4 ms·

Owning the real estate is exactly why McDonald's is valuable :) but there are odd terms. But it doesn't answer the existential question as to their valuation.

Owning the real estate is exactly why McDonald's is valuable :) but there are odd terms. But it doesn't answer the existential question as to their valuation. I don't see how WW has any systematic advantages at all. Nobody really cares if offices are in WW or some copycat clone. Many companies are wearing of paying heavy premiums for such offices and want out as soon as they can. Real estate is an old business. There is no 'new' here. Dressing up places, making them cool and selling at a premium is not new. I just don't see where the magic sauce in this business is.

secabeen 8y ago
I wonder too, but I do see some possibilities: 1) The brand has value. Sure, making an empty space into a co-working space is not that hard. However, how do you market that? How do you get potential workers to know about your space, and choose to work there? If WeWork or Impact Hub are the known brands, people will search there first, and never find you. 2) They may also be exploiting information asymmetry between the high-cost and low-cost areas. If a company in NYC or SF is used to paying $50/sqft/mo ($500/mo for just 10sqft) for space alone plus utilities, etc., they may not really balk at $500/mo for the co-working space used by a remote employee. Sure, those companies know they're getting fleeced compared to regular costs in those cities, but they may also not care, as it's not worth it to economize for just a few employees, and when it gets to many, they just negotiate a bulk deal with WeWork.
- sonnyblarney 8y ago
  I think the brand surely has value, but not $30Billion worth of value. It's like a clothing line brand or something, i.e. you might trust it more, might be willing to open offices remotely there just because your familiar with it. There is no 'asymmetry' in commercial real-estate really ... prices are well known and watched in every town. Do a little running around in any town and you get a pretty good idea very quickly. Also, they are loosing a huge ball of money. The BI article hints at 'dot-com bubble trouble' and I believe it for this one ... the economics look bad and it could crash. If this goes, and say, Tesla pops ... it could be really bad because the 'crypto coin' thing is essentially a bubble of sort (by that I mean fuelled by speculation) and that could come crashing down very easily and quickly as well. There is also an AI bubble (AI is here to stay, but companies/valuations are whack) that needs a correction. So long as the US economy stays good ... maybe all of this will hold, but some douche-bags are going to just make 'one lie too far' and things will get gummed up for a lot of otherwise good companies.
  - empath75 8y ago
    Add uber to that list.
    - sonnyblarney 8y ago
      Uber may be overvalued but they are viable on some level - so they won't go out of business, just investors will get hit. Tesla needs cash, and if they can't get it, they could fail. Or be massively downsized. WW needs cash badly, if they don't raise ... it will crash.
      - CamperBob2 8y ago
        WW needs cash badly, if they don't raise ... it will crash. I don't know about that. The relationship between WeWork and the building owners may be co-dependent rather than merely symbiotic. If you owe $10,000,000 in rent, you have a problem. If you owe $10,000,000,000 in rent, the landlord has a problem.
        microtherion 8y ago
        Not sure to what extent this holds when you owe $10M each to 1000 different landlords, though (I have no idea how many different landlords they are dealing with).
HillaryBriss 8y ago
i think the magic sauce is to create synergy in each WeWork econo-vortex for new economy micro-proprietors who are uniquely positioned to profit from aggregated networking opportunities and beer
- sonnyblarney 8y ago
  Even though your post is brilliantly sarcastic ... it may work. Starbuck's convinced a generation that they = coffee + environment. WeWork could feasibly convince a generation of Gen-Z startup wannabes that 'they are startups'. I find the milktoast 'fake startup' environments at WW kind of repulsive in that way - they are literally designed to be the 'environment for the post-Uni lifestyle' but in a watered down, 'safe space' inauthentic manner. Kids are going through schools with 'everything', Unis 'with everything' (i.e. cappuccinos and lattes into class) to workspaces 'with everything'. It's like they don't have to encounter reality now until 30. And with 'retirement spaces' moving back from 65 ... we may successfully create the capitalist driven 'cradle to grave' lifestyle factories. Like 'touring the world' is hoping from each of the 'French' and 'UK' and 'Canada' pavillions at Disney's Epcot centre ... you'll soon be able to walk through someone else's version of reality, like living full time in a 'real life commercial'. I always appreciate the entrepreneurs who want to 'get out of there as soon as possible' for so many reasons. All startups should have at least a few symbolic 'desks made out of doors' or something of the sorts, or maybe not-so-symbolic ones.
  - woah 8y ago
    You seem very angry and judgmental about people's choices about what to consume and it's not even very clear what exactly you are angry about. The only thing that you reference explicitly is lattes.
  - chipotle_coyote 8y ago
    Starbuck's convinced a generation that they = coffee + environment. I'm not entirely sure what that equation means. That Starbucks has convinced a generation they're...a coffee shop? Even if you don't like their coffee, they are a coffee shop. That Starbucks...cares about the environment? By big corporation standards, you could do worse, I guess? Or do you mean that they present themselves as a good environment to do the "hang out here for a while or work here with a laptop" thing? With provisos about how wildly this can vary from location to location (boy howdy, can it), in general I'd argue they are a good place for that. In the SF Bay Area I have a panoply of cafes that serve better coffee, but the majority of them are louder and/or more crowded and/or more expensive and/or less comfortable and/or subtly-to-openly hostile to "digital nomads." If I have a complaint against WeWork & friends, it's mostly a matter of cost; if I'd been bold enough to try a startup 10–15 years ago, which I probably should have, I wouldn't have dreamed of looking for office space until we had actual revenue (i.e., not VC/seed funding).
jartelt 8y ago
There is somewhat of a network effect for business travelers. If you are WeWork member, I assume you can grab a desk in any of their buildings around the world. That is much better than needing to sign up for multiple co-working services, and it beats always working out of a hotel business center. I am not saying WeWork can justify their valuation, but they (and some others) are fundamentally changing portions of the real estate market. They are putting more people per square foot into offices and are getting people to pay a premium for perks and flexible leases. Getting people to pay more for less space is a big deal (if it continues to work...) This is a totally different model than what traditional real estate players have done. Hence why a lot of commercial real estate players are scared and trying to catch up.
- csomar 8y ago
  > I assume you can grab a desk in any of their buildings around the world. No. At least for now.
  - deleted 8y ago
    [deleted]

secabeen 8y ago

I wonder too, but I do see some possibilities: 1) The brand has value. Sure, making an empty space into a co-working space is not that hard. However, how do you market that? How do you get potential workers to know about your space, and choose to work there? If WeWork or Impact Hub are the known brands, people will search there first, and never find you. 2) They may also be exploiting information asymmetry between the high-cost and low-cost areas. If a company in NYC or SF is used to paying $50/sqft/mo ($500/mo for just 10sqft) for space alone plus utilities, etc., they may not really balk at $500/mo for the co-working space used by a remote employee. Sure, those companies know they're getting fleeced compared to regular costs in those cities, but they may also not care, as it's not worth it to economize for just a few employees, and when it gets to many, they just negotiate a bulk deal with WeWork.

sonnyblarney 8y ago
I think the brand surely has value, but not $30Billion worth of value. It's like a clothing line brand or something, i.e. you might trust it more, might be willing to open offices remotely there just because your familiar with it. There is no 'asymmetry' in commercial real-estate really ... prices are well known and watched in every town. Do a little running around in any town and you get a pretty good idea very quickly. Also, they are loosing a huge ball of money. The BI article hints at 'dot-com bubble trouble' and I believe it for this one ... the economics look bad and it could crash. If this goes, and say, Tesla pops ... it could be really bad because the 'crypto coin' thing is essentially a bubble of sort (by that I mean fuelled by speculation) and that could come crashing down very easily and quickly as well. There is also an AI bubble (AI is here to stay, but companies/valuations are whack) that needs a correction. So long as the US economy stays good ... maybe all of this will hold, but some douche-bags are going to just make 'one lie too far' and things will get gummed up for a lot of otherwise good companies.
- empath75 8y ago
  Add uber to that list.
  - sonnyblarney 8y ago
    Uber may be overvalued but they are viable on some level - so they won't go out of business, just investors will get hit. Tesla needs cash, and if they can't get it, they could fail. Or be massively downsized. WW needs cash badly, if they don't raise ... it will crash.
    - CamperBob2 8y ago
      WW needs cash badly, if they don't raise ... it will crash. I don't know about that. The relationship between WeWork and the building owners may be co-dependent rather than merely symbiotic. If you owe $10,000,000 in rent, you have a problem. If you owe $10,000,000,000 in rent, the landlord has a problem.
      - microtherion 8y ago
        Not sure to what extent this holds when you owe $10M each to 1000 different landlords, though (I have no idea how many different landlords they are dealing with).

HillaryBriss 8y ago

i think the magic sauce is to create synergy in each WeWork econo-vortex for new economy micro-proprietors who are uniquely positioned to profit from aggregated networking opportunities and beer

sonnyblarney 8y ago
Even though your post is brilliantly sarcastic ... it may work. Starbuck's convinced a generation that they = coffee + environment. WeWork could feasibly convince a generation of Gen-Z startup wannabes that 'they are startups'. I find the milktoast 'fake startup' environments at WW kind of repulsive in that way - they are literally designed to be the 'environment for the post-Uni lifestyle' but in a watered down, 'safe space' inauthentic manner. Kids are going through schools with 'everything', Unis 'with everything' (i.e. cappuccinos and lattes into class) to workspaces 'with everything'. It's like they don't have to encounter reality now until 30. And with 'retirement spaces' moving back from 65 ... we may successfully create the capitalist driven 'cradle to grave' lifestyle factories. Like 'touring the world' is hoping from each of the 'French' and 'UK' and 'Canada' pavillions at Disney's Epcot centre ... you'll soon be able to walk through someone else's version of reality, like living full time in a 'real life commercial'. I always appreciate the entrepreneurs who want to 'get out of there as soon as possible' for so many reasons. All startups should have at least a few symbolic 'desks made out of doors' or something of the sorts, or maybe not-so-symbolic ones.
- woah 8y ago
  You seem very angry and judgmental about people's choices about what to consume and it's not even very clear what exactly you are angry about. The only thing that you reference explicitly is lattes.
- chipotle_coyote 8y ago
  Starbuck's convinced a generation that they = coffee + environment. I'm not entirely sure what that equation means. That Starbucks has convinced a generation they're...a coffee shop? Even if you don't like their coffee, they are a coffee shop. That Starbucks...cares about the environment? By big corporation standards, you could do worse, I guess? Or do you mean that they present themselves as a good environment to do the "hang out here for a while or work here with a laptop" thing? With provisos about how wildly this can vary from location to location (boy howdy, can it), in general I'd argue they are a good place for that. In the SF Bay Area I have a panoply of cafes that serve better coffee, but the majority of them are louder and/or more crowded and/or more expensive and/or less comfortable and/or subtly-to-openly hostile to "digital nomads." If I have a complaint against WeWork & friends, it's mostly a matter of cost; if I'd been bold enough to try a startup 10–15 years ago, which I probably should have, I wouldn't have dreamed of looking for office space until we had actual revenue (i.e., not VC/seed funding).

jartelt 8y ago

There is somewhat of a network effect for business travelers. If you are WeWork member, I assume you can grab a desk in any of their buildings around the world. That is much better than needing to sign up for multiple co-working services, and it beats always working out of a hotel business center. I am not saying WeWork can justify their valuation, but they (and some others) are fundamentally changing portions of the real estate market. They are putting more people per square foot into offices and are getting people to pay a premium for perks and flexible leases. Getting people to pay more for less space is a big deal (if it continues to work...) This is a totally different model than what traditional real estate players have done. Hence why a lot of commercial real estate players are scared and trying to catch up.

csomar 8y ago
> I assume you can grab a desk in any of their buildings around the world. No. At least for now.
- deleted 8y ago
  [deleted]