8 ms·

WeWork: Now a $5B Co-Working Startup

50 points by mbesto 12y ago

mrfusion 12y ago
This got me wondering, why hasn't anyone made an airbnb for office space? (Or is that what this company does)
- ryanb 12y ago
  There's been a number of attempts at this - see ShareDesk.
- stevesearer 12y ago
  https://desksnear.me/ https://desksnear.me/ http://www.peerspace.com/ http://www.peerspace.com/ Loosecubes is another that recently shut down. Kodesk doesn't look like is is around anymore either. Here's a Quora answer with a bunch of them: http://www.quora.com/What-are-all-of-the-sites-that-do-Airbnb-for-office-space http://www.quora.com/What-are-all-of-the-sites-that-do-Airbn... And Airbnb's 'Airbrb' April Fools: http://blog.airbnb.com/introducing-airbrb/ http://blog.airbnb.com/introducing-airbrb/
  - mikraft 12y ago
    Airpnp: http://www.airpnp.co/ http://www.airpnp.co/
jarjoura 12y ago
Instead of thinking of WeWork as Airbnb for desk spaces, I like to think of them more like office hostels. They are relatively cheap spaces depending on how much of it you need and and how private of an area you want. They offer community events and shared spaces to help connect founders with as many other people as possible. They're not all startups like at accelerators, but also include remote office workers from big companies who haven't rented an official space yet. So it is quite the diverse crowd. If you like working in coffee-shops, give WeWork a try. It was a worthwhile couple of months and I met some good friends.
- pdq 12y ago
  It's definitely not like Airbnb, as the producers own the space, the consumers rent it by the day, and Airbnb connects the two for a fee. WeWork lease the office spaces themselves and rent it directly out to consumers, ala Coworking. The only secret sauce is if they can get a large enough following nationwide (especially for startups) to get a household name, such that you go directly to their location in your city, rather than Googling for Coworking.
7Figures2Commas 12y ago
> “If I showed you their cash-flow statement, you would not compare it to a real-estate company,” said Henry Ellenbogen, a portfolio manager at T. Rowe Price. “You’d compare it to a brand or tech company—maybe Chipotle or Uber.” > WeWork said its December revenue puts it on an about $150 million annual revenue run rate. It also said the month’s annualized operating income puts its valuation at roughly 100 times income. It expects to grow significantly in years ahead, which would lower that ratio. Landlords typically trade between 18 times and 20 times earnings, according to Jed Reagan, an analyst at real estate consultants Green Street Advisors. > Price depends on location. In the company’s Financial District headquarters, it charges $400 a month for a desk and $1,400 a month for a small two-person office, well above the area’s rate for such space. > The business is a risky one in which its costs, fees paid to landlords, are fixed, but its revenues from startups and established businesses can fall quickly when the economy slows. > “The small-to-medium-size businesses, they get particularly impacted in a recession,” said Jon Halpern, who ran shared office space firm HQ Global Workplaces in the early 2000s. > HQ grew rapidly in the run-up to the dot-com bust. But in the recession that followed, its value plummeted. It ultimately sold itself to Regus. Let me guess: this time it's different?
- infecto 12y ago
  I have a hard time understanding why you would not compare this to real-estate. Its certainly not a brand or tech play. If the market slowed it would certainly take a hit. Most of these places have monthly contracts and its highly tied to how well the economy is doing. With that said, I really do appreciate the services these kinds of places offer. While they charge above market rate for sq.ft., they make up for it in services. I do not have to worry about anything within the office and can simply work. They usually have amazing internet, some free coffee/drinks and cater towards keeping me being productive. They offer nice community benefits as well.
  - interstitial 12y ago
    The funny thing is during the 2004-2008 bubble, you were not allowed to compare real estate to real estate.
- 12y ago
bache 12y ago
We need this in Toronto
- driverdan 12y ago
  A 30 sec search for "coworking toronto" shows me many coworking spaces in your city.
  - bache 12y ago
    Massively overpriced, a private office in a Toronto coworking space starts at 2x what wework charges
etjossem 12y ago
Paywalled. I wish the submission link went to the full article.
- melling 12y ago
  Sign up. It's a little over $1 a day.
  - pbreit 12y ago
    Which is kind of a ripoff, dontcha think? That's about what I pay for all my internet access and triple that of Netflix, Hulu, Amazon Prime & NY Times.
    - eli 12y ago
      Well, it's not a ripoff if the articles are worth it to you. Regardless of what other unrelated media services cost.
    - melling 12y ago
      It really depends on how much you value the content. I pay for the WSJ. People need to earn a living. We fight for McDonalds employees to earn a fare wage but we complain because we don't want to pay for newspapers. There's nothing wrong with "premium content".
  - etjossem 12y ago
    For the frequent WSJ reader, several hundred dollars a year makes sense. For a casual reader, it doesn't - but they still want the opportunity to convert me to a frequent reader. That's why they offer previews via search engines, etc.
- jweir 12y ago
  https://www.google.com/search?q=we+work+5billion&oq=we+work+5billion https://www.google.com/search?q=we+work+5billion&oq=we+work+... and click the first link
  - 12y ago
pdq 12y ago
Is there history behind the $355MM Series A funding, and does anyone have statistics for other large A rounds? I have never heard of such a large investment on the front side.
- gatsby 12y ago
  Much more similar to private equity financing / bank loans, as opposed to traditional VC investment. WeWork needs lots of upfront capital to cover security deposits, build out spaces (tenant improvements), prove enough assets to take 250k sq. ft. at a time for 15 year terms, etc. Lots of coworking spaces have raised significant 6, 7, or 8 figure sums (WeWork definitely getting more than most), that mostly fly under the radar in terms of "companies that raise huge amounts of capital."
francesca 12y ago
WeWork did a great job of capitalizing on the move to smaller more agile companies. I don't think that "startup hype" is going to die. It's cheaper than ever to start a company and the market for tech companies is excellent right now. It's not easy to do, but getting $1-3MM in funding is accessible to talented people and once they get that in the bank, they're not going to open an office-- they're going to WeWork. This is huge for their business and it also enables the creation and maintenance of small companies who want to do things lean until the build a market and revenue stream (or maybe in some cases, adoption to drive further venture investment). I've seen WeWork do great things for companies in NYC by just giving them a place to work and a community to work with. Still, WeWork is not just another. They are actually a next-generation Real-Estate company! WeWork makes it clear that working is not just about your desk. It's also about your environment, the other people you interact with, the events that come to your space, the coffee you have (and in the case of WeWork, the architecture and design of your floor!). This is very cool for the future of company/working culture.
dimva 12y ago
This company provides inspirational, collaborative, nice office spaces for very high prices (compared to traditional office space). Their outsized profits will encourage competitors to enter the space and undercut them on price. Is there a way they can defend against that? - Their events provide some sort of network effect and marketing - The current group of startups provides some sort of network effect Still, their customer base consists almost entirely of price-sensitive, savvy, early-adopters, so any new competitor would be known about without having to do much marketing, and could start without all the nice events in the beginning if the price is lower. I just don't see how this business is defensible long-term...
- mbendett 12y ago
  @dimva, what company are you mentioning in this comment? WeWork?
- acgourley 12y ago
  I suspect that if you ask them they will say that there are network effects in that a) you can travel and use other wework spaces with a single membership and b) you get access to a community to hire from, seek advice from, network with, etc. For me those would not command a large price premium and so am incline to agree with you that it's not very defensible. That said, a capital heavy business like this doesn't need as much defensive power as a tech company. Very few challengers will have access to the capital needed to compete with wework at scale (and there are scaling benefits here) so the competition won't be crippling.

50 points by mbesto 12y ago

mrfusion 12y ago

This got me wondering, why hasn't anyone made an airbnb for office space? (Or is that what this company does)

ryanb 12y ago
There's been a number of attempts at this - see ShareDesk.
stevesearer 12y ago
https://desksnear.me/ https://desksnear.me/ http://www.peerspace.com/ http://www.peerspace.com/ Loosecubes is another that recently shut down. Kodesk doesn't look like is is around anymore either. Here's a Quora answer with a bunch of them: http://www.quora.com/What-are-all-of-the-sites-that-do-Airbnb-for-office-space http://www.quora.com/What-are-all-of-the-sites-that-do-Airbn... And Airbnb's 'Airbrb' April Fools: http://blog.airbnb.com/introducing-airbrb/ http://blog.airbnb.com/introducing-airbrb/
- mikraft 12y ago
  Airpnp: http://www.airpnp.co/ http://www.airpnp.co/

jarjoura 12y ago

Instead of thinking of WeWork as Airbnb for desk spaces, I like to think of them more like office hostels. They are relatively cheap spaces depending on how much of it you need and and how private of an area you want. They offer community events and shared spaces to help connect founders with as many other people as possible. They're not all startups like at accelerators, but also include remote office workers from big companies who haven't rented an official space yet. So it is quite the diverse crowd. If you like working in coffee-shops, give WeWork a try. It was a worthwhile couple of months and I met some good friends.

pdq 12y ago
It's definitely not like Airbnb, as the producers own the space, the consumers rent it by the day, and Airbnb connects the two for a fee. WeWork lease the office spaces themselves and rent it directly out to consumers, ala Coworking. The only secret sauce is if they can get a large enough following nationwide (especially for startups) to get a household name, such that you go directly to their location in your city, rather than Googling for Coworking.

7Figures2Commas 12y ago

> “If I showed you their cash-flow statement, you would not compare it to a real-estate company,” said Henry Ellenbogen, a portfolio manager at T. Rowe Price. “You’d compare it to a brand or tech company—maybe Chipotle or Uber.” > WeWork said its December revenue puts it on an about $150 million annual revenue run rate. It also said the month’s annualized operating income puts its valuation at roughly 100 times income. It expects to grow significantly in years ahead, which would lower that ratio. Landlords typically trade between 18 times and 20 times earnings, according to Jed Reagan, an analyst at real estate consultants Green Street Advisors. > Price depends on location. In the company’s Financial District headquarters, it charges $400 a month for a desk and $1,400 a month for a small two-person office, well above the area’s rate for such space. > The business is a risky one in which its costs, fees paid to landlords, are fixed, but its revenues from startups and established businesses can fall quickly when the economy slows. > “The small-to-medium-size businesses, they get particularly impacted in a recession,” said Jon Halpern, who ran shared office space firm HQ Global Workplaces in the early 2000s. > HQ grew rapidly in the run-up to the dot-com bust. But in the recession that followed, its value plummeted. It ultimately sold itself to Regus. Let me guess: this time it's different?

infecto 12y ago
I have a hard time understanding why you would not compare this to real-estate. Its certainly not a brand or tech play. If the market slowed it would certainly take a hit. Most of these places have monthly contracts and its highly tied to how well the economy is doing. With that said, I really do appreciate the services these kinds of places offer. While they charge above market rate for sq.ft., they make up for it in services. I do not have to worry about anything within the office and can simply work. They usually have amazing internet, some free coffee/drinks and cater towards keeping me being productive. They offer nice community benefits as well.
- interstitial 12y ago
  The funny thing is during the 2004-2008 bubble, you were not allowed to compare real estate to real estate.
12y ago

bache 12y ago

We need this in Toronto

driverdan 12y ago
A 30 sec search for "coworking toronto" shows me many coworking spaces in your city.
- bache 12y ago
  Massively overpriced, a private office in a Toronto coworking space starts at 2x what wework charges

etjossem 12y ago

Paywalled. I wish the submission link went to the full article.

melling 12y ago
Sign up. It's a little over $1 a day.
- pbreit 12y ago
  Which is kind of a ripoff, dontcha think? That's about what I pay for all my internet access and triple that of Netflix, Hulu, Amazon Prime & NY Times.
  - eli 12y ago
    Well, it's not a ripoff if the articles are worth it to you. Regardless of what other unrelated media services cost.
  - melling 12y ago
    It really depends on how much you value the content. I pay for the WSJ. People need to earn a living. We fight for McDonalds employees to earn a fare wage but we complain because we don't want to pay for newspapers. There's nothing wrong with "premium content".
- etjossem 12y ago
  For the frequent WSJ reader, several hundred dollars a year makes sense. For a casual reader, it doesn't - but they still want the opportunity to convert me to a frequent reader. That's why they offer previews via search engines, etc.
jweir 12y ago
https://www.google.com/search?q=we+work+5billion&oq=we+work+5billion https://www.google.com/search?q=we+work+5billion&oq=we+work+... and click the first link
- 12y ago

pdq 12y ago

Is there history behind the $355MM Series A funding, and does anyone have statistics for other large A rounds? I have never heard of such a large investment on the front side.

gatsby 12y ago
Much more similar to private equity financing / bank loans, as opposed to traditional VC investment. WeWork needs lots of upfront capital to cover security deposits, build out spaces (tenant improvements), prove enough assets to take 250k sq. ft. at a time for 15 year terms, etc. Lots of coworking spaces have raised significant 6, 7, or 8 figure sums (WeWork definitely getting more than most), that mostly fly under the radar in terms of "companies that raise huge amounts of capital."

francesca 12y ago

WeWork did a great job of capitalizing on the move to smaller more agile companies. I don't think that "startup hype" is going to die. It's cheaper than ever to start a company and the market for tech companies is excellent right now. It's not easy to do, but getting $1-3MM in funding is accessible to talented people and once they get that in the bank, they're not going to open an office-- they're going to WeWork. This is huge for their business and it also enables the creation and maintenance of small companies who want to do things lean until the build a market and revenue stream (or maybe in some cases, adoption to drive further venture investment). I've seen WeWork do great things for companies in NYC by just giving them a place to work and a community to work with. Still, WeWork is not just another. They are actually a next-generation Real-Estate company! WeWork makes it clear that working is not just about your desk. It's also about your environment, the other people you interact with, the events that come to your space, the coffee you have (and in the case of WeWork, the architecture and design of your floor!). This is very cool for the future of company/working culture.

dimva 12y ago

This company provides inspirational, collaborative, nice office spaces for very high prices (compared to traditional office space). Their outsized profits will encourage competitors to enter the space and undercut them on price. Is there a way they can defend against that? - Their events provide some sort of network effect and marketing - The current group of startups provides some sort of network effect Still, their customer base consists almost entirely of price-sensitive, savvy, early-adopters, so any new competitor would be known about without having to do much marketing, and could start without all the nice events in the beginning if the price is lower. I just don't see how this business is defensible long-term...

mbendett 12y ago
@dimva, what company are you mentioning in this comment? WeWork?
acgourley 12y ago
I suspect that if you ask them they will say that there are network effects in that a) you can travel and use other wework spaces with a single membership and b) you get access to a community to hire from, seek advice from, network with, etc. For me those would not command a large price premium and so am incline to agree with you that it's not very defensible. That said, a capital heavy business like this doesn't need as much defensive power as a tech company. Very few challengers will have access to the capital needed to compete with wework at scale (and there are scaling benefits here) so the competition won't be crippling.