Yes, I realize that We Work is a very questionable business model, but it's a bit unfair to evaluate it during the pandemic. I'm sure many investors are betting on people wanting to leave their home to work. If corporations downsize and give up their office space, that could me a big jump in customers. Once the pandemic fades.
Even if that happens and they reduce vacancy from 44% to 10%, it looks like each location will still barely cover the location operating expense, with nothing leftover to cover the others. In my admittedly naive view it’s a pretty gory sight.
WeWork doesn't own most of their locations. As leases expire, their landlords can jack up rent until WeWork loses the leasehold improvements.
This is the same fatal flaw that most US restaurants face, and why even successful ones move after 5 years.
FYI: A few programmers have asked me, "What's wrong with WeWork? It's a great idea - nice offices!" Those people are ignoring the business model, which is horrific, as the article mentions.
Also, temp spaces charge extra by the hour for meeting rooms. Even though tenants know this in advance, they get bitchy when they receive the itemized bill, and dump on fellow staff and even outside attendees - "You know, we had to pay $100 for that meeting room, and we didn't sign a deal. Did we really need to book a meeting room?", etc.
While we are on the topic of people paying lots of money for something that appears to not have much value...
-Modern art was sold by a billionaire recently for tens of millions of dollars per artwork. The art and question is literally just colored lines on a page.
-Bitcoin and other cryptocurrencies we're supposed to be new currencies. No one uses a currency, so now people call it a "asset". It burns thousands of times. More energy than traditional electronic currencies that are actually used.
-Lots of very high Price to Sales ratio Nasdaq stocks. Shake shack, Zillow, and a long list of other companies that may be nice businesses but are not worth more than 10x their annual revenues as market cap.
WeWorks business model is easy to clone. It also has no advantage of scale. In my city there are many mom-and-pop coworking spaces that easily compete with WeWork.
That's true, but WeWork also competes with national office space companies (Regus, Premier) -- so national presence is not exactly a unique competitive differentiator.
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[ 3.2 ms ] story [ 46.4 ms ] threadI'm old enough to remember Kozmo.com and Webvan
https://en.wikipedia.org/wiki/Kozmo.com https://en.wikipedia.org/wiki/Webvan
WeWork doesn't own most of their locations. As leases expire, their landlords can jack up rent until WeWork loses the leasehold improvements.
This is the same fatal flaw that most US restaurants face, and why even successful ones move after 5 years.
FYI: A few programmers have asked me, "What's wrong with WeWork? It's a great idea - nice offices!" Those people are ignoring the business model, which is horrific, as the article mentions.
Also, temp spaces charge extra by the hour for meeting rooms. Even though tenants know this in advance, they get bitchy when they receive the itemized bill, and dump on fellow staff and even outside attendees - "You know, we had to pay $100 for that meeting room, and we didn't sign a deal. Did we really need to book a meeting room?", etc.
-Modern art was sold by a billionaire recently for tens of millions of dollars per artwork. The art and question is literally just colored lines on a page.
-Bitcoin and other cryptocurrencies we're supposed to be new currencies. No one uses a currency, so now people call it a "asset". It burns thousands of times. More energy than traditional electronic currencies that are actually used.
-Lots of very high Price to Sales ratio Nasdaq stocks. Shake shack, Zillow, and a long list of other companies that may be nice businesses but are not worth more than 10x their annual revenues as market cap.
- operational ineffiency due to lack of pressure to make profits
- lack of competitiveness due to ability to undercut rivals on price, thabks to the endless amount of runway provided
- lack of a reality check internally as the company is seemingly always expanding, always hiring.