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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

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 7y 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 7y 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.
  - avinium 7y ago
    > You don't understand the business. You think WeWork is for individuals like you. It's not. It's for enterprises. What's your definition of "enterprise" leasing? 200+ sqm leases for 3 years? Either way, I guess we'll have to wait for the WeWork S-1 to see whether or not your assessment is correct. However, if my personal experience of 5 (admittedly international) WeWork offices is anything to go by, it's not. The tenants I saw were overwhelmingly 3-10 person teams (and when they exceeded that number, they moved out and traded up for a more traditional/permanent office lease). Of course, that's just anecdotal, and hardly statistically significant. You might be right - if so, I'm guessing their S-1 will show 30%+ of revenue from longer-term enterprise leases. But even if that's true, I still don't see it as an advantage. Serviced offices and independent coworking spaces offering "spillover" space for enterprises are a dime a dozen. I'll grant that WeWork might have an advantage in interior design & fitout - but again, so what? How many companies will pay a premium for a "WeWork designed office"? How many even care? This is obviously a lot of speculation about what businesses want and what they're willing to pay for. Maybe you're right, maybe I'm right - who knows. We'll keep a close eye on the numbers and see which one is correct.

avinium 7y 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 7y 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.
- avinium 7y ago
  > You don't understand the business. You think WeWork is for individuals like you. It's not. It's for enterprises. What's your definition of "enterprise" leasing? 200+ sqm leases for 3 years? Either way, I guess we'll have to wait for the WeWork S-1 to see whether or not your assessment is correct. However, if my personal experience of 5 (admittedly international) WeWork offices is anything to go by, it's not. The tenants I saw were overwhelmingly 3-10 person teams (and when they exceeded that number, they moved out and traded up for a more traditional/permanent office lease). Of course, that's just anecdotal, and hardly statistically significant. You might be right - if so, I'm guessing their S-1 will show 30%+ of revenue from longer-term enterprise leases. But even if that's true, I still don't see it as an advantage. Serviced offices and independent coworking spaces offering "spillover" space for enterprises are a dime a dozen. I'll grant that WeWork might have an advantage in interior design & fitout - but again, so what? How many companies will pay a premium for a "WeWork designed office"? How many even care? This is obviously a lot of speculation about what businesses want and what they're willing to pay for. Maybe you're right, maybe I'm right - who knows. We'll keep a close eye on the numbers and see which one is correct.