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It’s an old business model (Regis was doing this for years). If done well it can work, but is not without risk. This business model gets destroyed during downtu
by JCM9 5y ago
It’s an old business model (Regis was doing this for years). If done well it can work, but is not without risk. This business model gets destroyed during downturns or the extremes of a pandemic since they’re left holding long leases that nobody wants when the customers simply walk away. Knotel imploded quickly once the pandemic hit.
WeWork locations were arguably much nicer than your typical “coworking” offering at the time, but doing well in this business requires tight cost controls and meticulous attention to the details of managing the business. WeWork’s corporate culture was effectively the opposite of those things.
If the company, in its current form, can get its costs under control and streamline operations then it could survive and be profitable long term… but at the end of the day this is a boring real estate arbitrage business and ultimately a market commodity.
- secondaryacct 5y agoThe balance is probably hard to find: to get into the insane risk of locking the best locations in the expectation later your market shares will allow you to price them right requires cowboy management, while making any money in real estate scalping at large scale require ultra boring micro accountancy. So regus cant do it, they want to make money more safely, and WeWork cant do it, they wanted to change the world (sigh).
- dustintrex 5y agoLast I checked Regus (and WeWork!) have actually done quite well in the pandemic, because lots of companies are letting long-term leases expire and leasing flexible short-term space like Regus/WW instead.
- tyingq 5y agoWeWork was overpaying (outbidding others by 20% in some cases) and undercharging for quite some time.