14 ms·

WeWork’s once robust cash reserves have dwindled, raising chances of default

168 points by lxm 4y ago

greggarious 4y ago
Makes sense, people need privacy to plan a business.
- eatonphil 4y ago
  Do you mean WeWork needs privacy or the users of WeWork need privacy? Regarding the latter, coworking has been a thing since before WeWork and will certainly remain a thing after WeWork.
pzb 4y ago
https://archive.ph/sVNVU https://archive.ph/sVNVU
blitzar 4y ago
Does WeWork still exist?
- arcticbull 4y ago
  WeWork's all-access hot desking plan is great, couple hundred bucks a month and you can work from any WeWork anywhere in the world. You can drink half that back in cold brew if you just used it as a coffee shop subscription. Terrible business though.
  - acchow 4y ago
    WeWork has cold brew coffee? What beans do they use?
    - woodruffw 4y ago
      Mine has this "nitro" cold brew[1] on tap. [1]: https://commonwealthjoe.com/ https://commonwealthjoe.com/
    - ineedasername 4y ago
      >What beans do they use? Coffee beans
      - fortysixdegrees 4y ago
        Roastedd coffee beans, actually
    - paulcole 4y ago
      The one I go to (Portland, OR) used to have Stumptown on tap (that was awesome). But since WeWork went public, they’ve been getting contracts with some SysCo-esque food provider for cold brew/kombucha/seltzer. I forget the name of it but the cold brew is OK, not great but definitely not terrible.
    - andirk 4y ago
      It also has other people's beer in the fridge.
- mikestew 4y ago
  ‘‘Twas my first thought as well: “After all that drama, I just assumed they went under.”
- meltyness 4y ago
  for d in diseases: d.r += weworkpremium
- woodruffw 4y ago
  I'm typing this message from a WeWork, so yes. But past and current performance is not a guarantee of future performance :-)
  - mixedmath 4y ago
    How do you like working from a WeWork? Do you find that there is any community there, or is it just a nice place that isn't your home to work?
    - woodruffw 4y ago
      Just to clarify: I have a full office in a WeWork, and I've worked in the same office (along with some of my colleagues) for over 4 years. So I (and the company I work for) might not be the "typical" WeWork customer story. As far as workplaces go, it's perfectly fine: the office itself is nicely designed and has reasonable (but not especially fancy) amenities. I haven't really engaged in the community, although there seems to be a somewhat active one. I know other people who have, including going to parties and social events that were organized by WeWork (I have no idea if these are as common anymore, but they seemed to be happening a lot in 2018-19).
      - bombcar 4y ago
        We've done something similar, WeWork is "expensive for an office" if you've never paid commercial real estate prices before. Compared to an actual lease it can be quite competitive, especially as you only have to 'pay' for the office itself but get all the other "shared perks".
        woodruffw 4y ago
        Yep -- the impression that I get is that WeWork is no longer particularly competitive for us in the current market (but was for a long time).
        sjkoelle 4y ago
- CSMastermind 4y ago
  As someone with a distributed team, I try to visit each of my engineers in person at least once every 6 months. Being able to pick up a WeWork for us to work out of when I'm in town is really nice.
  - dpflan 4y ago
    Is it a yearly membership to support 2 meetings per year?
    - caterama 4y ago
      We use WeWork On Demand for this. No recurring membership fees, just pay as you go. It's okay -- $30 to $50 / day to use the common rooms and amenities. Much better than ... a library / coffee shop / hotel room. Their guest policy could be better though! You essentially cannot have guests with the On Demand membership -- just go to a coffee shop for that.
  - EGreg 4y ago
    What about Croissant? Just a marketplace to rent on demand. Like AirBNB for office space
    - CSMastermind 4y ago
      Never heard of it, I'll check it out.
  - jdmark 4y ago
    Your public library and locally owned coffee shop offers the same benefits for free.
    - giobox 4y ago
      I'm sure my "locally owned coffee shop" is going to just love it next time I use an overhead projector or a 42 inch TV to present a deck to the team.
    - 4y ago
julianlam 4y ago
Flexibility is king, and while compared to a traditional office lease, WeWork et al. are flexible, they still lock you into a contract, albeit a shorter one. We're a small business, we rent out a couple offices, but we've downsized. Especially with more WFH, a co-working space is criminally expensive for occasional usage. In my area, a startup has formed[0] offering desks at an HOURLY rate. Consistent decor, internet, staff, etc. across all locations. At the end of the day we still need a place to meet up in-person occasionally, this works for our use case perfectly. [0] https://www.lauft.work/ https://www.lauft.work/
- amluto 4y ago
  It’s not just startups. There are established players like Regus.
- jnwatson 4y ago
  Super confused. There is nothing new with WeWork other than perhaps cooler interior design. Renting an office room by the hour/month has been a thing for a very long time. Regus/IWG was founded in 1989.
- hinkley 4y ago
  Flexibility is king for small operations - unless you're a restaurant. Moving a storefront to a new location loses half of your customers, and for restaurants that's even worse. The tax you pay for wholesale goods includes the costs of logistics - the forethought, the scaling, the redundancy. If all of that were free then you'd get everything straight from the manufacturer for half the price. It might be that there's a business model for a WeWork-style company that actually works, but I'm not sure this is it. There are a number of companies where most of their hard assets are real estate, and we joke about them being real estate companies masquerading as something else (eg, McDonald's, and Sears before malls died). If they owed buildings outright they might have something as well. In many cities the number of landlords that own 80% of the available space is actually a pretty small number. What a WeWork would be doing is hiring charismatic people to build relationships with those companies to try to establish long term leases at a more favorable rate than you or I could ever hope for, particularly during a down economy when you can spin it as doing them a huge favor. Possibly by taking additional discounts for clauses like, "I can move you to a different suite in the same building in these situations" because maybe there will be a day when the guys on the fifth and sixth floor really want the fourth floor and meanwhile the tenants on the 3rd floor are downsizing. Some people will pay for those sorts of contingency. If even half of that is reasonable, then you might be looking for a shared space company that's backed by a hedge fund, rather than VC's, because you're looking for a company that is watching the downward trends in the market, not the upward ones. But I don't get the impression they did any of that.
pocketsand 4y ago
Honestly thought they were already bankrupt
deleted 4y ago
[deleted]
deeptote 4y ago
I wanted to get out of my office basement and into something that was close by, I went to a WeWork in my locality and while it was a nice space overall, I was astounded by both how expensive, and how empty, it was. For less I was able to find an office space that was closer to my house, owned and operated by a local company, and was larger.
- flutas 4y ago
  > For less I was able to find an office space that was closer to my house, owned and operated by a local company, and was larger. Any tips on that? Currently looking for a place locally and it feels impossible. But this could be due to market size (city of ~200k).
  - djbusby 4y ago
    They're not called co-working space. They're just regular old small office building. They typically don't have a flashy website, so you have to find them the old way. They may be on CraigsList or even LoopNet
  - jnwatson 4y ago
    Just Google “executive suites”. The WeWork business model has been around for decades.
    - ok123456 4y ago
      Regus is a chain that has been doing this exact thing. I worked at a startup that used one of those. A lot of the other tenants were lawyers in solo practice.
  - mgkimsal 4y ago
    Town of 40k here - we have 3 coworking spaces. I started the first one - just leased a small office building, and started subleasing spaces. Some private office space, some shared public/hotdesk seats. We're small - 12-15 people at a time, max. The others came later, and are larger, but we're all within a 5 minute walk from each other.
gw67 4y ago
In Milan, Italy their renting price are too expensive (550€/month + VAT for a dedicated desk) and their space are almost empty. For context, an house in same location costs 30€/sqm/month. I don’t understand why the keep their price so high if nobody is going there.
- duxup 4y ago
  I was curious and I searched locally, can't even get a price out of them on their website.
- rafaelero 4y ago
  I used it in São Paulo for a monthly subscription of BRL 750, something like $150. I also noticed that there weren't a lot of people there. I thought that was due to them focusing on leasing it to companies instead of individuals. But overall it was a pretty pleasurable place to be in, but they could definitely make it cheaper.
- criddell 4y ago
  30€ / day doesn't seem too bad to me. Can you really get space for less than that?
  - Raed667 4y ago
    The coworking space down the street is 375€ +VAT / month
- readbeard 4y ago
  I was very recently at their central Milan location next to the cathedral for a few days and found it to be quite busy. In fact, some days I wasn't able to get a slot to use the shared space. However, a not insignificant percentage of people in the shared space were students on a discounted membership who were there due to inadequate study space at the local university. I also found their more central Madrid locations to be quite reliably busy.
  - gw67 4y ago
captn3m0 4y ago
Byju, one of Softbank’s flagship investments in India ($22B valuation at peak) is in a similar place. $290M worth of payments are pending to just AWS and a there’s a $1.2B loan left hanging. https://themorningcontext.com/internet/byjus-is-in-the-throes-of-a-working-capital-crisis https://themorningcontext.com/internet/byjus-is-in-the-throe...
- captn3m0 4y ago
  Correction: $3.2M, not 290. That did feel incorrect, should have double checked.
- pkaye 4y ago
  The CEO of SoftBank Masayoshi Son (https://en.wikipedia.org/wiki/Masayoshi_Son https://en.wikipedia.org/wiki/Masayoshi_Son) also had really bad bets during the dot com bust and lost a tony of money. He got a second chance by betting early on Alibaba. > As of September 2022, Son ranks 73rd on the Forbes list of The World's Billionaires 2022,[9] despite having the distinction of losing the most money in history (approximately $70bn during the dot com crash of 2000).[10]
  - hinkley 4y ago
    I worked in Japan right at the beginning of the dotcom boom, and Japan was in the grip of a massive financial crisis at that time. And by crisis I mean people committing suicide with alarming regularity. My boss got most of his money from people trying to find some place better to put their money. Since the DotCom boom only felt long to people who said words like "internet time", I imagine the whiplash on that was pretty bad for everybody there.
- raverbashing 4y ago
  Interesting, they didn't seem to be lacking in money to sponsor the World Cup
olivermarks 4y ago
'WeWork, saddled with expensive long-term leases and more than $3 billion of debt, recorded a negative cash flow of around $4.3 billion between July 2020 and September of this year. It has been able to cover its losses partly with loans and equity investments from its biggest backer, SoftBank Group Corp. , which to date has sank more than $10 billion into the business. WeWork has burned through nearly all of it. The company has $500 million in undrawn debt commitments from SoftBank and has said it expects to end 2022 with $300 million in cash, less than one-third of what it had at the end of 2021. Its debt contracts allow it to borrow another $500 million'. Wikipedia: https://en.wikipedia.org/wiki/Adam_Neumann https://en.wikipedia.org/wiki/Adam_Neumann As WeWork CEO, Neumann on multiple occasions purchased buildings and then leased the space back to WeWork.[56] Observers noted this as a potential conflict of interest and one that would not be allowed if WeWork were a public company.[57] During his tenure as CEO of WeWork, Neumann also purchased US$90 million worth of residences, including a 60-acre (24 ha) estate in Westchester County, New York, a 6,000-square-foot (560 m2) condominium near Gramercy Park, two homes in The Hamptons, and a US$21 million mansion in Corte Madera, California.[19] Neumann has begun purchasing apartment buildings and, as of early 2022, owned some 4,000 apartments worth about US$1 billion, primarily located in the American South.[58]' In 'Generation Hustle' someone is left holding the bag...
- anon223345 4y ago
  What’s epic is that A16Z actually just invested a shit ton with Neumann again August 2022 https://a16z.com/2022/08/15/investing-in-flow/ https://a16z.com/2022/08/15/investing-in-flow/
- Marazan 4y ago
  My opinion of Neumann has varied from total contempt to amazement amd grudging respect at his abilitu at conning vast quantaties of cash from VCs. Overall though his contribution to massive capital mis-allocation is a huge net negative for my opinion of him.
  - gtowey 4y ago
    I'm not sure I understand the perspective that people like Neumann have anything admirable about them. All he has "discovered" is the one of the oldest lessons in the world -- it's pretty easy to sell something when you can lie as much as possible. Or put another way, that if you're willing to ignore the rules of society that most people agree to, then it's pretty easy to take advantage of the system. Now I know that not everyone could be as convincing of a liar as Neumann, but most of us have the ethical boundaries to not really try. So all you can really say is that of the people who are morally bankrupt enough to try to steal as much money as possible, he seems better at it than average.
throw33away 4y ago
They have a nasty bug where if you buy "all access" membership now for say June next year (set start date in June) you'll get free access until then. You actually can't pay for on-demand while you wait for your membership to start. But you can book desks for zero credits. However many parts of the app don't work and it seems the wifi doesn't work - but you can use guest wifi.
- jameslk 4y ago
  How does this work when you need the WeWork card to enter their buildings?
- humanistbot 4y ago
  > They have a nasty bug where if you buy "all access" membership now for say June next year (set start date in June) you'll get free access until then. You actually can't pay for on-demand while you wait for your membership to start. But you can book desks for zero credits. However many parts of the app don't work and it seems the wifi doesn't work - but you can use guest wifi. Good job posting this publicly on a thread I'm sure at least one WeWork corporate employee is reading. Expect to find a charge on the credit card you put down for your June purchase for all the services you have used. It is 100% legal for them to bill you for their price mistakes. Check the terms and conditions.
  - tbalsam 4y ago
    You seem to be exceptionally confident about an area where that is very rarely legally the case. Secondarily, the TOC don't define necessarily what's legal or not. Do you have a source for your claims here? They mentioned a contract beginning in June of next year, if the company fulfils more than the contract generally that would be upon them, though it may be grounds for termination of the contract. If you have some relevant law or legal reference to back up your statements on the matter, I'd be interested in learning a bit more about it personally.
    - humanistbot 4y ago
      Thanks for taking the HN-style approach of trying to call BS on me in the most civil manner possible. All the core elements of a contract are there: offer, acceptance, consideration, and exercise. By making use of the services early, OP is materially expressing their intent to exercise the contract early, which gives WeWork the right to take consideration in kind, per the terms of the original boilerplate contract. (And yes, clickthrough or shrinkwrapped TOCs often do not constitute an enforceable contract, especially when one party has not expressed any actual intent to form any contract and the offering party does everything they can to obscure the TOC and its implications, per Specht v. Netscape. But there is clearly intent to form a contract by the customer here, which means the entire TOC is as valid and enforceable as a rental car contract people sign without reading.) This goes by different names, one of which is "contract by acceptance" (more common in the UK). In the US, see [Uniform Commercial Code § 2-207](https://www.law.cornell.edu/ucc/2/2-207 https://www.law.cornell.edu/ucc/2/2-207): > (1) A definite and seasonable expression of acceptance ... operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms. [...] > (3) Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract. In such case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of this Act. Let me put it this way: A customer signs a contract to pay a company a rate of $X per month for unlimited usage of the company's services. The customer agrees that the contracted services will be exercised by booking through the app. The customer initially informs the company they want to start using these services and paying the monthly fee in June. They provide a credit card and sign a contract that authorizes payment for services rendered on a monthly basis, rolling until canceled by either party with X days notice. Then before June, the customer uses the app to book services, then actually makes use of those services. The company observes that the customer is using the app to make use of the services, for which there is normally no additional payment required. This lack of an additional payment is in line with the "all-access" subscription (and note the app states it in 'credits', not dollars). While the company also offers a per-hour rate, the customer does not make any attempt to communicate their intent to enter into a different contract to pay for these services by the hour. What else should the company assume? The customer's behavior and prior contract clearly signals intent to exercise the contract earlier than originally communicated. The company then actually provides those services to the customer, who materially benefits from them, at cost to the company. The company then charges the customer for services rendered at the monthly all-access rate, starting at the first day they made use of the services without any additional payment. And the fact that this is a "mistake" by the app is actually irrelevant. It is the same as if you had a similar agreement with a gym, and show up earlier than you requested. You check in with the human at the counter. They let you in without saying anything other than "Welcome!" The gym starts to bill you the monthly fee. You can't complain. You're right that I maybe shouldn't have said 100%, because these things are ruled on by human judges and juries. Edit: Another relevant concept is that contract law assumes parties are reasonable and acting in good faith. I'm pretty confident most judges and juries would think it is unreasonable for a person to expect to pay nothing for services that they already agreed are worth $X/mo. The fact that there are so many things broken with the customer experience if you do this one weird trick to get a free WeWork desk would be further evidence OP is acting in bad faith. I'm imagining how that cross-examination would go when OP is put on the witness stand to explain their state of mind.
RcouF1uZ4gsC 4y ago
Remember the James Bond movie, “Casino Royale”: I think Adam Neumann is the real life version of James Bond setting billions of dollars worth of Mohammed bin Salman‘s money on fire (by way of SoftBank).
ravenstine 4y ago
Not surprising, especially given the current economic situation. They must have had a real boatload of cash to last this long. I've tried a few coworking spaces and always come to the conclusion that they're a grift. Many people such as myself probably try them out, begrudgingly pay $300 a month for a few months, and inevitably cancel to make room for the next sucker. In another time, this model probably worked, or at least was less unsustainable than it is now. Charge enough to have non-riffraff clientele that are dumb enough to fall for the grift but smart enough move on so another sap can take their place and repeat the cycle. Perhaps it's a good business to own when times are good (and easy money flowing in WeWork's case), but not when inflation goes up, wages stagnate, and labor force participation is down. $300 means something different than it did 3 years ago even though I was numerically making less than I am now without adjusting for inflation. There's no way in hell I'm throwing away $300 on that kind of experiment now, though part of me misses the days when I could and not feel bad about it. It may be one thing if you're a scrappy business that has bootstrapped cash or a revenue stream, but coworking seems like a complete dud if you're just a professional who wants to work somewhere that's not Starbucks or the spare bedroom.
- notfromhere 4y ago
  It makes sense if you're a team of like 5-10 people and you really need a physically space. Otherwise, why waste the expenditure when you can just work remotely and save yourself the lease. They always sell networking as an advantage, but people aren't that chatty and the folks in there are in the same boat as you are, which limits the worth of that network if you're trying to find clients. Never made much sense to me if you have a home office or a space bedroom to turn into one.
- citizenpaul 4y ago
  I agree with all that and add. The entire market is a dud in my mind. How many scrappy startups without funding that need co-work space really exist? I don't see enough for an entire multi billion industry across the world. Especially since the enviable outcome if those are successful is they no longer are a customer once they get a lease somewhere for less. They can't sublease at a better rate than a direct lease so again no business. Also I tried one and they all center around the horrible ineffective for getting things done open floor plans. Yes they have private areas I know but they are the exception. The offices should focus on the needs of freelance professionals and provide a better workspace than the FREE library that is in every city.
user3939382 4y ago
At one point I was an independent tech consultant down the street from one of their spaces, basically their prime customer profile. It was way too expensive for what you got. What some people may not realize is that "executive suites" have been around forever, however they were never looked at as a "hypergrowth" SV/hot startup. This is where you get a small office among many others and there's a shared receptionist. When I looked at WeWork, sitting at a table all day with other people and no privacy was about the same price as executive suites. They've also apparently had a business model where they don't own the spaces, so the underlying landlords can squeeze them at any time. Was this the company where the CEO owned the trademark and was leasing it back to the company? In any case just a company that, with a cursory inspection, IMHO showed no promise from day 1.
- xyzelement 4y ago
  I mainly agree with you but want to throw a different angle on it. There is a lot of value in marketing and brand awareness. Like, when you mentioned "executive suites" - it makes sense to me but isn't something that is on my radar as a human being. So like let's say my house got too crazy to work from, without being aware of WeWorks, it would seem like something I just have to suck up and deal with, but with awareness of WeWorks (and the associated concept of co-working spaces) my mind would at least go there. So maybe I'd shop around from the different co-working options based on location and price but wouldn't even occur to me to look at exec suites. So all that is to say - I agree with you on the business, but that the existence of WeWorks may have widened the audience for that type of service with We itself getting the largest share of that business (same as Uber gets the most rides just by being the most associated name with taxis right now) None of this is to say that We is "worth it" in valuation or as a service, I have no idea. Just point out the impact of marketing/awareness.
  - rchaud 4y ago
    > So like let's say my house got too crazy to work from, without being aware of WeWorks, Is this a hypothetical? Because if you did run a business out of your home, you absolutely would know about short-term rental offices. Pre-covid, it was normal to meet in person at both offices if the size of the contract is large enough.
perryizgr8 4y ago
https://m.economictimes.com/industry/services/property-/-cstruction/wework-turns-profitable-reports-around-40-year-on-year-growth/articleshow/91391629.cms https://m.economictimes.com/industry/services/property-/-cst... Meanwhile WeWork seems to be thriving in India. They have a large number of locations in bangalore. Each one of them is reasonably priced, adequately appointed in amenities, and generally pleasant to work out of. I wonder what's the difference between the operations (India vs USA) that led to such a vast gap in outcomes.
- andirk 4y ago
  billion people?
- kylehotchkiss 4y ago
  I wouldn’t call it different in operations as much of difference in culture/environment. WeWork level office spaces/amenities are less common in india where it provides just a small level of improvements over other options in US.
d136o 4y ago
For the WSB crowd, here’s one of their bonds: https://markets.businessinsider.com/bonds/wework_companies_incdl-notes_201818-25_regs-bond-2025-usu96217aa99 https://markets.businessinsider.com/bonds/wework_companies_i...
fortysixdegrees 4y ago
My half joking advise to wework. Ditch the lame Kombucha taps and bring in beer. I for one will happily pay a huge real estate premium for free* beer
blippage 4y ago
Brit here, so it's always interesting to see how things operate across the pond. We have an AIM market in the UK, which is a junior market. There are some good quality companies on there, mixed-in with a hell of a lot of the worst dreck imaginable. The US has a lot more entrepreneurship than the UK, and I think it is something that us Brits could well do more of. In the UK we're too conservative, whilst the US plays it much more fast-an-loose. The UK has its fair share of financial scandals, mind. I get the impression that in the US there has been far too much money chasing after far too opportunities. Blasting through $10b in a single business seems, shall we say, "quite an achievement." I mean, Juicero, what was that crap, anyway? And then there was the whole Elizabeth Holmes thing. It would have been a large-cap company by UK standards. It seems that there's a lot of US "businesses" out there who are looking to hoover a lot of that sweet sweet VC lolly. I'm not sure what "due diligence" the VC guys are doing, but it doesn't seem much. Another thing I have noticed is that, fairly recently, VC has seemed to switch into reverse gear. Now growth seems to be de-emphasised. It's like the whole Venture Capital market has collectively woken up one day and decided that they are much more sceptical about funding growth opportunities. What has changed really, though? It seems that just because Facebook and a couple of other titans decided to have a round of layoffs, that everyone else should, too. It's not really logical when you think about it. Sure, there's the whole Covid and Russian conflict thing throwing a spanner in the works, but have things really changed that much? It seems more a case of a lack of "animal spirit" compared to formerly that is causing the problems rather than any real problems themselves.
- pcurve 4y ago
  "What has changed really, though? " Inflation. :-/
- JustLurking2022 4y ago
  Interest rates can change everything. This is a logical extreme but think of it this way - when you can get a 0% loan, does anything have a cost? Sure, there's a price tag but if you can finance it without any interest, you're only paying principle. Now, if you can continue finding more 0% financing to cover those principle payments, any profit the business makes at all is a good return since you put nothing into it. While we weren't quite to that situation, the last decade of near zero interest rates put VCs precariously close to it.
xyzelement 4y ago
I am a very conservative person financially so the way WeWorks and other SoftBank-run companies are run doesn't resonate with me personally, but I totally get it. I actually worked at an SB-funded company for over a year (I had a non-compete so it was a good time to branch out and try crazy stuff) and the way the company was run was explicitly poised to bet on high growth with acknowledgement that it was a very risky bet that had a high chance of blowing up. We were one of the first notable companies to do the "we over-hired and now that the world is changing, we need to lay off" thing in this cycle, and got a tremendous amount of negative press for what is now just basically expected behavior across industries. But anyway, neither company management nor SB were dumb. Everyone understood that we were playing a high-risk high-reward strategy and recognized that "high risk" means the company blows up if things don't go right. It's just a choice that people make about: where to invest their money, what kind of company to start, and where to work. Like, for some people working at the DMV makes sense (very steady, no growth or significant upside) and for some people working at a crazy startup does (not steady at all, some chance of hitting it big.) The company I was in was very sensitive to rates. We bet that if capital remained cheap, we'd power our way to real scale and profitability. It was a reasonable bet. History showed that we bet wrong and paid the price (I doubt the investors will recoup their money, and my equity is likely to be worth nothing although the company itself still exists.) But that's OK. My company made a bet at revolutionizing its industry (and to some extent, it did) as did We. If these companies completely die, well - that's the nature of the game we chose to play. If luck worked out the other way, it would be glorious. My main point is you can't apply the same lens to an explicitly high growth/high risk company that looks to change the world (or die trying) as you would to a self-funded bootstrapped business that is looking to slowly grow (and avoid death at all costs) by taking only small incremental bets. As long as everyone knows who is playing which game (and I guarantee you that management, employees and the investors like SoftBank knows which game they are playing) it's all good.
vhold 4y ago
Just canceled my membership because they closed the only location in San Francisco that had something resembling modern office bike storage. The rest of their bike parking "amenities" seem to just be the bare minimum required by San Francisco law, which often means having to take a freight elevator which can take a very long time in a busy building, or put it in a shared cage in a parking garage that is open to the public. Notably they didn't send me any notification regarding the office closure, I just opened the app and it was gone.
cs702 4y ago
WeWork is the largest office tenant in many of the world's largest cities, including NY and London. If it stops paying rent, it will put many premium office buildings in those cities in a precarious financial situation, just as many other smaller tenants are reconsidering their office footprint. Yikes!
- quickthrower2 4y ago
  It would be cool if they could be converted into residences, creating a NIMBY immune housing supply boost!
  - MrMan 4y ago
    this conversion is happening in a lot of cities
imroot 4y ago
I am in a coworking space -- not a WeWork (only because they raised my rates to almost $3500/month for a single person office) -- and it currently has a 95% vacancy rate. In 2019, they had a 99% occupancy rate. The most successful coworking spaces near me have a restaurant, a bar, and nice multimedia event spaces with Satellite TV -- all expenses that I don't think Regus, WeWork, or Expansive would ever spend money on. Those spaces, that have amenities that are not things that you could get at home, have waiting lists for offices.
moralestapia 4y ago
Lol, debt is never robust. Exhibit A.
hardwaregeek 4y ago
I started using WeWork because it's close to my apartment and I need a change of pace from my regular work from home setup. It's wild how bad of a space it is to work in. Like plain uncomfortable chairs, with people talking loudly in public because all the phone call booths have people camped out in them for hours. I bought a portable laptop stand and keyboard and it's still way less comfortable than my home setup. Maybe the space makes more sense for people who aren't coding and just need to check a few emails and write some documents, but even then it's pretty damn bad for your back to be hunched over your laptop.
AlexMuir 4y ago
Friend of mine works for a huge global consumer brand. They decided to launch an online ordering platform for their trade customers, with the aim of eliminating a lot of call centres etc. Developers were going to need paying more than even a 10-year served exec in the UK with 200 staff under them. They couldn’t run it within their existing organisation - the salary disparity would have been unpalatable. So they were advised to set up a subsidiary, rent a whole floor of Wework in London and run it out of there. Burned through £20m in a year - a decent chunk on contractors from the sort of IT brand you know. Nothing shipped. Wrote it off after a year. Fired everyone and surrendered lease. That was Wework’s target market - not freelancers or startups. Big companies with deep pockets who could have leased the whole building but never created the buzz. Work from home killed that market and it won’t return.
- rchaud 4y ago
  > That was Wework’s target market - not freelancers or startups. Great point, and a key issue in the PR narrative about WeWork and others like Uber and Airbnb. The PR is always about "helping the small guy", when the business reality is that enterprise whales are much better for the bottom line.
rchaud 4y ago
WeWork, Uber, Airbnb, Doordash, UberEats.... At a certain scale of $$$, is private sector VC investment any less inefficient than state-backed enterprises, aka "government picking winners"?

168 points by lxm 4y ago

greggarious 4y ago

Makes sense, people need privacy to plan a business.

eatonphil 4y ago
Do you mean WeWork needs privacy or the users of WeWork need privacy? Regarding the latter, coworking has been a thing since before WeWork and will certainly remain a thing after WeWork.

pzb 4y ago

https://archive.ph/sVNVU https://archive.ph/sVNVU

blitzar 4y ago

Does WeWork still exist?

arcticbull 4y ago
WeWork's all-access hot desking plan is great, couple hundred bucks a month and you can work from any WeWork anywhere in the world. You can drink half that back in cold brew if you just used it as a coffee shop subscription. Terrible business though.
- acchow 4y ago
  WeWork has cold brew coffee? What beans do they use?
  - woodruffw 4y ago
    Mine has this "nitro" cold brew[1] on tap. [1]: https://commonwealthjoe.com/ https://commonwealthjoe.com/
  - ineedasername 4y ago
    >What beans do they use? Coffee beans
    - fortysixdegrees 4y ago
      Roastedd coffee beans, actually
  - paulcole 4y ago
    The one I go to (Portland, OR) used to have Stumptown on tap (that was awesome). But since WeWork went public, they’ve been getting contracts with some SysCo-esque food provider for cold brew/kombucha/seltzer. I forget the name of it but the cold brew is OK, not great but definitely not terrible.
  - andirk 4y ago
    It also has other people's beer in the fridge.
mikestew 4y ago
‘‘Twas my first thought as well: “After all that drama, I just assumed they went under.”
meltyness 4y ago
for d in diseases: d.r += weworkpremium
woodruffw 4y ago
I'm typing this message from a WeWork, so yes. But past and current performance is not a guarantee of future performance :-)
- mixedmath 4y ago
  How do you like working from a WeWork? Do you find that there is any community there, or is it just a nice place that isn't your home to work?
  - woodruffw 4y ago
    Just to clarify: I have a full office in a WeWork, and I've worked in the same office (along with some of my colleagues) for over 4 years. So I (and the company I work for) might not be the "typical" WeWork customer story. As far as workplaces go, it's perfectly fine: the office itself is nicely designed and has reasonable (but not especially fancy) amenities. I haven't really engaged in the community, although there seems to be a somewhat active one. I know other people who have, including going to parties and social events that were organized by WeWork (I have no idea if these are as common anymore, but they seemed to be happening a lot in 2018-19).
    - bombcar 4y ago
      We've done something similar, WeWork is "expensive for an office" if you've never paid commercial real estate prices before. Compared to an actual lease it can be quite competitive, especially as you only have to 'pay' for the office itself but get all the other "shared perks".
      - woodruffw 4y ago
        Yep -- the impression that I get is that WeWork is no longer particularly competitive for us in the current market (but was for a long time).
        sjkoelle 4y ago
CSMastermind 4y ago
As someone with a distributed team, I try to visit each of my engineers in person at least once every 6 months. Being able to pick up a WeWork for us to work out of when I'm in town is really nice.
- dpflan 4y ago
  Is it a yearly membership to support 2 meetings per year?
  - caterama 4y ago
    We use WeWork On Demand for this. No recurring membership fees, just pay as you go. It's okay -- $30 to $50 / day to use the common rooms and amenities. Much better than ... a library / coffee shop / hotel room. Their guest policy could be better though! You essentially cannot have guests with the On Demand membership -- just go to a coffee shop for that.
- EGreg 4y ago
  What about Croissant? Just a marketplace to rent on demand. Like AirBNB for office space
  - CSMastermind 4y ago
    Never heard of it, I'll check it out.
- jdmark 4y ago
  Your public library and locally owned coffee shop offers the same benefits for free.
  - giobox 4y ago
    I'm sure my "locally owned coffee shop" is going to just love it next time I use an overhead projector or a 42 inch TV to present a deck to the team.
  - 4y ago

julianlam 4y ago

Flexibility is king, and while compared to a traditional office lease, WeWork et al. are flexible, they still lock you into a contract, albeit a shorter one. We're a small business, we rent out a couple offices, but we've downsized. Especially with more WFH, a co-working space is criminally expensive for occasional usage. In my area, a startup has formed[0] offering desks at an HOURLY rate. Consistent decor, internet, staff, etc. across all locations. At the end of the day we still need a place to meet up in-person occasionally, this works for our use case perfectly. [0] https://www.lauft.work/ https://www.lauft.work/

amluto 4y ago
It’s not just startups. There are established players like Regus.
jnwatson 4y ago
Super confused. There is nothing new with WeWork other than perhaps cooler interior design. Renting an office room by the hour/month has been a thing for a very long time. Regus/IWG was founded in 1989.
hinkley 4y ago
Flexibility is king for small operations - unless you're a restaurant. Moving a storefront to a new location loses half of your customers, and for restaurants that's even worse. The tax you pay for wholesale goods includes the costs of logistics - the forethought, the scaling, the redundancy. If all of that were free then you'd get everything straight from the manufacturer for half the price. It might be that there's a business model for a WeWork-style company that actually works, but I'm not sure this is it. There are a number of companies where most of their hard assets are real estate, and we joke about them being real estate companies masquerading as something else (eg, McDonald's, and Sears before malls died). If they owed buildings outright they might have something as well. In many cities the number of landlords that own 80% of the available space is actually a pretty small number. What a WeWork would be doing is hiring charismatic people to build relationships with those companies to try to establish long term leases at a more favorable rate than you or I could ever hope for, particularly during a down economy when you can spin it as doing them a huge favor. Possibly by taking additional discounts for clauses like, "I can move you to a different suite in the same building in these situations" because maybe there will be a day when the guys on the fifth and sixth floor really want the fourth floor and meanwhile the tenants on the 3rd floor are downsizing. Some people will pay for those sorts of contingency. If even half of that is reasonable, then you might be looking for a shared space company that's backed by a hedge fund, rather than VC's, because you're looking for a company that is watching the downward trends in the market, not the upward ones. But I don't get the impression they did any of that.

pocketsand 4y ago

Honestly thought they were already bankrupt

deleted 4y ago

[deleted]

deeptote 4y ago

I wanted to get out of my office basement and into something that was close by, I went to a WeWork in my locality and while it was a nice space overall, I was astounded by both how expensive, and how empty, it was. For less I was able to find an office space that was closer to my house, owned and operated by a local company, and was larger.

flutas 4y ago
> For less I was able to find an office space that was closer to my house, owned and operated by a local company, and was larger. Any tips on that? Currently looking for a place locally and it feels impossible. But this could be due to market size (city of ~200k).
- djbusby 4y ago
  They're not called co-working space. They're just regular old small office building. They typically don't have a flashy website, so you have to find them the old way. They may be on CraigsList or even LoopNet
- jnwatson 4y ago
  Just Google “executive suites”. The WeWork business model has been around for decades.
  - ok123456 4y ago
    Regus is a chain that has been doing this exact thing. I worked at a startup that used one of those. A lot of the other tenants were lawyers in solo practice.
- mgkimsal 4y ago
  Town of 40k here - we have 3 coworking spaces. I started the first one - just leased a small office building, and started subleasing spaces. Some private office space, some shared public/hotdesk seats. We're small - 12-15 people at a time, max. The others came later, and are larger, but we're all within a 5 minute walk from each other.

gw67 4y ago

In Milan, Italy their renting price are too expensive (550€/month + VAT for a dedicated desk) and their space are almost empty. For context, an house in same location costs 30€/sqm/month. I don’t understand why the keep their price so high if nobody is going there.

duxup 4y ago
I was curious and I searched locally, can't even get a price out of them on their website.
rafaelero 4y ago
I used it in São Paulo for a monthly subscription of BRL 750, something like $150. I also noticed that there weren't a lot of people there. I thought that was due to them focusing on leasing it to companies instead of individuals. But overall it was a pretty pleasurable place to be in, but they could definitely make it cheaper.
criddell 4y ago
30€ / day doesn't seem too bad to me. Can you really get space for less than that?
- Raed667 4y ago
  The coworking space down the street is 375€ +VAT / month
readbeard 4y ago
I was very recently at their central Milan location next to the cathedral for a few days and found it to be quite busy. In fact, some days I wasn't able to get a slot to use the shared space. However, a not insignificant percentage of people in the shared space were students on a discounted membership who were there due to inadequate study space at the local university. I also found their more central Madrid locations to be quite reliably busy.
- gw67 4y ago

captn3m0 4y ago

Byju, one of Softbank’s flagship investments in India ($22B valuation at peak) is in a similar place. $290M worth of payments are pending to just AWS and a there’s a $1.2B loan left hanging. https://themorningcontext.com/internet/byjus-is-in-the-throes-of-a-working-capital-crisis https://themorningcontext.com/internet/byjus-is-in-the-throe...

captn3m0 4y ago
Correction: $3.2M, not 290. That did feel incorrect, should have double checked.
pkaye 4y ago
The CEO of SoftBank Masayoshi Son (https://en.wikipedia.org/wiki/Masayoshi_Son https://en.wikipedia.org/wiki/Masayoshi_Son) also had really bad bets during the dot com bust and lost a tony of money. He got a second chance by betting early on Alibaba. > As of September 2022, Son ranks 73rd on the Forbes list of The World's Billionaires 2022,[9] despite having the distinction of losing the most money in history (approximately $70bn during the dot com crash of 2000).[10]
- hinkley 4y ago
  I worked in Japan right at the beginning of the dotcom boom, and Japan was in the grip of a massive financial crisis at that time. And by crisis I mean people committing suicide with alarming regularity. My boss got most of his money from people trying to find some place better to put their money. Since the DotCom boom only felt long to people who said words like "internet time", I imagine the whiplash on that was pretty bad for everybody there.
raverbashing 4y ago
Interesting, they didn't seem to be lacking in money to sponsor the World Cup

olivermarks 4y ago

'WeWork, saddled with expensive long-term leases and more than $3 billion of debt, recorded a negative cash flow of around $4.3 billion between July 2020 and September of this year. It has been able to cover its losses partly with loans and equity investments from its biggest backer, SoftBank Group Corp. , which to date has sank more than $10 billion into the business. WeWork has burned through nearly all of it. The company has $500 million in undrawn debt commitments from SoftBank and has said it expects to end 2022 with $300 million in cash, less than one-third of what it had at the end of 2021. Its debt contracts allow it to borrow another $500 million'. Wikipedia: https://en.wikipedia.org/wiki/Adam_Neumann https://en.wikipedia.org/wiki/Adam_Neumann As WeWork CEO, Neumann on multiple occasions purchased buildings and then leased the space back to WeWork.[56] Observers noted this as a potential conflict of interest and one that would not be allowed if WeWork were a public company.[57] During his tenure as CEO of WeWork, Neumann also purchased US$90 million worth of residences, including a 60-acre (24 ha) estate in Westchester County, New York, a 6,000-square-foot (560 m2) condominium near Gramercy Park, two homes in The Hamptons, and a US$21 million mansion in Corte Madera, California.[19] Neumann has begun purchasing apartment buildings and, as of early 2022, owned some 4,000 apartments worth about US$1 billion, primarily located in the American South.[58]' In 'Generation Hustle' someone is left holding the bag...

anon223345 4y ago
What’s epic is that A16Z actually just invested a shit ton with Neumann again August 2022 https://a16z.com/2022/08/15/investing-in-flow/ https://a16z.com/2022/08/15/investing-in-flow/
Marazan 4y ago
My opinion of Neumann has varied from total contempt to amazement amd grudging respect at his abilitu at conning vast quantaties of cash from VCs. Overall though his contribution to massive capital mis-allocation is a huge net negative for my opinion of him.
- gtowey 4y ago
  I'm not sure I understand the perspective that people like Neumann have anything admirable about them. All he has "discovered" is the one of the oldest lessons in the world -- it's pretty easy to sell something when you can lie as much as possible. Or put another way, that if you're willing to ignore the rules of society that most people agree to, then it's pretty easy to take advantage of the system. Now I know that not everyone could be as convincing of a liar as Neumann, but most of us have the ethical boundaries to not really try. So all you can really say is that of the people who are morally bankrupt enough to try to steal as much money as possible, he seems better at it than average.

throw33away 4y ago

They have a nasty bug where if you buy "all access" membership now for say June next year (set start date in June) you'll get free access until then. You actually can't pay for on-demand while you wait for your membership to start. But you can book desks for zero credits. However many parts of the app don't work and it seems the wifi doesn't work - but you can use guest wifi.

jameslk 4y ago
How does this work when you need the WeWork card to enter their buildings?
humanistbot 4y ago
> They have a nasty bug where if you buy "all access" membership now for say June next year (set start date in June) you'll get free access until then. You actually can't pay for on-demand while you wait for your membership to start. But you can book desks for zero credits. However many parts of the app don't work and it seems the wifi doesn't work - but you can use guest wifi. Good job posting this publicly on a thread I'm sure at least one WeWork corporate employee is reading. Expect to find a charge on the credit card you put down for your June purchase for all the services you have used. It is 100% legal for them to bill you for their price mistakes. Check the terms and conditions.
- tbalsam 4y ago
  You seem to be exceptionally confident about an area where that is very rarely legally the case. Secondarily, the TOC don't define necessarily what's legal or not. Do you have a source for your claims here? They mentioned a contract beginning in June of next year, if the company fulfils more than the contract generally that would be upon them, though it may be grounds for termination of the contract. If you have some relevant law or legal reference to back up your statements on the matter, I'd be interested in learning a bit more about it personally.
  - humanistbot 4y ago
    Thanks for taking the HN-style approach of trying to call BS on me in the most civil manner possible. All the core elements of a contract are there: offer, acceptance, consideration, and exercise. By making use of the services early, OP is materially expressing their intent to exercise the contract early, which gives WeWork the right to take consideration in kind, per the terms of the original boilerplate contract. (And yes, clickthrough or shrinkwrapped TOCs often do not constitute an enforceable contract, especially when one party has not expressed any actual intent to form any contract and the offering party does everything they can to obscure the TOC and its implications, per Specht v. Netscape. But there is clearly intent to form a contract by the customer here, which means the entire TOC is as valid and enforceable as a rental car contract people sign without reading.) This goes by different names, one of which is "contract by acceptance" (more common in the UK). In the US, see [Uniform Commercial Code § 2-207](https://www.law.cornell.edu/ucc/2/2-207 https://www.law.cornell.edu/ucc/2/2-207): > (1) A definite and seasonable expression of acceptance ... operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms. [...] > (3) Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract. In such case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of this Act. Let me put it this way: A customer signs a contract to pay a company a rate of $X per month for unlimited usage of the company's services. The customer agrees that the contracted services will be exercised by booking through the app. The customer initially informs the company they want to start using these services and paying the monthly fee in June. They provide a credit card and sign a contract that authorizes payment for services rendered on a monthly basis, rolling until canceled by either party with X days notice. Then before June, the customer uses the app to book services, then actually makes use of those services. The company observes that the customer is using the app to make use of the services, for which there is normally no additional payment required. This lack of an additional payment is in line with the "all-access" subscription (and note the app states it in 'credits', not dollars). While the company also offers a per-hour rate, the customer does not make any attempt to communicate their intent to enter into a different contract to pay for these services by the hour. What else should the company assume? The customer's behavior and prior contract clearly signals intent to exercise the contract earlier than originally communicated. The company then actually provides those services to the customer, who materially benefits from them, at cost to the company. The company then charges the customer for services rendered at the monthly all-access rate, starting at the first day they made use of the services without any additional payment. And the fact that this is a "mistake" by the app is actually irrelevant. It is the same as if you had a similar agreement with a gym, and show up earlier than you requested. You check in with the human at the counter. They let you in without saying anything other than "Welcome!" The gym starts to bill you the monthly fee. You can't complain. You're right that I maybe shouldn't have said 100%, because these things are ruled on by human judges and juries. Edit: Another relevant concept is that contract law assumes parties are reasonable and acting in good faith. I'm pretty confident most judges and juries would think it is unreasonable for a person to expect to pay nothing for services that they already agreed are worth $X/mo. The fact that there are so many things broken with the customer experience if you do this one weird trick to get a free WeWork desk would be further evidence OP is acting in bad faith. I'm imagining how that cross-examination would go when OP is put on the witness stand to explain their state of mind.

RcouF1uZ4gsC 4y ago

Remember the James Bond movie, “Casino Royale”: I think Adam Neumann is the real life version of James Bond setting billions of dollars worth of Mohammed bin Salman‘s money on fire (by way of SoftBank).

ravenstine 4y ago

Not surprising, especially given the current economic situation. They must have had a real boatload of cash to last this long. I've tried a few coworking spaces and always come to the conclusion that they're a grift. Many people such as myself probably try them out, begrudgingly pay $300 a month for a few months, and inevitably cancel to make room for the next sucker. In another time, this model probably worked, or at least was less unsustainable than it is now. Charge enough to have non-riffraff clientele that are dumb enough to fall for the grift but smart enough move on so another sap can take their place and repeat the cycle. Perhaps it's a good business to own when times are good (and easy money flowing in WeWork's case), but not when inflation goes up, wages stagnate, and labor force participation is down. $300 means something different than it did 3 years ago even though I was numerically making less than I am now without adjusting for inflation. There's no way in hell I'm throwing away $300 on that kind of experiment now, though part of me misses the days when I could and not feel bad about it. It may be one thing if you're a scrappy business that has bootstrapped cash or a revenue stream, but coworking seems like a complete dud if you're just a professional who wants to work somewhere that's not Starbucks or the spare bedroom.

notfromhere 4y ago
It makes sense if you're a team of like 5-10 people and you really need a physically space. Otherwise, why waste the expenditure when you can just work remotely and save yourself the lease. They always sell networking as an advantage, but people aren't that chatty and the folks in there are in the same boat as you are, which limits the worth of that network if you're trying to find clients. Never made much sense to me if you have a home office or a space bedroom to turn into one.
citizenpaul 4y ago
I agree with all that and add. The entire market is a dud in my mind. How many scrappy startups without funding that need co-work space really exist? I don't see enough for an entire multi billion industry across the world. Especially since the enviable outcome if those are successful is they no longer are a customer once they get a lease somewhere for less. They can't sublease at a better rate than a direct lease so again no business. Also I tried one and they all center around the horrible ineffective for getting things done open floor plans. Yes they have private areas I know but they are the exception. The offices should focus on the needs of freelance professionals and provide a better workspace than the FREE library that is in every city.

user3939382 4y ago

At one point I was an independent tech consultant down the street from one of their spaces, basically their prime customer profile. It was way too expensive for what you got. What some people may not realize is that "executive suites" have been around forever, however they were never looked at as a "hypergrowth" SV/hot startup. This is where you get a small office among many others and there's a shared receptionist. When I looked at WeWork, sitting at a table all day with other people and no privacy was about the same price as executive suites. They've also apparently had a business model where they don't own the spaces, so the underlying landlords can squeeze them at any time. Was this the company where the CEO owned the trademark and was leasing it back to the company? In any case just a company that, with a cursory inspection, IMHO showed no promise from day 1.

xyzelement 4y ago
I mainly agree with you but want to throw a different angle on it. There is a lot of value in marketing and brand awareness. Like, when you mentioned "executive suites" - it makes sense to me but isn't something that is on my radar as a human being. So like let's say my house got too crazy to work from, without being aware of WeWorks, it would seem like something I just have to suck up and deal with, but with awareness of WeWorks (and the associated concept of co-working spaces) my mind would at least go there. So maybe I'd shop around from the different co-working options based on location and price but wouldn't even occur to me to look at exec suites. So all that is to say - I agree with you on the business, but that the existence of WeWorks may have widened the audience for that type of service with We itself getting the largest share of that business (same as Uber gets the most rides just by being the most associated name with taxis right now) None of this is to say that We is "worth it" in valuation or as a service, I have no idea. Just point out the impact of marketing/awareness.
- rchaud 4y ago
  > So like let's say my house got too crazy to work from, without being aware of WeWorks, Is this a hypothetical? Because if you did run a business out of your home, you absolutely would know about short-term rental offices. Pre-covid, it was normal to meet in person at both offices if the size of the contract is large enough.

perryizgr8 4y ago

https://m.economictimes.com/industry/services/property-/-cstruction/wework-turns-profitable-reports-around-40-year-on-year-growth/articleshow/91391629.cms https://m.economictimes.com/industry/services/property-/-cst... Meanwhile WeWork seems to be thriving in India. They have a large number of locations in bangalore. Each one of them is reasonably priced, adequately appointed in amenities, and generally pleasant to work out of. I wonder what's the difference between the operations (India vs USA) that led to such a vast gap in outcomes.

andirk 4y ago
billion people?
kylehotchkiss 4y ago
I wouldn’t call it different in operations as much of difference in culture/environment. WeWork level office spaces/amenities are less common in india where it provides just a small level of improvements over other options in US.

d136o 4y ago

For the WSB crowd, here’s one of their bonds: https://markets.businessinsider.com/bonds/wework_companies_incdl-notes_201818-25_regs-bond-2025-usu96217aa99 https://markets.businessinsider.com/bonds/wework_companies_i...

fortysixdegrees 4y ago

My half joking advise to wework. Ditch the lame Kombucha taps and bring in beer. I for one will happily pay a huge real estate premium for free* beer

blippage 4y ago

Brit here, so it's always interesting to see how things operate across the pond. We have an AIM market in the UK, which is a junior market. There are some good quality companies on there, mixed-in with a hell of a lot of the worst dreck imaginable. The US has a lot more entrepreneurship than the UK, and I think it is something that us Brits could well do more of. In the UK we're too conservative, whilst the US plays it much more fast-an-loose. The UK has its fair share of financial scandals, mind. I get the impression that in the US there has been far too much money chasing after far too opportunities. Blasting through $10b in a single business seems, shall we say, "quite an achievement." I mean, Juicero, what was that crap, anyway? And then there was the whole Elizabeth Holmes thing. It would have been a large-cap company by UK standards. It seems that there's a lot of US "businesses" out there who are looking to hoover a lot of that sweet sweet VC lolly. I'm not sure what "due diligence" the VC guys are doing, but it doesn't seem much. Another thing I have noticed is that, fairly recently, VC has seemed to switch into reverse gear. Now growth seems to be de-emphasised. It's like the whole Venture Capital market has collectively woken up one day and decided that they are much more sceptical about funding growth opportunities. What has changed really, though? It seems that just because Facebook and a couple of other titans decided to have a round of layoffs, that everyone else should, too. It's not really logical when you think about it. Sure, there's the whole Covid and Russian conflict thing throwing a spanner in the works, but have things really changed that much? It seems more a case of a lack of "animal spirit" compared to formerly that is causing the problems rather than any real problems themselves.

pcurve 4y ago
"What has changed really, though? " Inflation. :-/
JustLurking2022 4y ago
Interest rates can change everything. This is a logical extreme but think of it this way - when you can get a 0% loan, does anything have a cost? Sure, there's a price tag but if you can finance it without any interest, you're only paying principle. Now, if you can continue finding more 0% financing to cover those principle payments, any profit the business makes at all is a good return since you put nothing into it. While we weren't quite to that situation, the last decade of near zero interest rates put VCs precariously close to it.

xyzelement 4y ago

I am a very conservative person financially so the way WeWorks and other SoftBank-run companies are run doesn't resonate with me personally, but I totally get it. I actually worked at an SB-funded company for over a year (I had a non-compete so it was a good time to branch out and try crazy stuff) and the way the company was run was explicitly poised to bet on high growth with acknowledgement that it was a very risky bet that had a high chance of blowing up. We were one of the first notable companies to do the "we over-hired and now that the world is changing, we need to lay off" thing in this cycle, and got a tremendous amount of negative press for what is now just basically expected behavior across industries. But anyway, neither company management nor SB were dumb. Everyone understood that we were playing a high-risk high-reward strategy and recognized that "high risk" means the company blows up if things don't go right. It's just a choice that people make about: where to invest their money, what kind of company to start, and where to work. Like, for some people working at the DMV makes sense (very steady, no growth or significant upside) and for some people working at a crazy startup does (not steady at all, some chance of hitting it big.) The company I was in was very sensitive to rates. We bet that if capital remained cheap, we'd power our way to real scale and profitability. It was a reasonable bet. History showed that we bet wrong and paid the price (I doubt the investors will recoup their money, and my equity is likely to be worth nothing although the company itself still exists.) But that's OK. My company made a bet at revolutionizing its industry (and to some extent, it did) as did We. If these companies completely die, well - that's the nature of the game we chose to play. If luck worked out the other way, it would be glorious. My main point is you can't apply the same lens to an explicitly high growth/high risk company that looks to change the world (or die trying) as you would to a self-funded bootstrapped business that is looking to slowly grow (and avoid death at all costs) by taking only small incremental bets. As long as everyone knows who is playing which game (and I guarantee you that management, employees and the investors like SoftBank knows which game they are playing) it's all good.

vhold 4y ago

Just canceled my membership because they closed the only location in San Francisco that had something resembling modern office bike storage. The rest of their bike parking "amenities" seem to just be the bare minimum required by San Francisco law, which often means having to take a freight elevator which can take a very long time in a busy building, or put it in a shared cage in a parking garage that is open to the public. Notably they didn't send me any notification regarding the office closure, I just opened the app and it was gone.

cs702 4y ago

WeWork is the largest office tenant in many of the world's largest cities, including NY and London. If it stops paying rent, it will put many premium office buildings in those cities in a precarious financial situation, just as many other smaller tenants are reconsidering their office footprint. Yikes!

quickthrower2 4y ago
It would be cool if they could be converted into residences, creating a NIMBY immune housing supply boost!
- MrMan 4y ago
  this conversion is happening in a lot of cities

imroot 4y ago

I am in a coworking space -- not a WeWork (only because they raised my rates to almost $3500/month for a single person office) -- and it currently has a 95% vacancy rate. In 2019, they had a 99% occupancy rate. The most successful coworking spaces near me have a restaurant, a bar, and nice multimedia event spaces with Satellite TV -- all expenses that I don't think Regus, WeWork, or Expansive would ever spend money on. Those spaces, that have amenities that are not things that you could get at home, have waiting lists for offices.

moralestapia 4y ago

Lol, debt is never robust. Exhibit A.

hardwaregeek 4y ago

I started using WeWork because it's close to my apartment and I need a change of pace from my regular work from home setup. It's wild how bad of a space it is to work in. Like plain uncomfortable chairs, with people talking loudly in public because all the phone call booths have people camped out in them for hours. I bought a portable laptop stand and keyboard and it's still way less comfortable than my home setup. Maybe the space makes more sense for people who aren't coding and just need to check a few emails and write some documents, but even then it's pretty damn bad for your back to be hunched over your laptop.

AlexMuir 4y ago

Friend of mine works for a huge global consumer brand. They decided to launch an online ordering platform for their trade customers, with the aim of eliminating a lot of call centres etc. Developers were going to need paying more than even a 10-year served exec in the UK with 200 staff under them. They couldn’t run it within their existing organisation - the salary disparity would have been unpalatable. So they were advised to set up a subsidiary, rent a whole floor of Wework in London and run it out of there. Burned through £20m in a year - a decent chunk on contractors from the sort of IT brand you know. Nothing shipped. Wrote it off after a year. Fired everyone and surrendered lease. That was Wework’s target market - not freelancers or startups. Big companies with deep pockets who could have leased the whole building but never created the buzz. Work from home killed that market and it won’t return.

rchaud 4y ago
> That was Wework’s target market - not freelancers or startups. Great point, and a key issue in the PR narrative about WeWork and others like Uber and Airbnb. The PR is always about "helping the small guy", when the business reality is that enterprise whales are much better for the bottom line.

rchaud 4y ago

WeWork, Uber, Airbnb, Doordash, UberEats.... At a certain scale of $$$, is private sector VC investment any less inefficient than state-backed enterprises, aka "government picking winners"?