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Note that Aswath is detailing a best-case scenario for WeWork here, where they're somehow making $80.5B revenue in 2029. That's... a bit of a stretch, seeing as

Note that Aswath is detailing a best-case scenario for WeWork here, where they're somehow making $80.5B revenue in 2029. That's... a bit of a stretch, seeing as they'd have to 26x their current 2019 revenue. Are they going to buy out every building in Manhattan? So we can say the fair pricing is somewhere between $0 and Aswath's $13B. Personally, I feel that no matter what price WeWork IPOs at, it's going to pancake pretty hard. There's a good business in there somewhere (AWS for real-estate), but it's saddled under so much crap, debt, and hot air.

Twirrim 7y ago
> There's a good business in there somewhere (AWS for real-estate) Is there? I keep looking at the WeWork thing as a complete outside, someone who's never had to deal with that sector, and it's just not clear to me what is actually different/innovative about what they do.
- Androider 7y ago
  Leasing office space in a place like NY traditionally required at least a one year lease, often longer. WeWork has at least popularized the notion of extremely flexible month-to-month contracts for fully managed facilities in historically expensive markets, which is very attractive to virtually all companies (now is that a sustainable business remains to be seen, but at least the demand is there). Not just small companies and startups, but companies of all sizes like the flexible opex that can be scaled on short notice. WeWork's S1 shows that a big chunk of the customer base and growing is in fact large companies. E.g. Microsoft in New York has their entire sales organization scattered across WeWork properties. That kind of thing is where WeWork appears to be doubling down on according to their S1, not really the freelancer hot-desk market. Companies also generally don't like to deal with anything that is not core to their business. Already previously most functions were outsourced (cleaning, maintenance, stocking the fridge etc.) but increasingly companies don't even want to deal with the hassle of sourcing a supplier. Or getting Internet. Or insurance. WeWork makes all of that a non-issue. So does Regus Spaces product, but it has to be at least acknowledged that it's a direct reaction to WeWork. I think the future will look something like this, and why it can be likened to AWS for physical space (WeWork doesn't go this far yet, today requiring e.g. physically visiting the space before leasing which is honestly a pain-in-the-ass speaking as someone looking to place multiple people all over the US, just let me input my credit card already): - Startup company in the Bay Area logs in online and clicks to reserve a 1x Private Office in NYC, for the two new hires starting there next week. No tour, no calls, no interaction with anyone at WeWork. WeWork is already a "known quantity" (kind of like McDonald's), no need for any of that process. - Microsoft manager in Redmond does absolutely nothing workplace related as his new hire just shows up at WeWork Houston, as the company already has a direct expensing agreement. His cost center is just billed X for the month automatically.
  - ghaff 7y ago
    Or, if they're remote employees, the expectations have just been set that they'll deal with their work arrangement with, possibly, up to $X/month reimbursable. In the case of a remote employee, why wouldn't the employee knows what works best for them? Maybe it's not a hipster open space with beer on tap. If they're setting up a remote but co-located team, the situation may well be different--although there are a variety of options.
    - Androider 7y ago
      Dystopian take: WeWork will provide companies with all kinds of metrics and tracking, like time to enter and leave. This will make remote work "palatable" to a wider range of employers. Practical take: For the same reason companies don't let you book your own plane tickets and expense claim them, and almost always instead use corporate services like Amex Global Travel / Carlson Wagonlit Travel, as well as mandate the use of the corporate card on travels etc. When you have a non-trivial amount of employees, companies don't want to do one-off arrangements like that, or argue about what is reimbursable. WeWork being a "known quantity" / The Default(tm) is really important to Corporate. Your experience may vary at smaller companies. As Patio11 put it, "You probably have a lot of questions but it’s a Holiday Inn; anything else?" https://twitter.com/patio11/status/1161796809741627392?lang=en https://twitter.com/patio11/status/1161796809741627392?lang=...
  - fragmede 7y ago
    AWS-for-office-space is apt, considering EC2 instances/other VPS are paid per-hour(/minute) but AWS owns the computers for the duration. As been pointed out elsewhere though, WeWork, owes money to landlords, even if that WeWork space is empty. AWS doesn't have the same contracts with their computers. Or do they? It's entirely possible AWS buys their server farms on credit rather than all upfront. AWS, of course, is a different beast, having the backing of Amazon.com. Thus the more useful debate, rather than rehash the "is it a tech company" argument yet again, is what is a reasonable valuation for WeWork? Enterprise Value for IWG is 9.8B; so a 10B valuation for WeWork is not totally ridiculous. There's a risk that everyone will just work from home during a recession. During that same recession though, we'll also want to move our company's website from AWS to a desktop computer I have in my garage that I leave on all the time, to save money.
btown 7y ago
There are a number of other great coworking spaces in Manhattan (I'm in one now!) so there's definitely a story where over 10 years, We consolidates it all in a winner-takes-all format. That's... not a story I'd put money behind, especially not with what seems to be an executive team intent on extracting personal wealth until they're caught doing so.

Twirrim 7y ago

> There's a good business in there somewhere (AWS for real-estate) Is there? I keep looking at the WeWork thing as a complete outside, someone who's never had to deal with that sector, and it's just not clear to me what is actually different/innovative about what they do.

Androider 7y ago
Leasing office space in a place like NY traditionally required at least a one year lease, often longer. WeWork has at least popularized the notion of extremely flexible month-to-month contracts for fully managed facilities in historically expensive markets, which is very attractive to virtually all companies (now is that a sustainable business remains to be seen, but at least the demand is there). Not just small companies and startups, but companies of all sizes like the flexible opex that can be scaled on short notice. WeWork's S1 shows that a big chunk of the customer base and growing is in fact large companies. E.g. Microsoft in New York has their entire sales organization scattered across WeWork properties. That kind of thing is where WeWork appears to be doubling down on according to their S1, not really the freelancer hot-desk market. Companies also generally don't like to deal with anything that is not core to their business. Already previously most functions were outsourced (cleaning, maintenance, stocking the fridge etc.) but increasingly companies don't even want to deal with the hassle of sourcing a supplier. Or getting Internet. Or insurance. WeWork makes all of that a non-issue. So does Regus Spaces product, but it has to be at least acknowledged that it's a direct reaction to WeWork. I think the future will look something like this, and why it can be likened to AWS for physical space (WeWork doesn't go this far yet, today requiring e.g. physically visiting the space before leasing which is honestly a pain-in-the-ass speaking as someone looking to place multiple people all over the US, just let me input my credit card already): - Startup company in the Bay Area logs in online and clicks to reserve a 1x Private Office in NYC, for the two new hires starting there next week. No tour, no calls, no interaction with anyone at WeWork. WeWork is already a "known quantity" (kind of like McDonald's), no need for any of that process. - Microsoft manager in Redmond does absolutely nothing workplace related as his new hire just shows up at WeWork Houston, as the company already has a direct expensing agreement. His cost center is just billed X for the month automatically.
- ghaff 7y ago
  Or, if they're remote employees, the expectations have just been set that they'll deal with their work arrangement with, possibly, up to $X/month reimbursable. In the case of a remote employee, why wouldn't the employee knows what works best for them? Maybe it's not a hipster open space with beer on tap. If they're setting up a remote but co-located team, the situation may well be different--although there are a variety of options.
  - Androider 7y ago
    Dystopian take: WeWork will provide companies with all kinds of metrics and tracking, like time to enter and leave. This will make remote work "palatable" to a wider range of employers. Practical take: For the same reason companies don't let you book your own plane tickets and expense claim them, and almost always instead use corporate services like Amex Global Travel / Carlson Wagonlit Travel, as well as mandate the use of the corporate card on travels etc. When you have a non-trivial amount of employees, companies don't want to do one-off arrangements like that, or argue about what is reimbursable. WeWork being a "known quantity" / The Default(tm) is really important to Corporate. Your experience may vary at smaller companies. As Patio11 put it, "You probably have a lot of questions but it’s a Holiday Inn; anything else?" https://twitter.com/patio11/status/1161796809741627392?lang=en https://twitter.com/patio11/status/1161796809741627392?lang=...
- fragmede 7y ago
  AWS-for-office-space is apt, considering EC2 instances/other VPS are paid per-hour(/minute) but AWS owns the computers for the duration. As been pointed out elsewhere though, WeWork, owes money to landlords, even if that WeWork space is empty. AWS doesn't have the same contracts with their computers. Or do they? It's entirely possible AWS buys their server farms on credit rather than all upfront. AWS, of course, is a different beast, having the backing of Amazon.com. Thus the more useful debate, rather than rehash the "is it a tech company" argument yet again, is what is a reasonable valuation for WeWork? Enterprise Value for IWG is 9.8B; so a 10B valuation for WeWork is not totally ridiculous. There's a risk that everyone will just work from home during a recession. During that same recession though, we'll also want to move our company's website from AWS to a desktop computer I have in my garage that I leave on all the time, to save money.

btown 7y ago

There are a number of other great coworking spaces in Manhattan (I'm in one now!) so there's definitely a story where over 10 years, We consolidates it all in a winner-takes-all format. That's... not a story I'd put money behind, especially not with what seems to be an executive team intent on extracting personal wealth until they're caught doing so.