8 ms·

WeWork Book: The $10T Mirage

104 points by elsewhen 5y ago

paulpauper 5y ago
Doesn't we work still exist? I wouldn't say it is worthless or a total loss just yet.
- marcinzm 5y ago
  Wasn't more money invested into it at this point than it's current valuation?
  - femto113 5y ago
    A lot more. Current valuation is fuzzy, but the SPAC deal announced earlier this year was publicly putting the valuation at around $9B, and the total cash invested is around $15B, plus there's around $7B in debt (mostly lease obligations). There's also the issue that WeWork is bleeding cash and their revenue has fallen off a cliff. IMO $0 is as plausible a value as any other.
- castwide 5y ago
  Not worthless, but last I heard it was at a $9 billion valuation after receiving around $20 billion in venture capital, so not exactly a success story either.
- bdcravens 5y ago
  My understanding is that it's not the company they're trying to keep alive as much as preventing the devastating effects its closing would have on commercial real estate.
  - mcintyre1994 5y ago
    Are their investors heavily invested in commercial real estate? I’d have thought for most VCs crashing commercial real estate would be a plus for most of their portfolio, but WeWork had some weird investors.
    - qeternity 5y ago
      Because capital is fungible, all markets are linked in some form. A collapse in commercial property would roil all markets, including VC.
- suzzer99 5y ago
  I got a WeWork mask in a FedEx package about a year ago. Such a weird promotion. I have no idea how they got my info as I've never used WeWork or any other coworking space. But I did take a class in one. Maybe that was it.
  - paulpauper 5y ago
    lol the shipping cost more than the mask
    - suzzer99 5y ago
      But it got me to open the package! And then free advertising when I wore the mask (which I never did). Clearly a company with more money to burn than they know what to do with. Like when Boston Market expanded everywhere - including neighborhoods in SF that had zero other chain restaurants/fast food places. The hubris.
- rvz 5y ago
  Yes. WeWork is still alive. Even better, they are going public via a SPAC. So the CEO won anyway, got their billions and the exit scam still succeeded. Theranos tried to do the same thing but the scam was detected and stopped before they could try to get away with it. Like many blog posts, this one is just parroting and hyping the 'Cult of We' book and telling the story of its failed IPO and overvaluation in 2019. It would be more interesting if this failed IPO was the start of a gigantic crash, destroyed WeWork and took the tech industry with it. But given that they are still IPOing and exiting for billions and more overvalued companies are still going through SPACs and IPOs like business as usual; that 'failure' has become ancient history.
  - polynomial 5y ago
    Are you saying Neumann got his exit payment? I hadn't seen that story, and speculation was although it was agreed to, he would never see the money.
- vmception 5y ago
  Yeah they are in the middle of a SPAC deal! People just need to catch up to modern methods of making money. If: interest rate environment = low Then: act this way If: interest rate environment = high Then: act this other way There is zero utility in worrying about Neumann’s actual financial success, the cult-like employees who got burned after segregated themselves from how the entire finance sector was making fun of wework pitches. Softbank want to pump and risk limited partners infinite money, so be it.
briefcomment 5y ago
I don't know much about Axios, but I thought they tended towards impartial fact-based reporting, and I'm surprised at the emotionally charged language in this article > "chronicling the wiles and humiliation of Adam Neumann, WeWork's day-drinking co-founder, former CEO, and chief snake-oil salesman"
- brewdad 5y ago
  While the snake-oil salesman label is a bit too charged, the rest of the sentence is fact-based with just a bit of flourish.
  - brink 5y ago
    Emotionally charged doesn't mean false.
    - starfallg 5y ago
      I don't understand where this recent obsession about using neutral language in reporting is coming from. Using neutral language doesn't mean unbiased. Very convincing yet very biased pieces can be written in the most neutral language.
      - fouric 5y ago
        Emotionally-charged language is another way to create bias. An un-biased article must at least be written in an emotionally neutral tone - necessary, but not sufficient.
        benlivengood 5y ago
        Do we actually want emotionally neutral articles? There's always a value judgement being made about what is important to report. That value judgement will correspond with emotions in most cases, so it's worthwhile to acknowledge that fact as well. It's fine to describe situations where people lose their lives as "tragedies", for example. It's possible to go overboard by projecting emotions onto the audience that they don't actually have.
paulcole 5y ago
All this talk about WeWork being a total disaster actually got me to sign up for a membership. I figure if they were losing so much money they must be offering a high-end product for too low of a price. So far, I’ve loved it compared to working out of my apartment. There’s almost nobody there. Work areas are comfortable, furniture is great, building is really fancy, it’s secure, there’s really good free food and coffee, shower, bike room. I’m telling everybody I know to take advantage of it now while SoftBank is still footing most of the bill.
- briefcomment 5y ago
  I really like the idea of having more comfortable common spaces, and I would have no problem paying a fee for that. I miss being able sit in my college library's beautiful reading room any time I want. I guess WeWork's initial execution was bad, but I hope the general industry succeeds.
  - mcintyre1994 5y ago
    I don’t think their execution was ever bad to be honest, it’s just literally impossible to execute their business model in a way that justifies the insane valuation they were getting.
  - HWR_14 5y ago
    WeWork's initial execution wasn't bad, as far as I can tell. It was their business model that failed, not the product delivery.
  - mhh__ 5y ago
    It strikes me as a perfectly reasonable business model for anything other than an enormous startup. Not every thing can grow to a million billion, not everything should.
- ren_engineer 5y ago
  the criticism about WeWork wasn't the product itself, it was the fact that somehow it was being valued like a software startup despite being just a standard low margin real estate and co-working business
Animats 5y ago
"... how grifters came to be called visionaries." Yes. Near-zero interest rates enabled the creation of "successful" companies that didn't actually make money. That era is coming to a close.
- HWR_14 5y ago
  > Near-zero interest rates enabled the creation of "successful" companies that didn't actually make money. That era is coming to a close. Rates seem to be going down again. What makes you think near-zero interest rates are going away?
  - Lionga 5y ago
    Inflation
    - magila 5y ago
      That's putting a lot of faith in central banks. The current heads of those banks, at least in the US and EU, have telegraphed pretty clearly that they are willing to let inflation run hot for better or worse.
      - kevin_thibedeau 5y ago
        The wealthy deserve their low interest loans. Then the manna they generate will trickle down... Somehow.
        kortilla 5y ago
        Loans are for people without money. High interest is good for people with money who loan it out. The wealthy only use the loans when it makes more sense to keep money earning returns somewhere else.
        HWR_14 5y ago
notsospecialk 5y ago
Seems like WeWork will continue to be in trouble for a while. The pandemic has allowed them to renegotiate a lot of their lease agreements, which how's allowed them to eek out profitability in many locations, and they're trying to extricate themselves from their worst deals, but demand for their product is going to continue to look different when the pandemic ends (assuming it ends!). Less desire for shared/common working space. Less worker density. More WFH. They're going to need to invest even more to alter their workspaces to what their customers actually want.
- ghaff 5y ago
  >Less desire for shared/common working space. At the individual company level, there's some level of common understanding of rules/protocols for coming into offices. That's not generally going to be the case with co-working spaces.
- dehrmann 5y ago
  They might actually positioned really well for companies that don't want to commit to their own space when the company is remote half the time.
  - ethbr0 5y ago
    That's a fickle slice though. They're only attractive to (a) individuals or (b) companies too small to just deal directly with standard office space brokers. They need larger accounts to drive their COGS down, but larger accounts can bypass their service. So they're like a cloud provider, except without all the synergy and lock-in. The only future where they're moderately successful is one where workforces are substantially more spread out (one employee in each different city) and they're a broker. But even then... they'd face the challenge of scaling their business geographically (office in every city) vs having larger offices in hubs.
  - notsospecialk 5y ago
    Maybe. They'll still need to invest quite a bit to get there though both in how their space is set up and their operating model. Right now empty co-working spaces are quite attractive, but as the get back to a capacity that's actually profitable for WeWork, they are essentially selling 1) occasionally sitting in close proximity to a bunch strangers that changes every time you go in (the day pass), 2) or nicely furnished/designed but overpriced priced reserved offices (monthly subscription). Companies (and probably workers too) are generally going to be cautious about #1 due to covid long after the dust settles, and #2 is just not a great deal regardless of who's fronting the bill.
fabianhjr 5y ago
> In 1866 there was a bank called Overend, Gurney and Company [..] they went bust. They invested a whole bunch of money in the railway industry and then the railway bubble burst. Thing is, if you invest a bundle in railways and lose it, there are still railways, people can still use them. But that's increasingly not how investment works. A lot of companies, especially tech companies, borrow money not to make anything, just on the promise that they will eventually make it back. > Let's take a case study: WeWork. WeWork are an American company that provide office space. They dress it up as revolutionizing your workplace and bringing people closer together(, but we're doing materialism, remember?) They own a bunch of offices, and if you need one you can rent it from them. They're landlords! [..] In summer of 2019, WeWork was valued at $47 billion. Now, just a few months later they're worth.. Well actually, it's not clear how much they're worth but nowhere near that. > So what happened? Was there some kind of disaster? Did the offices burn down? No. The truth is, they were never worth 47 billion. > [..] > Their business model was just owning stuff and charging rent, and if nobody wants your stuff or nobody can afford the rent, then all the money that was invested in you can just vanish. From: The Trouble with the Video Game Industry | Philosophy Tube ( https://www.youtube.com/watch?v=IYkLVU5UGM8&t=1000s https://www.youtube.com/watch?v=IYkLVU5UGM8&t=1000s at 16m and 40s) This was published in November 2019, before the pandemic. I am amazed that WeWork is still around. Citation on that segment: Grace Blakely, Stolen: How to Save the World from Financialisation
- sokoloff 5y ago
  > They [WeWork] own a bunch of offices, and if you need one you can rent it from them. I always assumed that WeWork was mostly leasing their space (to acquire the space, I mean), rather than buying it.
  - fabianhjr 5y ago
    The video does side on over-simplification and that is worse for WeWork since they would have the lease obligations and no assets they could liquidate on a downturn. (Like, for example, a pandemic)
  - fakedang 5y ago
duped 5y ago
The way this article is structured is bizarre, I don't know how I'm supposed to read it or what it's supposed to be telling me. Is this a book review or advertisement?
uses 5y ago
Bloomberg Podcasts did a 7-part deep dive into WeWork last year and its extremely entertaining and eye-opening: https://www.bloomberg.com/news/articles/2020-06-25/wework-podcast-adam-neumann-s-kibbutz-2-0?srnd=foundering https://www.bloomberg.com/news/articles/2020-06-25/wework-po... I believe Ellen Huet was the narrator and main journalist. One of the more fascinating podcast series I've listened to. Hearing about Adam and all the wackiness surrounding him, I can totally recall some of the hyper charismatic people I've known. They can have this weird almost energy field around them that just turns people's brains off.
- hinkley 5y ago
  There was a guy I worked for, I had to quit three times, because he could always paint a picture of the cool things we were going to work on, and on the first two occasions I got a field promotion out of it. The last time I literally did not make eye contact with him and I kept interrupting his train of thought before he could spin up into a speech.

104 points by elsewhen 5y ago

paulpauper 5y ago

Doesn't we work still exist? I wouldn't say it is worthless or a total loss just yet.

marcinzm 5y ago
Wasn't more money invested into it at this point than it's current valuation?
- femto113 5y ago
  A lot more. Current valuation is fuzzy, but the SPAC deal announced earlier this year was publicly putting the valuation at around $9B, and the total cash invested is around $15B, plus there's around $7B in debt (mostly lease obligations). There's also the issue that WeWork is bleeding cash and their revenue has fallen off a cliff. IMO $0 is as plausible a value as any other.
castwide 5y ago
Not worthless, but last I heard it was at a $9 billion valuation after receiving around $20 billion in venture capital, so not exactly a success story either.
bdcravens 5y ago
My understanding is that it's not the company they're trying to keep alive as much as preventing the devastating effects its closing would have on commercial real estate.
- mcintyre1994 5y ago
  Are their investors heavily invested in commercial real estate? I’d have thought for most VCs crashing commercial real estate would be a plus for most of their portfolio, but WeWork had some weird investors.
  - qeternity 5y ago
    Because capital is fungible, all markets are linked in some form. A collapse in commercial property would roil all markets, including VC.
suzzer99 5y ago
I got a WeWork mask in a FedEx package about a year ago. Such a weird promotion. I have no idea how they got my info as I've never used WeWork or any other coworking space. But I did take a class in one. Maybe that was it.
- paulpauper 5y ago
  lol the shipping cost more than the mask
  - suzzer99 5y ago
    But it got me to open the package! And then free advertising when I wore the mask (which I never did). Clearly a company with more money to burn than they know what to do with. Like when Boston Market expanded everywhere - including neighborhoods in SF that had zero other chain restaurants/fast food places. The hubris.
rvz 5y ago
Yes. WeWork is still alive. Even better, they are going public via a SPAC. So the CEO won anyway, got their billions and the exit scam still succeeded. Theranos tried to do the same thing but the scam was detected and stopped before they could try to get away with it. Like many blog posts, this one is just parroting and hyping the 'Cult of We' book and telling the story of its failed IPO and overvaluation in 2019. It would be more interesting if this failed IPO was the start of a gigantic crash, destroyed WeWork and took the tech industry with it. But given that they are still IPOing and exiting for billions and more overvalued companies are still going through SPACs and IPOs like business as usual; that 'failure' has become ancient history.
- polynomial 5y ago
  Are you saying Neumann got his exit payment? I hadn't seen that story, and speculation was although it was agreed to, he would never see the money.
vmception 5y ago
Yeah they are in the middle of a SPAC deal! People just need to catch up to modern methods of making money. If: interest rate environment = low Then: act this way If: interest rate environment = high Then: act this other way There is zero utility in worrying about Neumann’s actual financial success, the cult-like employees who got burned after segregated themselves from how the entire finance sector was making fun of wework pitches. Softbank want to pump and risk limited partners infinite money, so be it.

briefcomment 5y ago

I don't know much about Axios, but I thought they tended towards impartial fact-based reporting, and I'm surprised at the emotionally charged language in this article > "chronicling the wiles and humiliation of Adam Neumann, WeWork's day-drinking co-founder, former CEO, and chief snake-oil salesman"

brewdad 5y ago
While the snake-oil salesman label is a bit too charged, the rest of the sentence is fact-based with just a bit of flourish.
- brink 5y ago
  Emotionally charged doesn't mean false.
  - starfallg 5y ago
    I don't understand where this recent obsession about using neutral language in reporting is coming from. Using neutral language doesn't mean unbiased. Very convincing yet very biased pieces can be written in the most neutral language.
    - fouric 5y ago
      Emotionally-charged language is another way to create bias. An un-biased article must at least be written in an emotionally neutral tone - necessary, but not sufficient.
      - benlivengood 5y ago
        Do we actually want emotionally neutral articles? There's always a value judgement being made about what is important to report. That value judgement will correspond with emotions in most cases, so it's worthwhile to acknowledge that fact as well. It's fine to describe situations where people lose their lives as "tragedies", for example. It's possible to go overboard by projecting emotions onto the audience that they don't actually have.

paulcole 5y ago

All this talk about WeWork being a total disaster actually got me to sign up for a membership. I figure if they were losing so much money they must be offering a high-end product for too low of a price. So far, I’ve loved it compared to working out of my apartment. There’s almost nobody there. Work areas are comfortable, furniture is great, building is really fancy, it’s secure, there’s really good free food and coffee, shower, bike room. I’m telling everybody I know to take advantage of it now while SoftBank is still footing most of the bill.

briefcomment 5y ago
I really like the idea of having more comfortable common spaces, and I would have no problem paying a fee for that. I miss being able sit in my college library's beautiful reading room any time I want. I guess WeWork's initial execution was bad, but I hope the general industry succeeds.
- mcintyre1994 5y ago
  I don’t think their execution was ever bad to be honest, it’s just literally impossible to execute their business model in a way that justifies the insane valuation they were getting.
- HWR_14 5y ago
  WeWork's initial execution wasn't bad, as far as I can tell. It was their business model that failed, not the product delivery.
- mhh__ 5y ago
  It strikes me as a perfectly reasonable business model for anything other than an enormous startup. Not every thing can grow to a million billion, not everything should.
ren_engineer 5y ago
the criticism about WeWork wasn't the product itself, it was the fact that somehow it was being valued like a software startup despite being just a standard low margin real estate and co-working business

Animats 5y ago

"... how grifters came to be called visionaries." Yes. Near-zero interest rates enabled the creation of "successful" companies that didn't actually make money. That era is coming to a close.

HWR_14 5y ago
> Near-zero interest rates enabled the creation of "successful" companies that didn't actually make money. That era is coming to a close. Rates seem to be going down again. What makes you think near-zero interest rates are going away?
- Lionga 5y ago
  Inflation
  - magila 5y ago
    That's putting a lot of faith in central banks. The current heads of those banks, at least in the US and EU, have telegraphed pretty clearly that they are willing to let inflation run hot for better or worse.
    - kevin_thibedeau 5y ago
      The wealthy deserve their low interest loans. Then the manna they generate will trickle down... Somehow.
      - kortilla 5y ago
        Loans are for people without money. High interest is good for people with money who loan it out. The wealthy only use the loans when it makes more sense to keep money earning returns somewhere else.
        HWR_14 5y ago

notsospecialk 5y ago

Seems like WeWork will continue to be in trouble for a while. The pandemic has allowed them to renegotiate a lot of their lease agreements, which how's allowed them to eek out profitability in many locations, and they're trying to extricate themselves from their worst deals, but demand for their product is going to continue to look different when the pandemic ends (assuming it ends!). Less desire for shared/common working space. Less worker density. More WFH. They're going to need to invest even more to alter their workspaces to what their customers actually want.

ghaff 5y ago
>Less desire for shared/common working space. At the individual company level, there's some level of common understanding of rules/protocols for coming into offices. That's not generally going to be the case with co-working spaces.
dehrmann 5y ago
They might actually positioned really well for companies that don't want to commit to their own space when the company is remote half the time.
- ethbr0 5y ago
  That's a fickle slice though. They're only attractive to (a) individuals or (b) companies too small to just deal directly with standard office space brokers. They need larger accounts to drive their COGS down, but larger accounts can bypass their service. So they're like a cloud provider, except without all the synergy and lock-in. The only future where they're moderately successful is one where workforces are substantially more spread out (one employee in each different city) and they're a broker. But even then... they'd face the challenge of scaling their business geographically (office in every city) vs having larger offices in hubs.
- notsospecialk 5y ago
  Maybe. They'll still need to invest quite a bit to get there though both in how their space is set up and their operating model. Right now empty co-working spaces are quite attractive, but as the get back to a capacity that's actually profitable for WeWork, they are essentially selling 1) occasionally sitting in close proximity to a bunch strangers that changes every time you go in (the day pass), 2) or nicely furnished/designed but overpriced priced reserved offices (monthly subscription). Companies (and probably workers too) are generally going to be cautious about #1 due to covid long after the dust settles, and #2 is just not a great deal regardless of who's fronting the bill.

fabianhjr 5y ago

> In 1866 there was a bank called Overend, Gurney and Company [..] they went bust. They invested a whole bunch of money in the railway industry and then the railway bubble burst. Thing is, if you invest a bundle in railways and lose it, there are still railways, people can still use them. But that's increasingly not how investment works. A lot of companies, especially tech companies, borrow money not to make anything, just on the promise that they will eventually make it back. > Let's take a case study: WeWork. WeWork are an American company that provide office space. They dress it up as revolutionizing your workplace and bringing people closer together(, but we're doing materialism, remember?) They own a bunch of offices, and if you need one you can rent it from them. They're landlords! [..] In summer of 2019, WeWork was valued at $47 billion. Now, just a few months later they're worth.. Well actually, it's not clear how much they're worth but nowhere near that. > So what happened? Was there some kind of disaster? Did the offices burn down? No. The truth is, they were never worth 47 billion. > [..] > Their business model was just owning stuff and charging rent, and if nobody wants your stuff or nobody can afford the rent, then all the money that was invested in you can just vanish. From: The Trouble with the Video Game Industry | Philosophy Tube ( https://www.youtube.com/watch?v=IYkLVU5UGM8&t=1000s https://www.youtube.com/watch?v=IYkLVU5UGM8&t=1000s at 16m and 40s) This was published in November 2019, before the pandemic. I am amazed that WeWork is still around. Citation on that segment: Grace Blakely, Stolen: How to Save the World from Financialisation

sokoloff 5y ago
> They [WeWork] own a bunch of offices, and if you need one you can rent it from them. I always assumed that WeWork was mostly leasing their space (to acquire the space, I mean), rather than buying it.
- fabianhjr 5y ago
  The video does side on over-simplification and that is worse for WeWork since they would have the lease obligations and no assets they could liquidate on a downturn. (Like, for example, a pandemic)
- fakedang 5y ago

duped 5y ago

The way this article is structured is bizarre, I don't know how I'm supposed to read it or what it's supposed to be telling me. Is this a book review or advertisement?

uses 5y ago

Bloomberg Podcasts did a 7-part deep dive into WeWork last year and its extremely entertaining and eye-opening: https://www.bloomberg.com/news/articles/2020-06-25/wework-podcast-adam-neumann-s-kibbutz-2-0?srnd=foundering https://www.bloomberg.com/news/articles/2020-06-25/wework-po... I believe Ellen Huet was the narrator and main journalist. One of the more fascinating podcast series I've listened to. Hearing about Adam and all the wackiness surrounding him, I can totally recall some of the hyper charismatic people I've known. They can have this weird almost energy field around them that just turns people's brains off.

hinkley 5y ago
There was a guy I worked for, I had to quit three times, because he could always paint a picture of the cool things we were going to work on, and on the first two occasions I got a field promotion out of it. The last time I literally did not make eye contact with him and I kept interrupting his train of thought before he could spin up into a speech.