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Comment by lph | Hacker News Reader

"WeWork, a startup that rents out shared workspaces, branched into co-living in 2016. Their "dorms for grown-ups" are intended for people moving to a city and looking for fast friends.The company, which has a $20 billion valuation, has two locations: one in New York and one in Crystal City, Virginia, outside DC. The average apartment is just 450 square feet."

How does a company running glorified dormitories have a $20 billion valuation with only two locations?

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You misread it. WeWork is a huge, international network of co-working office spaces that also happens to be experimenting with two co-living locations.

See https://www.wework.com/locations

Still incredibly overvalued -- they're just sublessors. They don't own their real estate.

Could be but they're middlemen providing a valuable service. It's a one-stop shop for a work environment. The landlord benefits because they have a regular income stream & don't need to worry about tenants coming & going. Customers get to adjust their needs on a month-to-month basis for a smaller up-front cost than they could get leasing themselves & can dynamically adjust if they grow. Similarly, they don't need to worry about setting up internet service & any of the other things WeWork offers. Additionally you can cheaply temporarily rent space if you have travel needs. That's the value-add. Now how successful they will be I don't know but I fail to see why real estate ownership matters here.

Personally I think WeWork is pretty exposed to any kind of economic downturn as most of their customers are burning cheap VC money. If half those companies were serious about getting profitable they'd go somewhere else with half the amenities at a quarter of the price.

There aren’t places like this with short term leases. You either get expensive month-to-month (or slightly cheaper year to year) or you get a cheap 5-10 year lease.

If you are not established enough to take a 5 year lease, then wework (and their competitors, of which there are many) make a lot of financial sense, especially for the flexibility — e.g. if you downsize, rent goes down accordingly in 1 month. No “cheap” lease has this feature.

Also, WeWork is cheap compared to prices Regus used to charge 5 years ago; I would assume Regus did respond to the price pressure, but I haven’t checked.

"2 locations" sounds little because your mind is psychologically focused on the number "2" and not on how economically powerful those locations are.

The Bay Area economy alone is larger than most countries in the world. You can add up 100+ cities in the world and it won't compare to the Bay Area

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