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Comment by dasil003 | Hacker News Reader

I had no idea WeWork was growing so fast. Maybe I'm old fashioned, but there's no surer sign of a new bubble than this kind of growth for a luxury supplier to startups. For a new startup, it's crazy to pay WeWork's premium when your runway is so limited and you need to hustle as hard as you can to get traction. Once you get a little bigger, for the WeWork premium you can hire an office manager with an interior design edge and get all the upside but customized to your actual needs. I guess their golden goose would be big corporate clients who want to reinvent their workplace but are too set in their ways to drive it internally, but having raised almost $7B, over $5B this year, I just don't see where the upside is for investors.

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WeWork is actually perfect for startups; they sell no commitment pay by the month office space that comes with desks and internet. They're cheaper than most sf office space and an order of magnitude easier to rent.

The sole drawback is they're an unmaintained dump and working in one is an utterly miserable experience. I had the very very unfortunate experience of working at 995 Market and these worthless idiots couldn't even get their elevators to regularly work, and just plain didn't give a damn. Who doesn't enjoy a nice 15 minute break while you wait for an elevator (both ways)? The offices are tiny and LOUD. Some other idiot decided to make the floors hardwood; a single person in heels walking down the long shared corridors goes CLACK CLACK CLACK. The walls are transparent glass so you are distracted by every bit of movement. There's no sound insulation so you get to listen to the office 3 doors down discuss their thanksgiving plans. I really can't say enough bad things about it.

But hey, there's lemon water in the kitchen! (In a leaky carafe that makes a puddle on the counter every day. Naturally.)

I also get the impression that they're lifted by these small teams in transition periods. No one plans to stay in wework for long if they can help it.

There's a reason why landlords like long term leases and I can't imagine wework is immune to the pressures of a down market.

Wework is definitely eating a bunch of risk. I imagine we'll get to see how good they are at modeling it soon enough...

Hold up, so their elevators are shit EVERYWHERE?! Good grief! I think WW has its uses but I definitely don’t miss the obnoxiously loud millennials from Invision’s office (Boston).

I have similar negative experience as a tenant of a WeWork rival, overall I think the shared office space fad is a big step in the wrong direction: http://www.alphadevx.com/a/512-Hell-is-a-stylish-shared-offi...

This is very insightful. I’ve never been into a coworking space myself, but don’t these problems apply to all coworkign spaces? Or are they somehow better designed?

To offer a counterpoint to this post, I am also a renter of WeWork's at 995 Market. We around 2k/mo for a four-person office and I'm fairly satisfied with this arrangement. The facilities were much worse when the building first opened, but now most of the HVAC and elevator issues seem to have been sorted. I work on the busiest floor (the 2nd) and don't have an issue with noise. Hell, the place is almost never actually at full capacity.

We were on floor 3, and the long L shaped hall to get to the restrooms had a decent amount of traffic.

Our company eventually left, in part because we employees made it clear we were very unhappy inside wework.

Thats definitely jumping to conclusions. I don't fully disagree with you, but from my experience, I can say that what WeWork is doing is incredible.

At a conference I attended recently, one of the WeWork chief data scientists presented on their process for analyzing cities and determining venues for expansion. The detail with which WeWork acquires and analyzes public and private demographic data is incredible. Based on their information, they are making highly targeted decisions about property acquisition. From my perspective, when compared to any other real estate entity, I can wholeheartedly say that what they are doing the right thing.

Well I'm not exactly jumping to conclusions as I've shopped for office space for multiple startups and toured multiple WeWork locations as well as dozens of other co-working space and sublets over the past few years, and IMHO WeWork is cashing in on easy money from boom-time founders. Clearly they are doing something right, but I don't know what data they would be analyzing that would protect them from a downturn.

You seem amazed by their secret sauce, but fundamentally, are they that much better than their competition in terms of the product they offer? Is it 10x better in price, service, quality?

McDonald’s is by far more successful than other burger chains; Starbucks than coffee chains. WeWork is trying (and at this point seems to be succeeding) to be the equivalent for coworking spaces.

Also note McDonald’s burgers are not very different than burger kings, and Starbucks is not better than any other chains. The secret sauce doesn’t have to be in the actual product.

McDonalds is a franchise; it doesn't acquire or run restaurants.

In case anyone was curious, I have collected some context from McDonald's 10-K filing on March 1, 2017 available at http://corporate.mcdonalds.com/mcd/investors/financial-infor... :

At year-end 2016, McDonald's had ~37k restaurants, of which ~15% were company-operated and 85% were franchised. (The filing expresses a long-term goal to be ~95% franchised.) Of the franchised restaurants, ~70% were "conventional franchisees". Under both the company-operated and conventionally franchised models, McDonald's "generally owns the land and building or secures long-term leases".

I believe it is this real estate-focused setup that drives the comparison between WeWork and McDonald's in various comments.

Which is what the movie "The Founder" drives home near the end (besides that Ray Kroc screwed over the McDonald brothers). It's a real estate company that owns buildings that are occupied by fast food burger restaurants. How well those restaurants do doesn't really matter all that much because the value of the real estate is most likely going to increase over time. If the restaurant does well, it's just a bonus.

I mean is it any different in sophistication from what McDonald's has been doing expertly for decades now?

Do you know if there is a video or slides for that talk? I tried Googling but couldn't find anything,

It was an in-person talk at CARTO from their Spatial Data Science conference. I remember seeing that the talks woulds be uploaded, but I don't know where.

Thanks! If anyone else is interested, the speaker was Carl Anderson (https://twitter.com/leapingllamas). The talks aren't on YouTube yet. I've messaged him and CARTO on Twitter asking if the videos will be uploaded.

Thirty-nine percent of membership is "freelancers and independent workers" while another 20% are companies with 1,000 or more employees.

You can get a desk in Oakland for $340/month or a private office for $730/month. If I had a small apartment in a city and worked primarily freelance, I'd consider something like that, if only for the quality of life.

Or you could buy a desk and just work from home.

After 5 years of working remotely from home, I'm moving to a coworking space this week.

Working from home hasy many perks. But the downside is that you get actually lazy.

I should move out to an office for the sake of my mental and physical health.

Try it for ten years and report back

If you can still speak intelligibily, grunting doesn’t qualify :D

Been doing it for going on seven. No complaints. An occasional dip to the coffee shop for an hour or two cures cabin fever quickly and inexpensively.

I think you are presuming several preconditions to make this a viable suggestion.

You could. Some will, maybe most. Some people like working from a wework, if it's nice and the cost works out ok.

But there are so many problems with that depending on circumstances. Assuming an urban apartment, it is likely very small. It may be loud throughout the day. You may have a partner who also wants to work from home. You may have family coming through frequently. You may not want to live 2/3rds of your life in the same two rooms, and so on.

London does also have a significant number of FinTech startups who have a lot of cash compared to other markets. They seem to love WeWork, possibly because they can afford it, and their founders are coming from finance and want the fun side of startups that they’ve read about without the cheap crappy office space and having to make your own tea and coffee.

I'm not sure to what extent this is really startup luxury good.

First, here (tel aviv) the basic wework costs range from $150 to $600 depending on location and frills (eg private office). This sounds like pretty standard pp office costs. They tend to be well liked by the people who work there. Well kept, well located, social, etc. Unless paying money for office workspace is ipso facto a luxury good, this seems like a regular good. Money for services at market rates.

Second, people working there range. There are some are "startups" without definitional grey areas but these're just some of the tenants. There are external employees of regular companies. All the work from home people that prefer a shared office, at least part of the time. Apartments and cafes are still active, but it turned out there's room in the market.

The way I see this is (1) internet has created more demand for flexible offices. (2) The older versions of this were pretty crappy, so these guys moved in.

As to wework as an investment... IDK. But, you could say that about a lot of companies. As a company offering a product to a market for a price, seems like a fine company. The product is sensible. People like it. It will vary geographically, but seems perfectly plausible that wework-like offices will grow to house 1m workers.

Their business model is not complicated. They arbitrage office space. Office space is expensive to rent (operationally), takes a long time to find a tenant, and there's a lot of different kinds of leases (short/long term) and most office management companies are not equipped to deal with 100s of tenants in a single space. Similarly there's lots of pain points when you're the trnter, in terms of finding the space which can be time consuming, deposits, contract negotiations, needing to setup utilities (esp internet).

Wework opertionalizes all of things putting them in position of being able to arbitrage this disconnect in the market.

I think that's stretching the definition of arbitrage. It's arbitrage in the sense that a hotel is.

How's that? Weworks is buying in one market and reselling (with value adds) in a different market and profiting off this difference.

They lease large commercial (multi-story) offices from owners and building management companies and rent out to 100s of small businesses in the same space.

I agree - and what about all the high end bars/cafes/shops full in the same areas? Working at startups has become a relatively comfortable lifestyle for twenty-somethings who don't necessarily generate value.

I think WeWork positions itself as a startup champion because that makes it seem far 'cooler'. The reality is I meet more people in my WeWork working for established companies or one/two person businesses than I do startups. Personally I'd worked from home for ~5 years and was more than happy to pay for somewhere that does _everything_ just to get out. And I've covered more than I've spent on rent in money I've made from people I met in or because I was there.

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