>The losses for each WeWork member -- about $5,200 per customer -- are about 28 times what Uber loses per active rider.
What is the value of those customers though? $3500-$12,000/year.
And as I understand the business model, it is really a realestate business so how of the value is in asset appreciation. If you’re buying real estate at pennies on the dollar and using cash flow to pay off debt, then $1.3B in losses may not be a big deal since you really need to look at LTV. If I put down $200k for a house in SF and take on debt for the rest then I am loosing a hell of a lot more money per occupant.
To be fair, if this was the start of the business cycle, it might not be a bad idea. Real estate had some great deals to be found in 2008 if you had the liquidity to purchase.
I'm unsure how - We were at WeWork for a couple of years and whilst the overally experience was fantastic we were paying probably a 10% premium in Australia for an office 20% of the size we could have got elsewhere.
I think the experience is generally worth the downsize - but if you need any kind of space - WeWork just isn't for you!
> The losses for each WeWork member — about $5,200 per customer — are about 28 times what Uber loses per active rider.
Why do so many articles compare WeWork and Uber per-customer losses? It's absurd on the face of it.
Per customer profit/loss comparisons only make sense when per-customer revenues (or at least lifetime value) are similar. A WeWork customer might be renting a small office for a year and worth >$25,000 in annual revenue. An uber customer might be worth maybe 1% that.
It would be better to compare WeWork per-customer revenues to companies like Regus or ServeCorp with whom they are actually competing.
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[ 2.9 ms ] story [ 48.3 ms ] threadWhat is the value of those customers though? $3500-$12,000/year.
And as I understand the business model, it is really a realestate business so how of the value is in asset appreciation. If you’re buying real estate at pennies on the dollar and using cash flow to pay off debt, then $1.3B in losses may not be a big deal since you really need to look at LTV. If I put down $200k for a house in SF and take on debt for the rest then I am loosing a hell of a lot more money per occupant.
I think the experience is generally worth the downsize - but if you need any kind of space - WeWork just isn't for you!
The real metric that matters is average payback period per property as a factor of the total rent liability.
The risk is WeWork's average payback period is never or they don't have enough cash to reach their payback period.
Why do so many articles compare WeWork and Uber per-customer losses? It's absurd on the face of it.
Per customer profit/loss comparisons only make sense when per-customer revenues (or at least lifetime value) are similar. A WeWork customer might be renting a small office for a year and worth >$25,000 in annual revenue. An uber customer might be worth maybe 1% that.
It would be better to compare WeWork per-customer revenues to companies like Regus or ServeCorp with whom they are actually competing.