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Many profitable business models do not survive competition with unprofitable ones without becoming unprofitable. If WeWork subsidizes all office space with ~50
by lumost 5y ago
Many profitable business models do not survive competition with unprofitable ones without becoming unprofitable.
If WeWork subsidizes all office space with ~50 billion dollars, all other profitable landlords will need to lower prices to compete. To the investor the only viable business is the one that grows so large as to not have any unprofitable competition.
- nradov 5y agoOther landlords can borrow money the same way that WeWork borrowed money. There is literally a whole specialized financial services industry which arranges such financing for landlords.
- microtherion 5y agoYes, but in order to attract tenants, they would have to offer lease terms competitive with WeWork and thus lock themselves into a similarly unprofitable business model.
- native_samples 5y agoI don't think most landlords have the option of convincing Masayashi Son to write an infeasibly large cheque on the grounds that that remind him of what he used to be like, and/or that they are making a "tech" company.
- lotsofpulp 5y agoWeWork is not a landlord, and actual landlords would never give away their land / space so cheaply to WeWork such that WeWork could afford those losses. I do not see what kind of moat WeWork could ever have to justify being locked into it, which means they would always end up being a useless middleman if they tried to monopolize and raise prices. And even if they succeeded, then the landlord would just raise the price it charges WeWork.