While WeWork is a little expensive, the fact that you can get a decent office without a multi year lease is amazing for small businesses. Its really hard to plan that far out when you are growing.
I had no idea WeWork was growing so fast. Maybe I'm old fashioned, but there's no surer sign of a new bubble than this kind of growth for a luxury supplier to startups. For a new startup, it's crazy to pay WeWork's premium when your runway is so limited and you need to hustle as hard as you can to get traction. Once you get a little bigger, for the WeWork premium you can hire an office manager with an interior design edge and get all the upside but customized to your actual needs. I guess their golden goose would be big corporate clients who want to reinvent their workplace but are too set in their ways to drive it internally, but having raised almost $7B, over $5B this year, I just don't see where the upside is for investors.
Thats definitely jumping to conclusions. I don't fully disagree with you, but from my experience, I can say that what WeWork is doing is incredible.
At a conference I attended recently, one of the WeWork chief data scientists presented on their process for analyzing cities and determining venues for expansion. The detail with which WeWork acquires and analyzes public and private demographic data is incredible. Based on their information, they are making highly targeted decisions about property acquisition. From my perspective, when compared to any other real estate entity, I can wholeheartedly say that what they are doing the right thing.
Well I'm not exactly jumping to conclusions as I've shopped for office space for multiple startups and toured multiple WeWork locations as well as dozens of other co-working space and sublets over the past few years, and IMHO WeWork is cashing in on easy money from boom-time founders. Clearly they are doing something right, but I don't know what data they would be analyzing that would protect them from a downturn.
You seem amazed by their secret sauce, but fundamentally, are they that much better than their competition in terms of the product they offer? Is it 10x better in price, service, quality?
McDonald’s is by far more successful than other burger chains; Starbucks than coffee chains. WeWork is trying (and at this point seems to be succeeding) to be the equivalent for coworking spaces.
Also note McDonald’s burgers are not very different than burger kings, and Starbucks is not better than any other chains. The secret sauce doesn’t have to be in the actual product.
At year-end 2016, McDonald's had ~37k restaurants, of which ~15% were company-operated and 85% were franchised. (The filing expresses a long-term goal to be ~95% franchised.) Of the franchised restaurants, ~70% were "conventional franchisees". Under both the company-operated and conventionally franchised models, McDonald's "generally owns the land and building or secures long-term leases".
I believe it is this real estate-focused setup that drives the comparison between WeWork and McDonald's in various comments.
Which is what the movie "The Founder" drives home near the end (besides that Ray Kroc screwed over the McDonald brothers). It's a real estate company that owns buildings that are occupied by fast food burger restaurants. How well those restaurants do doesn't really matter all that much because the value of the real estate is most likely going to increase over time. If the restaurant does well, it's just a bonus.
It was an in-person talk at CARTO from their Spatial Data Science conference. I remember seeing that the talks woulds be uploaded, but I don't know where.
Thanks! If anyone else is interested, the speaker was Carl Anderson (https://twitter.com/leapingllamas). The talks aren't on YouTube yet. I've messaged him and CARTO on Twitter asking if the videos will be uploaded.
WeWork is actually perfect for startups; they sell no commitment pay by the month office space that comes with desks and internet. They're cheaper than most sf office space and an order of magnitude easier to rent.
The sole drawback is they're an unmaintained dump and working in one is an utterly miserable experience. I had the very very unfortunate experience of working at 995 Market and these worthless idiots couldn't even get their elevators to regularly work, and just plain didn't give a damn. Who doesn't enjoy a nice 15 minute break while you wait for an elevator (both ways)? The offices are tiny and LOUD. Some other idiot decided to make the floors hardwood; a single person in heels walking down the long shared corridors goes CLACK CLACK CLACK. The walls are transparent glass so you are distracted by every bit of movement. There's no sound insulation so you get to listen to the office 3 doors down discuss their thanksgiving plans. I really can't say enough bad things about it.
But hey, there's lemon water in the kitchen! (In a leaky carafe that makes a puddle on the counter every day. Naturally.)
Hold up, so their elevators are shit EVERYWHERE?! Good grief! I think WW has its uses but I definitely don’t miss the obnoxiously loud millennials from Invision’s office (Boston).
This is very insightful. I’ve never been into a coworking space myself, but don’t these problems apply to all coworkign spaces? Or are they somehow better designed?
To offer a counterpoint to this post, I am also a renter of WeWork's at 995 Market. We around 2k/mo for a four-person office and I'm fairly satisfied with this arrangement. The facilities were much worse when the building first opened, but now most of the HVAC and elevator issues seem to have been sorted. I work on the busiest floor (the 2nd) and don't have an issue with noise. Hell, the place is almost never actually at full capacity.
Thirty-nine percent of membership is "freelancers and independent workers" while another 20% are companies with 1,000 or more employees.
You can get a desk in Oakland for $340/month or a private office for $730/month. If I had a small apartment in a city and worked primarily freelance, I'd consider something like that, if only for the quality of life.
But there are so many problems with that depending on circumstances. Assuming an urban apartment, it is likely very small. It may be loud throughout the day. You may have a partner who also wants to work from home. You may have family coming through frequently. You may not want to live 2/3rds of your life in the same two rooms, and so on.
I agree - and what about all the high end bars/cafes/shops full in the same areas? Working at startups has become a relatively comfortable lifestyle for twenty-somethings who don't necessarily generate value.
London does also have a significant number of FinTech startups who have a lot of cash compared to other markets. They seem to love WeWork, possibly because they can afford it, and their founders are coming from finance and want the fun side of startups that they’ve read about without the cheap crappy office space and having to make your own tea and coffee.
I think WeWork positions itself as a startup champion because that makes it seem far 'cooler'. The reality is I meet more people in my WeWork working for established companies or one/two person businesses than I do startups. Personally I'd worked from home for ~5 years and was more than happy to pay for somewhere that does _everything_ just to get out. And I've covered more than I've spent on rent in money I've made from people I met in or because I was there.
I'm not sure to what extent this is really startup luxury good.
First, here (tel aviv) the basic wework costs range from $150 to $600 depending on location and frills (eg private office). This sounds like pretty standard pp office costs. They tend to be well liked by the people who work there. Well kept, well located, social, etc. Unless paying money for office workspace is ipso facto a luxury good, this seems like a regular good. Money for services at market rates.
Second, people working there range. There are some are "startups" without definitional grey areas but these're just some of the tenants. There are external employees of regular companies. All the work from home people that prefer a shared office, at least part of the time. Apartments and cafes are still active, but it turned out there's room in the market.
The way I see this is (1) internet has created more demand for flexible offices. (2) The older versions of this were pretty crappy, so these guys moved in.
As to wework as an investment... IDK. But, you could say that about a lot of companies. As a company offering a product to a market for a price, seems like a fine company. The product is sensible. People like it. It will vary geographically, but seems perfectly plausible that wework-like offices will grow to house 1m workers.
Their business model is not complicated. They arbitrage office space. Office space is expensive to rent (operationally), takes a long time to find a tenant, and there's a lot of different kinds of leases (short/long term) and most office management companies are not equipped to deal with 100s of tenants in a single space. Similarly there's lots of pain points when you're the trnter, in terms of finding the space which can be time consuming, deposits, contract negotiations, needing to setup utilities (esp internet).
Wework opertionalizes all of things putting them in position of being able to arbitrage this disconnect in the market.
How's that? Weworks is buying in one market and reselling (with value adds) in a different market and profiting off this difference.
They lease large commercial (multi-story) offices from owners and building management companies and rent out to 100s of small businesses in the same space.
What are HN's impressions of WeWork? I haven't rented one myself, but everyone I talk to seems to say think that they're expensive, that the environment creates a super distracting workplace, and that they only make sense for tiny teams or freelancers who want to meet people.
If you can get an office, do so. And get a poster or rolling whiteboard to act as a divider (all walls are glass). Oh, and invest in noise-cancelling headphones.
The open plan spaces are very noisy, personally I wouldn't be able to get anything done. If you can, get a separate unit and make sure to put a carpet on the floor, e.g. DEKOWE that can be made to measure, to dampen the echo cause by the glass walls and wooden floors.
WW isn't just renting office space; they're selling a dream that YOU, yes YOU, are the next Mark Zuckerberg. They're a byproduct of the extreme fetishization of entrepreneurship that has happened over the past decade.
And the effect? Just about every WeWork I've ever been in is exactly the same: full of wantrepreneurs with extreme delusions of grandeur. Only problem is that the talent, work ethic, and product vision don't match. Walk through one at 7:30, 8:00p, the same hours that you'd expect a hungry founder to be grinding it out and it's dead empty. Maybe it's because the free cucumber water is gone.
Or, to put it another, perhaps more callous way: WeWork is what happens when everyone listens to Gary Vaynerchuk. And all the while WeWork trades at an absurd multiple over just about every other realty holding company.
Is that specific to WeWork, or is that just a characteristic of early-stage startups in general, and WW just happens to be somewhere you can find a lot in one space without the filter of having had investment?
Some of both. The cultural aspects of it are certainly not specific to WeWork. (See also: "Shark Tank", pay-to-pitch conferences, etc.) They do however leverage that fetishization to a really impressive degree; everything there is specifically designed to make you feel like you're on the first step to the fantastic Internet riches you've deserved all your life.
> everything there is specifically designed to make you feel like you're on the first step to the fantastic Internet riches you've deserved all your life.
Interesting... how so? (I've never been to such a place)
But that doesn't make it factually untrue that WeWork disingenuously leverages those dreams to feed its growth. There's a reason why Simon Cowell was as compelling as he was: he was the only one who was actually honest with people when he told them that they were wasting their time pursuing their dreams of stardom. Everyone I've ever met associated with WeWork, comparably speaking, is Paula Abdul.
It's unsustainable - because a lot of the companies that are there, frankly, are losers and will churn out quickly - and they need to constantly refill the supply at the bottom of that pyramid. That supply is not infinite, and most certainly not at the rate they're expanding.
And again, the ultimate salient point here is that they've got orders of magnitude less property under management and yet they're trading at higher multiples than just about every other realty holding company.
It's bubblicious, bro. All the feel-good bullshit about wanting to disrupt the world doesn't change that.
I would rather folks be realistic with themselves about what kind of work they will need to put in to accomplish those dreams instead of wasting resources that could be allocated elsewhere.
What strikes me as cynical is creating a culture that attracts daydreamers with little chance of success and then turning around and selling investors on something else.
Funded startups can afford wework. We run our start-up from free Co working spaces and public libraries. Every dollar saved goes to customer acquisition and $500 is a luxury
> Walk through one at 7:30, 8:00p, the same hours that you'd
> expect a hungry founder to be grinding it out
Can we stop with this another fetishisation of unhealthy work habits? How about wise founder realising that having a good rest and a healthy work-life balance makes them more productive?
This is a fair point and I'm glad you brought it up. I'm using it as a proxy to refer to the general work ethic needed to get a company off the ground - which I've rarely seen in any WeWork office - but your point stands.
Well, looking at it another way, there's probably a distribution of times of day when people start working, including as late as 10:00 or 11:00 am. So, assuming that this anecdotal experience is representative (and it might well not be), it is surprising that no-one is in the office at 7:30 or 8:00 pm. Either the entrainment effect of the culture is so strong that everyone comes in at 8:00 in the morning, or folks are coming in late and leaving early.
It is quite a downer to walk around a coworking space at 6 or 7pm and find it totally empty. Whenever I did coworking, I was often the last one to leave at night.
That's kind of funny--I belonged to a WeWork in Queens for about six months and my favorite time to work there was 5-10pm because I'd usually have the place almost to myself.
Overall I found it a decent place to work. It was definitely better than working from home all the time. The wantrepreneur vibe was indeed pretty strong and socially it was kind of cliquey and too-cool-for-you. The space and location were good though. For me as a solo founder/coder it served its purpose and felt worth the price in spite of there being plenty of room for improvement.
They have moved way past the 'we cater to startups' mantra and have gone to catering to large corporations who want to get that 'startup feel'. I was visiting HSBC IT folks in Hong Kong last month, the largest and most established bank in town, maybe the most conservative one.
Their digital teams were working out of a rented floor at Wework in Causeway Bay, HK Island. With a small cafe inside. Seemed very un-banking like and that's exactly why they went there a year ago - http://www.scmp.com/property/hong-kong-china/article/2021679...
its a placebo for multinationals to get people to innovate
There are a bunch of coworking space accelerators in silicon valley which are occupied by some small unprofitable divisions of megacorps, their “alpha bets”
Allianz (huge insurance company) just opened some kind of branded co-working / barista bar / meetup space in the middle of one of Berlin’s “edgiest” neigbourhoods. It’s frankly quite hilarious and a fantastic example of cargo culting. The slogans on the wall, the lighting, the tables: it all feels like a WeWork mashup with a Google office made by someone from some remote island who just read about all this stuff. Google Allianz F200.
It's not just Allianz. I've worked with a bank founded in the 16th century who rented office space next to their main building, plastered with agile motivation propaganda posters of the worst kind [1]. Supposedly, they're doing it to attract young developers, and to build up fast-moving teams so FinTech startups don't get all the talent.
I work for a similar company and all of the IT floors have also adopted the very trendy startup setup. The irony being that IT in large bank is by far the most bureaucratic part of the bank, to an extreme (you will not discuss with anyone without going through a ticket system - even developers, they will rather bankrupt the bank than deviate from a policy or procedure, planned work has to go through twenty committees before anyone will even lift a finger, etc). And they are as agile as an elephant (despite lecturing the rest of the bank on how they too can get stuff done by adopting agile!).
Can’t agree more. OTOH a random shmuck from the Trading Room will bet millions on a daily basis with little or no supervision. Until of course they lose big on a stupid bet and everyone is busy finding “the idiot to blame”
Random schmuck here. There's tons of supervision, communication with research and clients, oversight, and risk limitation. Also, you can't make big bets without occasionally losing, and people usually know exactly whom to blame. (Sometimes it's not the trader whose position blew up, but the desk manager or senior sales person who fought for the trade, or even a client who had inside info on a deal.)
The only truly stupid bets are the illegal and/or unauthorized ones.
Started the interview process (via recruiter) for HSBC in HK as I was looking to work for a larger/more established company than the start ups I've been working with and the coworking space was a turn off for me.
I’ve been in a WeWork co-working space in London and, from my experience, don’t move there if you want to do deep work. It was quite noisy and mostly geared towards sales-y people, with events at 3-4PM (way too early) for “networking”.
The title is correct: the article, and the previous article it refers to [0], are about Wework's presence of 17 buildings all across London, not just in the City.
Then why are so many words dedicated to the City? It's ambiguous at best, but I really don't think that HSBC, Deutsch Bank, and JPM each own 1.7% of all London's office space, which is the leading comparison.
WeWorks are great to hang out in. The offices themselves are tiny glass boxes that grind you down over time. The building I was in was basically full of suits (recruiters, intrapreneurs etc). Glad to have left after 9 months in one!
They were also pushing for 6-9 month commitments from tenants.
I've been all three here in Shanghai: rented a desk, rented an office and actually worked for Wework.
For a non-tech freelancer, it's a good place to be: comparably high-level people, decent free coffee and beers. For a tech freelancer "community area" tends to be extremely noisy, with annoying pop music playing loud enough to distract, dogs barking, cleaning ladies "chatting" to each other (in China chatting is usually a 90 dB+ affair). During lunch, everything turns into eating surfaces as people here are accustomed to getting food delivered. Some food is extremely smelly, which can be very distracting if you need to finish something and didn't eat yet.
Offices are quieter, but they're really tiny, basic and dark, and very expensive compared to other market offers, at least in China. Shanghai has many managed offices, together with coffees, printers and set-up Wifi.
Speaking of Wifi, all Wework locations in China I've been to have awful speeds, during workdays, it's sometimes a 30-50 KBps crawl, in evenings a bit better. Of course, you need to bring your own VPN to access anything outside China.
81 comments
[ 3.4 ms ] story [ 134 ms ] threadAt a conference I attended recently, one of the WeWork chief data scientists presented on their process for analyzing cities and determining venues for expansion. The detail with which WeWork acquires and analyzes public and private demographic data is incredible. Based on their information, they are making highly targeted decisions about property acquisition. From my perspective, when compared to any other real estate entity, I can wholeheartedly say that what they are doing the right thing.
Also note McDonald’s burgers are not very different than burger kings, and Starbucks is not better than any other chains. The secret sauce doesn’t have to be in the actual product.
At year-end 2016, McDonald's had ~37k restaurants, of which ~15% were company-operated and 85% were franchised. (The filing expresses a long-term goal to be ~95% franchised.) Of the franchised restaurants, ~70% were "conventional franchisees". Under both the company-operated and conventionally franchised models, McDonald's "generally owns the land and building or secures long-term leases".
I believe it is this real estate-focused setup that drives the comparison between WeWork and McDonald's in various comments.
The sole drawback is they're an unmaintained dump and working in one is an utterly miserable experience. I had the very very unfortunate experience of working at 995 Market and these worthless idiots couldn't even get their elevators to regularly work, and just plain didn't give a damn. Who doesn't enjoy a nice 15 minute break while you wait for an elevator (both ways)? The offices are tiny and LOUD. Some other idiot decided to make the floors hardwood; a single person in heels walking down the long shared corridors goes CLACK CLACK CLACK. The walls are transparent glass so you are distracted by every bit of movement. There's no sound insulation so you get to listen to the office 3 doors down discuss their thanksgiving plans. I really can't say enough bad things about it.
But hey, there's lemon water in the kitchen! (In a leaky carafe that makes a puddle on the counter every day. Naturally.)
There's a reason why landlords like long term leases and I can't imagine wework is immune to the pressures of a down market.
Our company eventually left, in part because we employees made it clear we were very unhappy inside wework.
You can get a desk in Oakland for $340/month or a private office for $730/month. If I had a small apartment in a city and worked primarily freelance, I'd consider something like that, if only for the quality of life.
Working from home hasy many perks. But the downside is that you get actually lazy.
I should move out to an office for the sake of my mental and physical health.
First, here (tel aviv) the basic wework costs range from $150 to $600 depending on location and frills (eg private office). This sounds like pretty standard pp office costs. They tend to be well liked by the people who work there. Well kept, well located, social, etc. Unless paying money for office workspace is ipso facto a luxury good, this seems like a regular good. Money for services at market rates.
Second, people working there range. There are some are "startups" without definitional grey areas but these're just some of the tenants. There are external employees of regular companies. All the work from home people that prefer a shared office, at least part of the time. Apartments and cafes are still active, but it turned out there's room in the market.
The way I see this is (1) internet has created more demand for flexible offices. (2) The older versions of this were pretty crappy, so these guys moved in.
As to wework as an investment... IDK. But, you could say that about a lot of companies. As a company offering a product to a market for a price, seems like a fine company. The product is sensible. People like it. It will vary geographically, but seems perfectly plausible that wework-like offices will grow to house 1m workers.
Wework opertionalizes all of things putting them in position of being able to arbitrage this disconnect in the market.
They lease large commercial (multi-story) offices from owners and building management companies and rent out to 100s of small businesses in the same space.
And the effect? Just about every WeWork I've ever been in is exactly the same: full of wantrepreneurs with extreme delusions of grandeur. Only problem is that the talent, work ethic, and product vision don't match. Walk through one at 7:30, 8:00p, the same hours that you'd expect a hungry founder to be grinding it out and it's dead empty. Maybe it's because the free cucumber water is gone.
Or, to put it another, perhaps more callous way: WeWork is what happens when everyone listens to Gary Vaynerchuk. And all the while WeWork trades at an absurd multiple over just about every other realty holding company.
Interesting... how so? (I've never been to such a place)
Its awesome that more people are even dreaming of changing the world, starting businesses and have a support infrastructure and culture to do it.
Would you rather we aspired to cube farms instead?
But that doesn't make it factually untrue that WeWork disingenuously leverages those dreams to feed its growth. There's a reason why Simon Cowell was as compelling as he was: he was the only one who was actually honest with people when he told them that they were wasting their time pursuing their dreams of stardom. Everyone I've ever met associated with WeWork, comparably speaking, is Paula Abdul.
It's unsustainable - because a lot of the companies that are there, frankly, are losers and will churn out quickly - and they need to constantly refill the supply at the bottom of that pyramid. That supply is not infinite, and most certainly not at the rate they're expanding.
And again, the ultimate salient point here is that they've got orders of magnitude less property under management and yet they're trading at higher multiples than just about every other realty holding company.
It's bubblicious, bro. All the feel-good bullshit about wanting to disrupt the world doesn't change that.
What strikes me as cynical is creating a culture that attracts daydreamers with little chance of success and then turning around and selling investors on something else.
Overall I found it a decent place to work. It was definitely better than working from home all the time. The wantrepreneur vibe was indeed pretty strong and socially it was kind of cliquey and too-cool-for-you. The space and location were good though. For me as a solo founder/coder it served its purpose and felt worth the price in spite of there being plenty of room for improvement.
There are a bunch of coworking space accelerators in silicon valley which are occupied by some small unprofitable divisions of megacorps, their “alpha bets”
https://globaldigitalfactory.allianz.com
[1]: https://www.startupvitamins.con/
The only truly stupid bets are the illegal and/or unauthorized ones.
I'll let you know when it comes to my employer (BigCo in the Midwest) because it will mean the trend has ended.
What’s with the British English-style conjugation in the byline—I thought Bloomberg was US-based?
(Also, City of London != London.)
[0] https://www.bloomberg.com/news/articles/2017-12-06/wework-be...
They were also pushing for 6-9 month commitments from tenants.
For a non-tech freelancer, it's a good place to be: comparably high-level people, decent free coffee and beers. For a tech freelancer "community area" tends to be extremely noisy, with annoying pop music playing loud enough to distract, dogs barking, cleaning ladies "chatting" to each other (in China chatting is usually a 90 dB+ affair). During lunch, everything turns into eating surfaces as people here are accustomed to getting food delivered. Some food is extremely smelly, which can be very distracting if you need to finish something and didn't eat yet.
Offices are quieter, but they're really tiny, basic and dark, and very expensive compared to other market offers, at least in China. Shanghai has many managed offices, together with coffees, printers and set-up Wifi.
Speaking of Wifi, all Wework locations in China I've been to have awful speeds, during workdays, it's sometimes a 30-50 KBps crawl, in evenings a bit better. Of course, you need to bring your own VPN to access anything outside China.