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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
by 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 agoThis 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 agoThey 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.