4 ms·

I think a big perception issue in the general public that the money people are chafing against after doing their homework is that WeWork isn’t a tech company.

I think a big perception issue in the general public that the money people are chafing against after doing their homework is that WeWork isn’t a tech company. Economically they’re more like a b&m retailer, where the shelf space being leased is for workers, not mannequins and clothes. Their reach to individual pockets is orders of magnitude smaller. Big clients can abandon them as a supplier in a few weeks time to setup a new office. WeWork does not have the long term emotional buy-in potential like an Apple or Facebook. It’s a business to business business. Not going to hook a billion individual users on their gadgets and services. There’s a non-zero chance the property market implodes, and shifts to remote workers seem very likely to expand. Still need phones and software. Not downtown offices with cucumber water.

danko 7y ago
It's true there's a non-zero chance the property market implodes, but the shift to remote workers is exactly what WeWork is counting on. Many (even most) people chafe at working in their living space 100% of the time, and squatting in coffee shops and the like also has its limits. People generally need a work place that is separate from their living place, even if their work place is not the same work place as the rest of their company. Throw in the need for quiet places, conference rooms, whiteboards, etc, and before you know it...
- twic 7y ago
  Is there any evidence from their S-1 or other publications, that this is actually their strategy? Or is this a narrative retrofitted on the message boards?
- notyourday 7y ago
  This an an extremely unsexy long-term market that provides very solid returns in exchange for lots of work. That is why management companies have very low valuation even compared to REITs. It is a market where you hire Jamel and Jose who have been building supers for twenty years and who know what's on sale today in the Home Depo and what kind of light bulbs should be hoarded rather than Jack who will order stuff on Amazon because Jack will overpay by 220% by buying that stuff for just-in-time on Amazon and over a period of 10 years those mistakes are going to be a $100k difference in opex per location. A company that gives an engineer budget to deck out his desk is fundamentally incompatible with a slow and steady way of making money in real estate management.

danko 7y ago

It's true there's a non-zero chance the property market implodes, but the shift to remote workers is exactly what WeWork is counting on. Many (even most) people chafe at working in their living space 100% of the time, and squatting in coffee shops and the like also has its limits. People generally need a work place that is separate from their living place, even if their work place is not the same work place as the rest of their company. Throw in the need for quiet places, conference rooms, whiteboards, etc, and before you know it...

twic 7y ago
Is there any evidence from their S-1 or other publications, that this is actually their strategy? Or is this a narrative retrofitted on the message boards?
notyourday 7y ago
This an an extremely unsexy long-term market that provides very solid returns in exchange for lots of work. That is why management companies have very low valuation even compared to REITs. It is a market where you hire Jamel and Jose who have been building supers for twenty years and who know what's on sale today in the Home Depo and what kind of light bulbs should be hoarded rather than Jack who will order stuff on Amazon because Jack will overpay by 220% by buying that stuff for just-in-time on Amazon and over a period of 10 years those mistakes are going to be a $100k difference in opex per location. A company that gives an engineer budget to deck out his desk is fundamentally incompatible with a slow and steady way of making money in real estate management.