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There are two ways to get to positive margins: Either drive down costs (as Amazon did) or increase price. Part of WeWork's plan is presumably to increase prices
by tlb 7y ago
There are two ways to get to positive margins: Either drive down costs (as Amazon did) or increase price. Part of WeWork's plan is presumably to increase prices once tenants are locked in.
The big question is how much lock-in they can achieve. The lock-in is largely caused by employee loyalty. Employees who like beer and camaraderie in the evenings may be hard to persuade to move to a soulless office park.
It's a micro version of the way a city gets lock-in. San Francisco office space costs 2-5x more than Sunnyvale, because employees will quit if you move your office from one to the other.
- wolco 7y agoWould 50-80% of employees quit if a company moved to Sunnyvale? Was that a serious fact?
- tlb 7y agoYes, something like that depending on the company and how committed employees are. It’s a horrible commute. But for many companies, even 10% of employees quitting is enough reason to stick with the expensive office space.