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WeWork chases new financing as cash crunch looms

114 points by paulsutter 7y ago

joshstrange 7y ago
Does anyone here on HN use WeWork spaces and enjoy them? I'm not suggesting they are bad, I honestly don't know. Ignoring the business model, the CEO, the failed IPO, do YOU or do you not enjoy that actual offering of WeWork?
- vr46 7y ago
  Typing this from my desk in a WW. The location is great, building is good, the facilities are good, there's quite a nice dynamic about the place. No complaints, it's very smooth and well-organized. Lots of staff to run the place too.
- question_away 7y ago
  I just started working out of a space in Boston last month and it's been sublime. There's always a WeWork in whatever city I'm traveling to and at 25$ per day (beyond my usual credits), it's really affordable to have an office while traveling to both work and host clients.
- sasper 7y ago
  It's been fantastic for our fast-growing SaaS startup. We've been able to spin up offices in 4 international cities in the last 18 months with very few issues, and our teams are productive and happy with the spaces. I manage one of the new offices and have LOVED the responsiveness of the local WeWork team, the facilities, the infrastructure, and it's lightyears better than the previous office we were occupying. I don't have to worry about office-related issues any longer. That is, if WeWork stays solvent and doesn't go bankrupt. It's really too bad because their core business (renting office space) is done really well. Maybe a bankruptcy and restructuring would be good for their business, or maybe it will cause them to explode.
  - remarkEon 7y ago
    It seems like the value that they are offering is just outsourced-office-management then. Am I wrong in thinking that? It's hard for me to parse what WeWork was "trying" to become. A real estate company that manages offices? An office management company that also does real estate?
    - hn_throwaway_99 7y ago
      That's kind of exactly the point. IMO there are a lot of unicorns out there that have pretty decent business models (Uber/Lyft, WeWork, delivery services, etc.) The problem is they are probably worth much less than their investors paid for them, because everyone is discovering that once the VC subsidies go away after the "growth at all cost" mentality, these are actually pretty low margin businesses that don't warrant their "tech" valuations.
      - htfu 7y ago
        Yup. Other issue for many of them (which WeWork actually should be less exposed to) is that, most of it hardly being rocket science, "blow money until monopoly" seems to forget that customer subsidies A. aren't r&d/infrastructure, B. will have to be earned back, and not just 1:1 either... So even if whatever competition is knocked out, anyone entering the space after that, and not saddled with legacy funnycost, won't need your efficiencies and economies of scale to manage an edge in pricing. And market dominance can't negate lack of friction for eg drivers and riders to run a second, third, fourth app all at once. But the sun appears to be settling on bizarro cargo culting Amazon being seen as a viable business model. As a consumer I'll miss it!
    - AgloeDreams 7y ago
      Management, location, and community. Hospitality. Basically, Wework is a hotel for awake business-focused people, with all the tweaks needed to make that work. It's kinda why Arlo SoHo NYC (hotel) reminded me of one. The real estate line never made much sense to anyone who ever was in one, I think Bloomburg started it. (Though real estate was the business that Adam used to screw everyone so, maybe that was his personal business lol)
- TomMarius 7y ago
  I was skeptical, but it's excellent, and they have the nicest view on the city.
- oroup 7y ago
  Before we sold, we had WeWork offices in Denver and NY and used a similar competitor in Austin. They worked great and we were happy with them. But they were also a commodity and we chose based on price and lack of lock-in.
- tnolet 7y ago
  I don’t work in one but have visited three of them here in Berlin quite recently for meetings. The one in Friedrichshafen on the Spree is pretty nice. Great view. The other ones more in Mitte had way too much of a semi hipster hotel lobby feel. Everyone was just too fashionable and cool for my taste.
- jekrb 7y ago
  I used to work for a company that rented a WeWork space to meet with clients in NYC. I only opted to work out of it once or twice, for a change of scenery from my typical office. I think the location was the main perk, since I then got to spend a day in NYC. Working fully remote now and I enjoy that much more than being in any office setting.
- rrdharan 7y ago
  Turns out most of us enjoy any exchange in which we receive goods whose value far exceeds what we pay for them. Same reason I love cheap ride share trips[1] and NYC ferry rides[2]. I'd probably really enjoy winning the mega millions jackpot with a $5 ticket too (though perhaps not? [3]). [1] https://www.vice.com/en_us/article/zmjew8/were-all-killing-uber-just-by-using-it https://www.vice.com/en_us/article/zmjew8/were-all-killing-u... [2] https://ny.curbed.com/2019/3/28/18285731/nyc-ferry-swimming-in-subsidies-mayor-de-blasio https://ny.curbed.com/2019/3/28/18285731/nyc-ferry-swimming-... [3] https://time.com/4176128/powerball-jackpot-lottery-winners/ https://time.com/4176128/powerball-jackpot-lottery-winners/
  - DisruptiveDave 7y ago
    Side note, I miss the East River ferry. It made my commute 100x more enjoyable than the subway (except when the ferries would leave my dock early and then yell at me for it).
    - CydeWeys 7y ago
      What do you mean "miss"? There's plenty of ferry routes across the East River. Quite possibly more now than ever before.
      - DisruptiveDave 7y ago
        Ha, I don't live there anymore! The actual "miss"!
  - sasper 7y ago
    WeWork is the most expensive option in our city for managed offices, by a large margin. It's not cheap.
    - bpt3 7y ago
      Have you tried to negotiate? If they have any competitors, they'll beat those prices just by asking in my experience.
- AgloeDreams 7y ago
  Quite love the space but it suffers from the too-little-too-much paradox. It costs too much for casual use (compared to like a starbucks) but costs reasonable amounts for hardcore use (compared to say, getting a larger apartment) and the gains in QOL are massive over working from home. It's a pretty great place to work..that likely costs more to run than they charge.
- tedmiston 7y ago
  I have used WeWorks on occasion when traveling and was always happy with the offering. Currently I use the major local coworking space when I need one or a coffee shop. If there were a WeWork in my city, I would consider it again. There aren't tons of them, but I really prefer the Galvanize coworking spaces [1] -- the crowd is a more diverse mix of people, and they feel more laid back to me. [1]: https://www.galvanize.com/entrepreneur#campuses https://www.galvanize.com/entrepreneur#campuses
- cpwright 7y ago
  Our company has a 9 and 6 person office in NYC. The space is clean, there are conference rooms available when we need them, and mostly everything works well enough. We mostly don't care about any of the community stuff, just that it is an effective way to get space without a long term lease or the need to worry about an office build out.
- eric_the_read 7y ago
  I just visited my boss in a WeWork space in San Jose, and it is the closest thing I've found so far to my idea of hell. The offices there have a unique combination of feeling exposed (from all the glass everywhere) and claustrophobic (from the tiny offices everywhere).
  - ganitarashid 7y ago
    That is hilarious. Best description yet that I’ve heard of the WeWork vibe
    - neuromantik8086 7y ago
      I prefer the following: "It felt like a yuppie aquarium." https://www.reddit.com/r/finance/comments/c93agd/wework_isnt_even_close_to_being_profitable_it/essod6h/ https://www.reddit.com/r/finance/comments/c93agd/wework_isnt...
- pbreit 7y ago
  We have a small office for up to 12 people in Atlanta and it's great. Super easy to work with, spaces are top notch, you get larger office amenities without a large office. I can easily see this growing massively in future for distributed teams.
- fredley 7y ago
  Fancy space, lots of perks, terrible place to get stuff done. Glass walls mean everywhere is loud, you can hear everyone's phone calls on the entire floor. Desks were wobbly, offices cramped. Once they hired a steel band to play in the reception area for most of Summer (as part of a branded event(?) called 'The Endless Summer of We'...). Bonkers.
- yeahigotgoats 7y ago
  I dont mind at all when foolish 'investors' give me free money
- dustinmoris 7y ago
  I'm currently typing this message from a WeWork. I've been at 3 different locations so far and this one is the nicest, overlooking Tower Bridge and Tower Hill in London. Absolutely stunning office, not as dull and dark as the other WeWorks I was before and nice community here and as always great free coffee, but apart from that, there's nothing unique about WeWork. It's just a nice office, and unless the space is in a stunning location like the one at Tower Hill in London, it's actually wearing off very very quickly.
jsnider3 7y ago
No! Not the most magical unicorn!
tibbydudeza 7y ago
Such a shame ... time to pony up some more of that "vision" Softbank.
xwdv 7y ago
Can’t wait to see WeWork crumble. If they had done an IPO I was hoping to open up a short position. If WeWork does run out of cash, I’ll be pulling money out from my tech stocks and holding cash for a while.
- youngtaff 7y ago
  Don't understand your linkage to tech stocks… WeWork are a property company
  - AgloeDreams 7y ago
    I think their comment is a little apocalyptic but I can say that wework going under could possibly trigger a large number of mid-small-size startups losing their spaces and possibly ending up out of business.
    - whatok 7y ago
      Startups aren't going out of business because they don't have a place to work from. They'll go out of business when funding dries up because valuations are in question now.
    - jborichevskiy 7y ago
      Surely most of these startups could just move to competitors or go remote for a few weeks/months? Part of the advantage of being a mid-small startup is the mobility and flexibility.
    - bpt3 7y ago
      Those companies will have their employees work from home, go to a WeWork competitor, or set up a permanent office. One of the many wonderful benefits of using WeWork is that it's very easy to stop using their service.
  - xwdv 7y ago
    The theory is that WeWork is a canary. It’s a shit company propped up by dumb investor cash. If it collapses and runs out of money, it could be a sign that investment in tech in general is drying up, probably because money isn’t flowing as easily as it once did and less startups are raising the cash to rent expensive WeWork office space, basically some things are happening and it’s better not to be heavily invested in case of sudden moves. It has nothing to do with startups losing office space.
Pwntastic 7y ago
non-paywalled link: http://archive.is/g1g6E http://archive.is/g1g6E
lordnacho 7y ago
Perhaps someone in the property business can illuminate something for me. I read somewhere that WeWork runs each site as a separate business. Can this really be true? It would seem to allow them to let each entity go bankrupt, which doesn't seem to be a sensible thing for the landlord to want to expose himself to. Sure he gets the building back, but you'd think there's then no advantage to renting it out to WeWork, since despite being a large entity they can just default on you anyway?
- keltex 7y ago
  Don't know for sure but they might run each one as a separate business but have the parent company guarantee the rent. I don't think many landlords would sign long expensive leases otherwise. [Edit] Actually looks like the parent company only guarantees a small percentage of leases: https://allwork.space/2019/08/wework-guarantees-a-small-portion-of-its-40-billion-rental-commitments/ https://allwork.space/2019/08/wework-guarantees-a-small-port...
- jbigelow76 7y ago
  I did some consulting once for a company that managed rooftop space for building operators to lease to telcos and what not and it was totally normal one company to "own" multiple buildings but for each building to be its own LLC.
  - mchristen 7y ago
    This seems to be a common practice. My parents live in a highrise that has construction defects and it took years to extract money to repair the building because the LLC that sold the building to the condo association had no cash or assets anymore.
    - deleted 7y ago
      [deleted]
    - markstos 7y ago
      My accountant advised our business to setup a separate business to own the building we wanted to buy. It silos the liabilities of each. Also, you have some flexibility in how much you charge yourself for rent. Depending on which company might owe more taxes, you may want to adjust that rate up and down. In our case, the property business outlived the primary business turned out to be another benefit of decoupling them.
cgh 7y ago
I don’t understand how this company employed 1500+ programmers, PMs and data science people. What did they do? I guess not much, as 500 of them got laid off recently.
- ben_jones 7y ago
  Analytics, logging, "Artificial Intelligence", the latest Fad in devops/application development, System administration duties, help desk duties, hiring/interviewing duties (you don't get to 1500+ without A LOT of this!), the refactoring after the clusterf* of using the latest Fad in devops/application development. "BIG" data pipelines, managing an Elasticsearch cluster, PM for the design of app 1, PM for the design of App 2, (for probably dozens of apps), QA teams, Design teams, Localization teams, Accessibility teams, SEO and marketing automation teams, teams to build out their CRM, and the all important management layer to interface all these teams together! This, this ladies and gentlemen, is how Silicon Valley changes the world.
  - reustle 7y ago
    Totally agree, but I guess this is how they tried to brand themselves as a tech company and not just an office space provider.
  - api 7y ago
    A small team could have written all the software for WeWork to do what it actually does. Each location could run it on an Intel NUC or similar. Central cloud could be moderately sized, maybe a dozen instances. That would be efficient, but ironically it would not have attracted so much investment because fewer buzzwords. It would have been a better way to run a business that sells office space but a less effective way to run a business that sells its stock. In a top heavy severely demand constrained economy it is far more profitable to sell stock than goods or services.
  - delfinom 7y ago
    And with all of that, they couldn't even setup their wework networks more securely, even as little as blocking device discovery and port scanning.
josephjrobison 7y ago
Interesting that Goldman Sachs pumped up their valuation to $60-90 billion at one point, but now won’t give them a lifeline: “ Goldman Sachs, one of WeWork’s investors, advisers and customers, had been among a consortium of banks willing to lend $6bn had the IPO succeeded but has so far sat out the new financing discussions out of concern about the level of uncertainty surrounding the company, one person said.”
- jiofih 7y ago
  My first thought was related to this: hhow is it possible that one moment the company is ready for an IPO, with all the due diligence that comes with it and backing of financial giants, and then next month be desperate for cash? Isn’t there some sort of fraud going on in this situation?
  - jartelt 7y ago
    The company believed it was ready for an IPO, but all the potential IPO investors disagreed after reading the S-1 and doing some diligence. In a sense the system worked well in that regard. The big issue was with the private investors letting the CEO do whatever he wanted and pushing the valuation up very high.
  - mistymountains 7y ago
    It's clear that investment banks are incentivized to maximally value a company. Valuing a company is pretty simple, in that you can tweak certain values in, say cash flow analyses and depreciation projections to literally make billions of dollars appear on paper. They have complete deniability in that, at whatever moment, their proprietary analyses and due diligence appears in a prospectus that public markets are supposed to just trust in good faith. That way, when the banks capture the spread on an IPO (difference in price guaranteed to a firm vs IPO price), the banks can offload shares en masse to investors and gain the spread, only paying capital gains taxes. It's pretty much theft, unless you are a very very early investor, to sell stock in something like WeWork as an investment bank. Financial giants aren't like other companies. If they don't make deals every single day, they will die. They have no product, nothing to offer that improves and compounds upon previous products (save, perhaps, for algorithmic trading software). Are we really surprised that this bloated corpse of an industry known for churn, extreme burnout, and grift would overvalue an IPO when it serves them?
soup10 7y ago
WeBankrupt
- g96alqdm0x 7y ago
  WeOuttaWork
raiyu 7y ago
This could be the best situation for Softbank. WeWork is obviously in desparate need of cash, no one is going to touch it with a ten foot pole. Softbank is too invested for it to fail. They can buy up 50% of the equity remaining for any sort of investment since they will have a gun to their head the company will have to accept or go bankrupt. Adam Neumann's shares will become worthless in the process and new shares will be issued for the new co-CEOs. So with $11B in capital committed to WeWork at the end of the whole mess Softbank can end up with 90% ownership. Get the company on track financially and see if they can bring it to an IPO in the next 2-3 years when they have solved their financial issues. And hopefully realize some sort of return, or at the very least not leave a $9B hole in their vision fund.
- atdrummond 7y ago
  He already ferreted away $700m. He'll be fine.
  - booi 7y ago
    Well.. if you call that living...
  - fjp 7y ago
    And then borrowed $300-some million secured against his WeWork shares
    - api 7y ago
      I just did some work to get together info for an investor due diligence questionnaire and I LOLed when I came to a long series of questions at the end that I swear were an itemized list of all the shenanigans that went on at WeWork. Loans of that sort were one of the items.
    - bobbylarrybobby 7y ago
      Sucks to be that bank
  - endymi0n 7y ago
illender 7y ago
well i mean they let an umbrella shut down an office for 2 days instead of just breaking the window which would have cost less than days of being shutdown, so are we surprised?
acomjean 7y ago
Whats going to happen with their meetup.com subsidiary?
achow 7y ago
In the other news.. WeWork India looks to raise $200 million https://www.livemint.com/companies/news/wework-india-to-raise-200-million-to-fuel-growth-11570706101176.html https://www.livemint.com/companies/news/wework-india-to-rais... Unlike other Asian markets such as China and Japan, We Co. operates on a revenue and profit-sharing model with its Indian partner...3 years ago it entered the country through a brand franchise agreement.
deleted 7y ago
[deleted]
neonate 7y ago
http://archive.is/g1g6E http://archive.is/g1g6E
- camel_Snake 7y ago
  thank you
cmarschner 7y ago
Just as a datapoint - Wework‘s largest competitor IWG has 4x as many locations, makes 3 billion $ revenue and $150 million profit. Not really where a tech company would want to be. Its market cap is at around 4 billion. What is different for Wework that would warrant a higher valuation other than the clout of its founder and, arguably, much nicer offices?
WomanCanCode 7y ago
I don't understand the WeWork business model. Landlords are all around you. Companies sometimes prefer to own a property rather than lease because over the time, you only lose money renting. Explain pls, how is WeWork different than all the other commercial landlords?

114 points by paulsutter 7y ago

Does anyone here on HN use WeWork spaces and enjoy them? I'm not suggesting they are bad, I honestly don't know. Ignoring the business model, the CEO, the failed IPO, do YOU or do you not enjoy that actual offering of WeWork?

vr46 7y ago
Typing this from my desk in a WW. The location is great, building is good, the facilities are good, there's quite a nice dynamic about the place. No complaints, it's very smooth and well-organized. Lots of staff to run the place too.
question_away 7y ago
I just started working out of a space in Boston last month and it's been sublime. There's always a WeWork in whatever city I'm traveling to and at 25$ per day (beyond my usual credits), it's really affordable to have an office while traveling to both work and host clients.
sasper 7y ago
It's been fantastic for our fast-growing SaaS startup. We've been able to spin up offices in 4 international cities in the last 18 months with very few issues, and our teams are productive and happy with the spaces. I manage one of the new offices and have LOVED the responsiveness of the local WeWork team, the facilities, the infrastructure, and it's lightyears better than the previous office we were occupying. I don't have to worry about office-related issues any longer. That is, if WeWork stays solvent and doesn't go bankrupt. It's really too bad because their core business (renting office space) is done really well. Maybe a bankruptcy and restructuring would be good for their business, or maybe it will cause them to explode.
- remarkEon 7y ago
  It seems like the value that they are offering is just outsourced-office-management then. Am I wrong in thinking that? It's hard for me to parse what WeWork was "trying" to become. A real estate company that manages offices? An office management company that also does real estate?
  - hn_throwaway_99 7y ago
    That's kind of exactly the point. IMO there are a lot of unicorns out there that have pretty decent business models (Uber/Lyft, WeWork, delivery services, etc.) The problem is they are probably worth much less than their investors paid for them, because everyone is discovering that once the VC subsidies go away after the "growth at all cost" mentality, these are actually pretty low margin businesses that don't warrant their "tech" valuations.
    - htfu 7y ago
      Yup. Other issue for many of them (which WeWork actually should be less exposed to) is that, most of it hardly being rocket science, "blow money until monopoly" seems to forget that customer subsidies A. aren't r&d/infrastructure, B. will have to be earned back, and not just 1:1 either... So even if whatever competition is knocked out, anyone entering the space after that, and not saddled with legacy funnycost, won't need your efficiencies and economies of scale to manage an edge in pricing. And market dominance can't negate lack of friction for eg drivers and riders to run a second, third, fourth app all at once. But the sun appears to be settling on bizarro cargo culting Amazon being seen as a viable business model. As a consumer I'll miss it!
  - AgloeDreams 7y ago
    Management, location, and community. Hospitality. Basically, Wework is a hotel for awake business-focused people, with all the tweaks needed to make that work. It's kinda why Arlo SoHo NYC (hotel) reminded me of one. The real estate line never made much sense to anyone who ever was in one, I think Bloomburg started it. (Though real estate was the business that Adam used to screw everyone so, maybe that was his personal business lol)
TomMarius 7y ago
I was skeptical, but it's excellent, and they have the nicest view on the city.
oroup 7y ago
Before we sold, we had WeWork offices in Denver and NY and used a similar competitor in Austin. They worked great and we were happy with them. But they were also a commodity and we chose based on price and lack of lock-in.
tnolet 7y ago
I don’t work in one but have visited three of them here in Berlin quite recently for meetings. The one in Friedrichshafen on the Spree is pretty nice. Great view. The other ones more in Mitte had way too much of a semi hipster hotel lobby feel. Everyone was just too fashionable and cool for my taste.
jekrb 7y ago
I used to work for a company that rented a WeWork space to meet with clients in NYC. I only opted to work out of it once or twice, for a change of scenery from my typical office. I think the location was the main perk, since I then got to spend a day in NYC. Working fully remote now and I enjoy that much more than being in any office setting.
rrdharan 7y ago
Turns out most of us enjoy any exchange in which we receive goods whose value far exceeds what we pay for them. Same reason I love cheap ride share trips[1] and NYC ferry rides[2]. I'd probably really enjoy winning the mega millions jackpot with a $5 ticket too (though perhaps not? [3]). [1] https://www.vice.com/en_us/article/zmjew8/were-all-killing-uber-just-by-using-it https://www.vice.com/en_us/article/zmjew8/were-all-killing-u... [2] https://ny.curbed.com/2019/3/28/18285731/nyc-ferry-swimming-in-subsidies-mayor-de-blasio https://ny.curbed.com/2019/3/28/18285731/nyc-ferry-swimming-... [3] https://time.com/4176128/powerball-jackpot-lottery-winners/ https://time.com/4176128/powerball-jackpot-lottery-winners/
- DisruptiveDave 7y ago
  Side note, I miss the East River ferry. It made my commute 100x more enjoyable than the subway (except when the ferries would leave my dock early and then yell at me for it).
  - CydeWeys 7y ago
    What do you mean "miss"? There's plenty of ferry routes across the East River. Quite possibly more now than ever before.
    - DisruptiveDave 7y ago
      Ha, I don't live there anymore! The actual "miss"!
- sasper 7y ago
  WeWork is the most expensive option in our city for managed offices, by a large margin. It's not cheap.
  - bpt3 7y ago
    Have you tried to negotiate? If they have any competitors, they'll beat those prices just by asking in my experience.
AgloeDreams 7y ago
Quite love the space but it suffers from the too-little-too-much paradox. It costs too much for casual use (compared to like a starbucks) but costs reasonable amounts for hardcore use (compared to say, getting a larger apartment) and the gains in QOL are massive over working from home. It's a pretty great place to work..that likely costs more to run than they charge.
tedmiston 7y ago
I have used WeWorks on occasion when traveling and was always happy with the offering. Currently I use the major local coworking space when I need one or a coffee shop. If there were a WeWork in my city, I would consider it again. There aren't tons of them, but I really prefer the Galvanize coworking spaces [1] -- the crowd is a more diverse mix of people, and they feel more laid back to me. [1]: https://www.galvanize.com/entrepreneur#campuses https://www.galvanize.com/entrepreneur#campuses
cpwright 7y ago
Our company has a 9 and 6 person office in NYC. The space is clean, there are conference rooms available when we need them, and mostly everything works well enough. We mostly don't care about any of the community stuff, just that it is an effective way to get space without a long term lease or the need to worry about an office build out.
eric_the_read 7y ago
I just visited my boss in a WeWork space in San Jose, and it is the closest thing I've found so far to my idea of hell. The offices there have a unique combination of feeling exposed (from all the glass everywhere) and claustrophobic (from the tiny offices everywhere).
- ganitarashid 7y ago
  That is hilarious. Best description yet that I’ve heard of the WeWork vibe
  - neuromantik8086 7y ago
    I prefer the following: "It felt like a yuppie aquarium." https://www.reddit.com/r/finance/comments/c93agd/wework_isnt_even_close_to_being_profitable_it/essod6h/ https://www.reddit.com/r/finance/comments/c93agd/wework_isnt...
pbreit 7y ago
We have a small office for up to 12 people in Atlanta and it's great. Super easy to work with, spaces are top notch, you get larger office amenities without a large office. I can easily see this growing massively in future for distributed teams.
fredley 7y ago
Fancy space, lots of perks, terrible place to get stuff done. Glass walls mean everywhere is loud, you can hear everyone's phone calls on the entire floor. Desks were wobbly, offices cramped. Once they hired a steel band to play in the reception area for most of Summer (as part of a branded event(?) called 'The Endless Summer of We'...). Bonkers.
yeahigotgoats 7y ago
I dont mind at all when foolish 'investors' give me free money
dustinmoris 7y ago
I'm currently typing this message from a WeWork. I've been at 3 different locations so far and this one is the nicest, overlooking Tower Bridge and Tower Hill in London. Absolutely stunning office, not as dull and dark as the other WeWorks I was before and nice community here and as always great free coffee, but apart from that, there's nothing unique about WeWork. It's just a nice office, and unless the space is in a stunning location like the one at Tower Hill in London, it's actually wearing off very very quickly.

jsnider3 7y ago

No! Not the most magical unicorn!

tibbydudeza 7y ago

Such a shame ... time to pony up some more of that "vision" Softbank.

xwdv 7y ago

Can’t wait to see WeWork crumble. If they had done an IPO I was hoping to open up a short position. If WeWork does run out of cash, I’ll be pulling money out from my tech stocks and holding cash for a while.

youngtaff 7y ago
Don't understand your linkage to tech stocks… WeWork are a property company
- AgloeDreams 7y ago
  I think their comment is a little apocalyptic but I can say that wework going under could possibly trigger a large number of mid-small-size startups losing their spaces and possibly ending up out of business.
  - whatok 7y ago
    Startups aren't going out of business because they don't have a place to work from. They'll go out of business when funding dries up because valuations are in question now.
  - jborichevskiy 7y ago
    Surely most of these startups could just move to competitors or go remote for a few weeks/months? Part of the advantage of being a mid-small startup is the mobility and flexibility.
  - bpt3 7y ago
    Those companies will have their employees work from home, go to a WeWork competitor, or set up a permanent office. One of the many wonderful benefits of using WeWork is that it's very easy to stop using their service.
- xwdv 7y ago
  The theory is that WeWork is a canary. It’s a shit company propped up by dumb investor cash. If it collapses and runs out of money, it could be a sign that investment in tech in general is drying up, probably because money isn’t flowing as easily as it once did and less startups are raising the cash to rent expensive WeWork office space, basically some things are happening and it’s better not to be heavily invested in case of sudden moves. It has nothing to do with startups losing office space.

Pwntastic 7y ago

non-paywalled link: http://archive.is/g1g6E http://archive.is/g1g6E

lordnacho 7y ago

Perhaps someone in the property business can illuminate something for me. I read somewhere that WeWork runs each site as a separate business. Can this really be true? It would seem to allow them to let each entity go bankrupt, which doesn't seem to be a sensible thing for the landlord to want to expose himself to. Sure he gets the building back, but you'd think there's then no advantage to renting it out to WeWork, since despite being a large entity they can just default on you anyway?

keltex 7y ago
Don't know for sure but they might run each one as a separate business but have the parent company guarantee the rent. I don't think many landlords would sign long expensive leases otherwise. [Edit] Actually looks like the parent company only guarantees a small percentage of leases: https://allwork.space/2019/08/wework-guarantees-a-small-portion-of-its-40-billion-rental-commitments/ https://allwork.space/2019/08/wework-guarantees-a-small-port...
jbigelow76 7y ago
I did some consulting once for a company that managed rooftop space for building operators to lease to telcos and what not and it was totally normal one company to "own" multiple buildings but for each building to be its own LLC.
- mchristen 7y ago
  This seems to be a common practice. My parents live in a highrise that has construction defects and it took years to extract money to repair the building because the LLC that sold the building to the condo association had no cash or assets anymore.
  - deleted 7y ago
    [deleted]
  - markstos 7y ago
    My accountant advised our business to setup a separate business to own the building we wanted to buy. It silos the liabilities of each. Also, you have some flexibility in how much you charge yourself for rent. Depending on which company might owe more taxes, you may want to adjust that rate up and down. In our case, the property business outlived the primary business turned out to be another benefit of decoupling them.

cgh 7y ago

I don’t understand how this company employed 1500+ programmers, PMs and data science people. What did they do? I guess not much, as 500 of them got laid off recently.

ben_jones 7y ago
Analytics, logging, "Artificial Intelligence", the latest Fad in devops/application development, System administration duties, help desk duties, hiring/interviewing duties (you don't get to 1500+ without A LOT of this!), the refactoring after the clusterf* of using the latest Fad in devops/application development. "BIG" data pipelines, managing an Elasticsearch cluster, PM for the design of app 1, PM for the design of App 2, (for probably dozens of apps), QA teams, Design teams, Localization teams, Accessibility teams, SEO and marketing automation teams, teams to build out their CRM, and the all important management layer to interface all these teams together! This, this ladies and gentlemen, is how Silicon Valley changes the world.
- reustle 7y ago
  Totally agree, but I guess this is how they tried to brand themselves as a tech company and not just an office space provider.
- api 7y ago
  A small team could have written all the software for WeWork to do what it actually does. Each location could run it on an Intel NUC or similar. Central cloud could be moderately sized, maybe a dozen instances. That would be efficient, but ironically it would not have attracted so much investment because fewer buzzwords. It would have been a better way to run a business that sells office space but a less effective way to run a business that sells its stock. In a top heavy severely demand constrained economy it is far more profitable to sell stock than goods or services.
- delfinom 7y ago
  And with all of that, they couldn't even setup their wework networks more securely, even as little as blocking device discovery and port scanning.

josephjrobison 7y ago

Interesting that Goldman Sachs pumped up their valuation to $60-90 billion at one point, but now won’t give them a lifeline: “ Goldman Sachs, one of WeWork’s investors, advisers and customers, had been among a consortium of banks willing to lend $6bn had the IPO succeeded but has so far sat out the new financing discussions out of concern about the level of uncertainty surrounding the company, one person said.”

jiofih 7y ago
My first thought was related to this: hhow is it possible that one moment the company is ready for an IPO, with all the due diligence that comes with it and backing of financial giants, and then next month be desperate for cash? Isn’t there some sort of fraud going on in this situation?
- jartelt 7y ago
  The company believed it was ready for an IPO, but all the potential IPO investors disagreed after reading the S-1 and doing some diligence. In a sense the system worked well in that regard. The big issue was with the private investors letting the CEO do whatever he wanted and pushing the valuation up very high.
- mistymountains 7y ago
  It's clear that investment banks are incentivized to maximally value a company. Valuing a company is pretty simple, in that you can tweak certain values in, say cash flow analyses and depreciation projections to literally make billions of dollars appear on paper. They have complete deniability in that, at whatever moment, their proprietary analyses and due diligence appears in a prospectus that public markets are supposed to just trust in good faith. That way, when the banks capture the spread on an IPO (difference in price guaranteed to a firm vs IPO price), the banks can offload shares en masse to investors and gain the spread, only paying capital gains taxes. It's pretty much theft, unless you are a very very early investor, to sell stock in something like WeWork as an investment bank. Financial giants aren't like other companies. If they don't make deals every single day, they will die. They have no product, nothing to offer that improves and compounds upon previous products (save, perhaps, for algorithmic trading software). Are we really surprised that this bloated corpse of an industry known for churn, extreme burnout, and grift would overvalue an IPO when it serves them?

soup10 7y ago

WeBankrupt

g96alqdm0x 7y ago
WeOuttaWork

raiyu 7y ago

This could be the best situation for Softbank. WeWork is obviously in desparate need of cash, no one is going to touch it with a ten foot pole. Softbank is too invested for it to fail. They can buy up 50% of the equity remaining for any sort of investment since they will have a gun to their head the company will have to accept or go bankrupt. Adam Neumann's shares will become worthless in the process and new shares will be issued for the new co-CEOs. So with $11B in capital committed to WeWork at the end of the whole mess Softbank can end up with 90% ownership. Get the company on track financially and see if they can bring it to an IPO in the next 2-3 years when they have solved their financial issues. And hopefully realize some sort of return, or at the very least not leave a $9B hole in their vision fund.

atdrummond 7y ago
He already ferreted away $700m. He'll be fine.
- booi 7y ago
  Well.. if you call that living...
- fjp 7y ago
  And then borrowed $300-some million secured against his WeWork shares
  - api 7y ago
    I just did some work to get together info for an investor due diligence questionnaire and I LOLed when I came to a long series of questions at the end that I swear were an itemized list of all the shenanigans that went on at WeWork. Loans of that sort were one of the items.
  - bobbylarrybobby 7y ago
    Sucks to be that bank
- endymi0n 7y ago

illender 7y ago

well i mean they let an umbrella shut down an office for 2 days instead of just breaking the window which would have cost less than days of being shutdown, so are we surprised?

acomjean 7y ago

Whats going to happen with their meetup.com subsidiary?

achow 7y ago

In the other news.. WeWork India looks to raise $200 million https://www.livemint.com/companies/news/wework-india-to-raise-200-million-to-fuel-growth-11570706101176.html https://www.livemint.com/companies/news/wework-india-to-rais... Unlike other Asian markets such as China and Japan, We Co. operates on a revenue and profit-sharing model with its Indian partner...3 years ago it entered the country through a brand franchise agreement.

deleted 7y ago

[deleted]

neonate 7y ago

http://archive.is/g1g6E http://archive.is/g1g6E

camel_Snake 7y ago
thank you

cmarschner 7y ago

Just as a datapoint - Wework‘s largest competitor IWG has 4x as many locations, makes 3 billion $ revenue and $150 million profit. Not really where a tech company would want to be. Its market cap is at around 4 billion. What is different for Wework that would warrant a higher valuation other than the clout of its founder and, arguably, much nicer offices?

WomanCanCode 7y ago

I don't understand the WeWork business model. Landlords are all around you. Companies sometimes prefer to own a property rather than lease because over the time, you only lose money renting. Explain pls, how is WeWork different than all the other commercial landlords?