6 ms·

The company will likely become owned by Softbank (it already mostly is). It can still become profitable by removing the bad leases/renegotiating, I believe aft

The company will likely become owned by Softbank (it already mostly is). It can still become profitable by removing the bad leases/renegotiating, I believe after the bankruptcy filling it will be an okayish company, but I doubt that it will still be a public company. Doubt Softbank will ever recover what they invested in there though

WJW 3y ago
Is Softbank also a majority bondholder of WeWork? AFAIK the shareholders (ie mostly Softbank in this case) are last in line during bankruptcy, well after other creditors like employees, suppliers and bondholders.
- thiago_fm 3y ago
  Yes, they are a majority, so it's probably of their interest that the company doesn't cease to exist, as it would imply an even bigger loss. I think it's very likely a takeover. Right now it costs nothing(~$100M) for SoftBank, but they'd rather let it go through bankruptcy as it will help the company to get rid of the bad part of WeWork. I'm not an investor in WeWork ATM, but I wouldn't mind to own some stocks once this is sorted out.
  - d0gsg0w00f 3y ago
    Especially since they may be poised to significantly reduce their costs with renegotiating leases while the commercial real estate market is in tatters.
- justincormack 3y ago
  Not a majority bondholder no, they have some debt as well as equity, and unsurprisingly the debt structure is complex and has already had some changes. Should be an interesting battle.
  - pseingatl 3y ago
    Just out of curiosity, assuming no bankruptcy, why would a company convert equity to debt?
hnreport 3y ago
I’d argue God saved wework. Leasing temporary/limited capacity office space is going to be the future and wework fills that.
- jkaplowitz 3y ago
  They’re not the only company in that space, just the flashiest. Their competitors are generally less insolvent but have worse UX. I wonder if Regus will put in a bid to buy WeWork out of bankruptcy?
  - steve_adams_86 3y ago
    My experience in Regus coworking spaces has been fairly awful. Disorganized, dirty, my desks were wobbly, never got the key to my storage drawers, etc. If they’re a big player and they purchase WeWork, I’d consider the entire space worth avoiding.
    - pseingatl 3y ago
      They're not focused on individuals. Their focus is larger companies and long term relationships. The "co-working" factor isn't there at all.
      - steve_adams_86 3y ago
        That explains my experience. I wonder if they pivoted to coworking in my area due to the pandemic and having too much unrented space.
        whizzter 3y ago
        That and with WeWork running around with the hype there was probably investors/shareholders demanding that they take a piece of the supposedly juicy market (that existed because the ilk's of Regus never made short-term feasible).
    - d0gsg0w00f 3y ago
yashap 3y ago
> Doubt Softbank will ever recover what they invested in there though That’s virtually guaranteed. They’ve put over $17 billion into WeWork, and the entire company (which they only own a portion of) is currently valued at $121 million. I’m not sure how much it’s value would have to rise for them to break even, but … it would have to be a lot. 300x? Something like that.
- potatolicious 3y ago
  This is part of why I wonder if WeWork will actually be rescued into some smaller but sustainable business. Softbank has already lost >99% of their investment - and VCs are infamous for being willing to sacrifice a sustainable business model for a shot at nearly impossible odds. What incentive does Softbank have to actually turning WeWork into a far less profitable going concern, vs. taking yet another wild swing at a thing?
  - thiago_fm 3y ago
    It can, but it needs to be able to renegotiate their leases and break out of the bad leases. The problem with WeWork is that Adam Neumann closed really bad leases (which are typically like decade long) which makes certain locations not profitable at all, no matter how WeWork provides a good service. Once you remove the rotten stuff, they've got actually pretty good business, 75%+ occupancy rate and people who use WeWork actually like it. It's also a memorable brand and that business model they have is actually good. But you need to "reshape" completely the company, and only through bankruptcy laws you could achieve it.
    - flutas 3y ago
      I do wonder (and truly mean wonder, because I have no clue), what percentage of the 75%+ occupancy is attributed to the bad leases. Are their most used buildings "bad leases" and their good leases are sitting empty? i.e. are the most sought after / used locations are also the most costly to WeWork.
      - 3y ago
ttul 3y ago
It's all history, but it does sting somewhat to realize that so much VC went to the undeserving founder of WeWork, enriching him enormously while the eventual funding all bled away to landlords and banks - instead of other more deserving startups.

WJW 3y ago

Is Softbank also a majority bondholder of WeWork? AFAIK the shareholders (ie mostly Softbank in this case) are last in line during bankruptcy, well after other creditors like employees, suppliers and bondholders.

thiago_fm 3y ago
Yes, they are a majority, so it's probably of their interest that the company doesn't cease to exist, as it would imply an even bigger loss. I think it's very likely a takeover. Right now it costs nothing(~$100M) for SoftBank, but they'd rather let it go through bankruptcy as it will help the company to get rid of the bad part of WeWork. I'm not an investor in WeWork ATM, but I wouldn't mind to own some stocks once this is sorted out.
- d0gsg0w00f 3y ago
  Especially since they may be poised to significantly reduce their costs with renegotiating leases while the commercial real estate market is in tatters.
justincormack 3y ago
Not a majority bondholder no, they have some debt as well as equity, and unsurprisingly the debt structure is complex and has already had some changes. Should be an interesting battle.
- pseingatl 3y ago
  Just out of curiosity, assuming no bankruptcy, why would a company convert equity to debt?

hnreport 3y ago

I’d argue God saved wework. Leasing temporary/limited capacity office space is going to be the future and wework fills that.

jkaplowitz 3y ago
They’re not the only company in that space, just the flashiest. Their competitors are generally less insolvent but have worse UX. I wonder if Regus will put in a bid to buy WeWork out of bankruptcy?
- steve_adams_86 3y ago
  My experience in Regus coworking spaces has been fairly awful. Disorganized, dirty, my desks were wobbly, never got the key to my storage drawers, etc. If they’re a big player and they purchase WeWork, I’d consider the entire space worth avoiding.
  - pseingatl 3y ago
    They're not focused on individuals. Their focus is larger companies and long term relationships. The "co-working" factor isn't there at all.
    - steve_adams_86 3y ago
      That explains my experience. I wonder if they pivoted to coworking in my area due to the pandemic and having too much unrented space.
      - whizzter 3y ago
        That and with WeWork running around with the hype there was probably investors/shareholders demanding that they take a piece of the supposedly juicy market (that existed because the ilk's of Regus never made short-term feasible).
  - d0gsg0w00f 3y ago

yashap 3y ago

> Doubt Softbank will ever recover what they invested in there though That’s virtually guaranteed. They’ve put over $17 billion into WeWork, and the entire company (which they only own a portion of) is currently valued at $121 million. I’m not sure how much it’s value would have to rise for them to break even, but … it would have to be a lot. 300x? Something like that.

potatolicious 3y ago
This is part of why I wonder if WeWork will actually be rescued into some smaller but sustainable business. Softbank has already lost >99% of their investment - and VCs are infamous for being willing to sacrifice a sustainable business model for a shot at nearly impossible odds. What incentive does Softbank have to actually turning WeWork into a far less profitable going concern, vs. taking yet another wild swing at a thing?
- thiago_fm 3y ago
  It can, but it needs to be able to renegotiate their leases and break out of the bad leases. The problem with WeWork is that Adam Neumann closed really bad leases (which are typically like decade long) which makes certain locations not profitable at all, no matter how WeWork provides a good service. Once you remove the rotten stuff, they've got actually pretty good business, 75%+ occupancy rate and people who use WeWork actually like it. It's also a memorable brand and that business model they have is actually good. But you need to "reshape" completely the company, and only through bankruptcy laws you could achieve it.
  - flutas 3y ago
    I do wonder (and truly mean wonder, because I have no clue), what percentage of the 75%+ occupancy is attributed to the bad leases. Are their most used buildings "bad leases" and their good leases are sitting empty? i.e. are the most sought after / used locations are also the most costly to WeWork.
    - 3y ago

ttul 3y ago

It's all history, but it does sting somewhat to realize that so much VC went to the undeserving founder of WeWork, enriching him enormously while the eventual funding all bled away to landlords and banks - instead of other more deserving startups.