If they wanted to, they could slow down on new purchases/rentals/construction and likely become profitable without too much trouble. But that would of course be at the expense of growth.
Not saying they're a great company or that they deserve a crazy high valuation, but suggesting that they're unprofitable because they have a bad business model is missing the whole picture.
If they are going to have to shut down all these sites the second the market slows down (or indeed as soon as the obligations are due), perhaps one might argue it was imprudent to open them to begin with.
Any marketing benefit gained by being "everywhere" is surely undone when they have to publicly shutter a large portion of their locations.
Coffee shops are great places to get work done for a few hours. But stay in one for a whole day and you start to get weird looks unless you are buying coffee continuously. And once you buy enough $5 coffees to justify sitting there for a day, you might as well be in a WeWork.
Working from home simply isn't an option for many people. If you live in a downtown area, you likely don't have the space for a proper setup. Even if you do, many people don't like working alone. Also, if you want multiple employees working together in person, an office starts to make a lot more sense.
So I actually think the freelancers and small businesses who remain in business are the last ones to leave. If you chose to be in WeWork in the first place, you probably like it, and the cost of office space there is negligible compared to payroll. The first ones to leave are the corporate customers who cut head counts. Small companies tend to have less waste, so it's hard to cut people in a downturn. Big corporations, where the people making the firing decisions don't actually know the people being fired personally, have easier time laying people off during recessions.
When the money's tight, being short on space doesn't necessarily keep you from doing it anyway. Hot desking at WeWork would cost more than half my rent.
Might be that the concept of huge corporate campus won’t be so popular in future and companies start looking at more flexible solutions.
This market is a tough one, with much competition. The fact we’re discussing this at all shows that they’ve managed to grow to become a recognisable name. Even if that’s just because of tons of VC cash, at least the VCs thought them worthy of investment.
Why? I think it’s a cultural change. Existing players market to companies, WeWork markets essentially to employees, it markets to the person who actually goes into the office and sits there every day, rather than to the balance sheet.
With their flexibility on leases, they pass the bar of cheap enough for the business considerations and do well enough for people’s minds, but with the trendy design, nice kitchens, beer on tap, plants, and effortless meeting room AV they appeal to people’s hearts. No one else does this. Is it worth it? Maybe, maybe not, we’ll find out in the long term.
This is innovative, and this creates meaningful hype. I believe they’ve got more right than you may be giving them credit for. Is it a long term business? Probably not this alone, there are loads of issues with WeWork as a business. I wouldn’t touch the stock.
God, tell me the editor was asleep. Tell me how it can both be “hotly anticipated” yet with “tepid interest.”
Brain hurts.
WW could be successful without all the rah-rah about changing the world. Like Uber, I’m sure they could afford to shed a few thousand employees (who were hired for growth) and continue to run a more sustainable business.
I don’t see Softbank have the option to continue feeding capital into the company so they might need to reassess their end-game with this investment. The alternative is possibly a spectacular crash into bankruptcy.
Sentences like these make skimming pretty hard. It made me re-read the entire article because I was confused about the who is the author.
I'm generally opposed to 1 company to "rule them all", and I would like to see giants to be broken down.
In case of say, Amazon, at the very least being so huge may allow (arguably) for cheaper prices and almost everything in one place, delivered conveniently. suppose that's true.
How one company owning a lot of real estate is good for me? The way I see it, if they are successful, they will spend less while charging more, even further accumulating wealth among the smaller amount of ppl. I don't see how it's good for most of us.
They aren't developing real estate market. They aren't creating new ways of building more efficiently. They aren't doing anything other than using huge sums of money to generate more money.
Say what you will about their ridiculous financials, the product itself is good.
But I don't think comparison to aws is fair. AWS can be scaled.
Renting out part of the office won't benefit in any way from the same company having offices in multiple cities.
Do you think, one landlord, owning offices in 10 cities be more efficient (better) than 10 separate landlords?
Isn't that the function of _any_ company in capitalism? (Excluding, possibly, non-profits)
Car manufacturers for example. The byproduct of them making money is the fact that cars becoming safer, more efficient, etc. Ultimately, it makes my life better.
I mean. I understand what WeWork is doing, they trying to make money and it's not against the law. All I'm saying is they aren't doing anything good for a regular person, and possibly even will hurt in the long run.
I think that's why ppl hate on them. At least I think that's why I don't root for them to succeed. I just don't see why
As long as a sophisticated large corporate sees a net benefit of being in a wework they will stay.
As an analogy, everyone knows running servers on AWS is more expensive per unit of compute than running your own hardware, however, there is a genuine value for a company to hand off the running of an office space (and the capital investment on buildout) to a third party in exchange for predictable monthly opex.
I was referring to a mechanism of taking in investment or capital to generate a return on that investment through some positive generation process (prototypical example: manufacturing.)
But you're technically right: if you're just using money to steal / suck resources away from somewhere else, with no net positive or even a net negative on the whole, then I agree with you.