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Definitely just another failed tech bro pump 'n dump scheme headed to the dustbin of history. I seriously doubt that. I think they're overvalued too, but I pre

Definitely just another failed tech bro pump 'n dump scheme headed to the dustbin of history. I seriously doubt that. I think they're overvalued too, but I predict WeWork is still going to be around in another decade. There's clearly a ton of demand for what they provide.

hyperbovine 7y ago
> There's clearly a ton of demand for what they provide. There has always been, and will always be, demand for the ability to buy one dollar for 80 cents. This is not some newfangled business model. Amazingly, it keeps cropping up again and again.
semi-extrinsic 7y ago
If you don't include the economics of the business model in the evaluation, you could say exactly the same of Juiceroo. There's clearly significant demand for juice presses.
- TremendousJudge 7y ago
  Not a valid comparison -- Juicero didn't really manage to sell its product, while many people and companies rent WeWork's space
  - semi-extrinsic 7y ago
    Sure, but that's because the economics of the specific way that the business model doesn't make sense is different for the two - with Juicero, they attempted to screw over the end user, while with WeWork they were trying to screw over (public) investors. Edit: or to borrow a popular saying - with WeWork, it's not the furnished rental office stuff that is the product, it's the IPO.
  - Tuna-Fish 7y ago
    Right now, based on their own data, We is selling a dollar for 60 cents to their customers. With very flexible contracts. Of course many people and companies rent from them. Just see how long that lasts when We starts needing to get actual profit from them.
gwbas1c 7y ago
> but I predict WeWork is still going to be around in another decade. There's clearly a ton of demand for what they provide There's also a TON of rent-a-desk places. The big questions are: - What's the benefit to a large corporation doing this instead of lots of small companies? (The economies of scale need to outweigh the large corporate overhead.) - What's WeWork's secret sauce or first mover advantage?
- seisvelas 7y ago
  The advantage is similar to that of a large gym chain - you can pay more to get a membership that's valid at all the WeWorks in the entire world. This is great for people who regularly travel between many large cities.
  - cj 7y ago
    I suspect the majority of WeWork's revenue comes from people working in the same location day in, day out. Same with gym chains. People sign up for Planet Fitness because the nearest location is the most convenient, not because they plan to visit multiple locations over the course of a year (not to say there aren't people taking advantage of the multi-city aspect, just that they aren't the typical customer).
    - jjeaff 7y ago
      Ya, I can't imagine that is really a draw at all. If you travel a lot, you will have an office in your hotel room or can use the business center in the hotel.
      - MrFantastic 7y ago
        It would be more impressive to meet a client at a WeWork office.
        goatinaboat 7y ago
        Not sure what industry you’re in but I don’t think most people’s clients think like that.
codesushi42 7y ago
That is interesting. Were you around in the dotcom days?
Tuna-Fish 7y ago
There is ton of demand for what they provide, but what they provide can easily be copied, and the copycats will not have a mountain of debt/investment caused by irrational drive for growth at any price that they need to pay back. Right now, no-one is competing against We because they are selling a dollar at 60 cents to their customers. The second they stop doing that, there will be a dozen clones. We is worthless.
- chrismarlow9 7y ago
  This is my thought. It's about real estate. If starbucks decided to go full throttle into this concept they would kill it. They've essentially been the unwritten king of co-workspace since they showed up.
- CaptainZapp 7y ago
  Right now, no-one is competing against We WHAT? there's quite healthy competition[1], which actually make money as opposed to We. Granted, you don't get free beer and smarmy slogans. But competition is definitly on the market. [1] https://en.wikipedia.org/wiki/IWG_plc https://en.wikipedia.org/wiki/IWG_plc
robbiemitchell 7y ago
Corporate governance problems aside, they have major cash flow problems relative to debt obligations and are also losing money. One could argue the demand is there because the price is artificially low.
empath75 7y ago
WeWork seems to have bought every single ad placement at some dc metro stops. Smacks of desperation.
x0x0 7y ago
I agree, but will any management still be there if they're worth $2-5B rather than $40 billion? Also, the strategy of segregating assets onto Adam's personal balance sheet looks like a bad idea now that he's no longer ceo.
- andrewem 7y ago
  Does putting assets onto Adam's balance sheet look like a bad idea for Adam, or for We? As with Enron, the way to understand the company's decision making is that in many particulars it was not trying to optimize its outcomes, it was trying to optimize the CEO's (and in Enron's case, the CFO's and maybe a couple others).
reilly3000 7y ago
Agreed. The Saudi's via Softbank will install an experienced CEO and they will start operating effectively. I was skeptical about the whole thing, as somebody who worked out of a Regus office about 10 years ago the idea was not novel at all. That said, I see the notion of on-demand capacity in the physical world very similar to what makes cloud computing work: pay for what you need when you need it. With an increasingly remote work world, on-demand space can be purchased or reserved by big companies and well-funded startups, allowing for project-based teams to collaborate in-person. I'm not super optimistic about their prospects, but their backers have the resources to ensure a return on their investment, and they are most likely to do so.
wpietri 7y ago
I mean, Groupon's still around too, but at ~10% of their IPO valuation. Is it possible WeWork will struggle along? Sure, although I have questions about what will happen with the $6bn of debt they declare in their S1. But supposing they do, I see little reason to think they'll be a major player. I don't see anything stopping other rental companies from matching any innovations they've made. The same goes for major property owners. Some will stick with big chunks of space. But if there's a 30% premium for being flexible, providing desks, etc, the some of them will happily cut out the middleman.

hyperbovine 7y ago

> There's clearly a ton of demand for what they provide. There has always been, and will always be, demand for the ability to buy one dollar for 80 cents. This is not some newfangled business model. Amazingly, it keeps cropping up again and again.

semi-extrinsic 7y ago

If you don't include the economics of the business model in the evaluation, you could say exactly the same of Juiceroo. There's clearly significant demand for juice presses.

TremendousJudge 7y ago
Not a valid comparison -- Juicero didn't really manage to sell its product, while many people and companies rent WeWork's space
- semi-extrinsic 7y ago
  Sure, but that's because the economics of the specific way that the business model doesn't make sense is different for the two - with Juicero, they attempted to screw over the end user, while with WeWork they were trying to screw over (public) investors. Edit: or to borrow a popular saying - with WeWork, it's not the furnished rental office stuff that is the product, it's the IPO.
- Tuna-Fish 7y ago
  Right now, based on their own data, We is selling a dollar for 60 cents to their customers. With very flexible contracts. Of course many people and companies rent from them. Just see how long that lasts when We starts needing to get actual profit from them.

gwbas1c 7y ago

> but I predict WeWork is still going to be around in another decade. There's clearly a ton of demand for what they provide There's also a TON of rent-a-desk places. The big questions are: - What's the benefit to a large corporation doing this instead of lots of small companies? (The economies of scale need to outweigh the large corporate overhead.) - What's WeWork's secret sauce or first mover advantage?

seisvelas 7y ago
The advantage is similar to that of a large gym chain - you can pay more to get a membership that's valid at all the WeWorks in the entire world. This is great for people who regularly travel between many large cities.
- cj 7y ago
  I suspect the majority of WeWork's revenue comes from people working in the same location day in, day out. Same with gym chains. People sign up for Planet Fitness because the nearest location is the most convenient, not because they plan to visit multiple locations over the course of a year (not to say there aren't people taking advantage of the multi-city aspect, just that they aren't the typical customer).
  - jjeaff 7y ago
    Ya, I can't imagine that is really a draw at all. If you travel a lot, you will have an office in your hotel room or can use the business center in the hotel.
    - MrFantastic 7y ago
      It would be more impressive to meet a client at a WeWork office.
      - goatinaboat 7y ago
        Not sure what industry you’re in but I don’t think most people’s clients think like that.

codesushi42 7y ago

That is interesting. Were you around in the dotcom days?

Tuna-Fish 7y ago

There is ton of demand for what they provide, but what they provide can easily be copied, and the copycats will not have a mountain of debt/investment caused by irrational drive for growth at any price that they need to pay back. Right now, no-one is competing against We because they are selling a dollar at 60 cents to their customers. The second they stop doing that, there will be a dozen clones. We is worthless.

chrismarlow9 7y ago
This is my thought. It's about real estate. If starbucks decided to go full throttle into this concept they would kill it. They've essentially been the unwritten king of co-workspace since they showed up.
CaptainZapp 7y ago
Right now, no-one is competing against We WHAT? there's quite healthy competition[1], which actually make money as opposed to We. Granted, you don't get free beer and smarmy slogans. But competition is definitly on the market. [1] https://en.wikipedia.org/wiki/IWG_plc https://en.wikipedia.org/wiki/IWG_plc

robbiemitchell 7y ago

Corporate governance problems aside, they have major cash flow problems relative to debt obligations and are also losing money. One could argue the demand is there because the price is artificially low.

empath75 7y ago

WeWork seems to have bought every single ad placement at some dc metro stops. Smacks of desperation.

x0x0 7y ago

I agree, but will any management still be there if they're worth $2-5B rather than $40 billion? Also, the strategy of segregating assets onto Adam's personal balance sheet looks like a bad idea now that he's no longer ceo.

andrewem 7y ago
Does putting assets onto Adam's balance sheet look like a bad idea for Adam, or for We? As with Enron, the way to understand the company's decision making is that in many particulars it was not trying to optimize its outcomes, it was trying to optimize the CEO's (and in Enron's case, the CFO's and maybe a couple others).

reilly3000 7y ago

Agreed. The Saudi's via Softbank will install an experienced CEO and they will start operating effectively. I was skeptical about the whole thing, as somebody who worked out of a Regus office about 10 years ago the idea was not novel at all. That said, I see the notion of on-demand capacity in the physical world very similar to what makes cloud computing work: pay for what you need when you need it. With an increasingly remote work world, on-demand space can be purchased or reserved by big companies and well-funded startups, allowing for project-based teams to collaborate in-person. I'm not super optimistic about their prospects, but their backers have the resources to ensure a return on their investment, and they are most likely to do so.

wpietri 7y ago

I mean, Groupon's still around too, but at ~10% of their IPO valuation. Is it possible WeWork will struggle along? Sure, although I have questions about what will happen with the $6bn of debt they declare in their S1. But supposing they do, I see little reason to think they'll be a major player. I don't see anything stopping other rental companies from matching any innovations they've made. The same goes for major property owners. Some will stick with big chunks of space. But if there's a 30% premium for being flexible, providing desks, etc, the some of them will happily cut out the middleman.