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Patrick McKenzie (twitter.com/patio11) has been relaying some of the bull case, though I don't know whether he's endorsing it, or just relaying it. I don't have

Patrick McKenzie (twitter.com/patio11) has been relaying some of the bull case, though I don't know whether he's endorsing it, or just relaying it. I don't have time to find his tweets right now, but they're in the past few weeks of his timeline. Basically: 1) if remote work continues to grow, they become an easy magnet because every company will pay for WeWork reimbursements more readily than some random local expenditure. 2) like AWS, they allow a big financial change: real estate moves from CapEx to OpEx, which is desirable for companies. Edit: one tweet https://twitter.com/patio11/status/1161796809741627392 https://twitter.com/patio11/status/1161796809741627392

tempsy 7y ago
How many remote workers choose to pay for a coworking desk (reimbursed I’m sure) instead of just working from home though?
- amerine 7y ago
  My completely personal experience hints that lots and lots now and more and more every year.
  - ghaff 7y ago
    Personally, I haven't really seen this. People need to get together in conference rooms from time to time for meetings and they rent space for that. However, on the video calls I'm on more or less daily, essentially everyone is in a company location, traveling, or at home. I've know people who did rent a co-working office but it's been the odd exception. To be fair, most of the remote people I work with are relatively senior and that may make a difference. They probably care less about having the social aspect of an office and they probably tend to have more room at home for, e.g., a dedicated office.
- kevstev 7y ago
  Remote workers can often get some budget for a coworking space. Not enough to work there every day. But enough to get out of the house every once in awhile. There is also just the contingency aspect of it- I had a scheduled power outage in my building when I was working remotely, I could either take off that day, or just find a coworking or other space, but I chose to try a coworking space. Power outages may not be common, but there were also days when I had family in town and such, and just didn't want the distraction.
- Mvhsz 7y ago
  So I actually have a free wework pass from my online masters degree program. I live about 3 blocks from a large wework that was built in the last couple of years. My company let's me work from home whenever I want. I have a 45 minute commute so I usually WFH on fridays or anytime I have an appointment. I went a few times when it was novel, but after that I really only use it less than 1 in 5 of my work from home days. And on some of those WFH days, I'll walk to the coffee shop accross from the wework to get an espresso and then go back and work at my house. Point being, I don't find wework to be a compelling remote work offering when it's free. So it seems unlikely to me that there's very much room to grow in that market.
goatinaboat 7y ago
every company will pay for WeWork reimbursements more readily than some random local expenditure But why would they? Even wealthy companies now insist that most business travel is done in economy class. Big airlines can’t sell business-class seats just by making expense claims easy to file. So why does WeWork think it can sell flashy office space?
- arcturus17 7y ago
  Following your analogy, wouldn't WeWork want to be the economy class of office expenditure, rather than the business class? One of the points of uncertainty though is whether they can keep up the flashiness, ie, they might be selling business seats at economy prices.
  - goatinaboat 7y ago
    Indeed - they can’t have their cake and eat it, in other words. A high valuation can only be justified by a high margin.
  - loopdoend 7y ago
    They are economy class. I don't find them flashy at all. Their offices are tiny, glass enclosed, like fish bowls. I can't imagine working in one of them, and I've heard nothing but terrible feedback from others.
    - breatheoften 7y ago
      I like my wework office space ...
- naravara 7y ago
  Yeah this is the argument I don't get. Tons of companies just give employees who travel a per diem for travel expenses. A per diem for remote work expenses to spend on whatever shared office space you want is not that hard. Filing expenses is trivially easy now and there are tons of apps/services out there that do text recognition on receipts and credit card statements to make the value addition of something like this very close to zero.
Avshalom 7y ago
The problem isn't the business concept; Regus/iwg make money, but it's 100m on 2b. The problem is that wework is just some combination of shady and awful at business, and there's no reason to think they'll get any better with scale.
gamblor956 7y ago
Regis has been around for a lot longer than WeWork and does the same thing for less. Their offices are also more professional, because they're designed for people to do actual work and not just be look like they're working.
- ineedasername 7y ago
  Are you saying that having beer on tap is either unprofessional or not conducive to actual work? Color me shocked!
  - sjburt 7y ago
    Didn't wework have to switch to kombucha after someone realized that a place where you pay money to hang out all day and drink is in fact a bar and you need a liquor license?
    - ineedasername 7y ago
      I thought that was only in certain jurisdictions. Maybe it was universal though.
      - chucksmash 7y ago
        I'd assume it'd be certain jurisdictions. You definitely don't need a liquor license to serve beer and wine universally[1]. [1]: Which leads to insane decisions like restaurants that make "Bloody Marys" with beer...
    - jonwachob91 7y ago
      > Are you saying that having beer on tap is either unprofessional or not conducive to actual work? Color me shocked! >> Didn't wework have to switch to kombucha after someone realized that a place where you pay money to hang out all day and drink is in fact a bar and you need a liquor license? A "liquor" license and a "beer and wine" license are 2 different things. A beer and wine license is a few hundred bucks (depending on your location), and just requires some paperwork. A liquor license can be over $100k depending on your location.
hogFeast 7y ago
As others have said: Regus. What is being missed though: WeWork have actually built out a fairly comparable level of capacity to Regus. The difference is that WeWork are heavily concentrated in major cities, whereas Regus is diversified (they have locations in Mongolia and Nepal, I believe). The reason why is simple: Regus made the mistake of overbuilding in major cities last time round. The US business went into BK, they aren't making that mistake again. In fact, even taking this very capital investment strategy, you can see that they still have substantial swings in their business. WeWork have built out massive capacity which cannot be filled (in London, they actually have a meaningful market share of new office space). They did this because you can show great short-term results. BK is inevitable. I would go as far to say: anyone who believes this isn't bullshit has identified themselves as an idiot too (at least, in terms of investment knowledge). This isn't remotely difficult.
- NotSammyHagar 7y ago
  sorry, what is BK? Bankruptcy I guess.
  - iamnotacrook 7y ago
    I thought Burger King. As in, they couldn't afford to eat anywhere else.
    - pnongrata 7y ago
      Though they could afford to eat at MD as well.
  - NotDavidLeeRoth 7y ago
    The Free Dictionary lists "Bankruptcy" as the meaning within the banking industry: https://acronyms.thefreedictionary.com/BK https://acronyms.thefreedictionary.com/BK
- ghaff 7y ago
  >they still have substantial swings in their business Not really surprising. Some uses--like a conference room for a big customer meeting--are pretty much business necessities. But things like an office for remote employees who mostly just prefer to get out of the house but not work out of free space somewhere are the sort of discretionary expense that companies will chop pretty quickly if they're tightening their belts.
ineedasername 7y ago
On #2, how does this change from CapEx to OpEx? Unless there's actually a transfer of ownership involved, generally at the end of a lease, traditional releases are already considered operational expenses, not capital.
- kasey_junk 7y ago
  It’s less a move from capex to opex and more a move to short term leases. I’m skeptical that’s a moat that will defend WeWork but it’s certainly a handy feature.
- kgwgk 7y ago
  The accounting standards are changing and long-term (i.e. longer than 12 months) leases are now included in the balance sheet: https://www.iasplus.com/en/publications/global/thinking-allowed/2016/lease-accounting https://www.iasplus.com/en/publications/global/thinking-allo...
  - ineedasername 7y ago
    Okay, that makes sense, so it's less of a shift and more of a way to continue or return to business as usual.
duxup 7y ago
How many of WeWork's customer's are individuals? I was curious and looked them up a while back, it was EXPENSIVE compared to other options. I'm not at all sure how many companies filter "We'll pay for an office for you to work at WeWork... but not elsewhere." In fact most remote work that I've seen isn't interested in paying for any local office space... they want to save on that, not spend more / manage it.
Dwolb 7y ago
I’m into this thesis but last time I checked for a sizable office they wanted a 2x-3x premium vs comparable long-term lease market rates. That type of premium felt irresponsible as compared to the possibility of increasing FTEs. My own gut is they can price at a 1.25x-1.75x vs. market.
luckydata 7y ago
I like Patrick but in a few cases his inexhaustible optimism makes him overlook stuff that he shouldn't overlook.

tempsy 7y ago

How many remote workers choose to pay for a coworking desk (reimbursed I’m sure) instead of just working from home though?

amerine 7y ago
My completely personal experience hints that lots and lots now and more and more every year.
- ghaff 7y ago
  Personally, I haven't really seen this. People need to get together in conference rooms from time to time for meetings and they rent space for that. However, on the video calls I'm on more or less daily, essentially everyone is in a company location, traveling, or at home. I've know people who did rent a co-working office but it's been the odd exception. To be fair, most of the remote people I work with are relatively senior and that may make a difference. They probably care less about having the social aspect of an office and they probably tend to have more room at home for, e.g., a dedicated office.
kevstev 7y ago
Remote workers can often get some budget for a coworking space. Not enough to work there every day. But enough to get out of the house every once in awhile. There is also just the contingency aspect of it- I had a scheduled power outage in my building when I was working remotely, I could either take off that day, or just find a coworking or other space, but I chose to try a coworking space. Power outages may not be common, but there were also days when I had family in town and such, and just didn't want the distraction.
Mvhsz 7y ago
So I actually have a free wework pass from my online masters degree program. I live about 3 blocks from a large wework that was built in the last couple of years. My company let's me work from home whenever I want. I have a 45 minute commute so I usually WFH on fridays or anytime I have an appointment. I went a few times when it was novel, but after that I really only use it less than 1 in 5 of my work from home days. And on some of those WFH days, I'll walk to the coffee shop accross from the wework to get an espresso and then go back and work at my house. Point being, I don't find wework to be a compelling remote work offering when it's free. So it seems unlikely to me that there's very much room to grow in that market.

goatinaboat 7y ago

every company will pay for WeWork reimbursements more readily than some random local expenditure But why would they? Even wealthy companies now insist that most business travel is done in economy class. Big airlines can’t sell business-class seats just by making expense claims easy to file. So why does WeWork think it can sell flashy office space?

arcturus17 7y ago
Following your analogy, wouldn't WeWork want to be the economy class of office expenditure, rather than the business class? One of the points of uncertainty though is whether they can keep up the flashiness, ie, they might be selling business seats at economy prices.
- goatinaboat 7y ago
  Indeed - they can’t have their cake and eat it, in other words. A high valuation can only be justified by a high margin.
- loopdoend 7y ago
  They are economy class. I don't find them flashy at all. Their offices are tiny, glass enclosed, like fish bowls. I can't imagine working in one of them, and I've heard nothing but terrible feedback from others.
  - breatheoften 7y ago
    I like my wework office space ...
naravara 7y ago
Yeah this is the argument I don't get. Tons of companies just give employees who travel a per diem for travel expenses. A per diem for remote work expenses to spend on whatever shared office space you want is not that hard. Filing expenses is trivially easy now and there are tons of apps/services out there that do text recognition on receipts and credit card statements to make the value addition of something like this very close to zero.

Avshalom 7y ago

The problem isn't the business concept; Regus/iwg make money, but it's 100m on 2b. The problem is that wework is just some combination of shady and awful at business, and there's no reason to think they'll get any better with scale.

gamblor956 7y ago

Regis has been around for a lot longer than WeWork and does the same thing for less. Their offices are also more professional, because they're designed for people to do actual work and not just be look like they're working.

ineedasername 7y ago
Are you saying that having beer on tap is either unprofessional or not conducive to actual work? Color me shocked!
- sjburt 7y ago
  Didn't wework have to switch to kombucha after someone realized that a place where you pay money to hang out all day and drink is in fact a bar and you need a liquor license?
  - ineedasername 7y ago
    I thought that was only in certain jurisdictions. Maybe it was universal though.
    - chucksmash 7y ago
      I'd assume it'd be certain jurisdictions. You definitely don't need a liquor license to serve beer and wine universally[1]. [1]: Which leads to insane decisions like restaurants that make "Bloody Marys" with beer...
  - jonwachob91 7y ago
    > Are you saying that having beer on tap is either unprofessional or not conducive to actual work? Color me shocked! >> Didn't wework have to switch to kombucha after someone realized that a place where you pay money to hang out all day and drink is in fact a bar and you need a liquor license? A "liquor" license and a "beer and wine" license are 2 different things. A beer and wine license is a few hundred bucks (depending on your location), and just requires some paperwork. A liquor license can be over $100k depending on your location.

hogFeast 7y ago

As others have said: Regus. What is being missed though: WeWork have actually built out a fairly comparable level of capacity to Regus. The difference is that WeWork are heavily concentrated in major cities, whereas Regus is diversified (they have locations in Mongolia and Nepal, I believe). The reason why is simple: Regus made the mistake of overbuilding in major cities last time round. The US business went into BK, they aren't making that mistake again. In fact, even taking this very capital investment strategy, you can see that they still have substantial swings in their business. WeWork have built out massive capacity which cannot be filled (in London, they actually have a meaningful market share of new office space). They did this because you can show great short-term results. BK is inevitable. I would go as far to say: anyone who believes this isn't bullshit has identified themselves as an idiot too (at least, in terms of investment knowledge). This isn't remotely difficult.

NotSammyHagar 7y ago
sorry, what is BK? Bankruptcy I guess.
- iamnotacrook 7y ago
  I thought Burger King. As in, they couldn't afford to eat anywhere else.
  - pnongrata 7y ago
    Though they could afford to eat at MD as well.
- NotDavidLeeRoth 7y ago
  The Free Dictionary lists "Bankruptcy" as the meaning within the banking industry: https://acronyms.thefreedictionary.com/BK https://acronyms.thefreedictionary.com/BK
ghaff 7y ago
>they still have substantial swings in their business Not really surprising. Some uses--like a conference room for a big customer meeting--are pretty much business necessities. But things like an office for remote employees who mostly just prefer to get out of the house but not work out of free space somewhere are the sort of discretionary expense that companies will chop pretty quickly if they're tightening their belts.

ineedasername 7y ago

On #2, how does this change from CapEx to OpEx? Unless there's actually a transfer of ownership involved, generally at the end of a lease, traditional releases are already considered operational expenses, not capital.

kasey_junk 7y ago
It’s less a move from capex to opex and more a move to short term leases. I’m skeptical that’s a moat that will defend WeWork but it’s certainly a handy feature.
kgwgk 7y ago
The accounting standards are changing and long-term (i.e. longer than 12 months) leases are now included in the balance sheet: https://www.iasplus.com/en/publications/global/thinking-allowed/2016/lease-accounting https://www.iasplus.com/en/publications/global/thinking-allo...
- ineedasername 7y ago
  Okay, that makes sense, so it's less of a shift and more of a way to continue or return to business as usual.

duxup 7y ago

How many of WeWork's customer's are individuals? I was curious and looked them up a while back, it was EXPENSIVE compared to other options. I'm not at all sure how many companies filter "We'll pay for an office for you to work at WeWork... but not elsewhere." In fact most remote work that I've seen isn't interested in paying for any local office space... they want to save on that, not spend more / manage it.

Dwolb 7y ago

I’m into this thesis but last time I checked for a sizable office they wanted a 2x-3x premium vs comparable long-term lease market rates. That type of premium felt irresponsible as compared to the possibility of increasing FTEs. My own gut is they can price at a 1.25x-1.75x vs. market.

luckydata 7y ago

I like Patrick but in a few cases his inexhaustible optimism makes him overlook stuff that he shouldn't overlook.