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4 important numbers, from the video: WeWork's average lease term: 15 years WeWork Tenant's average lease term: 15 months WeWork's lease obligations: 47.2 bn

4 important numbers, from the video: WeWork's average lease term: 15 years WeWork Tenant's average lease term: 15 months WeWork's lease obligations: 47.2 bn WeWork Tenant's lease commitments: 3.4 bn Almost certainly, the video glosses over (read: ignores) the likely fact that the 47.2bn is over that 15 year average, and the 3.4bn is over the 15 month average, so this doesn't necessarily represent a shortfall in the long term.

jcstauffer 7y ago
> Almost certainly, the video glosses over (read: ignores) the likely fact that the 47.2bn is over that 15 year average, and the 3.4bn is over the 15 month average, so this doesn't necessarily represent a shortfall in the long term. $47.2bn/15 yrs = $3.15bn/yr lease obligation $3.4bh/1.25 yrs = $2.72bn/yr lease revenue So, if they can manage to continue leases at their current rate, they'll be losing $400m/yr.
- jiveturkey 7y ago
  Thank you for mathing it! That's very helpful. Big office spaces go un-rented for long periods between tenants. In WeWork's case, maybe they expect shorter dead times. Keep in mind also, 15 years on WeWork's side means they've locked those prices in, whereas 15 month terms on the client side means rents will go up on each renewal. (assuming no downturns in real estate, of course.) So, this might pencil out to break-even or a few millions in gross profit ... over 15 years. Hardly a good business.
Mtinie 7y ago
Lease obligations over the next 15 years: $47.2 billion ($262.2 million/month for 180 months) Lease commitments for the first 15 months of that 180 months: $3.4 billion ($226.6 million/month) Shortfall for the first 15 months which we know there is contractually-obligated income for: $35.6 million/month. I haven't read through the original filing, but was the expectation that We would see increased per-month margins over the next 15 years to make it to a break-even or better point?
- Glibaudio 7y ago
  It's been floated they can get margins instantly by pulling back on variable cost ameneties like beer, kombucha, operations staff, etc. That said, having been one of their tennants in SF, the price still feels high. The facilities are really nice, but it's A LOT of cash flow for most startups. The clinentell that seem OK with the price tend to be large corporations conducing top-of-cycle innovation theater with small offices doing "INNOVATION" And service agencies; PR, Marketing, etc. There are relatively few low capital, expoential growth companies I have found. Very few people griding out code past say 6pm most days. Most folks are living a lifestyle outside of WeWork's walls. The Transbay facility at 535 Mission is completely empty Saturday and Sunday. It's a lot of innovation & tec tourists. Folks here for top of cycle vibes, but without the cred of having built something that will last. People who want to build lasting companies GTF away from WeWork.
  - fock 7y ago
    Do you mind telling me what you picture when describing "something that lasts"? The typical HN-featured SaaS isn't for one (with all of them offering a product easily replaced except for vendor lock-in and the big-data aspects) neither are the funky Teslas (with the eMMC dying faster than all the other cars going into planned obsolescence...)

jcstauffer 7y ago

> Almost certainly, the video glosses over (read: ignores) the likely fact that the 47.2bn is over that 15 year average, and the 3.4bn is over the 15 month average, so this doesn't necessarily represent a shortfall in the long term. $47.2bn/15 yrs = $3.15bn/yr lease obligation $3.4bh/1.25 yrs = $2.72bn/yr lease revenue So, if they can manage to continue leases at their current rate, they'll be losing $400m/yr.

jiveturkey 7y ago
Thank you for mathing it! That's very helpful. Big office spaces go un-rented for long periods between tenants. In WeWork's case, maybe they expect shorter dead times. Keep in mind also, 15 years on WeWork's side means they've locked those prices in, whereas 15 month terms on the client side means rents will go up on each renewal. (assuming no downturns in real estate, of course.) So, this might pencil out to break-even or a few millions in gross profit ... over 15 years. Hardly a good business.

Mtinie 7y ago

Lease obligations over the next 15 years: $47.2 billion ($262.2 million/month for 180 months) Lease commitments for the first 15 months of that 180 months: $3.4 billion ($226.6 million/month) Shortfall for the first 15 months which we know there is contractually-obligated income for: $35.6 million/month. I haven't read through the original filing, but was the expectation that We would see increased per-month margins over the next 15 years to make it to a break-even or better point?

Glibaudio 7y ago
It's been floated they can get margins instantly by pulling back on variable cost ameneties like beer, kombucha, operations staff, etc. That said, having been one of their tennants in SF, the price still feels high. The facilities are really nice, but it's A LOT of cash flow for most startups. The clinentell that seem OK with the price tend to be large corporations conducing top-of-cycle innovation theater with small offices doing "INNOVATION" And service agencies; PR, Marketing, etc. There are relatively few low capital, expoential growth companies I have found. Very few people griding out code past say 6pm most days. Most folks are living a lifestyle outside of WeWork's walls. The Transbay facility at 535 Mission is completely empty Saturday and Sunday. It's a lot of innovation & tec tourists. Folks here for top of cycle vibes, but without the cred of having built something that will last. People who want to build lasting companies GTF away from WeWork.
- fock 7y ago
  Do you mind telling me what you picture when describing "something that lasts"? The typical HN-featured SaaS isn't for one (with all of them offering a product easily replaced except for vendor lock-in and the big-data aspects) neither are the funky Teslas (with the eMMC dying faster than all the other cars going into planned obsolescence...)