Interesting. Are there blocked by ISP or archive doesn't support Europe? I wonder if either way it's something to do with European laws? Germany in particular seems to have a cottage industry of copyright harassment
I like the archive.ph links. What alternative do you use? It would be easy to have users post both in a thread. Perhaps one of the European users could post the alternative.
In this case the Wayback Machine and archive.ph handle the content similarly, but archive.ph is more resistant to content removal efforts and makes it easier to archive rapidly changing pages on demand.
archive.today has issues with certain DNS eg. 1.1.1.1 aka Cloudflare.[0] It isn't geofenced, and simply using another DNS is the easy fix to your troubles here.
The solution isn’t to switch away from Cloudflare DNS. Particularly when the most notable alternative is Google or my ISP DNS who sells my internet history to the highest bidder.
I really wish the community would post links with a service that works on Cloudflare DNS.
archive.is also blocks quad9 now. pretty much every privacy-oriented DNS service doesn't provide EDNS, which means that whether or not archive.is blocks them depends on whether or not the operator has gotten in a mood yet.
why anyone would use cloudflare for anything unless there were no other viable choice is beyond me. Honnestly, why?
DNS has many, vastly better alternatives.
edit: explanation I thought was common knowledge. Set "do not track" on your browser and watch cloudflare break the internet for you without your consent. Far, far too much centralized power. Just don't.
Yes. I know the latest HN trend is to hate on Cloudflare, but I’ve had zero negative experiences even as a heavy user (dns and CDN and workers) even during the major downtime events.
The negativity toward Cloudflare has always confused me. I don’t get it.
If you have DoH (DNS over HTTPS) turned on in Firefox, I think it defaults to Cloudflare as a DNS provider. I can't remember if DoH is on by default with Firefox though.
Some are speculating that it is a way for them to re-negotiate leases, given what is currently happening with office space rents it could come out stronger.
edit: Also, given that startup investments are way down right now, tech is in a recession and there are recessionary tail winds this is a great way to get out of leases to downsize to a smaller footprint. Either way I don't have their stock or any ties to them and all of this could be wrong, but it is an interesting theory.
Some also speculated that Ryan Cohen and Carl Ichan were going to save BBBY in a sweetheart deal that would make bagholders who got in at $30/share whole despite the pennies-per-share valuation.
Bagholders never lose hope. Even if "We" comes out ahead, the equity holders will be wiped out.
Yeah, this whole murky area smacks to me of blatant fraud - get massive investment in a company you create, use the valuation to get personal loans against your stake in the company, then use those loans to buy real-estate which you lease back to the company.
Oh, and you keep personal ownership of 'We' as a trademark, so they have to lease that too.
And then, when it all starts to crumble, walk away with a multi-hundred-million dollar exit package.
I can't imagine how this guy still walks free and isn't being sued into the ground by investors.
> Some are speculating that it is a way for them to re-negotiate leases.
People aren't "speculating". WeWork has said outright that is exactly what they're doing, and that is the entire purpose of Chapter 11 bankruptcy, to allow a company to shed some debt, and in return equity holders lose everything and some debt holders take stakes in the reorganized company.
Or consider a different type of investment if they don't want the risk. The low interest rates drove a lot of people into the stock market that would have otherwise chosen more conservative investments. It also drove high valuations for some companies that make no sense. Sadly the market is like a casino with how many stocks are valued and what drives a stock up or down. One one hand if you bet the right way you can make a lot of money, but if you bet wrong you can also lose a lot.
well, luckily, wework is not public, and so only sophisticated buyers are able to buy. Therefore, there's no need for "buyer beware", as if there's some scam going on.
Until a company is dissolved, somebody is speculating that everything's part of a plan or that it's all going to turn around. Speculation is armchair effort that helps passive bagholders stay hopeful and that helps savvy traders work out of their positions.
I suppose it's a fun curiosity to hear the detail of somone's speculation, but it shouldn't be taken for much and it shouldn't be a surprise that there is some. There always is.
You are incorrect, this is not their second bankruptcy. They renegotiated some debt and leases previously but they have never actually filed for bankruptcy before today.
They currently claim 660 locations in 119 cities (avg 5.5/city) NYC seems to be the biggest with 49 or so. They will try to renegotiate all potentially profitable locations and cancel everything else, so maybe 50-75% get canceled? In average that's 2-4 canceled leases per city. That's commercial real estate so no effect on housing.
Wonder how many bullets India dodged by having smaller stakes held by foreign entities. In Tata AIG, AIG has 26%, so we werent worried when AIG was in trouble in 2008.
It will have the same effect as a raindrop does to a flood. One of many contributing events that continue to create downward pressure on prices and rent.
Almost certainly priced in already given that the pending filing was in the news a week or so ago.
I haven’t been following the market lately but CRE has been getting absolutely crushed all year, remember the “return to office” hubub? And WeWork is a big player in terms of the news cycle but tiny in comparison to the market as a whole.
Coworking spaces has been commoditized. Every major metro area has a dozen local companies offering coworking spaces. So unless you need the same membership to work in very different locations, you'd just join any of the local companies near home.
Yeah I remember Regus office space commercials well before WeWork offering single offices/flex spaces. They even had shared reception you could subscribe to.
Exactly, and more is on the way. There are a lot of empty / underused offices right now and the easiest way to try to monetize all that real estate is co-working, flex desks, sub leases, and other forms of short term usage. If it's empty, it's not generating any money. Finding space is easy right now. I think prices are still a bit inflated given the amount of vacancies. They have to come down a lot for that to start changing. But you can get some really nice bar gains if you invest a bit of time.
Over the next few years, a lot of leases are coming up for renewal and I'm guessing a lot of companies are looking to reduce the amount of square meters they have and what they pay for that.
Apartment buildings have very different surface to volume ratios. There are only so many square feet you want per window, assuming conventional layouts. Of course there's always the "disused industrial floor loft" approach to living, but that requires exceptionally rich tenants and/or exceptionally low rent expectations. Chances are most office buildings have higher operational costs than the rent that could be collected that way.
We'll see a lot of decay, building operators trying to make ends meet with ever cheaper office tenants, before informal factory floor type conversions happen. Wouldn't be surprised if, very much unlike those old factory floors, buildings are well beyond effective service life by then. (because architecture has become depressingly good at being on schedule in terms of design service life)
It's a Chapter 11 bankruptcy so likely they're not all shutting down. Some locations will probably renegotiate the lease term with the landlords and the profitable ones will stay open. With the office vacancy rate rising, I'm sure some landlords want to keep them.
I met a client in a co-working space in Midland TX of all places, and it was great. We could grab coffee in the open area, we had a private room with a big screen, whiteboards, it was quiet, convenient, everything you could ask for.
I dislike remote work and really dislike working from my apartment and coffee shops. I really really like WeWork.
If WeWork went away completely and I couldn’t find a local coworking space that I really liked it’d probably be the impetus I need to find a job at an on-site only company.
I would put it differently: an IPO is what most tech startups aim for or are pressured into.
I'm a founder and have talked with few people (albeit I'm not looking for money) and you could clearly see disappointment in money-bringing people hearing you want to stay private.
I guess WeWork Won'tWork then /jk
But I wish something like this existed in my town. Coffee shops are okay but sometimes you just need a proper working env.
Temporary office spaces have been a thing in a lot of places for a long time.
I have no idea about your town in particular, but there's a company called Regus who have a presence in the US, UK, France, Australia, Singapore, Japan ... actually according to their website they're in 120 countries.
They are not cool. They are not new. They have not spun themselves a reputation of being an awesome, new, disruptive, special, fun, aspirational, Silicon Valley tech-adjacent service like WeWork did. But if you want an office or a meeting room for a day or a week or a month, they can do it.
Having used their services in the past, the rise of WeWork was massively surprising to me. It was touted as disruptive, as new, as amazing! It's gonna be huge! But there are already these boring companies doing this exact thing, boringly, making money but hardly earth-shattering. I guess it's testimony to Neumann's charisma as much as anything else.
A lot of places do also have more casual co-working spaces. Worth looking to see if there's one near you. You mention coffee shops - in Southampton UK, where I lived pre-pandemic, one of the coffee shops took the initiative to open a co-working space on an upper floor. Which would have been a great business move if the pandemic hadn't hit and f*cked everything.
(edit - I am rate limited so cannot reply below, but I wanted to add that I have used Regus in Australia as a private individual with a credit card. Obviously I don't know how it works in every country, but here it seems to be very easy)
WeWork pushed incumbents like Regus to simplify the onboarding process.
In the olden days, getting a Regus desk required an office tour appointment, followed by paperwork. Now they have an app, and nobody needs to send or receive a PDF.
1. Like many companies who go through Chapter 11, WeWork will come out stronger after they cut a lot of their debt, offload leases on non-performing locations, and shrink to only be in those locations that can be sustainably profitable.
2. WeWork users are likely to also be happy, as with the greatly reduced debt WeWork can invest in their product (though I think most folks that used it always thought their product was good). Of course, this assumes the locations you use don't get cut.
3. Some landlords are going to take a bath as their leases are terminated during what is essentially a depression in commercial real estate. Given how big WeWork is in many cities, it remains to be seen whether this will have any cascading effects.
> The Company maintains the strong support of its key financial stakeholders and has entered into a Restructuring Support Agreement (“RSA”) with holders representing approximately 92% of its secured notes to drastically reduce the Company’s existing funded debt and expedite the restructuring process.
Perhaps. That's just one class of creditors though. Maybe they'll reject a bunch of leases and come out of bankruptcy, but they wouldn't be the first company to go into Ch 11 with high hopes and never come out.
That's a bet I'd easily take 7 days a week and twice on Sundays.
There is nothing fundamentally wrong with WeWork's core product. Users are generally big fans of their services, they have huge brand recognition and are basically synonymous with co-working spaces, and while the need for corporate office space is drastically reduced post-pandemic, the flexibility that WeWork provides is exactly what many companies want.
The problems with WeWork are nearly entirely with their capital structure. They expanded way too fast, they signed many leases that would never have been profitable (often in bizarro 0-rate environment world sweetheart deals with Adam Neumann), and their ridonculous valuation made them take on way too much debt to fund further expansion. Chapter 11 gets rid of all that. WeWork will be a much smaller company in the rather mundane business of office and property management, but it serves none of their stakeholder's interests to liquidate.
> There is nothing fundamentally wrong with WeWork's core product.
You have to justify this for a company that has just entered bankruptcy.
I suppose it depends on how you define “core”. But even if you take the most conservative definition and call their core product “office space” even that market has been thrown into massive turmoil.
There is plenty wrong with WeWork’s core product and much of what made it popular also made it unprofitable.
That phrase mostly means that the company is profitable, but it's RoI is smaller than the interest rate on its debit.
For having really nothing wrong with the company, it needs to be able to scale profitably too, by having a RoI that is larger than the interest on its assets.
The first part is clearly true for WeWork. On that strict sense, the company is quite alive, and its creditors would lose by closing it down. On the second sense, well, I don't think anybody can really say.
Profitable before considering the alternative of a guaranteed return at a higher rate is unprofitable, people were just confused (or imprecise about an irrelevant distinction) when the interest rate was near 0.
Are they viable though? The market they served is holed below the waterline by people getting the idea that they can WFH and the spread of high speed fibre. The years of the pandemic were years where (if it had been well run) a model like WeWorks could have established itself as the alternative to standard offices, but that's ship saled. Who want's to work in an openplan now?
Seems unlikely they'd go for that under any circumstances. I know they claim billions in assets, but I'm guessing it's all stuff whose resale value has tanked since 2020 and WeWork's actual liquidation value is $0 give or take.
What would the creditors get from the liquidation of a company that leases its spaces? The value of second hand office furniture? Doubt they’ll vote for this.
The asset is the positive operating properties/leases.
The idea from WeWork management would be to shed the bad properties and keep the good ones and operate them as post-BK WeWork.
Creditors could say, great idea, but we want to sell that remaining business for cash rather than leave it in your hands because we don't trust you to continue to run this.
Definitely agree liquidation is non-starter here. They don't sign long term deals with their own customers so WeWork's only real asset is the brand. What the creditors will do is take over ownership from the equity-hodlers, then try to milk the brand for any remaining value. It's conceivable many of the building owners might actually do ok directly operating WeWork branded spaces and keeping the margin that used to go to WeWork for themselves.
That last one has me really worried. A big dump of real estate on an already strained market with a lot of folks using it as investment. How many big buildings have we seen go up in the last year and remain basically empty.
Commercial real estate needs to pull its head out of its ass soon and start heavily discounting spaces or shit’s going to get real real.
> Commercial real estate needs to pull its head out of its ass soon and start heavily discounting spaces or shit’s going to get real real.
Looking at SF, I think it is not only a discount thing. The way it was rented before: "open space" office with bare wall, rows of desks and insanely high price per sqft or a mall is probably not gonna work anymore. They need to repurpose it: convert to apartments, smaller open space offices, regular offices, etc. Trying to do any kind of construction in SF is ridiculously complicated. When money was flowing it created many layers of bureaucracy and complexity, but it was affordable. Since then money flow dried up but complexity and bureaucracy is still there.
> Commercial real estate needs to pull its head out of its ass soon and start heavily discounting spaces or shit’s going to get real real.
Agreed - so many viable businesses have been forced to close due to rent hikes but the underlying problem is that there a lot of investors who were promised guaranteed high returns for commercial property. They should be forced to accept the downside of that gamble but as a group they have so much political clout. Pretty much all of the “return to office” hype machine is driven by those very well-connected people and cities are receptive because most downtowns were heavily over-focused on subsidizing suburban car commuters, which can’t easily be converted into more attractive spaces for actual residents.
It's a prerequisite to be a fool to invest in, or start, a business of the startup subtype. This isn't a bad thing™ on its own if there a path to something that can also be a mildly or wildly profitable business. One issue is not every founder can become a CEO, and that's okay. And not every startup->business CEO wears the CFO hat enough of the time to keep their numbers on a sustainable trajectory. That's one of the differentiators between startup CEOs and corporate CEOs.
For every wildly-ambitious founder or founder team, they need to bend an ear toward the sage advice of a conservative corporate CFO to ensure the venture stays alive and has a chance to thrive. Surrounding oneself with "toxic economic positivity" is a recipe for failure.
Will he continue to spray his new potential investigators with fire extinguishers to solidify potential rounds of funding?
> In late 2015, WeWork was completing an investment round led by Beijing-based Hony Capital Ltd. that pushed its valuation to $16 billion. Mr. Neumann invited its CEO, John Zhao, to a party at 110 Wall Street, where WeWork was about to open its first WeLive dormlike apartment building. Toward the end of the night, Mr. Neumann led others to the roof of the 27-story building. There, guests passed around tequila shots. Mr. Neumann picked up a fire extinguisher and set it off, spraying Mr. Zhao and others with white foam.
> The deal went through. Mr. Zhao joined WeWork’s board in July 2016.
To be completely honest, Neumann reminds me of Ian Schrager. He would run a fantastic club. Somehow, we’re in a world where clubs contain the C suite and are grafted on multi-billion dollar companies.
It's different, because this time he is only getting funding by putting up his hundreds of millions of dollars worth of real estate (bought using his WeWork money) as collateral.
Do you have a source for that? Not a challenge, I'm genuinely really interested in learning more as that's the first I've heard that. I always wondered what would have caused a16z to put so much money into Flow, but them having actual collateral against their investment would make more sense. But as far as I know a16z's investment was a pure equity stake so I don't know how collateral would work in that situation.
I don’t think there’s a founder who has at one point been running a company over $1BN in value who would have trouble finding venture capital for their next thing.
I sincerely believe if SBF or Holmes were raising money for a new startup today, they’d have at least a few notable names lined up to throw money their way.
There’s a famous NFL quote from the general manager of the Arizona Cardinals that goes, “I've said this before - If Hannibal Lecter ran a 4.3 (40-yard dash) we'd probably diagnose it as an eating disorder.”
Buy property where you have no flexibility to scale your space (and thus, debt payments), then offer it to others with maximum flexibility to scale down on a month-to-month basis.
Guess what happens when demand falters? Though, to be fair, they were losing money before the pandemic...just much closer to break even.
The losing money pre-Covid was very typical in a low inflation, low interest rate environment where growth is prioritized over profit for newer companies that recently went through the startup IPO cycle. With high interest rates profitability is more important so it's a vicious cycle right now.
Chapter 11 petitions have been accurately and usefully described in other comments, I justed wanted to add, chapter 11 doesn't "cap" or "downfall" anything, just as record profits don't cap or downfall anything. It's an orderly measure to try to preserve as much value as possible for stakeholders.
The court decides but the rules are quite literally written in the Chapter 11 of the United States Bankruptcy Code. The shareholders usually gets the shortest end of the stick.
How is it that time and time again, business die and the executives walk away with a parachute while the regular employees walk away with not even the rest of their pay, but hacker news and Reddit consistently states the regular employees come first?
The anecdotes are not aligning with the observations. So what’s the deal here?
if there's any money at all, employees get their pay. Shareholders can be forced to go in their pockets and pay employees wages due.
I don't know of this happening to a large corp, but if a local restaurant goes bankrupt, or a local construction company, and the owner is not also bankrupt, they can be forced to pay employees. Usually they are also bankrupt. Not sure if those debts survive through personal bankruptcy.
You may be referring to employees losing retirement or other benefits like that, but the worst of those loopholes have been closed (the pension can't be in the company's own stock, that type of thing)
> Shareholders can be forced to go in their pockets
no they cannot. Shareholders can only lose at most the capital they put in originally - they cannot be liable for additional debt.
> the owner is not also bankrupt, they can be forced to pay employees.
That would be because the owner mixed their own personal wealth with their business (e.g., as a single entity), instead of a limited liability company. Therefore, any assets the owner has is subject to be sold to pay the debt of the business. It's why only small businesses, owned by a single owner (who would have nothing else) is done this way (cheaper administratively i presume).
It’s usually state labor laws. Some states don’t have it, most do. Wages are treated as a special case, often with these type of forced payout clauses and even criminal penalties.
We're talking about Chapter 11 here, which means the plane has already crashed and the court is deciding who gets what on what is left of the plane, which could still be somewhat valuable. People with golden parachutes already jumped off before the crash.
Do preferred shareholders still get their liquidation preference in a bankruptcy? I don’t think they should, they are usually the ones responsible for the bankruptcy. Common shareholders are going to be the employees in this case with ESOPs or RSUs, getting the shortest end of the stick.
Preferred shareholders can be VCs who are usually not directly responsible for the bankruptcy. Also, WeWork is a public company so common shareholder can really be anybody, not necessarily all employees.
In theory the existing shareholders should be the first to lose their stake - though those with inside access can benefit by re-investing at a low price once the restructuring is complete.
Those owed debts can lose much of what they are owed. In the case of WeWork, landlords will likely lose a lot of owed rent, and lease agreements will be cancelled or renegotiated at much lower rates.
Employees are meant to be at the top of the list to be paid what they’re owed, but that’s still contingent on funds being available to pay them.
“The company said creditors holding 92 percent of its secured debt had agreed on a restructuring plan that would include reducing its portfolio of office leases.”
They will almost certainly be cutting a bunch of locations.
I've always wondered why WeWork didn't operate more on a "franchise" model. Lots of property management companies have empty space that will be empty for a year or two, and the WeWork system is useful to install against, along with its brand, so these management companies should be able to "install" a WeWork for a year or whatever while their space is vacant, to help offset the lost revenue from leases.
Shifting the revenue to a franchise model seems like it solves the majority of their lease issues, and still lets them be useful, even in smaller markets. Their value, IMO, is in the "seamless" experience. Knowing I can paratroop into a city and will have a space to work that's of a consistent quality is great, someone sell me that!
Adam Neumann is literally the landlord on most of their best-located places. That's why. WeWork gave his real estate company loans to buy buildings to then rent back to WeWork.
It’s not self dealing if you really love the building I guess. To be fair it was a matter of time before somebody loaded them up with debt and wiped equity. Might as well do it yourself.
If a company tanks right after being listed on the public markets -- that is, right after insiders got an opportunity to dump their shares on less informed investors -- most likely a serious financial crime has taken place. A real business doesn't go from a 47bn market cap to zero in ~2 years. It's not sufficient to make generic disclosures to investors that there are substantial risks and that you have an unproven business model and such. If it looks, talks, and walks like a pump & dump scheme it probably is.
I had to look myself, from wikipedia: "As CEO, Neumann, on multiple occasions purchased buildings and then leased the space back to WeWork.[60] Observers noted this as a potential conflict of interest and one that would not be allowed if WeWork were a public company.[61] During his tenure as CEO of WeWork, Neumann also purchased US$90 million worth of residences, including a 60-acre (24 ha) estate in Westchester County, New York, a 6,000-square-foot (560 m2) condominium near Gramercy Park, two homes in The Hamptons, and a US$21 million mansion in Corte Madera, California.[16]
Neumann launched Flow, a residential real estate startup funded by the venture capital firm Andreessen Horowitz, in August 2022." (https://en.wikipedia.org/wiki/Adam_Neumann)"
Its astonishing that Adam Newumann was able to raise hundreds of millions for Flow after all he did at WeWork. At this point you wonder, if VCs are also complacent in these scams. Are they together in scamming the LPs?
Although to be fair, they seemed to be interested in scamming true crypto believers in that space, more than their partners, they'd get a bunch of shitcoins in the ICO and then offload them asap.
Not LPs, but later stage VCs and private equity. It’s a game of musical chairs, you just need to be early in. And A16Z are experts in this, with all their investments in crypto. Def not great for their rep and I’d never raise from them because of this btw.
a16z viewed Neumann very positively, to the point that they asked potential CEOs what they thought of Neumann, and the "correct" answer was to be empathetic that he took a huge swing of the bat.
> A candidate who displayed empathy for the entrepreneur would answer the question about Neumann with something like the following, Horowitz said: "He did an unbelievable thing in that he built something that almost nobody has done, which is he built a consumer brand in commercial real estate." The person might add, "He told that story so beautifully that he was able to raise a gigantic amount of money and fund this incredible growing operation."
I mean, Ben Horowitz is correct here. In a VC interview context, crapping on Adam Neumann is boring and zero information value which is a negative signal. Being able to fairly evaluate people you have strong emotions for, positive or negative is a key VC trait.
I somehow think that Horowitz wouldn't want to hear my honest evaluation of Adam Neumann: He found a set of idiots with money (chiefly Andreesen Horowitz and Softbank) and saw them making dumb trades, so he found a way to put himself on the other side of those trades. To do this, he constructed an "audacious" but ultimately fundamentally dumb business that he could wrap in VC shibboleths, whose principal goal was to collect VC money and funnel it into his pocket. In a way, he is a brilliant exploiter of people like Horowitz.
I don't think that anyone can do this, at all. I think there's a totally different skillset that it takes to actually run a business than to get money from VCs, and by stripping away the need for the running-a-business skillset, Adam Neumann really perfected his VC grift game. That doesn't mean that he wasn't exceptionally skilled at it.
This was a big part of the controversy that scuttled their 2019 IPO plan and ousted Neumann from WeWork leadership, along with the toxic workplace accusations and other...volatile things associated with Neumann.
It's not as if he was doing it under the wraps or something. He did it in full public glare so creditors (and equity investors) knew exactly what they were getting into.
If that's the case and he isn't under legal risk then he hit a damn gray hat gold mine. A fool and his money. Idk if it was worth his reputation and company being completely destroyed but many people have risked their (literal) freedom for much much less.
Seritage is funny since the REIT is public, but Warren Buffett's Berkshire owns much (most? all?) of the secured debt. BH will get paid first at a good rate at relatively low risk, while public investors really take a (highly leveraged) chance (and have been getting hosed after initially being drawn in by a high yield).
I understand they're currently liquidating it, TBD if the common stock investors see anything left after BH gets paid back (and then preferred stock holders, currently trading pretty close to par)
Most retailers, banks, and companies realized that owning realestate is not part of their core competency. Canadian tire rolled their realestate into a REIT and then rents the locations back.
There's no double dealing or anything nefarious about it. Heck there is a huge company called Brookfield that has made a living out of buying commercial realestate from companies and renting it back to them while spining the realestate out into a REIT.
That's just smart business for the company who gets money upfront and a stable knowing rental price.
I agree it's common and not underhanded. But it's not always smart business.
Most commercial tenants are still resonsibile for maintenance, which is the primary ongoing expertise.
It can be a useful way to free up capital, but only useful if it's used to expand the business and deliver a greater return.
Too often it's used to artificially increase the share price or pay out dividend. In these cases the company commits to never ending rent payments for no actual benefit.
There are whole bunch of businesses who have bucked this MBA trend, kept their freeholds and have ended up with a more resilient business better able to weather a change of economic circumstances.
It seems like for that to work, you'd need to be mostly reliant on day-pass-type customers rather than longer-term ones -- if I were looking for a permanent arrangement to house a small team, say, I'm not sure I'd want to sign with someplace I knew was only going to last until they found a permanent tenant. But I think the day-pass people, in practice, are a pretty small percentage of total revenue.
Regus has been selling that for ages and ages. They have more locations in more cities in more countries, too. If they're not as well-known, I'm guessing it's because they're just a boring old real estate company and not a SoftBank-fueled moon rocket.
Does Regus sell that? I just did a search for a coworking space on Regus website and it matches my earlier experience: they want me to get a quote and talk 1:1 with an advisor. Wework I can just pay for a 1 day pass at a location purely online. So its so much easier to use when traveling or if you need adhoc coworking.
I guess it's a little hard to find from their home page because the top search widget thingy is for longer-term reservations, but if you scroll down and choose the "coworking" tab, there's a tile for coworking day passes with a link you can click for the reservation page.
Yes, there are hot desk memberships on their coworking page [1], including single day purchases. They're underneath the giant "get a quote" call to action, however, which is indicative of their priorities.
I went to one of these this summer and had to create a full corporate account online before the people at the front desk could sell me a day pass, and I was bombarded with emails for months afterwards about signing up the rest of my "company"
They are in chapter 11, which is aimed at reorganizing a company. They hope to still be a business going forward.
For customers, it should still be relatively the same service. I expect some amenities to change, but you should still be able to rent a desk (for at least the near term).
As mbreeze stated, this location is probably going to continue operating as some form of coworking space even if it gets spun off of wework, which it may or it may not. There were a lot of people there, I imagine that location is probably cash flow positive. It would make sense for someone to operate it, as there was clearly demand at least at that location.
That is the good part about We-Work. Regus is very old school. The one I went into earlier in the year seemed to have been fitted out with plastic wood grain panels from the 70s. That's said, Regus is still running and WeWork is in Chapter 11. Plastic wood grain is fine for the price and the lack of bullshit add-ons like an extra stool.
I can only speak for Regus locations in Europe, but all of the ones I’ve visited have been new and modern, if a little office-drone boring. But frankly after being at a WeWork beforehand, I prefer the Regus blandness to the fake enthusiasm and brightly colored furniture.
Competition from WeWork seems to have gotten Regus to up their game. Like you said, it's still bland and corporate, but the quality of the spaces is pretty good.
They also seem to have a relationship with a nicer service called Spaces, but I’m not sure what the connection is exactly. Spaces seemed like a direct WeWork competitor to me.
I work with a company that has a spaces subscription and their location in Prague has so many weird rules and ways to squeese money out of both the workers and the company that I find the office to be downright unpleasant.
You're not allowed to eat food or bring your own drinks into the common areas because they want you to pay for their overpriced coffee and sandwitches. The coworking space closes at 5 and you have to leave. It opens at 8:30 and you can't enter before then. They will randomly close half the common area because someone rented it for a party. In the private office there are no power outlets at the desk. There is exactly one hookup place in the middle of the floor and we have extention cables everywhere. Despite paying (way above market) for a private office only a limited number of preaproved people are allowed to use it, anyone extra has to have a spaces subscription too. Despite allegedly renting the private office we are not allowed to use our own furnature, or electronics, or place anything on the walls (we can, but this would be paid extra).
Overall, it looks nice and has a nice view but once you see the rulebook it becomes an extremely unwelcoming experience.
Yeah my only experience with Spaces is that I stumbled into one while traveling, assuming it was a Regus location. They let me use it anyway, although I think it’s technically a separate membership.
I do have a dedicated desk in a standard Regus location and for the most part, it’s fine. Unlimited access 24:7, clean kitchen, etc. Unlike WeWork, the coffee machine isn’t free and there isn’t an on-site barista, but I don’t care about that anyway. No weird rules about food or anything else.
My protip for anyone who has arbitrary food or drink restrictions is to come with dietary restrictions - as soon as you ask for a low sodium vegan gluten free sandwich the company will give you a hall pass to bring your own food in.
I've shared this tip with so many people after actually going vegan and noticing that airplane food is less intolerable.
I asked around and apparently the same is true for all "special" meals, I thought it was interesting. Finding some related data to analyze has been on the back of my mind for a bit now.
And yes, often people are just okay with you bringing your own. I guess it works everywhere except prison, based on SBF.
Spaces is/was a Dutch WeWork clone, but they are now owned by the same parent as Regus and they've been integrating the two. My office is in a Spaces in Amsterdam and I like it, but I think the Spaces facilities outside The Netherlands are a bit of hit or miss. I think they've been quickly assembled to show a growth curve but are not all up to the same standard.
How are they in general to deal with? I was in touch with them last week and there were red flags abound. They don't respond to emails, but would rather spam my phone. The price kept increasing from the first point of contact, and they finally wanted me to pay a bill where fees again were unspecified. When I asked for a detailed, itemized bill, they ghosted me.
Their mother company iwg PLC has less than stellar reviews on trustpilot.
Am I missing out by looking elsewhere? They were by far the cheapest and most flexible, but I don't have time to deal with administrative bullshit and protecting myself against predatory sales.
I haven’t had any issues, but I just did everything in person. It isn’t as streamlined as WeWork, though.
I have heard negative experiences from people renting an entire office, but I only rent a desk.
Editing to add a few more details: their app and tech stuff is a little clunky and not as good as WeWork's. You have to pay via an invoice system (at least in my EU country) which is again a little clunky. Otherwise I haven't had any issues with billing, etc. – but I reiterate that I only talked to the guy on the phone to set up a meeting, and then did everything else in person.
They squeeze you on some various fees - you can rent an office, never use it, and be charged a 300 or 400 cleaning fee etc. you get charged a separate fee for access to coffee etc. pricing isnt online you work w a salesperson. Square footage is hard to find. I’m sure if you were very careful you could pick up on all this but not greatest
Guess which other companies filed for chapter 11 bankruptcy? Sears, BedBath&Beyond, and Circuit City. I don’t see them coming back at all.
Not saying that there is no possible comeback from chapter 11, there is. But seeing a chapter 11 filing and assuming the company will get out of it just fine is a bit preposterous.
Most of the time, the whole point of “reorganization” under chapter 11 is to keep generating whatever cash flow they can in the process, to make sure the creditors recoup as much of their investment before the (most likely inevitable) shutdown and the operations are wound down as gently as possible.
And yet, chances don’t seem that good. The highest possible estimate for survival rate from chapter 11 bankruptcy that i managed to find was quoting about 25%[0].
It’s not “plain wrong”. Sure, most chapter 11 companies don’t make it - but by filing chapter 11 instead of chapter 7, it means they’re still operating and trying to make it. Chapter 7 is “turn out the lights and liquidate”.
Yes, you are correct. Maybe I should have said there is more certainty about the future of Regus. I am not even sure of that.
I do agree, a lot of the media is saying this is a tactical move to re-negotiate a lot of expensive leases and they plan to get out of chapter 11 when they do.
That doesn't match my experience in Ireland. I select co-working spaces or meeting rooms, add options and checkout. I've never spoken to a Regus advisor.
Regus in Chicago used to offer a phone number for tenants then lock that number to your lease and never let you port it away. That soured me to them. I’ll never use them again. I’m glad nimble startup companies like CoHatch have figured out how to open locations in Malls in the Midwest.
Regus has way too much bureaucracy and are also expensive (though WeWork is also expensive but it never made sense to me).
The reality might be that there are enough co-working spaces and you can paratroop into anyone and check before hand that it meets your expectation. There is nothing to franchise.
I think they really wanted "parachute", which has been used in a non-threatening metaphorical way for a long time. You can be "parachuted into a meeting" or "parachuted into a project" for example.
To say the least. I recently signed up for an office at a Regus location with the explicit purpose to incorporate a company there. All went well until a few weeks later when I went there to pick up post for the company and was told I was not allowed to do so until I had submitted a particular document. Only problem is that this document can only be sent to the registered company address by post. The woman in the reception literally had the document they needed in an envelope behind her desk but could not give it to me until I had submitted that same document. Zero understanding or willingness to escalate the issue to make an exception, just hiding behind "process".
In the end I managed to get in touch with someone else in the organization who realized how ridiculous the situation was and convinced them to make an exception so I could hand in the document but I'm not impressed at all by the company, to say the least.
Boring old real estate company with nearly the identical WeWork business model that also filed a strategic bankruptcy to shed its leases a couple years earlier.
Regus doesn’t let you just book space on demand from what I could tell (admittedly years ago).
Tried to book an office for my sister’s exam in a city with Regus but no WeWork and had to get a hotel room instead as we couldn’t figure out how to actually book any space. There was just a fill out a form and we will call you option.
This is the most hilarious part to me. This is a VC’s forum, right? So, ostensibly they offer connections to the right organizational entities. But then a startup darling forms that offers a boring thing that already exists and it gets labeled as innovative. So, what were the WeWork VCs thinking? Did they expect failure or were they just wrong?
It still seems likely that they were offering more than they were charging. If the cost to convert is $200,000 and the cost to operate is $200,000 a year - but they can only realistically bring in $200,000 - then no one is going to buy that model.
It worked when investors didn't care about losses because the losses were hidden as technology investments that they thought would get smaller with scale.
What's interesting is McDonald's HQ owns the real estate of many McDonald's locations and takes rent from the franchisee. This way they can guarantee a steady stream of income regardless of their food sales.
I'm not sure how this would've worked out for WeWork.
That was true until the Global Financial Crisis in 2008. Now, they use their finance arm to help customers finance very large purchases. This is common in heavy industry.
Isn't that precisely how it started? Then, they realized they had so much they could open that financing to more than just large industrial clients. Did they just scale it back to their original intent?
People complain about "ZIRP", but it did reduce the benefits of co-mingling finance with retail and decoupled consumer credit from being quite so critical to sales.
I was expecting it to turn into some kind of AirBnB model where people rent out a room as an office. A good desk, a good chair and a good connection in a house sounds rentable to me, many people could have rented a room in their house during the working hours to those who don’t have a spare room to turn into an office.
The reason for this is that the rent they would pay will fluctuate with the market. If a city grows and an area becomes more expensive, the landlord captures the uplift by raising the rent and WeWork would operate on a thin margin. On the other hand, if they buy the property, then (if its with leverage) the mortage should be relatively stable as surrounding rents rise making it cheaper. After the mortgage is paid off there is no rent to pay at all and 100% of the location value is captured as profit. Also, the value of the property goes on the balance sheet, giving you back most of the cash paid on the mortgage (or the upfront cash price), so little loss.
Before the pandemic, commerical real estate was seen as a very low risk store of wealth.
At the time of the construction of WeWork's business model, actually being on the deeds would have been seen as reducing the risk profile (by not being beholden to variability/increases of renting). At the time, private capital would have seen being on the deed as a low risk benefit to the business plan.
Obviously how we think about commercial real estate, particularly 'downtown' office space has changed heavily, and it seems like wework for whatever reason was unable to pivot. It's arguably very difficult to move the direction of that much capital on w you've made the opposite argument and are already holding the bag.
That model would make sense if you have interesting ideas/culture/tech but are capital constrained. WeWork's problem was the exact opposite - they had an excess of capital and nothing to spend it on except for buying buildings and taking out long-term leases.
I think part of the misunderstanding of WeWork even within Silicon Valley/tech is what a diminishing part of their business the "coworking spaces" actually were. WeWork gets a lot of hate both inside and outside Silicon Valley, but I worked a lot with their team before the failed IPO and my strong sense is most of the blame for the process that lead to today rests entirely with senior management and not even the core business.
I'd be curious to know how this trajectory played out past the IPO blunder, but at the time they were already focused on the "enterprise" model of being the best place for a large firm to go to source/spin-up offices around the world (where in some sense you could understand the coworking spaces as dogfooding their own systems of vendor/space management for quickly spinning up and operating office space around the world). I.e. rather than either having to maintain profitability at a global network of coworking spaces or whatever franchise model you become the outsourced office team for the world's largest/high growth firms, who want to focus on their core competence not sourcing furniture vendors in China.
Rather than partaking in the joy of mocking WeWork's obvious hubris leading to their downfall, I think the interesting question, especially in this time of high interest rates, is what this bankruptcy signals for the future of "tech-accelerated" firms that want to primarily focus on the real world not software (ie without marginal cost of 0) -- who want to achieve the exponential scale of software yet who have to operate with the margin/cost structure constraint of a traditional firm. Tesla/SpaceX are of course the big success here, but I doubt we'll see anything equivalent until interest rates are back to 0...
> Tesla/SpaceX are of course the big success here, but I doubt we'll see anything equivalent until interest rates are back to 0...
I guess it's all about where and when you draw the boundaries, Mush has just managed to lose $20bn on "X" so the Tesla/SpaceX empire may not be counted as a big success for ever.
The problem is more fundamental. As with Uber, WeWork is an evolution of a simple and well understood business model… but layered with some high-tech fantasy about being able to change the fundamentals of the universe.
WeWork could have succeeded with the franchise model you describe or the focus on being a flexible leasing option for enterprise… but we wouldn’t have heard of them, that wouldn’t be the WeWork we ever knew. WeWork only became big because of the mythology, otherwise it would just be a nicer Regus… which existed before WeWork and will exist long after.
WeWork’s core business was mythology, like Uber, and every other “technology” business from the 2010s. You can peel back all the bullshit and say that their “core business” was good but it was all the bullshit that made WeWork, WeWork.
> Shifting the revenue to a franchise model seems like it solves the majority of their lease issues, and still lets them be useful, even in smaller markets.
The beauty of this idea is that they could make some money while all of this settles out, and then it would pave the way for another PE to come along and start rolling up all of the most profitable locations until they re-consume all the properties again.
They might be doing that in some countries. Last week I heard from a friend working at a WeWork in Bogotá, that they don’t think it will affect them, because the location is run by Softbank using the WeWork brand. Don’t know if that is true.
https://www.morning.fr/
in France does that, using buildings that are scheduled to be destroyed or "repurposed" in 12-24 months. They convert them in offices and rent office space until the landlord carry on with their initial projects.
I feel like I dodged a bullet being declined by Flow. I didn't know it was run by Neumann when I was interviewing, but I think he's a complete idiot and I don't think I would enjoy working for him.
Looks like he has a couple billion dollars in the bank, so if you have any suggestions on how one might dummy themselves down to "idiot billionaire" level, I am all ears.
If you read about interactions with him, he's preternaturally confident and charming. I think he's also deranged. Per Wikipedia, "The Wall Street Journal reported in 2019 that Neumann had aspirations to live forever, become the world's first trillionaire, expand WeWork to the planet Mars, become Israel's prime minister, and become 'president of the world'."
There are plenty of nutty rich people like this. If you would like to follow the path to lunatic billionaire, I'd suggest you start by being very tall so as to impress and dominate people. Definitely come from a broken home, the wilder the better. A sufficiently dysfunctional early environment will fuck you up for life, but it also gives some the ability to thrive in chaos. Make sure to be a charming sociopath, so that you can manipulate people, quite a lot of people, without being crushed by the moral weight of the harm you do. You'll also need some desperate character flaw that makes you insatiable: sane people will get enough money and stop, but you'll have to have some sort of unfillable void that compels you to keep going beyond all need.
Lastly, make sure to be very lucky. You must be born into the right moment, such that there are people foolish enough to give you a lot of money. Luckier still to fall into the right context, so that you have plenty of enablers around you who will effectively institutionalize you. Even luckier that your crimes against society are of the sort that either aren't currently illegal or are sufficiently inconvenient to prosecute.
I mean, at the risk of making this political, I think we can find at least one ostensible billionaire that most people are not arguing for the intelligence of. I'll let you figure out who I might be implying.
I think intelligence is helpful, but not a necessary component to become really rich. I think there can be combinations of luck, opportunity, and charisma. It doesn't hurt that silicon valley investors appear to be the most gullible people on the planet.
I don't know the guy, but I did hear reports of him constantly drinking and smoking weed at the office, and him claiming that they're making a "human based operating system", a claim that does not make sense.
The only billionaire I am 100% sure is a genius is Jim Simons. For the rest, the most common trait seems to be that they are good at spotting trends early
Holmes got federal prison time. Neumann did not. Arguably, Holmes did worse. Holmes was about to start selling snake oil, or rather snake oil blood test, which is essentially a medical fraud, although this is not the type of fraud that brought her to she to the prison cell.
Neumann took stupid VC money for a ride. Unethical? Yes. But they giving it to him very willingly. His actions arguably could do more damage, because maybe WeWork bankruptcy can finish off SF commercial real estate market – I don't know how much of their 13 billion lease obligations are in the city. But it's hardly his fault that the system is so brittle.
When I search it says this is a chapter 11 bankruptcy, and it says that means its a restructuring. What does this really mean? So can we see we work come back again ? Or is we work as we know it never going to come back?
As an end user, I really hope WeWork the product sticks around. It's been super helpful while traveling, and when I was more invested in spending time on side projects I seriously considered getting a WeWork membership to have access to a curated environment specifically designed for getting work done on personal time.
Try spaces/regus if wework fails - more locations, some offices are nice and hip but others are just normal office buildings. I like travelling to small towns, and seemingly everywhere has a couple regus offices.
I had a baffling customer service experience with Spaces where I signed up, it took 2 months to get an access card that worked, then they claimed I’d signed up to something totally different. They would be one of the last companies on earth I’d ever sign up with again.
I don't understand though, finding a place to work in pretty much every city is simple and doesn't require WeWork, pretty much every city in the world, even when I was visiting smaller polish towns had at least 3/4 coworking places.
What's the WeWork moat? Because there's an insane operational costs that have to be passed down to the customer.
I have used both Regus and WeWork while traveling and compared to signing up for a local coworking space, both were a million times easier. Don’t underestimate how convenient it is to stroll into a foreign city’s WW/Regus, swipe your card, and be working two minutes later. Signing up for a local space always takes longer.
Yes it's true that normal co-workings take a bit more, but I have never spent more than 3/4 minutes and that's not nearly enough of an annoyance to pay off for the much higher prices.
Most people just want a table, a chair and internet.
It’s as much of a moat as chain hotels have compared to local hotels. Reliability and predictability are worth paying a bit more for many people.
Personally, it was absolutely worth knowing that I’d have a clean, organized space, coffee, not need to fiddle with the Wi-Fi, not need to sign contracts in foreign languages, etc.
Most coworking places are clean, organized, have snacks, do not have Wi-fi issues. Most of them also have contracts in english or don't even ask you for a contract at all.
I keep not seeing the moat. The customer you describe "picky and willing to pay double normal rates when travelling to foreign countries" is quite of a niche use case.
Most people simply find the coworking that is closest to their hotel/train station.
Yeah, I don't think you have much experience with this, and I do. Again, it's extremely convenient to know that your coworking space will be ready and waiting for you, without the need to sign contracts, input wi-fi passwords, get a tour of the building, on and on. You just walk in, scan your card, and you're go to go. The wi-fi connects automatically at every location.
It's also extremely unlikely that local coworking spaces in random countries around the world can be relied on to have robust contracts in English.
People with stuff to do don't want to waste time figuring out the nuances of a dozen different coworking spots. This is the entire use case for half of the hotel industry and why chains like Holiday Inn or Marriott exist.
Your cost argument also doesn't make much sense either, as if anything, using a service like Regus or WeWork is cheaper because you get both the travel benefits and the local space for the same price. You don't need to sign up for a separate coworking space and pay a separate fee for every place you visit. I get access to thousands of Regus locations around the world with my single flat fee.
In terms of actual monthly prices, I pay about 1/3 more than I would at a comparable local coworking space. Not double.
So yes, for a slightly larger fee (something like $150 more per month), that extra stuff is worth it.
> Most coworking places are clean, organized, have snacks, do not have Wi-fi issues
You would think so, but this is incorrect. Every single WeWork you go to, across the globe, offers the same fantastic experience from "feel good vibes" to functional meeting rooms, wifi, and ad-hoc services.
But even if there are local gems, it becomes another chore to browse listings, read reviews, spend time deciding between Coworking Space A and B and C. With WeWork and Regus/Spaces, you save a lot of time and can just get there, and get busy.
> The customer you describe "picky and willing to pay double normal rates when travelling to foreign countries" is quite of a niche use case.
Not OP but just like luxury hotels are niche, WeWork is not your local coffeeshop and does cater to a different crowd. Whether that's profitable for them or not, looks like not for now.
It's brand expectation. Finding X in any given city is easy, why do people go to brand Y everywhere? People like knowing what to expect, even more so in an unfamiliar place.
There may be some places that are easier than others, but in my experience it's the consistency of knowing you'll have access to good wifi, outlets, bathrooms, and a desk which provide a moat. Otherwise it's a gamble whether the coffee-shop you stop at will have those.
Local co-working office spaces are options of course, but with WeWork's brand you already know what to expect rather than gambling on something new.
WeWork went up against a market already under heavy Securitization for 30 years.
They didn't stand a chance, as most sane commercial companies no longer maintain locations in high-tax neighborhoods post 2008. Only legal and financial services tend to cling to the traditional tower blocks.
Should convert the assets into retirement village care facilities, as this is a projected growth market in the next 10 years. =)
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[ 2.9 ms ] story [ 354 ms ] threadIs that your intention?
[0]https://news.ycombinator.com/item?id=19828702
I really wish the community would post links with a service that works on Cloudflare DNS.
It's so incredibly easy and vastly better.
https://docs.pi-hole.net/guides/dns/unbound/
It also doesn’t work on mobile unless on WiFi. Unless I also self-host a VPN I suppose.
DNS has many, vastly better alternatives.
edit: explanation I thought was common knowledge. Set "do not track" on your browser and watch cloudflare break the internet for you without your consent. Far, far too much centralized power. Just don't.
I’d love to be convinced to switch.
You "trust" cloudflare ?
The negativity toward Cloudflare has always confused me. I don’t get it.
2. turn on "do not track"
3. reach enlightenment.
No workaround link works for everyone, unfortunately.
edit: Also, given that startup investments are way down right now, tech is in a recession and there are recessionary tail winds this is a great way to get out of leases to downsize to a smaller footprint. Either way I don't have their stock or any ties to them and all of this could be wrong, but it is an interesting theory.
Bagholders never lose hope. Even if "We" comes out ahead, the equity holders will be wiped out.
Sometimes now is the right time to move in ... but I'm typing this from an apartment so don't listen to me.
Oh, and you keep personal ownership of 'We' as a trademark, so they have to lease that too.
And then, when it all starts to crumble, walk away with a multi-hundred-million dollar exit package.
I can't imagine how this guy still walks free and isn't being sued into the ground by investors.
Doesn’t mean they’ll be successful of course.
People aren't "speculating". WeWork has said outright that is exactly what they're doing, and that is the entire purpose of Chapter 11 bankruptcy, to allow a company to shed some debt, and in return equity holders lose everything and some debt holders take stakes in the reorganized company.
It's almost entirely false if you're talking about a business that's turning a profit, especially over years or (better) decades.
Also, there's an obvious difference between day trading and long-term investing.
I suppose it's a fun curiosity to hear the detail of somone's speculation, but it shouldn't be taken for much and it shouldn't be a surprise that there is some. There always is.
https://www.wework.com/locations
https://inc42.com/buzz/wework-globals-bankruptcy-will-have-n...
I haven’t been following the market lately but CRE has been getting absolutely crushed all year, remember the “return to office” hubub? And WeWork is a big player in terms of the news cycle but tiny in comparison to the market as a whole.
Over the next few years, a lot of leases are coming up for renewal and I'm guessing a lot of companies are looking to reduce the amount of square meters they have and what they pay for that.
We'll see a lot of decay, building operators trying to make ends meet with ever cheaper office tenants, before informal factory floor type conversions happen. Wouldn't be surprised if, very much unlike those old factory floors, buildings are well beyond effective service life by then. (because architecture has become depressingly good at being on schedule in terms of design service life)
I'll probably split my time between indie coworking spots and "unofficial" coworking spots (in SF, Celo space).
If WeWork went away completely and I couldn’t find a local coworking space that I really liked it’d probably be the impetus I need to find a job at an on-site only company.
There's plenty, plen of people who love remote work, so it would be net positive if your job became available.
I have a job I like a lot. But it’s a remote job.
I can put up with the remoteness for now but if I didn’t have a good place to work that I enjoyed working from, I’d reconsider my options.
I would put it differently: an IPO is what most tech startups aim for or are pressured into.
I'm a founder and have talked with few people (albeit I'm not looking for money) and you could clearly see disappointment in money-bringing people hearing you want to stay private.
I have no idea about your town in particular, but there's a company called Regus who have a presence in the US, UK, France, Australia, Singapore, Japan ... actually according to their website they're in 120 countries.
They are not cool. They are not new. They have not spun themselves a reputation of being an awesome, new, disruptive, special, fun, aspirational, Silicon Valley tech-adjacent service like WeWork did. But if you want an office or a meeting room for a day or a week or a month, they can do it.
Having used their services in the past, the rise of WeWork was massively surprising to me. It was touted as disruptive, as new, as amazing! It's gonna be huge! But there are already these boring companies doing this exact thing, boringly, making money but hardly earth-shattering. I guess it's testimony to Neumann's charisma as much as anything else.
A lot of places do also have more casual co-working spaces. Worth looking to see if there's one near you. You mention coffee shops - in Southampton UK, where I lived pre-pandemic, one of the coffee shops took the initiative to open a co-working space on an upper floor. Which would have been a great business move if the pandemic hadn't hit and f*cked everything.
(edit - I am rate limited so cannot reply below, but I wanted to add that I have used Regus in Australia as a private individual with a credit card. Obviously I don't know how it works in every country, but here it seems to be very easy)
[1] https://www.regus.com/en-us/membership
In the olden days, getting a Regus desk required an office tour appointment, followed by paperwork. Now they have an app, and nobody needs to send or receive a PDF.
1. Like many companies who go through Chapter 11, WeWork will come out stronger after they cut a lot of their debt, offload leases on non-performing locations, and shrink to only be in those locations that can be sustainably profitable.
2. WeWork users are likely to also be happy, as with the greatly reduced debt WeWork can invest in their product (though I think most folks that used it always thought their product was good). Of course, this assumes the locations you use don't get cut.
3. Some landlords are going to take a bath as their leases are terminated during what is essentially a depression in commercial real estate. Given how big WeWork is in many cities, it remains to be seen whether this will have any cascading effects.
> The Company maintains the strong support of its key financial stakeholders and has entered into a Restructuring Support Agreement (“RSA”) with holders representing approximately 92% of its secured notes to drastically reduce the Company’s existing funded debt and expedite the restructuring process.
There is nothing fundamentally wrong with WeWork's core product. Users are generally big fans of their services, they have huge brand recognition and are basically synonymous with co-working spaces, and while the need for corporate office space is drastically reduced post-pandemic, the flexibility that WeWork provides is exactly what many companies want.
The problems with WeWork are nearly entirely with their capital structure. They expanded way too fast, they signed many leases that would never have been profitable (often in bizarro 0-rate environment world sweetheart deals with Adam Neumann), and their ridonculous valuation made them take on way too much debt to fund further expansion. Chapter 11 gets rid of all that. WeWork will be a much smaller company in the rather mundane business of office and property management, but it serves none of their stakeholder's interests to liquidate.
You have to justify this for a company that has just entered bankruptcy.
I suppose it depends on how you define “core”. But even if you take the most conservative definition and call their core product “office space” even that market has been thrown into massive turmoil.
There is plenty wrong with WeWork’s core product and much of what made it popular also made it unprofitable.
For having really nothing wrong with the company, it needs to be able to scale profitably too, by having a RoI that is larger than the interest on its assets.
The first part is clearly true for WeWork. On that strict sense, the company is quite alive, and its creditors would lose by closing it down. On the second sense, well, I don't think anybody can really say.
Getting paid 50k as a software engineer is still positive income, just unsavvy compared to getting paid 150k.
I’m also a big fan of paying below cost for my goods and services. The seller, not so much.
The idea from WeWork management would be to shed the bad properties and keep the good ones and operate them as post-BK WeWork.
Creditors could say, great idea, but we want to sell that remaining business for cash rather than leave it in your hands because we don't trust you to continue to run this.
This is what they are doing in terms of bankruptcy protection. A liquidation is different - there is no intent to continue operating afterward.
Commercial real estate needs to pull its head out of its ass soon and start heavily discounting spaces or shit’s going to get real real.
Looking at SF, I think it is not only a discount thing. The way it was rented before: "open space" office with bare wall, rows of desks and insanely high price per sqft or a mall is probably not gonna work anymore. They need to repurpose it: convert to apartments, smaller open space offices, regular offices, etc. Trying to do any kind of construction in SF is ridiculously complicated. When money was flowing it created many layers of bureaucracy and complexity, but it was affordable. Since then money flow dried up but complexity and bureaucracy is still there.
Agreed - so many viable businesses have been forced to close due to rent hikes but the underlying problem is that there a lot of investors who were promised guaranteed high returns for commercial property. They should be forced to accept the downside of that gamble but as a group they have so much political clout. Pretty much all of the “return to office” hype machine is driven by those very well-connected people and cities are receptive because most downtowns were heavily over-focused on subsidizing suburban car commuters, which can’t easily be converted into more attractive spaces for actual residents.
For every wildly-ambitious founder or founder team, they need to bend an ear toward the sage advice of a conservative corporate CFO to ensure the venture stays alive and has a chance to thrive. Surrounding oneself with "toxic economic positivity" is a recipe for failure.
> In late 2015, WeWork was completing an investment round led by Beijing-based Hony Capital Ltd. that pushed its valuation to $16 billion. Mr. Neumann invited its CEO, John Zhao, to a party at 110 Wall Street, where WeWork was about to open its first WeLive dormlike apartment building. Toward the end of the night, Mr. Neumann led others to the roof of the 27-story building. There, guests passed around tequila shots. Mr. Neumann picked up a fire extinguisher and set it off, spraying Mr. Zhao and others with white foam.
> The deal went through. Mr. Zhao joined WeWork’s board in July 2016.
https://www.wsj.com/articles/the-money-men-who-enabled-adam-...
I sincerely believe if SBF or Holmes were raising money for a new startup today, they’d have at least a few notable names lined up to throw money their way.
There’s a famous NFL quote from the general manager of the Arizona Cardinals that goes, “I've said this before - If Hannibal Lecter ran a 4.3 (40-yard dash) we'd probably diagnose it as an eating disorder.”
It’d be “worth a shot” as it were.
Guess what happens when demand falters? Though, to be fair, they were losing money before the pandemic...just much closer to break even.
The anecdotes are not aligning with the observations. So what’s the deal here?
I don't know of this happening to a large corp, but if a local restaurant goes bankrupt, or a local construction company, and the owner is not also bankrupt, they can be forced to pay employees. Usually they are also bankrupt. Not sure if those debts survive through personal bankruptcy.
You may be referring to employees losing retirement or other benefits like that, but the worst of those loopholes have been closed (the pension can't be in the company's own stock, that type of thing)
no they cannot. Shareholders can only lose at most the capital they put in originally - they cannot be liable for additional debt.
> the owner is not also bankrupt, they can be forced to pay employees.
That would be because the owner mixed their own personal wealth with their business (e.g., as a single entity), instead of a limited liability company. Therefore, any assets the owner has is subject to be sold to pay the debt of the business. It's why only small businesses, owned by a single owner (who would have nothing else) is done this way (cheaper administratively i presume).
https://cmmllp.com/shareholder-liability-for-unpaid-wages/#:....
Those owed debts can lose much of what they are owed. In the case of WeWork, landlords will likely lose a lot of owed rent, and lease agreements will be cancelled or renegotiated at much lower rates.
Employees are meant to be at the top of the list to be paid what they’re owed, but that’s still contingent on funds being available to pay them.
They will almost certainly be cutting a bunch of locations.
Shifting the revenue to a franchise model seems like it solves the majority of their lease issues, and still lets them be useful, even in smaller markets. Their value, IMO, is in the "seamless" experience. Knowing I can paratroop into a city and will have a space to work that's of a consistent quality is great, someone sell me that!
It’s not self dealing if everyone is on the same page. Neumann didn’t hide any of this. From SoftBank. From the public.
Neumann launched Flow, a residential real estate startup funded by the venture capital firm Andreessen Horowitz, in August 2022." (https://en.wikipedia.org/wiki/Adam_Neumann)"
This guy is just a greed engine at full steam!
Although to be fair, they seemed to be interested in scamming true crypto believers in that space, more than their partners, they'd get a bunch of shitcoins in the ICO and then offload them asap.
What's their advice to Neumann this time?
"I hope you are more discreet this time so your scam lasts long enough for us to exit"???
> A candidate who displayed empathy for the entrepreneur would answer the question about Neumann with something like the following, Horowitz said: "He did an unbelievable thing in that he built something that almost nobody has done, which is he built a consumer brand in commercial real estate." The person might add, "He told that story so beautifully that he was able to raise a gigantic amount of money and fund this incredible growing operation."
People never like to be told they’re mugs
I'm not astonished: WeWork made VCs lots of money - not counting SoftBank as they were the unsophisticated marks/bag holders.
https://www.businessinsider.in/wework-ceo-adam-neumann-has-r...
Unless it was a 0% fixed interest only for 100 years or something crazy.
Feels like a better scenario than that money spent on parties or a datadog bill.
> 200 Sears locations were sold to a REIT and leased back to the retailer.
https://therealdeal.com/national/2021/10/21/the-man-who-raid...
I understand they're currently liquidating it, TBD if the common stock investors see anything left after BH gets paid back (and then preferred stock holders, currently trading pretty close to par)
edit: REIT has been converted into a C-Corp, possibly to carry-forward losses better as it becomes not-a-Sears-property owner? https://therealdeal.com/new-york/2022/07/08/seritage-growth-...
Most retailers, banks, and companies realized that owning realestate is not part of their core competency. Canadian tire rolled their realestate into a REIT and then rents the locations back.
There's no double dealing or anything nefarious about it. Heck there is a huge company called Brookfield that has made a living out of buying commercial realestate from companies and renting it back to them while spining the realestate out into a REIT.
That's just smart business for the company who gets money upfront and a stable knowing rental price.
Most commercial tenants are still resonsibile for maintenance, which is the primary ongoing expertise.
It can be a useful way to free up capital, but only useful if it's used to expand the business and deliver a greater return.
Too often it's used to artificially increase the share price or pay out dividend. In these cases the company commits to never ending rent payments for no actual benefit.
There are whole bunch of businesses who have bucked this MBA trend, kept their freeholds and have ended up with a more resilient business better able to weather a change of economic circumstances.
[1] https://www.regus.com/en-us/coworking
Edit: haha j/k they also went bankrupt.
For customers, it should still be relatively the same service. I expect some amenities to change, but you should still be able to rent a desk (for at least the near term).
You're not allowed to eat food or bring your own drinks into the common areas because they want you to pay for their overpriced coffee and sandwitches. The coworking space closes at 5 and you have to leave. It opens at 8:30 and you can't enter before then. They will randomly close half the common area because someone rented it for a party. In the private office there are no power outlets at the desk. There is exactly one hookup place in the middle of the floor and we have extention cables everywhere. Despite paying (way above market) for a private office only a limited number of preaproved people are allowed to use it, anyone extra has to have a spaces subscription too. Despite allegedly renting the private office we are not allowed to use our own furnature, or electronics, or place anything on the walls (we can, but this would be paid extra).
Overall, it looks nice and has a nice view but once you see the rulebook it becomes an extremely unwelcoming experience.
I do have a dedicated desk in a standard Regus location and for the most part, it’s fine. Unlimited access 24:7, clean kitchen, etc. Unlike WeWork, the coffee machine isn’t free and there isn’t an on-site barista, but I don’t care about that anyway. No weird rules about food or anything else.
I asked around and apparently the same is true for all "special" meals, I thought it was interesting. Finding some related data to analyze has been on the back of my mind for a bit now.
And yes, often people are just okay with you bringing your own. I guess it works everywhere except prison, based on SBF.
Their mother company iwg PLC has less than stellar reviews on trustpilot.
https://www.trustpilot.com/review/iwgplc.com
Am I missing out by looking elsewhere? They were by far the cheapest and most flexible, but I don't have time to deal with administrative bullshit and protecting myself against predatory sales.
I have heard negative experiences from people renting an entire office, but I only rent a desk.
Editing to add a few more details: their app and tech stuff is a little clunky and not as good as WeWork's. You have to pay via an invoice system (at least in my EU country) which is again a little clunky. Otherwise I haven't had any issues with billing, etc. – but I reiterate that I only talked to the guy on the phone to set up a meeting, and then did everything else in person.
Not really:
https://globalinsolvency.com/headlines/iwg-plans-set-regus-i...
Guess which other companies filed for chapter 11 bankruptcy? Sears, BedBath&Beyond, and Circuit City. I don’t see them coming back at all.
Not saying that there is no possible comeback from chapter 11, there is. But seeing a chapter 11 filing and assuming the company will get out of it just fine is a bit preposterous.
Most of the time, the whole point of “reorganization” under chapter 11 is to keep generating whatever cash flow they can in the process, to make sure the creditors recoup as much of their investment before the (most likely inevitable) shutdown and the operations are wound down as gently as possible.
General Motors, American Airlines, Marvel Entertainment, Hertz ...
0. https://www.forbes.com/2008/09/25/chapter-11-bankruptcy-ent-...
I do agree, a lot of the media is saying this is a tactical move to re-negotiate a lot of expensive leases and they plan to get out of chapter 11 when they do.
https://www.regus.com/en-us/membership
The reality might be that there are enough co-working spaces and you can paratroop into anyone and check before hand that it meets your expectation. There is nothing to franchise.
What’s next? We gonna SWAT into Hartford for an insurance sales conference?
To say the least. I recently signed up for an office at a Regus location with the explicit purpose to incorporate a company there. All went well until a few weeks later when I went there to pick up post for the company and was told I was not allowed to do so until I had submitted a particular document. Only problem is that this document can only be sent to the registered company address by post. The woman in the reception literally had the document they needed in an envelope behind her desk but could not give it to me until I had submitted that same document. Zero understanding or willingness to escalate the issue to make an exception, just hiding behind "process".
In the end I managed to get in touch with someone else in the organization who realized how ridiculous the situation was and convinced them to make an exception so I could hand in the document but I'm not impressed at all by the company, to say the least.
Tried to book an office for my sister’s exam in a city with Regus but no WeWork and had to get a hotel room instead as we couldn’t figure out how to actually book any space. There was just a fill out a form and we will call you option.
Could allow CRE landlords to fill space temporarily, much the way pop up shops, sample says, food halls and halloween stores do..
Much better business model to just take a cut of a fee than take on all the lease risk for a startup.
It worked when investors didn't care about losses because the losses were hidden as technology investments that they thought would get smaller with scale.
I'm not sure how this would've worked out for WeWork.
https://m.imdb.com/title/tt4276820/
[0] https://www.google.com/search?q=youtube+mcdonalds+you%27re+i...
Ford is a pension fund that happens to make cars.
Berkshire Hathaway is an insurance company that makes a lot of investments.
A supermarket is a bank that sells food.
GE at one point was also more or less a financial company that sold industrial goods.
I guess the thing is once you take a financial view of how a business works, a lot of things don't look like what they normally look like.
At the time of the construction of WeWork's business model, actually being on the deeds would have been seen as reducing the risk profile (by not being beholden to variability/increases of renting). At the time, private capital would have seen being on the deed as a low risk benefit to the business plan.
Obviously how we think about commercial real estate, particularly 'downtown' office space has changed heavily, and it seems like wework for whatever reason was unable to pivot. It's arguably very difficult to move the direction of that much capital on w you've made the opposite argument and are already holding the bag.
Thats a good question. I wonder if security (hidden cameras and network and stuff) could be a reason.
I'd be curious to know how this trajectory played out past the IPO blunder, but at the time they were already focused on the "enterprise" model of being the best place for a large firm to go to source/spin-up offices around the world (where in some sense you could understand the coworking spaces as dogfooding their own systems of vendor/space management for quickly spinning up and operating office space around the world). I.e. rather than either having to maintain profitability at a global network of coworking spaces or whatever franchise model you become the outsourced office team for the world's largest/high growth firms, who want to focus on their core competence not sourcing furniture vendors in China.
Rather than partaking in the joy of mocking WeWork's obvious hubris leading to their downfall, I think the interesting question, especially in this time of high interest rates, is what this bankruptcy signals for the future of "tech-accelerated" firms that want to primarily focus on the real world not software (ie without marginal cost of 0) -- who want to achieve the exponential scale of software yet who have to operate with the margin/cost structure constraint of a traditional firm. Tesla/SpaceX are of course the big success here, but I doubt we'll see anything equivalent until interest rates are back to 0...
I guess it's all about where and when you draw the boundaries, Mush has just managed to lose $20bn on "X" so the Tesla/SpaceX empire may not be counted as a big success for ever.
WeWork could have succeeded with the franchise model you describe or the focus on being a flexible leasing option for enterprise… but we wouldn’t have heard of them, that wouldn’t be the WeWork we ever knew. WeWork only became big because of the mythology, otherwise it would just be a nicer Regus… which existed before WeWork and will exist long after.
WeWork’s core business was mythology, like Uber, and every other “technology” business from the 2010s. You can peel back all the bullshit and say that their “core business” was good but it was all the bullshit that made WeWork, WeWork.
The beauty of this idea is that they could make some money while all of this settles out, and then it would pave the way for another PE to come along and start rolling up all of the most profitable locations until they re-consume all the properties again.
WeBankrupt
WeDefendant
WeLiquidate
We341UnderOath
Looks like he has a couple billion dollars in the bank, so if you have any suggestions on how one might dummy themselves down to "idiot billionaire" level, I am all ears.
I'm currently at "erudite hundredaire" level.
Lacking scruples seems to be more important than having intelligence.
There are plenty of nutty rich people like this. If you would like to follow the path to lunatic billionaire, I'd suggest you start by being very tall so as to impress and dominate people. Definitely come from a broken home, the wilder the better. A sufficiently dysfunctional early environment will fuck you up for life, but it also gives some the ability to thrive in chaos. Make sure to be a charming sociopath, so that you can manipulate people, quite a lot of people, without being crushed by the moral weight of the harm you do. You'll also need some desperate character flaw that makes you insatiable: sane people will get enough money and stop, but you'll have to have some sort of unfillable void that compels you to keep going beyond all need.
Lastly, make sure to be very lucky. You must be born into the right moment, such that there are people foolish enough to give you a lot of money. Luckier still to fall into the right context, so that you have plenty of enablers around you who will effectively institutionalize you. Even luckier that your crimes against society are of the sort that either aren't currently illegal or are sufficiently inconvenient to prosecute.
I think intelligence is helpful, but not a necessary component to become really rich. I think there can be combinations of luck, opportunity, and charisma. It doesn't hurt that silicon valley investors appear to be the most gullible people on the planet.
I don't know the guy, but I did hear reports of him constantly drinking and smoking weed at the office, and him claiming that they're making a "human based operating system", a claim that does not make sense.
If Neumann catches some years for defrauding investors, will he still be a smart crook?
Neumann took stupid VC money for a ride. Unethical? Yes. But they giving it to him very willingly. His actions arguably could do more damage, because maybe WeWork bankruptcy can finish off SF commercial real estate market – I don't know how much of their 13 billion lease obligations are in the city. But it's hardly his fault that the system is so brittle.
It felt so weird after being spoiled by WeWork and left a very negative impression about Regus/Spaces.
What's the WeWork moat? Because there's an insane operational costs that have to be passed down to the customer.
Yes it's true that normal co-workings take a bit more, but I have never spent more than 3/4 minutes and that's not nearly enough of an annoyance to pay off for the much higher prices.
Most people just want a table, a chair and internet.
Personally, it was absolutely worth knowing that I’d have a clean, organized space, coffee, not need to fiddle with the Wi-Fi, not need to sign contracts in foreign languages, etc.
Most coworking places are clean, organized, have snacks, do not have Wi-fi issues. Most of them also have contracts in english or don't even ask you for a contract at all.
I keep not seeing the moat. The customer you describe "picky and willing to pay double normal rates when travelling to foreign countries" is quite of a niche use case.
Most people simply find the coworking that is closest to their hotel/train station.
It's also extremely unlikely that local coworking spaces in random countries around the world can be relied on to have robust contracts in English.
People with stuff to do don't want to waste time figuring out the nuances of a dozen different coworking spots. This is the entire use case for half of the hotel industry and why chains like Holiday Inn or Marriott exist.
Your cost argument also doesn't make much sense either, as if anything, using a service like Regus or WeWork is cheaper because you get both the travel benefits and the local space for the same price. You don't need to sign up for a separate coworking space and pay a separate fee for every place you visit. I get access to thousands of Regus locations around the world with my single flat fee.
In terms of actual monthly prices, I pay about 1/3 more than I would at a comparable local coworking space. Not double.
So yes, for a slightly larger fee (something like $150 more per month), that extra stuff is worth it.
You would think so, but this is incorrect. Every single WeWork you go to, across the globe, offers the same fantastic experience from "feel good vibes" to functional meeting rooms, wifi, and ad-hoc services.
But even if there are local gems, it becomes another chore to browse listings, read reviews, spend time deciding between Coworking Space A and B and C. With WeWork and Regus/Spaces, you save a lot of time and can just get there, and get busy.
> The customer you describe "picky and willing to pay double normal rates when travelling to foreign countries" is quite of a niche use case.
Not OP but just like luxury hotels are niche, WeWork is not your local coffeeshop and does cater to a different crowd. Whether that's profitable for them or not, looks like not for now.
Local co-working office spaces are options of course, but with WeWork's brand you already know what to expect rather than gambling on something new.
They didn't stand a chance, as most sane commercial companies no longer maintain locations in high-tax neighborhoods post 2008. Only legal and financial services tend to cling to the traditional tower blocks.
Should convert the assets into retirement village care facilities, as this is a projected growth market in the next 10 years. =)
I guess its worth a little less than 10T now.