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They're signing expensive long term leases and then renting them for the short term at a loss, which is like exactly the opposite of how it's supposed to work.

harryh 7y ago
Their unit economics are positive, not negative.
- Barrin92 7y ago
  with a sufficiently creative definition of unit economics aka "community-adjusted EBITDA", sure. In the actual world, not so much.
  - harryh 7y ago
    You are confusing unit economic vs profitability. They are very different things. If I manufacture a widget for $1 and sell it for $.50 then my unit economics are negative and, unless I manage to either lower manufacturing costs or raise prices I am in trouble forever. If I manufacture a widget for $1 and sell it for $1.50 then my unit economics are positive. My company might still be unprofitable due to other expenses though (R&D, Marketing, whatever). This is the situation that WeWork is in.
    - Barrin92 7y ago
      I am aware of the difference. If you look at their numbers, their literal unit economics are negative, if you employ normal EBITDA. They don't, they employ a so called "adjusted EBITDA", which last year flatout discounted 150 million in marketing as non-recurring trying to make the argument that you just made. But this is hilarious number fudging, because obviously a lot of marketing budget is recurring and goes towarss retaining existing customers and should go into a unit cost metric. They do the same thing that uber did, which is pretending that they can magically 'scale' and that they are a tech company, when in reality they are a real estate business siphoning money out of investors, pretending their losses are somehow magically going to turn into profit.
      - treis 7y ago
        >I am aware of the difference. If you look at their numbers, their literal unit economics are negative, if you employ normal EBITDA. I don't think you are aware of the difference. EBITDA takes overhead into account and is not unit economics.

harryh 7y ago

Their unit economics are positive, not negative.

Barrin92 7y ago
with a sufficiently creative definition of unit economics aka "community-adjusted EBITDA", sure. In the actual world, not so much.
- harryh 7y ago
  You are confusing unit economic vs profitability. They are very different things. If I manufacture a widget for $1 and sell it for $.50 then my unit economics are negative and, unless I manage to either lower manufacturing costs or raise prices I am in trouble forever. If I manufacture a widget for $1 and sell it for $1.50 then my unit economics are positive. My company might still be unprofitable due to other expenses though (R&D, Marketing, whatever). This is the situation that WeWork is in.
  - Barrin92 7y ago
    I am aware of the difference. If you look at their numbers, their literal unit economics are negative, if you employ normal EBITDA. They don't, they employ a so called "adjusted EBITDA", which last year flatout discounted 150 million in marketing as non-recurring trying to make the argument that you just made. But this is hilarious number fudging, because obviously a lot of marketing budget is recurring and goes towarss retaining existing customers and should go into a unit cost metric. They do the same thing that uber did, which is pretending that they can magically 'scale' and that they are a tech company, when in reality they are a real estate business siphoning money out of investors, pretending their losses are somehow magically going to turn into profit.
    - treis 7y ago
      >I am aware of the difference. If you look at their numbers, their literal unit economics are negative, if you employ normal EBITDA. I don't think you are aware of the difference. EBITDA takes overhead into account and is not unit economics.