4 ms·

Volume. Lose on every sale but make up for it with volume. :-)

• DebtDeflation 7y ago
  The issue is fixed vs variable costs. The scale argument requires very high fixed costs and very low variable costs. Then, once the initial hurdle is cleared, marginal costs per incremental unit of revenue are very low while barriers to entry against competition are very high. WeWork is the exact opposite of this as their leasing costs (variable) are like 90% of rental revenue.
  • petra 7y ago
    But leasing becomes ownership - and than it's a "high fixed costs, low marginal costs" situation.
    • imtringued 7y ago
      If WeWork had ownership claims to the properties it rents out then it wouldn't be in trouble. It's value would be equal to how much real estate it owns.