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Imagine you are an employee of MidSizedBank in MidSizedCity but happen to live and work in BigCity because your company has enough business with BigCity compani

by evgen 7y ago

Imagine you are an employee of MidSizedBank in MidSizedCity but happen to live and work in BigCity because your company has enough business with BigCity companies that it makes sense to have a local presence for face to face meetings. MidSizedBank isn't quite sure how much business they will actually be doing out of BigCity over the next five years and do not want to commit to a space just yet but currently have six people in BigCity and have teams day-tripping in for 2-3 days every couple of weeks. WeWork provides the space and general office infrastructure and MidSizedBank has flexibility for this remote team. The WeWork I am at in London is filled with companies like this. Docker's UK team, PagerDuty's EU branch, more small quant teams than you can shake a stick at, etc. You may have better coffee and wifi at your house, but the rest of your team is not interested in crashing in your kitchen all day...

TheOtherHobbes 7y ago
If WW can do this, so can any competitor - large and small. UK retail is about to implode, so there's going to be plenty of competition in the co-working space as landlords and local business associations agree that reduced rent from light office occupancy is better than no rent from shops. That may not quite serve the MidSizeMarket - but just as easily, larger competitors with stronger branding and sales efforts could move in. Especially after a downturn. So WW is horribly exposed. It has no real first-mover advantage, no long-term loyalty from customers, and serious financial issues.
TheCoelacanth 7y ago
But what differentiates them from any other company that rents out commercial real estate and re-leases it on a shorter term? I can totally believe that their line of business will grow by a huge factor, but I don't believe that they will ever earn the out-sized margins to justify their current valuation. Their business can be replicated by anyone with a bit of capital to spend on leasing office space. They don't actually own most of their office space; they just lease it.
- evgen 7y ago
  Nothing specific differentiates them other than scope. I can bounce among a hot desk at a variety of locations around the city, do the same in cities across the EU/US, and my company only needs one service provider account to manage. And we can do so with a generous subsidy from US VCs...
  - HillaryBriss 7y ago
    > I can bounce among a hot desk at a variety of locations around the city, do the same in cities across the EU/US ... what about a consistent user experience? that might differentiate We from competitors: ease of use and familiarity of environment for the workers. I mean, I go into a Starbucks or a Target store and it looks familiar and I already know what I'm gonna get (another Starbucks).

by evgen 7y ago

TheOtherHobbes 7y ago

If WW can do this, so can any competitor - large and small. UK retail is about to implode, so there's going to be plenty of competition in the co-working space as landlords and local business associations agree that reduced rent from light office occupancy is better than no rent from shops. That may not quite serve the MidSizeMarket - but just as easily, larger competitors with stronger branding and sales efforts could move in. Especially after a downturn. So WW is horribly exposed. It has no real first-mover advantage, no long-term loyalty from customers, and serious financial issues.

TheCoelacanth 7y ago

But what differentiates them from any other company that rents out commercial real estate and re-leases it on a shorter term? I can totally believe that their line of business will grow by a huge factor, but I don't believe that they will ever earn the out-sized margins to justify their current valuation. Their business can be replicated by anyone with a bit of capital to spend on leasing office space. They don't actually own most of their office space; they just lease it.

evgen 7y ago
Nothing specific differentiates them other than scope. I can bounce among a hot desk at a variety of locations around the city, do the same in cities across the EU/US, and my company only needs one service provider account to manage. And we can do so with a generous subsidy from US VCs...
- HillaryBriss 7y ago
  > I can bounce among a hot desk at a variety of locations around the city, do the same in cities across the EU/US ... what about a consistent user experience? that might differentiate We from competitors: ease of use and familiarity of environment for the workers. I mean, I go into a Starbucks or a Target store and it looks familiar and I already know what I'm gonna get (another Starbucks).