This is correct and only one half of the downsides of WeWork’s model. WeWork assumes the risk spread between a traditional commercial lease and a basket of shor

This is correct and only one half of the downsides of WeWork’s model. WeWork assumes the risk spread between a traditional commercial lease and a basket of short-term leases. The stability and creditworthiness of the short term leases is up for debate. So as they scale they’re signing up for a huge liability with a fairly uncertain stream of cashflows on the other side. Since there are only so many high-quality businesses that want temporary office space at a WeWork in a given area they also need to accept additional risk as they grow revenue regionally. Add to this the intense correlation of WeWork’s customer base to firms dependent on VC$ and you’ve got a lot of correlated risk sitting on one side of a nasty liability. Not good stuff.