sah2ed 9y ago
May I ask where your space is located?
- prawn 9y ago
  In South Australia (links to it via personal site linked in my profile). 13 desks total, but we're currently fully tenanted.

puranjay 9y ago

I gave up on coworking early this month. I've been using a coworking space for nearly 2 years, tested out various spaces and realized that they're just bad for productivity. Far too many people at coworking spaces seem to be there for networking, or are simply not serious enough about work. I moved to a 'business center' (like Regus) which has a much quieter and more professional environment. Couldn't be happier.

hellofunk 9y ago
I have found that a really good library is typically a much better work environment than these coworking spaces, and at 100% less the cost. I tried Regus for a couple days, but it felt no different to me than a coworking space. Maybe it was that particular Regus location.
- The_DaveG 9y ago
  Libraries are great places to work from! Typically quiet, good internet, nice people, and many larger ones have rooms you can sign out or rent for meetings.
- lostcolony 9y ago
  Yes! Whenever my wife and I have spent large amount of time at her mother's (where there's effectively no internet due to being so far out in the boonies), I'd drive the 10 minutes to a nearby library in town that actually had a decent connection, and would work from there. Only issue was the dearth of areas to take calls, but even that was only mildly inconvenient, since I'm usually on mute, and could duck outside for those.
  - jldugger 9y ago
    Every library I've been in has had a few small spaces available for reservation for maybe 2 hour blocks. They're sometimes kinda hidden though, and sometimes first come first serve, so not always what you need.
- puranjay 9y ago

meddlepal 9y ago

I don't think they buy all their property. In Boston they have four locations and are planning a fifth but they're all rented / leased from property mgmt firms.

solatic 9y ago

Recall how McDonald's is more of a real estate company than a restaurant company. Owning the land which is then leased out to franchisees isolates failure with the franchise's owner while funneling franchise fees into buying more real estate, which creates a positive spiral whereby the value of McDonald's is always growing because the it keeps adding more and more lands as assets. If WeWork buys real estate to operate co-working quasi-franchises on that real estate, and uses the profits to fund further asset acquisition, then that's a pretty similar model.

CPLX 9y ago
This comes up every time WeWork is mentioned, but their model is literally the opposite. They take leases on commercial space long term and then arbitrage short term. Meaning they lose out on massive gains but are totally exposed to a downturn in demand for the kind of space they provide.
- roguecoder 9y ago
  They are riding the current bubble, and momentum investing is solid cash. It seems like they want to be Levi's, using this gold rush to do rapid customer experimentation and then commercialize those gains over the long-term. Diversifying the possible uses of their space via MeetUp is at least a step in that direction.