31 ms·

How is this comment relevant to WeWork? How has it "cheated"? It definitely is early/first and very smart.

by pbreit 7y ago

gtirloni 7y ago
Early/first in what exactly?
- pbreit 7y ago
  Massive paradigm shift in office leasing.
  - munk-a 7y ago
    Please elaborate in what was innovative here, their technical infrastructure seems to be nothing to write home about and well appointed office leasing has been around for quite some time. The social focus is indeed different but I wouldn't call that alone a massive paradigm shift.
    - pbreit 7y ago
      The friction eliminated and expanded flexibility from normal office leasing was quite pronounced. Add to that a huge block of delighted customers. Not sure how you are defining innovation but there is clearly a lot going on there.
JumpCrisscross 7y ago
> How is this comment relevant to WeWork? How has it "cheated"? They borrowed short, lent long and then pretended it was as sustainable business. To their credit, they abundantly disclosed their shenanigans. (I haven't seen any evidence suggesting investors can reasonably claim fraud.) But they were playing fast and loose with basic economics. At its core, sure, WeWork could have been a business. Its thesis, that office space should be treated as a service versus capital expense, is plausible. But there was so much garbage--the party-at-work hypothesis, thoughtless cross-selling, nepotism, consciousness nonsense, self-dealing, et cetera--that the value got diluted while the price was pumped.
- ethbro 7y ago
  Furthermore, and this to me is the most damning indictment: where's the moat? SoftBank and Masayoshi Son's hypothesis is: 1. Find a market which can be captured by a business with access to massive capital 2. Provide massive capital 3. Extract profits once a monopoly has been established WeWork is a terrible example of this, because in no way does scale give them unique advantages. And furthermore, "scale" in this context means "scale in the office property market" -- that's a pretty big pool to expect to overflow.
  - konschubert 7y ago
    Same for Uber.
    - ethbro 7y ago
      I was going to include Uber, but there's an argument that creating a realtime, massively-scaled fare-setting infrastructure is a moat. Uber's product isn't rides. Uber's product is being the market-maker between riders and drivers.
      - rauchp 7y ago
        Right, but Lyft has the same product. Given enough time, we might see other ride-share companies succeed with the same (yet inferior) tech servicing specific cities. Austin has a non-profit rideshare business that matches riders and drivers. http://www.rideaustin.com http://www.rideaustin.com
  - mikeryan 7y ago
    I can't quantify it - but WeWork's scale does give them a bit of an advantage. I run a small digital agency, as a WeWork member when I'm on the road being able to know I can find and book space for meetings or work is invaluable. We've also spun up offices in new cities (Mexico City for us) easily and quickly with a confidence in the level of service and support that we're getting. There is a premium for this and we've moved on from those offices sometimes as we settle in. But its not a non-existent advantage.
munk-a 7y ago
Honestly, it wasn't even smart. And the thing it was first at was social focused co-working spaces, there have been more bare bones offerings for co-working spaces for a long time, WeWork just tried to appeal to that SV niche of people that'd like the folks they're subletting with to be the kind they'd like to share a beer with.

How is this comment relevant to WeWork? How has it "cheated"? It definitely is early/first and very smart.

by pbreit 7y ago

How is this comment relevant to WeWork? How has it "cheated"? It definitely is early/first and very smart.

gtirloni 7y ago

Early/first in what exactly?

pbreit 7y ago
Massive paradigm shift in office leasing.
- munk-a 7y ago
  Please elaborate in what was innovative here, their technical infrastructure seems to be nothing to write home about and well appointed office leasing has been around for quite some time. The social focus is indeed different but I wouldn't call that alone a massive paradigm shift.
  - pbreit 7y ago
    The friction eliminated and expanded flexibility from normal office leasing was quite pronounced. Add to that a huge block of delighted customers. Not sure how you are defining innovation but there is clearly a lot going on there.

JumpCrisscross 7y ago

> How is this comment relevant to WeWork? How has it "cheated"? They borrowed short, lent long and then pretended it was as sustainable business. To their credit, they abundantly disclosed their shenanigans. (I haven't seen any evidence suggesting investors can reasonably claim fraud.) But they were playing fast and loose with basic economics. At its core, sure, WeWork could have been a business. Its thesis, that office space should be treated as a service versus capital expense, is plausible. But there was so much garbage--the party-at-work hypothesis, thoughtless cross-selling, nepotism, consciousness nonsense, self-dealing, et cetera--that the value got diluted while the price was pumped.

ethbro 7y ago
Furthermore, and this to me is the most damning indictment: where's the moat? SoftBank and Masayoshi Son's hypothesis is: 1. Find a market which can be captured by a business with access to massive capital 2. Provide massive capital 3. Extract profits once a monopoly has been established WeWork is a terrible example of this, because in no way does scale give them unique advantages. And furthermore, "scale" in this context means "scale in the office property market" -- that's a pretty big pool to expect to overflow.
- konschubert 7y ago
  Same for Uber.
  - ethbro 7y ago
    I was going to include Uber, but there's an argument that creating a realtime, massively-scaled fare-setting infrastructure is a moat. Uber's product isn't rides. Uber's product is being the market-maker between riders and drivers.
    - rauchp 7y ago
      Right, but Lyft has the same product. Given enough time, we might see other ride-share companies succeed with the same (yet inferior) tech servicing specific cities. Austin has a non-profit rideshare business that matches riders and drivers. http://www.rideaustin.com http://www.rideaustin.com
- mikeryan 7y ago
  I can't quantify it - but WeWork's scale does give them a bit of an advantage. I run a small digital agency, as a WeWork member when I'm on the road being able to know I can find and book space for meetings or work is invaluable. We've also spun up offices in new cities (Mexico City for us) easily and quickly with a confidence in the level of service and support that we're getting. There is a premium for this and we've moved on from those offices sometimes as we settle in. But its not a non-existent advantage.

munk-a 7y ago

Honestly, it wasn't even smart. And the thing it was first at was social focused co-working spaces, there have been more bare bones offerings for co-working spaces for a long time, WeWork just tried to appeal to that SV niche of people that'd like the folks they're subletting with to be the kind they'd like to share a beer with.