21 ms·

WeWork Files for IPO

299 points by idlewords 8y ago

umeshunni 8y ago
Looks like its a confidential filing. No recent results in https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001533523&owner=exclude&count=40 https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&C... We'll have to wait for the public S-1 to understand their financials.
- hbcondo714 8y ago
  For those wanting to track this more, here's the RSS link: https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001533523&type=&dateb=&owner=exclude&start=0&count=40&output=atom https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&C...
- nodesocket 8y ago
  Any timeline on the s-1 release?
jgalt212 8y ago
Looking forward to reading the "Related Persons Transactions" section.
areoform 8y ago
Out of all the recent IPOs, WeWork has both the most certain and uncertain future of them all. The spaces are clearly differentiated, hard to replicate (without a significant capital injection from a limited number of players who have a stake in WeWork anyway) and have the clearest economic model of all the recent startups; offer services + community (to the extent a place like this can offer one) + great workspaces to companies looking to mimic FANG benefits without investing significant capital. But everything rests on the edge of a knife. The underlying price sensitivity, the economics of providing the service and the rent of the space. Their model of cut-rate rents is subject to local trends and their investment in each property means that it is not easy for them to shift locations and it would be a significant loss if local landlords got out of hand. As a global company, not every market has strong renter's protections and it makes me wonder how they'll protect their assets when people realize that they could get more from them. Then there is the CEO that leased properties he owned to the We Company, making millions in the process - https://www.wsj.com/articles/weworks-ceo-makes-millions-as-landlord-to-wework-11547640000 https://www.wsj.com/articles/weworks-ceo-makes-millions-as-l... (this bit of impropriety should raise eyebrows and raises questions about the company's ability to prevent such rolling conflict of interests going forward). It is unclear to me how they'll position themselves for the long-term given the variability in real-estate. We are in the run-up to a recession, but after that when it's boom times again and prices rise rapidly, again, how will WeWork survive? Do they plan on buying properties during the bust? What's the long-term plan over here that ensures that they keep on top of the food chain? What is the lock for their spaces? Edit: The company might be losing money in the pursuit for growth but the model is clear in the sense that they provide services + benefits (swimming pools, beer, massage bars etc etc) on top of leasing out space for a fixed amount X. Unlike Uber, it is easy to imagine them minmaxing this to make money. It's not hard and they lack the kind of competition (Lyft) that would trap them at this low price point as few places in the different jurisdictions that they operate in can offer similar services due to the large upfront investment involved.
- itamarst 8y ago
  "Clearest economic model"? They're losing almost 2 BILLION dollars a year (https://www.nytimes.com/2019/03/25/business/dealbook/wework-loss-billion.html https://www.nytimes.com/2019/03/25/business/dealbook/wework-...)
  - idlewords 8y ago
    They lease property long-term, then rent it out short-term at a staggering loss. That's a model of clarity
    - itamarst 8y ago
      Fair. I used to work at company that rented from WeWork. And we were in their awful glass cubicles, like working in a Borg ship, and we wanted some privacy, so we asked about putting up some removal decals. They said no, it violated their brand guidelines. Clarity, always clarity.
      - idlewords 8y ago
        That is true commitment to transparency.
      - kevin_thibedeau 8y ago
        Just build a cubicle within your cubicle.
  - warent 8y ago
    Their revenue growth is accelerating and they're only losing money because they're investing it all on growth. The year they stop expanding/buying/renting new spaces, they'll bring in a huge net profit.
    - itamarst 8y ago
      "Sure, we lose a little on every sale, but we make it up on volume!"
lawrenceyan 8y ago
I see the looming edge of an economic recession as large swathes of hugely unprofitable companies with heavy debt offload their stock onto the public markets. Not only have a large amount of IPOs in recent months been heavily downgraded in initial pricing like Lyft, Pinterest, etc. They continue to drop in value day by day as they’re traded openly. I place a substantial amount of blame on SoftBank and by association, the Saudi Arabians, for unnecessarily inflating this current bubble to disproportionate levels. It will only cause the resultant crash to be all that much more damaging.
- stevenwliao 8y ago
  > They continue to drop in value day by day as they’re traded openly. Pinterest has been going up in value day by day.
  - lawrenceyan 8y ago
    That’s a lack of perspective playing tricks on you. You see, Pinterest heavily lowballed it’s IPO, setting initial pricing far below its previously held valuation. Why this was done? Your guess is as good as mine. :)
    - harryh 8y ago
      Pinterest's last pre-ipo valuation was at 12.something billion. It's market cap is currently a bit over 18 billion.
      - lawrenceyan 8y ago
        I can’t give you an answer as to why the stock has moved the way it’s moved in the short term of this past week. What I can tell you concretely though was that Pinterest made the willful decision to lower its initial pricing of its IPO to below its valuation (75 million shares priced between $15-17 for a total valuation of ~$11 billion compared to its original supposed pre-IPO valuation of ~$12 billion). This shows a clear lack of confidence in the company. This is a fact, not an opinion.
mrchess 8y ago
Why do people like WeWork? Here in Singapore, a hot-desk at WeWork is $400+ USD a mont. Am I crazy, or is $400 a month a lot of money for a hot-desk with decent internet? Or is it one of those things where all their money is in the big rentals, and the hot-desks are just for show?
- colmvp 8y ago
  FWIW, I've been using WeWork for the last six months to do both contract work and studying. As someone who has worked remotely for the last five years, I like having the option of working away from home, as I can get a bit cabin feverish. The location I work at is quite lively and friendly. Also, the fact that everyone around me is working has the psychological effect to encourage me not to slack off. I'll usually go to my WeWork location in the morning and work straight till the evening where I stop. Previously, when working exclusively at home, the work hours was particularly murky and inconsistent. To add, in my city WeWork usually gets prime real estate locations, so they can be easy to commute to, especially if you live in the city. And they have enough security mechanisms set up (i.e. not located on the ground floor, numerous security cameras, people at the front) where I can go to the washroom or go for a lunch break without taking my stuff. In contrast, when I used to go to the library/Starbucks to take a break from working at home, I'd always stress about finding a table/outlet a have to take my stuff anytime I took a break. No doubt $400/month isn't nothing, but for me, the efficiency and QOL gains has been well worth it.
- deleted 8y ago
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- Gpetrium 8y ago
  $400 for a month is close to $20 per day or $2.25 an hour(4 weeks*5 weekdays). If the environment WeWork gives provides a boost in your productivity, helps you network with other like-minded individuals, increases your brand exposure, provided extra amenities, decreases the cost in comparison to your current environment, etc. Then it may be worth it.
  - mrchess 8y ago
crsv 8y ago
It's going to be awesome to compare their S-1 to Uber's to see who is the most financially unviable in terms of sustainable operations.
- linuxftw 8y ago
  Plot twist (fiction, probably): Same VC's backed both companies, Large section of Uber staff paying inflated prices to WeWork.
  - bravoetch 8y ago
    That's hardly a plot twist. See Coinbase Inc. buying Earn.com for $100m in order to pay out the VCs that invested in both.
  - skinnymuch 8y ago
    Sam Altman’s company got bought out by friends/same VC/board members. And that’s a YC company with Sam being head of YC now I think. There are other examples too.
- pbreit 8y ago
  This comment shows no understanding of business or finance. For example, Uber prints money on non-pool rides in mature markets.
  - jgalt212 8y ago
    Fair enough, but if you take IBM's best product it looks like a great biz. The same goes for GE and any other currently struggling old economy biz. Even for places as colossally messed up as Deutsche Bank, you can spin the same yarn.
    - deleted 8y ago
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    - pbreit 8y ago
      you’ve cited 3 examples of the opposite of a young hyper growth company.
dvt 8y ago
Like others in this thread, I don't really get the point of WeWork. I'm 100% remote and I prefer working at coffee shops, campuses (UCLA, SMCC), or libraries -- I prefer my environment to feel less like "work" and more "creative." I also get to interact with a largely diverse group of people (as opposed to mostly tech people that work at WeWork). Going to a coffee shop is also cheaper (I buy ~2 items a day), I get to meet neighbors, plug myself into my local community, and sometimes even make small talk with cute girls. I think a good idea might be "reserving" seats at cool spots around town (coffee shops, bookstores, etc.) -- would be cheaper than a WeWork and (I think) more desireable. Think ClassPass for co-working.
- akadeb 8y ago
  I think WeWork's target audience is also new companies looking to get office space and not just solo workers. It would be hard for a group of 6-8 people, starting work on a new project, to congregate at a library/coffee-shop daily. That's probably why leasing an office would be helpful for such folks.
  - vehementi 8y ago
    They also make large offices for big companies
  - dvt 8y ago
    Yeah, this is a fair point, but aren't WeWork prices pretty exorbitant when compared to just renting some real estate through more traditional methods (i.e. an agent)?
    - lbotos 8y ago
      My understanding is you can basically be "month to month" with WeWork, where I imagine other options require you to sign a lease.
    - arusahni 8y ago
      There's a flexibility in duration and scalability that one doesn't get from a traditional agent/realtor. That being said, I've seen newer, less "hip" flex spaces open to try and target that market.
iooi 8y ago
What I don't understand about these companies that are filing with massive losses is how they plan to survive a mild recession. They're losing tons of cash during great economic conditions. What happens during a recession, when suddenly it's cheaper for tenants to break their leases?
- pie420 8y ago
  they break their leases, fire half their staff, and rent a small room from WeWork to put their remaining staff. I'm mostly joking, but I'm sure a lot of these companies believe that they can grow and exist in a recessionary economy. We'll see if that's true.
- mtkd 8y ago
  There is an argument the model they run is counter-cyclical -- some FDs would rather pay more monthly for a service they can quickly scale up/down against revenue in region vs 5 or 10yr commitments -- time may show revenues grow in a poor economy
- fullshark 8y ago
  > suddenly it's cheaper for tenants to break their leases? Isn't that also maybe good for WeWork? The following could happen: 1. WeWork will close down some sites 2. Threaten to close more and shake down their landlords for better lease conditions (since there's fewer people looking to rent corporate real estate) 3. Other companies will look to close down their own satellite offices and transfer workers to WeWork sites for cost savings. That's the bullish case for WeWork in a recession, I don't think it's absurd.
  - Traster 8y ago
    This gets the dynamic wrong though - WeWork has long term contracts with their suppliers and short term contracts with their customers. So what actually happens in a recession: 1. Businesses cancel their WeWork spaces because they're laying people off with 0-6 months notice. 2. WeWork has to eat the cost of low-occupancy buildings until their leases are up for renewal - which could be 5, 10 years down the line. 3. As the market heats back up WeWork change charge a lot for the office leases they established cheaply during the recession giving them low cost, high value rental spaces. Notice how at stage 2 you're going to have a few years where you've got a drop in revenue but high fixed costs? Normal office rental companies plan for this because of the cyclical nature of the market. The question you've got to answer is can WeWork weather that storm - and I would've though it obvious that it's in a bad position since right now they have $6.6Bn cash and lose $2Bn a year. Also I've got to challenge you on this: >3. Other companies will look to close down their own satellite offices and transfer workers to WeWork sites for cost savings. I think this is just utterly implausible. Companies don't shut down their satellite offices to move workers into smaller more expensive per head offices. What is far more likely to happen is that they cut head count and use the spare office space in their head office to close down satellite offices and move them to headquarters and close down small offices and move them to regional offices. That effect will reduce demand for WeWork, not increase it. Take Intel as an example of this: When they wanted to reduce head count the first step was to shut down failing projects and fire under performing employees. Their second step was then to use the spare space in their large offices to shut down small offices and consolidate into their big offices. All their big offices are offices they own or have extremely long term rents on, all the offices they didn't were much smaller and much more likely to be rental spaces - which is why it saved money to shut them down in the first place.
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JohnJamesRambo 8y ago
The ponzi is almost done now and ready to get out of the oven.
rchaud 8y ago
> While WeWork’s revenue is growing quickly — it doubled last year to $1.8 billion — so are its losses, which more than doubled to $1.9 billion. Those companies, like WeWork, Uber and Lyft, have argued that growing quickly is more important, and will eventually prove more lucrative, than breaking even right now. I'd agree with this outlook if this wasn't a 10-year old company that's already burned through billions in VC money. When you account for that, the "losses-now-are-good" logic only makes sense if you're a VC who needs to make their money back.
- yhoiseth 8y ago
  Should you consider past losses at all, though? Wouldn't you just be committing the sunk cost fallacy? [1] [1] https://en.wikipedia.org/wiki/Sunk_cost https://en.wikipedia.org/wiki/Sunk_cost
  - sjy 8y ago
    It is not a fallacy to consider sunk costs when they can help you estimate the marginal return on a new investment. This is likely when you are investing in something which is hard to value, with diminishing returns, like growth marketing. Making another $1 billion loss next year might be rational, but if profitability keeps getting deferred year after year, eventually it will become irrational to continue throwing good money after bad.
  - rchaud 8y ago
    I'd consider sunk costs on a project basis, as way to determine the profitability of an individual project, like the construction of an office building. For an IPO for a commercial leasing company however, a growth stock should be demonstrating positive cash flow net of financing costs. I know WeWork has these absurd WeLearn, WeLive pipe dreams to explain their growth strategy, but that takes time, and can be reversed suddenly. Uber's big pitch was "self-driving taxis" until the new CEO arrived, saw that it was a pipe dream, and focused the growth trajectory on to something more realistic like bike sharing and meal delivery. Given all that, if WeWork are IPO'ing now, I'm interested in seeing how far away they are from positive cash flow on their core business as it stands.
YeahSureWhyNot 8y ago
WeWork is buying properties and signing long term lease agreements at the very peak of the market right now and for the past few years. We all know real estate goes up and down and these purchases/leases made at the peak aren't going to be easy to keep paying for when real estate cools off.
joeblau 8y ago
This is going to be spectacular to watch.
opportune 8y ago
I think the dark horse feature of wework that may make it relatively recession proof is that recessions might increase demand for wework office space. More unemployed/underemployed white collar workers might turn to wework offices to work in startups or just to have some sort of office environment to get things done in
fergyfresh 8y ago
WeWork does for office space what companies like Just Works does for HR stuff. We are a small company that works out of NYC and WeWork is great for New York. Most office leases have a 2-5 year minimum and you have you deal with getting office furniture, janitorial services, etc. It's a LOT of overhead for a small company. Also they let you go month to month or sign up for multiple years at a discount. Also you don't have to worry about overpaying for office space as wework lets you grow from office to office without having to change your whole office setting slash commute. Its also not HORRIBLE pricing wise if you're okay with having a slightly smaller office space, because it does have a common area with free coffee, milk, beer, etc. TLDR: WeWork is more than just a sexy startup office space. It also gives you flexibility until you get big enough to be able to need a massive office.
- evantahler 8y ago
  Yep! In downtown Seattle, if you factor in all the overhead, WeWork is cheaper by person until you hit ~15 people... and without that 3 year lease!
mothsonasloth 8y ago
I think of WeWork as a haven for middle class yuppies who like to socialize with other "like minded" individuals who are trying to make the world a better place, with their sustainably produced dog outfits.
anm89 8y ago
I feel like I'm the target market for WeWork, a 30 year old contractor who primarily works out of coworking spaces and I have never seen any appeal in WeWork. Yeah, they are nice, but at their price they are not a good value relative to competitors in any major city I've seen. The two times I walked into one to try to get a tour in various cities I was told it was appointment only. The value proposition wasn't good enough to schedule time for a tour so that was the end of my interaction with WeWork. Also they had tons of full time staff just sitting around. Why not just show me around like every other coworking space in the world? Just left a bad taste in my mouth.
- rossenberg79 8y ago
  There’s lots of reasons to hate WeWork, but not giving a tour isn’t one of them. If they did that for you and a few others then word would get around that you don’t really need appointments for tours and that would cause other problems. Nothing personal.
  - yks 8y ago
    what are the problems with showing the place around? literally everyone else is doing that. besides, WeWork once responded to my appointment request a month after the date I requested it for, so they even can't get their brilliant appointment system straight.
    - smileysteve 8y ago
      > what are the problems with showing the place around? You and others coming during an event or even focus hours. Also, I imagine that their willingness to do a tour at random directly correlates with vacancy rate. It could also be a form of decorum and filtering you out. If they're not hurting for business, they'd probably much prefer clients that responsibly schedule uses of limited resources.
      - coupdejarnac 8y ago
        I've never been to a coworking space that wasn't willing to give me a tour when I dropped by. Maybe wework doesn't like making money.
impendia 8y ago
I am confused about how they could be valued at $47 billion. (Unless they own $46.9 billion worth of real estate.) Let's suppose this company can eventually turn a profit (which already seems to be in doubt). I see nothing to prevent competitors from renting out real estate, nor customers from switching. So what then is to stop WeAlsoWork, WeWorkToo, and WeWorkHarder from springing up like mushrooms?
- paxys 8y ago
  Not really defending WeWork's business model, but you can say the exact same thing about any company ever.
- Traster 8y ago
  The argument is network effects, you come to WeWork for the community. It's difficult and capital intensive to attract enough people to build a community so that's their moat. I don't belive it is anywhere near as valuable as they seem to think, but that's their argument.
pl0x 8y ago
Let us see how the public markets will tolerate the founder buying $60 million dollar private jets and starting a school just for wealthy kids.
rcconf 8y ago
I work at WeWork and I love it. The value comes from being able to network and have a place to meet and socialize while contracting. I don't really value WeWork for the space, but for the people. I find coworking spaces like WeWork to be quite an amazing place to socialize. As you age, it becomes more difficult to make friends and when working at 1 company, you usually surround yourself with the same people. At WeWork you get to meet people from many different backgrounds and companies. I met a friend who owns an insurance company (on a Microsoft stack.), another that owns a tech company for efficient travel to work (on a React stack), a group of people who have monthly subscription box companies (Shopify + CMS) and then an individual who owns an investment firm (various advice on how startups are doing in the city.) Each individual brings something to the table and I've learned a lot from them. We hang out on weekends and drink beer together. Socializing is critical for human happiness. That's the value add for WeWork for contractors in my opinion, the space is secondary. There are competitors, I've tried a few, but I found the WeWork space to be more professional. It costs more, but you get more in my opinion (in terms of space.) The other coworking spaces are kind of ugly, or they don't have constant events like WeWork. I'm sure this point varies heavily depending on the city. I'm sure monthly rate helps with keeping the space fresh. I am unsure about the valuation here, but I would consider WeWork and coworking spaces the best thing to ever happen to my social life. I went from a rather introverted person to being quite extroverted and growing emotionally. This had many other factors, but WeWork contributed.
- cjensen 8y ago
  You honestly value WeWork as a workspace, so I have a question: given the loss rates of WeWork, are you willing to pay 50% to 100% more money in the future for the space? What is your feeling about the willingness of others in the space to pay the increased rates?
  - mooreds 8y ago
    Was talking about this with some other folks and the moat for co-working space so seems pretty small, just because they are designed for mobile workers. (And hence designed for transience.)
- 8y ago
pdq 8y ago
Revenue of $1.8 billion. Loss of $1.9 billion. Thus, they are selling a dollar for 49 cents. [1] How is this a sustainable business model? [1] 1.8/(1.8+1.9)=0.49
- mrnobody_67 8y ago
  Clearly it's a great way to become a billionaire...
marinosbern 8y ago
I've had an office/desk at WeWork in NYC since 2014 (although I almost never use it any more). It's been interesting to see WeWork's evolution through the years. At the beginning, there was a lot of emphasis on community building, almost acting like a fake incubator with "WeWork Labs" (which has since shut down). The same pattern would repeat itself: new ambitious founder moves in (typically ex-Deloitte-type-person), would talk a strong game about how they're changing the world and reinventing and revolutionizing. Would have loud meetings in the conference rooms and loud fundraising calls in the phone booths that everyone would overhear and supposedly be envious of how much funding they are about to get. They would always be asking around about 'connecting' them to people who can build this app idea that they have, and how much it costs to build an app. Then, 6 months later, you would look at their desks. Empty. They were gone. We would never hear from them or see them again. I have seen this cycle repeat countless times. Starting around 2016, WeWork shifted its its efforts towards leasing to larger businesses instead of small startups or individuals. For example, last month my friend was given notice that they need to move because because a new company is renting the entire "dedicated desk" area (about 80 desks). I found it to be a very bad environment for a coder to be in. The offices are all right next to each other and the only thing separating them is a single pane of glass. Typically, 80% of the offices are occupied by loud sales-type people, who are yelling on the phone to their "overseas developers". Even if you're wearing headphones, it's pretty annoying. Especially when their conversations reveal how terrible their products and businesses are. When everyone is working at the same company, open-office-style environments are easier, because there's a level of respect among coworkers. But when you're surrounded by other companies, it's very hard to enforce. So, bottom line, if you're there to meet interesting people or be surrounded by quality companies, you will be disappointed. And if you're there to code in a quiet environment, better to stay at home. It's easy to hate on WeWork. But WeWork offers a few things that are very hard to match. First, design. You get an office space and environment (furniture, rooms, common spaces, food, snacks, coffee) that feels like you're working at a large fun tech office, which would be impossible to replicate if you just leased a commercial space on your own. Second, consistency. I can go to any WeWork in the world and I know exactly what it's going to be like — what the conference rooms will look like, how to book a day desk, how to print, etc. I know that it's going to be a good environment to have a client meeting or to do work, and I won't be let down. Third, flexibility. Most leases are month to month, and so it's very easy to move to different neighborhoods and offices (I've switched buildings 3 times). Good design, consistency and flexibility should not be discounted. I know I can rely on WeWork wherever I go. And so that's why I've still kept an office there as a pied-a-terre even though I almost never use it anymore
hoodwink 8y ago
I’ve worked in real estate private equity, specifically office acquisitions, my entire 15 year career and I can say I used to despise WeWork as much as everyone here. After doing the work to understand the business, however, I now take a contrarian position: WeWork is legit. They may not be worth $47bn, and many of these non-office endeavors may prove silly, but the coworking side is here to stay. And it is transforming (dare I say, disrupting) the old line, conservative office real estate industry. WeWork has collapsed the design-build value chain such that they can build workplaces in one-half the time as the rest of us, at a 40% discount. It’s staggering.
- avinium 8y ago
  How can you say they're disrupting anyting? WeWork didn't invent coworking, they don't have a unique offering and I don't believe they have any competitive advantage beyond capital reserves. I swapped coworking spaces purely because WeWork took it over - they're an incredibly obnoxious company, they're expensive and they've overexpanded. This is one IPO I wouldn't touch with a ten foot pole.
  - hoodwink 8y ago
    You don't understand the business. You think WeWork is for individuals like you. It's not. It's for enterprises. In any case, I addressed their staggering competitive advantage in my original post. They can build space in one-half the time at 60% of the cost because they have a 2,000 person multidisciplinary product team made up of architects, engineers, interior designers, developers, and contractors. They've integrated the value chain like Amazon has in online retail. They're disrupting the industrial complex of lawyers, lenders, brokers, and landlords who surround the Kafkaesque, traditional, 10-year office lease. WeWork is not even close to overexpanding. Coworking is less than 2% of the 10 billion square foot US office market. It's going to 30% or beyond. They haven't even hit the vertical part of the S-curve. Remember, coworking may have started with individuals like you, but now the much larger source of demand is enterprise. With actual companies WeWork and coworking are substitutes to a painful, limited-service, long-term lease.
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beager 8y ago
> Technically, its parent company is the We Company, whose stated mission is “to elevate the world’s consciousness.” Well, they're right. I'm now more conscious of how absurd their mission is.
themagician 8y ago
Every WeWork is different. I was one of the very first WeWork customers in New York. I was in the Chinatown building when it was still unfinished. I remember someone asking me about decor and what I thought they should do. I think it might have even been Adam Neumann himself. - Some locations are filled with real people doing actual business and provide real networking opportunities. - Some locations are dominated by a single startup. - Some locations are filled with rich kids goofing off, drinking on the roof. - Some locations are filled with scammers running all sorts of scams. (I've seen everything from bogus "information products" to outright ponzi's to fake doctors providing injections and transfusion for hangovers.) - Some locations provide an address for otherwise illegal businesses. I've probably been to over two dozen WeWork locations. Every one has its own vibe. They very much represent what's happening around them. I kept at least the minimum level subscription up until a year ago when I finally cancelled completely. The problem with WeWork is, in my opinion, that you never know what to expect. You can't rely on it being quiet. You can't reliably have a serious meeting if there's going to be some idiots outside the door screwing around, or someone is going to use the meeting room across from you to host an informal audition for a porn shoot and there's a line of scantily clad women stretching down the hall. I suspect that management knows this and it's part of the reason why they tried to drop the "work" in WeWork and just become We Company. WeWork is going to turn into something of a social club. Sure, you can work there if you want to, the same way you can work out of The Battery or the Soho House if you want. WeWork is just going to become a broadly accessible version of a social club. Pay a monthly fee and get to feel like you are part of something exclusive.
iamleppert 8y ago
I tried co-working as a cure for my WFH remote job depression and it didn’t work. Everyone sits together and works side by side but don’t talk to each other. Except for the people that are obviously working together. You don’t make real relationships, all the connections I made, while diverse and interesting, were not deep like you how you’d connect with real colleagues. I tried multiple co-working spaces and in the end I couldn’t replicate the connection or emotional obligation I felt toward real co-workers. This was despite all kinds of special events and hand holding by the spaces and forced socialization. It really feels they are doing their best to “build a community” so at some level they do know that it can’t just be a bunch of transient people who don’t really know each other. Or at least that will be quite depressing if that’s what it becomes. I hate to say it but when you’re forced to work with someone you do get to know them and bond with them. In my time there I noticed there was a huge problem with attrition. Just like I was experiencing, other people were not making the connections and gradually deciding it wasn’t worth it and thus not coming back. Also, all the forced socialization and events had a fake and artificial quality to them that eventually became annoying to me. No, I don’t want to bake cookies with some random guy I probably won’t ever see again. I soon stopped going to the events, and I noticed most of the people who went to them were all new people. The staff all knew this and they even tried to guilt us into attending the events, which just made it even more weird & awkward. Did anyone else have this experience? Maybe I’m just unique but I can’t help but feel these sorts of spaces may be just burning through a bunch of people trying them out and who knows where the bottom of that is? I’d like to see the attrition numbers of these places, which will ultimately tell you if it’s worth all this investment or not.
- ravenstine 8y ago
  That's my experience to a tee, although I'm not particularly bothered by it since I don't use "coworking" as a means to socialize or network, though I know it's sold as a way to facilitate networking. If I need to network, I simply go to industry meetups on Meetup.com, which are free. And yeah, a lot of the events these places have, while certainly well-intentioned, don't work that well in my experience. It's really not that easy to get to know people in these facilities since the expectation is that everyone be able to focus on what they are doing, so few feel comfortable striking up conversations with people they don't know. I'm sure it's regional to a degree, but that's my experience. I currently use a coworking space because I've found no other suitable places to work, and will have to do so until I find a home with a room that can be my office. Once I move, I won't ever go back to coworking if I can avoid it. Well, maybe I would if it was $50 a month, but paying hundreds of dollars a month for a chair and WiFi is pretty excessive. Most of the perks offered by coworking spaces can be had elsewhere for much cheaper.
nicolas_t 8y ago
I got 3 months hot-desk for free at a local Wework. I tried it and stayed 2 hours and an half. I never went back. The chairs were uncomfortable, the place was loud and overall the work environment was worse than a starbucks (starbucks is for me the minimum acceptable level of a coffee shop to work in). I get that it might make sense for companies sharing a desk, but it definitely doesn't make sense for someone like me who works remotely from home, especially not for the $600/month they ask for in HK. If they had comfortable chairs and monitors I could sometimes connect to when needed, it might make sense.
- deleted 8y ago
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tyingq 8y ago
Curious if the S1 mentions that the CEO personally owns many of the buildings they rent out. https://www.wsj.com/articles/weworks-ceo-makes-millions-as-landlord-to-wework-11547640000 https://www.wsj.com/articles/weworks-ceo-makes-millions-as-l...
formercoder 8y ago
Very curious to see what their cash flows are like. WeWork has a ton of what Is effectively debt in the form of capital leases. A key indicator is going to be what load factor can they maintain profitability at.
Taylor_OD 8y ago
I'm in a WeWork right now. Trying to get out as soon as possible. They just dont have spaces for anyone who needs to do phone sales. We've had to do so much to make our space work acoustically for us.
bfrog 8y ago
Another pyramid scheme public investor dump. Another stock I'll be shorting.
oli5679 8y ago
I really enjoyed Sam Altman's criticism of coworking spaces. https://medium.com/conversations-with-tyler/tyler-cowen-sam-altman-ai-tech-business-58f530417522 https://medium.com/conversations-with-tyler/tyler-cowen-sam-... "Every time someone decides they’re going to build the next Y Combinator, the idea is always the following: “It’s going to be just like Y Combinator, except we’re going to provide free coworking space.” I always want to say to people, “Did you ever think that maybe we thought about that, and it’s a feature, not a bug, that we don’t have it?” I think the single thing that has differentiated YC more than any other decision we’ve made is that we do not have a coworking space. We bring the companies together once a week, but that’s it. It’s enough for a community, but it is enough to build your own identity. Coworking spaces have two big classes of problems. Number one, they are a band-pass filter. Good ideas — actually, no, great ideas are fragile. Great ideas are easy to kill. An idea in its larval stage — all the best ideas when I first heard them sound bad. And all of us, myself included, are much more affected by what other people think of us and our ideas then we like to admit. If you are just four people in your own door, and you have an idea that sounds bad but is great, you can keep that self-delusion going. If you’re in a coworking space, people laugh at you, and no one wants to be the kid picked last at recess. So you change your idea to something that sounds plausible but is never going to matter. It’s true that coworking spaces do kill off the very worst ideas, but a band-pass filter for startups is a terrible thing because they kill off the best ideas, too. The other thing is the average level of ambition and willingness to work hard at a coworking space is incredibly low. There’s this reversion to the mean that is not what you want in your life."
Saturdays 8y ago
I think a lot of folks here think WeWork is just a co-working space. WeWork has full on teams from F500s occupying their spaces in some locations, sometimes even completely isolated from externals companies by building or floor. Its a great trade-off to owning/renting and managing your own space. I'm not saying its cheaper in all respects.. but its less of a headache, and less headcount needed to manage. The individual co-working space is the small play. It is especially more lucrative if you think about it from a real estate perspective, there are so many provisions and ways to grow that investment if you own key properties.
hellbanner 8y ago
You forgot the rest of the title.

299 points by idlewords 8y ago

Looks like its a confidential filing. No recent results in https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001533523&owner=exclude&count=40 https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&C... We'll have to wait for the public S-1 to understand their financials.

hbcondo714 8y ago
For those wanting to track this more, here's the RSS link: https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001533523&type=&dateb=&owner=exclude&start=0&count=40&output=atom https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&C...
nodesocket 8y ago
Any timeline on the s-1 release?

jgalt212 8y ago

Looking forward to reading the "Related Persons Transactions" section.

areoform 8y ago

Out of all the recent IPOs, WeWork has both the most certain and uncertain future of them all. The spaces are clearly differentiated, hard to replicate (without a significant capital injection from a limited number of players who have a stake in WeWork anyway) and have the clearest economic model of all the recent startups; offer services + community (to the extent a place like this can offer one) + great workspaces to companies looking to mimic FANG benefits without investing significant capital. But everything rests on the edge of a knife. The underlying price sensitivity, the economics of providing the service and the rent of the space. Their model of cut-rate rents is subject to local trends and their investment in each property means that it is not easy for them to shift locations and it would be a significant loss if local landlords got out of hand. As a global company, not every market has strong renter's protections and it makes me wonder how they'll protect their assets when people realize that they could get more from them. Then there is the CEO that leased properties he owned to the We Company, making millions in the process - https://www.wsj.com/articles/weworks-ceo-makes-millions-as-landlord-to-wework-11547640000 https://www.wsj.com/articles/weworks-ceo-makes-millions-as-l... (this bit of impropriety should raise eyebrows and raises questions about the company's ability to prevent such rolling conflict of interests going forward). It is unclear to me how they'll position themselves for the long-term given the variability in real-estate. We are in the run-up to a recession, but after that when it's boom times again and prices rise rapidly, again, how will WeWork survive? Do they plan on buying properties during the bust? What's the long-term plan over here that ensures that they keep on top of the food chain? What is the lock for their spaces? Edit: The company might be losing money in the pursuit for growth but the model is clear in the sense that they provide services + benefits (swimming pools, beer, massage bars etc etc) on top of leasing out space for a fixed amount X. Unlike Uber, it is easy to imagine them minmaxing this to make money. It's not hard and they lack the kind of competition (Lyft) that would trap them at this low price point as few places in the different jurisdictions that they operate in can offer similar services due to the large upfront investment involved.

itamarst 8y ago
"Clearest economic model"? They're losing almost 2 BILLION dollars a year (https://www.nytimes.com/2019/03/25/business/dealbook/wework-loss-billion.html https://www.nytimes.com/2019/03/25/business/dealbook/wework-...)
- idlewords 8y ago
  They lease property long-term, then rent it out short-term at a staggering loss. That's a model of clarity
  - itamarst 8y ago
    Fair. I used to work at company that rented from WeWork. And we were in their awful glass cubicles, like working in a Borg ship, and we wanted some privacy, so we asked about putting up some removal decals. They said no, it violated their brand guidelines. Clarity, always clarity.
    - idlewords 8y ago
      That is true commitment to transparency.
    - kevin_thibedeau 8y ago
      Just build a cubicle within your cubicle.
- warent 8y ago
  Their revenue growth is accelerating and they're only losing money because they're investing it all on growth. The year they stop expanding/buying/renting new spaces, they'll bring in a huge net profit.
  - itamarst 8y ago
    "Sure, we lose a little on every sale, but we make it up on volume!"

lawrenceyan 8y ago

I see the looming edge of an economic recession as large swathes of hugely unprofitable companies with heavy debt offload their stock onto the public markets. Not only have a large amount of IPOs in recent months been heavily downgraded in initial pricing like Lyft, Pinterest, etc. They continue to drop in value day by day as they’re traded openly. I place a substantial amount of blame on SoftBank and by association, the Saudi Arabians, for unnecessarily inflating this current bubble to disproportionate levels. It will only cause the resultant crash to be all that much more damaging.

stevenwliao 8y ago
> They continue to drop in value day by day as they’re traded openly. Pinterest has been going up in value day by day.
- lawrenceyan 8y ago
  That’s a lack of perspective playing tricks on you. You see, Pinterest heavily lowballed it’s IPO, setting initial pricing far below its previously held valuation. Why this was done? Your guess is as good as mine. :)
  - harryh 8y ago
    Pinterest's last pre-ipo valuation was at 12.something billion. It's market cap is currently a bit over 18 billion.
    - lawrenceyan 8y ago
      I can’t give you an answer as to why the stock has moved the way it’s moved in the short term of this past week. What I can tell you concretely though was that Pinterest made the willful decision to lower its initial pricing of its IPO to below its valuation (75 million shares priced between $15-17 for a total valuation of ~$11 billion compared to its original supposed pre-IPO valuation of ~$12 billion). This shows a clear lack of confidence in the company. This is a fact, not an opinion.

mrchess 8y ago

Why do people like WeWork? Here in Singapore, a hot-desk at WeWork is $400+ USD a mont. Am I crazy, or is $400 a month a lot of money for a hot-desk with decent internet? Or is it one of those things where all their money is in the big rentals, and the hot-desks are just for show?

colmvp 8y ago
FWIW, I've been using WeWork for the last six months to do both contract work and studying. As someone who has worked remotely for the last five years, I like having the option of working away from home, as I can get a bit cabin feverish. The location I work at is quite lively and friendly. Also, the fact that everyone around me is working has the psychological effect to encourage me not to slack off. I'll usually go to my WeWork location in the morning and work straight till the evening where I stop. Previously, when working exclusively at home, the work hours was particularly murky and inconsistent. To add, in my city WeWork usually gets prime real estate locations, so they can be easy to commute to, especially if you live in the city. And they have enough security mechanisms set up (i.e. not located on the ground floor, numerous security cameras, people at the front) where I can go to the washroom or go for a lunch break without taking my stuff. In contrast, when I used to go to the library/Starbucks to take a break from working at home, I'd always stress about finding a table/outlet a have to take my stuff anytime I took a break. No doubt $400/month isn't nothing, but for me, the efficiency and QOL gains has been well worth it.
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Gpetrium 8y ago
$400 for a month is close to $20 per day or $2.25 an hour(4 weeks*5 weekdays). If the environment WeWork gives provides a boost in your productivity, helps you network with other like-minded individuals, increases your brand exposure, provided extra amenities, decreases the cost in comparison to your current environment, etc. Then it may be worth it.
- mrchess 8y ago

crsv 8y ago

It's going to be awesome to compare their S-1 to Uber's to see who is the most financially unviable in terms of sustainable operations.

linuxftw 8y ago
Plot twist (fiction, probably): Same VC's backed both companies, Large section of Uber staff paying inflated prices to WeWork.
- bravoetch 8y ago
  That's hardly a plot twist. See Coinbase Inc. buying Earn.com for $100m in order to pay out the VCs that invested in both.
- skinnymuch 8y ago
  Sam Altman’s company got bought out by friends/same VC/board members. And that’s a YC company with Sam being head of YC now I think. There are other examples too.
pbreit 8y ago
This comment shows no understanding of business or finance. For example, Uber prints money on non-pool rides in mature markets.
- jgalt212 8y ago
  Fair enough, but if you take IBM's best product it looks like a great biz. The same goes for GE and any other currently struggling old economy biz. Even for places as colossally messed up as Deutsche Bank, you can spin the same yarn.
  - deleted 8y ago
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  - pbreit 8y ago
    you’ve cited 3 examples of the opposite of a young hyper growth company.

dvt 8y ago

Like others in this thread, I don't really get the point of WeWork. I'm 100% remote and I prefer working at coffee shops, campuses (UCLA, SMCC), or libraries -- I prefer my environment to feel less like "work" and more "creative." I also get to interact with a largely diverse group of people (as opposed to mostly tech people that work at WeWork). Going to a coffee shop is also cheaper (I buy ~2 items a day), I get to meet neighbors, plug myself into my local community, and sometimes even make small talk with cute girls. I think a good idea might be "reserving" seats at cool spots around town (coffee shops, bookstores, etc.) -- would be cheaper than a WeWork and (I think) more desireable. Think ClassPass for co-working.

akadeb 8y ago
I think WeWork's target audience is also new companies looking to get office space and not just solo workers. It would be hard for a group of 6-8 people, starting work on a new project, to congregate at a library/coffee-shop daily. That's probably why leasing an office would be helpful for such folks.
- vehementi 8y ago
  They also make large offices for big companies
- dvt 8y ago
  Yeah, this is a fair point, but aren't WeWork prices pretty exorbitant when compared to just renting some real estate through more traditional methods (i.e. an agent)?
  - lbotos 8y ago
    My understanding is you can basically be "month to month" with WeWork, where I imagine other options require you to sign a lease.
  - arusahni 8y ago
    There's a flexibility in duration and scalability that one doesn't get from a traditional agent/realtor. That being said, I've seen newer, less "hip" flex spaces open to try and target that market.

iooi 8y ago

What I don't understand about these companies that are filing with massive losses is how they plan to survive a mild recession. They're losing tons of cash during great economic conditions. What happens during a recession, when suddenly it's cheaper for tenants to break their leases?

pie420 8y ago
they break their leases, fire half their staff, and rent a small room from WeWork to put their remaining staff. I'm mostly joking, but I'm sure a lot of these companies believe that they can grow and exist in a recessionary economy. We'll see if that's true.
mtkd 8y ago
There is an argument the model they run is counter-cyclical -- some FDs would rather pay more monthly for a service they can quickly scale up/down against revenue in region vs 5 or 10yr commitments -- time may show revenues grow in a poor economy
fullshark 8y ago
> suddenly it's cheaper for tenants to break their leases? Isn't that also maybe good for WeWork? The following could happen: 1. WeWork will close down some sites 2. Threaten to close more and shake down their landlords for better lease conditions (since there's fewer people looking to rent corporate real estate) 3. Other companies will look to close down their own satellite offices and transfer workers to WeWork sites for cost savings. That's the bullish case for WeWork in a recession, I don't think it's absurd.
- Traster 8y ago
  This gets the dynamic wrong though - WeWork has long term contracts with their suppliers and short term contracts with their customers. So what actually happens in a recession: 1. Businesses cancel their WeWork spaces because they're laying people off with 0-6 months notice. 2. WeWork has to eat the cost of low-occupancy buildings until their leases are up for renewal - which could be 5, 10 years down the line. 3. As the market heats back up WeWork change charge a lot for the office leases they established cheaply during the recession giving them low cost, high value rental spaces. Notice how at stage 2 you're going to have a few years where you've got a drop in revenue but high fixed costs? Normal office rental companies plan for this because of the cyclical nature of the market. The question you've got to answer is can WeWork weather that storm - and I would've though it obvious that it's in a bad position since right now they have $6.6Bn cash and lose $2Bn a year. Also I've got to challenge you on this: >3. Other companies will look to close down their own satellite offices and transfer workers to WeWork sites for cost savings. I think this is just utterly implausible. Companies don't shut down their satellite offices to move workers into smaller more expensive per head offices. What is far more likely to happen is that they cut head count and use the spare office space in their head office to close down satellite offices and move them to headquarters and close down small offices and move them to regional offices. That effect will reduce demand for WeWork, not increase it. Take Intel as an example of this: When they wanted to reduce head count the first step was to shut down failing projects and fire under performing employees. Their second step was then to use the spare space in their large offices to shut down small offices and consolidate into their big offices. All their big offices are offices they own or have extremely long term rents on, all the offices they didn't were much smaller and much more likely to be rental spaces - which is why it saved money to shut them down in the first place.

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JohnJamesRambo 8y ago

The ponzi is almost done now and ready to get out of the oven.

rchaud 8y ago

> While WeWork’s revenue is growing quickly — it doubled last year to $1.8 billion — so are its losses, which more than doubled to $1.9 billion. Those companies, like WeWork, Uber and Lyft, have argued that growing quickly is more important, and will eventually prove more lucrative, than breaking even right now. I'd agree with this outlook if this wasn't a 10-year old company that's already burned through billions in VC money. When you account for that, the "losses-now-are-good" logic only makes sense if you're a VC who needs to make their money back.

yhoiseth 8y ago
Should you consider past losses at all, though? Wouldn't you just be committing the sunk cost fallacy? [1] [1] https://en.wikipedia.org/wiki/Sunk_cost https://en.wikipedia.org/wiki/Sunk_cost
- sjy 8y ago
  It is not a fallacy to consider sunk costs when they can help you estimate the marginal return on a new investment. This is likely when you are investing in something which is hard to value, with diminishing returns, like growth marketing. Making another $1 billion loss next year might be rational, but if profitability keeps getting deferred year after year, eventually it will become irrational to continue throwing good money after bad.
- rchaud 8y ago
  I'd consider sunk costs on a project basis, as way to determine the profitability of an individual project, like the construction of an office building. For an IPO for a commercial leasing company however, a growth stock should be demonstrating positive cash flow net of financing costs. I know WeWork has these absurd WeLearn, WeLive pipe dreams to explain their growth strategy, but that takes time, and can be reversed suddenly. Uber's big pitch was "self-driving taxis" until the new CEO arrived, saw that it was a pipe dream, and focused the growth trajectory on to something more realistic like bike sharing and meal delivery. Given all that, if WeWork are IPO'ing now, I'm interested in seeing how far away they are from positive cash flow on their core business as it stands.

YeahSureWhyNot 8y ago

WeWork is buying properties and signing long term lease agreements at the very peak of the market right now and for the past few years. We all know real estate goes up and down and these purchases/leases made at the peak aren't going to be easy to keep paying for when real estate cools off.

joeblau 8y ago

This is going to be spectacular to watch.

opportune 8y ago

I think the dark horse feature of wework that may make it relatively recession proof is that recessions might increase demand for wework office space. More unemployed/underemployed white collar workers might turn to wework offices to work in startups or just to have some sort of office environment to get things done in

fergyfresh 8y ago

WeWork does for office space what companies like Just Works does for HR stuff. We are a small company that works out of NYC and WeWork is great for New York. Most office leases have a 2-5 year minimum and you have you deal with getting office furniture, janitorial services, etc. It's a LOT of overhead for a small company. Also they let you go month to month or sign up for multiple years at a discount. Also you don't have to worry about overpaying for office space as wework lets you grow from office to office without having to change your whole office setting slash commute. Its also not HORRIBLE pricing wise if you're okay with having a slightly smaller office space, because it does have a common area with free coffee, milk, beer, etc. TLDR: WeWork is more than just a sexy startup office space. It also gives you flexibility until you get big enough to be able to need a massive office.

evantahler 8y ago
Yep! In downtown Seattle, if you factor in all the overhead, WeWork is cheaper by person until you hit ~15 people... and without that 3 year lease!

mothsonasloth 8y ago

I think of WeWork as a haven for middle class yuppies who like to socialize with other "like minded" individuals who are trying to make the world a better place, with their sustainably produced dog outfits.

anm89 8y ago

I feel like I'm the target market for WeWork, a 30 year old contractor who primarily works out of coworking spaces and I have never seen any appeal in WeWork. Yeah, they are nice, but at their price they are not a good value relative to competitors in any major city I've seen. The two times I walked into one to try to get a tour in various cities I was told it was appointment only. The value proposition wasn't good enough to schedule time for a tour so that was the end of my interaction with WeWork. Also they had tons of full time staff just sitting around. Why not just show me around like every other coworking space in the world? Just left a bad taste in my mouth.

rossenberg79 8y ago
There’s lots of reasons to hate WeWork, but not giving a tour isn’t one of them. If they did that for you and a few others then word would get around that you don’t really need appointments for tours and that would cause other problems. Nothing personal.
- yks 8y ago
  what are the problems with showing the place around? literally everyone else is doing that. besides, WeWork once responded to my appointment request a month after the date I requested it for, so they even can't get their brilliant appointment system straight.
  - smileysteve 8y ago
    > what are the problems with showing the place around? You and others coming during an event or even focus hours. Also, I imagine that their willingness to do a tour at random directly correlates with vacancy rate. It could also be a form of decorum and filtering you out. If they're not hurting for business, they'd probably much prefer clients that responsibly schedule uses of limited resources.
    - coupdejarnac 8y ago
      I've never been to a coworking space that wasn't willing to give me a tour when I dropped by. Maybe wework doesn't like making money.

impendia 8y ago

I am confused about how they could be valued at $47 billion. (Unless they own $46.9 billion worth of real estate.) Let's suppose this company can eventually turn a profit (which already seems to be in doubt). I see nothing to prevent competitors from renting out real estate, nor customers from switching. So what then is to stop WeAlsoWork, WeWorkToo, and WeWorkHarder from springing up like mushrooms?

paxys 8y ago
Not really defending WeWork's business model, but you can say the exact same thing about any company ever.
Traster 8y ago
The argument is network effects, you come to WeWork for the community. It's difficult and capital intensive to attract enough people to build a community so that's their moat. I don't belive it is anywhere near as valuable as they seem to think, but that's their argument.

pl0x 8y ago

Let us see how the public markets will tolerate the founder buying $60 million dollar private jets and starting a school just for wealthy kids.

rcconf 8y ago

I work at WeWork and I love it. The value comes from being able to network and have a place to meet and socialize while contracting. I don't really value WeWork for the space, but for the people. I find coworking spaces like WeWork to be quite an amazing place to socialize. As you age, it becomes more difficult to make friends and when working at 1 company, you usually surround yourself with the same people. At WeWork you get to meet people from many different backgrounds and companies. I met a friend who owns an insurance company (on a Microsoft stack.), another that owns a tech company for efficient travel to work (on a React stack), a group of people who have monthly subscription box companies (Shopify + CMS) and then an individual who owns an investment firm (various advice on how startups are doing in the city.) Each individual brings something to the table and I've learned a lot from them. We hang out on weekends and drink beer together. Socializing is critical for human happiness. That's the value add for WeWork for contractors in my opinion, the space is secondary. There are competitors, I've tried a few, but I found the WeWork space to be more professional. It costs more, but you get more in my opinion (in terms of space.) The other coworking spaces are kind of ugly, or they don't have constant events like WeWork. I'm sure this point varies heavily depending on the city. I'm sure monthly rate helps with keeping the space fresh. I am unsure about the valuation here, but I would consider WeWork and coworking spaces the best thing to ever happen to my social life. I went from a rather introverted person to being quite extroverted and growing emotionally. This had many other factors, but WeWork contributed.

cjensen 8y ago
You honestly value WeWork as a workspace, so I have a question: given the loss rates of WeWork, are you willing to pay 50% to 100% more money in the future for the space? What is your feeling about the willingness of others in the space to pay the increased rates?
- mooreds 8y ago
  Was talking about this with some other folks and the moat for co-working space so seems pretty small, just because they are designed for mobile workers. (And hence designed for transience.)
8y ago

pdq 8y ago

Revenue of $1.8 billion. Loss of $1.9 billion. Thus, they are selling a dollar for 49 cents. [1] How is this a sustainable business model? [1] 1.8/(1.8+1.9)=0.49

mrnobody_67 8y ago
Clearly it's a great way to become a billionaire...

marinosbern 8y ago

I've had an office/desk at WeWork in NYC since 2014 (although I almost never use it any more). It's been interesting to see WeWork's evolution through the years. At the beginning, there was a lot of emphasis on community building, almost acting like a fake incubator with "WeWork Labs" (which has since shut down). The same pattern would repeat itself: new ambitious founder moves in (typically ex-Deloitte-type-person), would talk a strong game about how they're changing the world and reinventing and revolutionizing. Would have loud meetings in the conference rooms and loud fundraising calls in the phone booths that everyone would overhear and supposedly be envious of how much funding they are about to get. They would always be asking around about 'connecting' them to people who can build this app idea that they have, and how much it costs to build an app. Then, 6 months later, you would look at their desks. Empty. They were gone. We would never hear from them or see them again. I have seen this cycle repeat countless times. Starting around 2016, WeWork shifted its its efforts towards leasing to larger businesses instead of small startups or individuals. For example, last month my friend was given notice that they need to move because because a new company is renting the entire "dedicated desk" area (about 80 desks). I found it to be a very bad environment for a coder to be in. The offices are all right next to each other and the only thing separating them is a single pane of glass. Typically, 80% of the offices are occupied by loud sales-type people, who are yelling on the phone to their "overseas developers". Even if you're wearing headphones, it's pretty annoying. Especially when their conversations reveal how terrible their products and businesses are. When everyone is working at the same company, open-office-style environments are easier, because there's a level of respect among coworkers. But when you're surrounded by other companies, it's very hard to enforce. So, bottom line, if you're there to meet interesting people or be surrounded by quality companies, you will be disappointed. And if you're there to code in a quiet environment, better to stay at home. It's easy to hate on WeWork. But WeWork offers a few things that are very hard to match. First, design. You get an office space and environment (furniture, rooms, common spaces, food, snacks, coffee) that feels like you're working at a large fun tech office, which would be impossible to replicate if you just leased a commercial space on your own. Second, consistency. I can go to any WeWork in the world and I know exactly what it's going to be like — what the conference rooms will look like, how to book a day desk, how to print, etc. I know that it's going to be a good environment to have a client meeting or to do work, and I won't be let down. Third, flexibility. Most leases are month to month, and so it's very easy to move to different neighborhoods and offices (I've switched buildings 3 times). Good design, consistency and flexibility should not be discounted. I know I can rely on WeWork wherever I go. And so that's why I've still kept an office there as a pied-a-terre even though I almost never use it anymore

hoodwink 8y ago

I’ve worked in real estate private equity, specifically office acquisitions, my entire 15 year career and I can say I used to despise WeWork as much as everyone here. After doing the work to understand the business, however, I now take a contrarian position: WeWork is legit. They may not be worth $47bn, and many of these non-office endeavors may prove silly, but the coworking side is here to stay. And it is transforming (dare I say, disrupting) the old line, conservative office real estate industry. WeWork has collapsed the design-build value chain such that they can build workplaces in one-half the time as the rest of us, at a 40% discount. It’s staggering.

avinium 8y ago
How can you say they're disrupting anyting? WeWork didn't invent coworking, they don't have a unique offering and I don't believe they have any competitive advantage beyond capital reserves. I swapped coworking spaces purely because WeWork took it over - they're an incredibly obnoxious company, they're expensive and they've overexpanded. This is one IPO I wouldn't touch with a ten foot pole.
- hoodwink 8y ago
  You don't understand the business. You think WeWork is for individuals like you. It's not. It's for enterprises. In any case, I addressed their staggering competitive advantage in my original post. They can build space in one-half the time at 60% of the cost because they have a 2,000 person multidisciplinary product team made up of architects, engineers, interior designers, developers, and contractors. They've integrated the value chain like Amazon has in online retail. They're disrupting the industrial complex of lawyers, lenders, brokers, and landlords who surround the Kafkaesque, traditional, 10-year office lease. WeWork is not even close to overexpanding. Coworking is less than 2% of the 10 billion square foot US office market. It's going to 30% or beyond. They haven't even hit the vertical part of the S-curve. Remember, coworking may have started with individuals like you, but now the much larger source of demand is enterprise. With actual companies WeWork and coworking are substitutes to a painful, limited-service, long-term lease.

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beager 8y ago

> Technically, its parent company is the We Company, whose stated mission is “to elevate the world’s consciousness.” Well, they're right. I'm now more conscious of how absurd their mission is.

themagician 8y ago

Every WeWork is different. I was one of the very first WeWork customers in New York. I was in the Chinatown building when it was still unfinished. I remember someone asking me about decor and what I thought they should do. I think it might have even been Adam Neumann himself. - Some locations are filled with real people doing actual business and provide real networking opportunities. - Some locations are dominated by a single startup. - Some locations are filled with rich kids goofing off, drinking on the roof. - Some locations are filled with scammers running all sorts of scams. (I've seen everything from bogus "information products" to outright ponzi's to fake doctors providing injections and transfusion for hangovers.) - Some locations provide an address for otherwise illegal businesses. I've probably been to over two dozen WeWork locations. Every one has its own vibe. They very much represent what's happening around them. I kept at least the minimum level subscription up until a year ago when I finally cancelled completely. The problem with WeWork is, in my opinion, that you never know what to expect. You can't rely on it being quiet. You can't reliably have a serious meeting if there's going to be some idiots outside the door screwing around, or someone is going to use the meeting room across from you to host an informal audition for a porn shoot and there's a line of scantily clad women stretching down the hall. I suspect that management knows this and it's part of the reason why they tried to drop the "work" in WeWork and just become We Company. WeWork is going to turn into something of a social club. Sure, you can work there if you want to, the same way you can work out of The Battery or the Soho House if you want. WeWork is just going to become a broadly accessible version of a social club. Pay a monthly fee and get to feel like you are part of something exclusive.

iamleppert 8y ago

I tried co-working as a cure for my WFH remote job depression and it didn’t work. Everyone sits together and works side by side but don’t talk to each other. Except for the people that are obviously working together. You don’t make real relationships, all the connections I made, while diverse and interesting, were not deep like you how you’d connect with real colleagues. I tried multiple co-working spaces and in the end I couldn’t replicate the connection or emotional obligation I felt toward real co-workers. This was despite all kinds of special events and hand holding by the spaces and forced socialization. It really feels they are doing their best to “build a community” so at some level they do know that it can’t just be a bunch of transient people who don’t really know each other. Or at least that will be quite depressing if that’s what it becomes. I hate to say it but when you’re forced to work with someone you do get to know them and bond with them. In my time there I noticed there was a huge problem with attrition. Just like I was experiencing, other people were not making the connections and gradually deciding it wasn’t worth it and thus not coming back. Also, all the forced socialization and events had a fake and artificial quality to them that eventually became annoying to me. No, I don’t want to bake cookies with some random guy I probably won’t ever see again. I soon stopped going to the events, and I noticed most of the people who went to them were all new people. The staff all knew this and they even tried to guilt us into attending the events, which just made it even more weird & awkward. Did anyone else have this experience? Maybe I’m just unique but I can’t help but feel these sorts of spaces may be just burning through a bunch of people trying them out and who knows where the bottom of that is? I’d like to see the attrition numbers of these places, which will ultimately tell you if it’s worth all this investment or not.

ravenstine 8y ago
That's my experience to a tee, although I'm not particularly bothered by it since I don't use "coworking" as a means to socialize or network, though I know it's sold as a way to facilitate networking. If I need to network, I simply go to industry meetups on Meetup.com, which are free. And yeah, a lot of the events these places have, while certainly well-intentioned, don't work that well in my experience. It's really not that easy to get to know people in these facilities since the expectation is that everyone be able to focus on what they are doing, so few feel comfortable striking up conversations with people they don't know. I'm sure it's regional to a degree, but that's my experience. I currently use a coworking space because I've found no other suitable places to work, and will have to do so until I find a home with a room that can be my office. Once I move, I won't ever go back to coworking if I can avoid it. Well, maybe I would if it was $50 a month, but paying hundreds of dollars a month for a chair and WiFi is pretty excessive. Most of the perks offered by coworking spaces can be had elsewhere for much cheaper.

nicolas_t 8y ago

I got 3 months hot-desk for free at a local Wework. I tried it and stayed 2 hours and an half. I never went back. The chairs were uncomfortable, the place was loud and overall the work environment was worse than a starbucks (starbucks is for me the minimum acceptable level of a coffee shop to work in). I get that it might make sense for companies sharing a desk, but it definitely doesn't make sense for someone like me who works remotely from home, especially not for the $600/month they ask for in HK. If they had comfortable chairs and monitors I could sometimes connect to when needed, it might make sense.

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tyingq 8y ago

Curious if the S1 mentions that the CEO personally owns many of the buildings they rent out. https://www.wsj.com/articles/weworks-ceo-makes-millions-as-landlord-to-wework-11547640000 https://www.wsj.com/articles/weworks-ceo-makes-millions-as-l...

formercoder 8y ago

Very curious to see what their cash flows are like. WeWork has a ton of what Is effectively debt in the form of capital leases. A key indicator is going to be what load factor can they maintain profitability at.

Taylor_OD 8y ago

I'm in a WeWork right now. Trying to get out as soon as possible. They just dont have spaces for anyone who needs to do phone sales. We've had to do so much to make our space work acoustically for us.

bfrog 8y ago

Another pyramid scheme public investor dump. Another stock I'll be shorting.

oli5679 8y ago

I really enjoyed Sam Altman's criticism of coworking spaces. https://medium.com/conversations-with-tyler/tyler-cowen-sam-altman-ai-tech-business-58f530417522 https://medium.com/conversations-with-tyler/tyler-cowen-sam-... "Every time someone decides they’re going to build the next Y Combinator, the idea is always the following: “It’s going to be just like Y Combinator, except we’re going to provide free coworking space.” I always want to say to people, “Did you ever think that maybe we thought about that, and it’s a feature, not a bug, that we don’t have it?” I think the single thing that has differentiated YC more than any other decision we’ve made is that we do not have a coworking space. We bring the companies together once a week, but that’s it. It’s enough for a community, but it is enough to build your own identity. Coworking spaces have two big classes of problems. Number one, they are a band-pass filter. Good ideas — actually, no, great ideas are fragile. Great ideas are easy to kill. An idea in its larval stage — all the best ideas when I first heard them sound bad. And all of us, myself included, are much more affected by what other people think of us and our ideas then we like to admit. If you are just four people in your own door, and you have an idea that sounds bad but is great, you can keep that self-delusion going. If you’re in a coworking space, people laugh at you, and no one wants to be the kid picked last at recess. So you change your idea to something that sounds plausible but is never going to matter. It’s true that coworking spaces do kill off the very worst ideas, but a band-pass filter for startups is a terrible thing because they kill off the best ideas, too. The other thing is the average level of ambition and willingness to work hard at a coworking space is incredibly low. There’s this reversion to the mean that is not what you want in your life."

Saturdays 8y ago

I think a lot of folks here think WeWork is just a co-working space. WeWork has full on teams from F500s occupying their spaces in some locations, sometimes even completely isolated from externals companies by building or floor. Its a great trade-off to owning/renting and managing your own space. I'm not saying its cheaper in all respects.. but its less of a headache, and less headcount needed to manage. The individual co-working space is the small play. It is especially more lucrative if you think about it from a real estate perspective, there are so many provisions and ways to grow that investment if you own key properties.

hellbanner 8y ago

You forgot the rest of the title.