WeWork IPO Shows It's the Most Magical Unicorn
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I’m good friends with the founder of the first and long-dominant tech/creative co-working space in my Australian city, and I served on its advisory board in the past couple years, through what turned out to be a distressed sale of the business to its landlord, after it became insolvent and unsalvageable.
There are several fundamental flaws with the concept that make it very hard for this kind of business to work:
1) Difficult/unpredictable/uncontrollable customer retention
Most of your customers are individual freelancers and early-stage companies up to about 20 people. If they become successful, they outgrow the space and leave (possibly after a period of tenancy on negotiated discounted rates because “hey it would really hurt you guys if we left”). If they are unsuccessful, they go out of business and leave, possibly after a couple of months of non-payment (“oh man we’re just waiting for a big payment/financing, we’ll be able to pay next month for sure”), which is hard/impossible to recover once they’ve left. And even where people remain eligible customers, the transient nature of the customer-supplier relationship means it's easy to jump ship if a cooler space opens around the corner.
So you’re running this revolving-door business, where retention is only partially within your control, and having to invest heavily on new customer acquisition (often involving free trial periods and other incentives) to keep up with churn.
Your most reliable customers in terms of tenancy and payment are remote workers/teams for bigger interstate/international companies, but too many of them and the culture can become too corporate-feeling and less appealing for everyone - them included.
2) High setup costs and fixed running costs
Rent, fit-out, furniture, facilities, utilities, cleaning/maintenance, staff, etc. Most of these costs are largely independent of occupancy levels/revenues.
3) Difficulty finding/keeping good staff
The “community management” job in these places is highly specialised and demanding. All day you’re dealing with human problems that are exacerbated by people’s stresses about their business or job, as well as all the minutiae of things like the toilets/kitchens being clean/stocked, meeting room booking windows being adhered to, ensuring that the people in the space are all people who are meant to be there.
Emergency calls from people who e.g. left their wallet in the space that day and “just need someone to let me in to grab it” (at 9.30pm) become routine occurrences once you reach a certain scale.
Beyond these practicalities, the people in these roles set the mood for the whole space, and can make all the difference between it being a welcoming and happy place or a dull/miserable one.
Finding people who can not only do this kind of work all day every day, but do it with an enthusiastic and friendly demeanour, is very difficult, and burnout/turnover is common.
In general, the kinds of people who can do this job really well can get a less-stressful/better paid job elsewhere (quite possibly for one of your resident companies).
4) Competition/substitution
The market in many cities has become saturated (partly thanks to WeWork itself). This pushes market rates down, acquisition/retention costs up, expectations up (“the other place has FOUR types of kombucha on tap”), and dilutes the pool of potential residents and staff.
And after all, what you’re offering is not essential for freelancers/small companies anyway. They can easily work from home, cafes, borrowed/subleased space with other companies.
It seems the only way to make these businesses financially viable is by partnering with something like a startup accelerator/investment company or an R&D body backed by industry and/or academia.
But this requires deep links with local community/industry, and is a huge amount of work to establish and manage.
For a player like WeWork, this kind of work is hard to do as it can’t be done with a cookie-cutter approach, and local collaborators for these kinds of partnerships often prefer to work with locally-owned businesses rather than big outsiders.
So, we’ll wait and see. Maybe WeWork has something up their sleeve that will allow them to build a model that works.
I’ll be interested to watch it play out.
WeWork and AMEX are currently offer a deal when if you get an Amex Business Platinum card, they give you unlimited hot desk access to any WeWork in the world for a year. You can work for an entire year for free (even in super high cost places like NYC, SF, London, etc.), even if you are already a paying WeWork member. All my friends and I cancelled our WeWork memberships and moved to AMEX. It's saving me >$6k this year and I get a better product than I had as a paying user.
This has led me to visit a lot of WeWork locations:
- In my experience, most of the WeWorks in the world don't have that many "coworkers". Most of the people in the buildings are at traditional companies renting office space. The companies renting space are frequently giant corps like Netflix or Facebook getting spill-over space when their main office is full. (There are exceptions like the WeWorks in downtown SF where there are lots of coworkers, but it is not the norm.)
- WeWork places so little value on the income from shared desk "coworkers" that they will give away the product completely for free as a loss leader to grow the brand and entice more people to try out the product and rent a larger space.
- Entire WeWork locations will just "shut down" to the public if WeWork manages to lease all the space to a company like Facebook. See 125 Shaftesbury Avenue in London. Obviously they care more about leasing to a big company than running shared office space.
My take is that they are trying to be Starbucks for renting office space. This product is very convenient and it has a lot of value, but I don't think it is a "tech company" and I don't think it justifies the current valuation level because the margins aren't there. But who knows what the market will think.
But two things are crystal clear to me:
1. I would get out of the coworking business if I was trying to compete with WeWork. I couldn't possibly offer the quality of product (pretty good) at their price point (as low as $0) unless I had unlimited piles of VC money to burn.
2. If you are doing independent consulting or remote dev and don't need traditional fixed office space, you might as well help them spend their VC money by using their space.
Customer retention is even worse here, as so many spaces keep opening up and offering huge discounts to move in.
At first WeWork kept their price the same at an average of 3,000RMB desk/month (600AUD per month), then local competition came in at under 2,000RMB, then WeWork did 3-6 months free rent incentives, 25% broker commissions etc, opened around 30 (?) spaces in 2 years.
Now the average price of a desk is around 2,000RMB at WeWork, local competiton is under that, and brokers still get 15%. The Tenants know how much power they have in the negotiation as it's all a big competition between coworking operators.
Who's winning in this? Landlords, Tenants and Brokers.
Right now we have a situation where companies like WeWork are creating huge amounts of demand by offering extremely low rents to tenants on short leases and renting spaces from landlords on long term leases at high prices. This is stimulating the creation of more office space.
If this continues for a long time, great landlords are rolling in it! But if we're right about how this is going to go - these companies are going to run out of money, and when they do run out of money, they're just going to fail to pay those long term leases. The landlords are the ones left holding the bag - they'll have a load of office space with broken contracts, that there's no demand for, because all the demand was stimulated by renting it out at a loss.
At that point the bottom will fall out of the market. Landlords will be stuck with a load of broken contracts, tenants will have unrealistic expectations and demand will collapse as people go back to working in cafes etc.
Ultimately, for control of many of these issues, a localist approach is superior..understand the local culture, etc.
Maybe a coworkery in La Jolla would have surfboard racks and a tacit understanding that surfing comes first...so allowance for wet gears (and showers) might be needed. Maybe a location in Boulder has community climbing gear and/or a bouldering wall.
So, does scale lend _any_ benefit? Certainly the "network" of locations might help...but what % of tenants are really and truely jet-setters off to many major cities, versus those that stay close to home and just need a regular space out of the house. I don't think scale is that vital in this view.
Next, deals...I suppose scale can lend itself to leasing deals with major brokers that have multi-city inventory. But that benefit is only on the supply side, and unless the _same_ landlord is involved, they won't come down in price just because.
At the end of the day, more, 'localist' coworking spaces probably wins and is a more dynamic market (and thus resilient) than some attempt at "winner-take-all" scale. Also, to reinforce that...I suspect many times a good coworking location is probably an individuals labor of love...they like their town, had access to the commercial space, and they wanted it first-and-foremost for themselves. Any subscribers are just helping to pay the bills and making new friends.
Spot on here. They are building for a world in which everyone is location-and-asset-independent. Don't need a car because we have Uber/Lyft. Don't need a home as we have Airbnb. Don't need an office as we have WeWork. Etc.
But the market of people who live that way is still small, and I think it will always be somewhat small, or at least limited. (It becomes much harder to live that way once you have a family, for example.)
And can they really end up opening spaces in all the places where location-independent, digital nomads want to go - e.g., all those beach resort towns in Thailand and exotic villages in Central/South America?
But even if they do, independent digital nomads are not the people who will sustain the business anyway, as independent freelancers are more costly to acquire and service, and harder to retain. Their bread-and-butter is mid-sized teams (5-20) and satellite staff for interstate/international companies.
They're often described as the Starbucks of office space [1].
But Starbucks doesn't succeed in every region it enters - certainly not ours [2], as we have our own many-decades-old coffee/cafe culture in which people much prefer independent cafes over large chains.
I'm sure this mentality will apply to co-working spaces just as much as cafes, in many places.
[1] https://www.inc.com/sonya-mann/wework-company-year-2017.html
[2] https://www.cnbc.com/2018/07/20/starbucks-australia-coffee-f...
> But the market of people who live that way is [A] still small, and [B] will always be somewhat small
I agree with A, but not B. To me this is a classic disruptive tech scenario. Right now living in hotels and working in coffee shops is strictly worse than having a home and an office for almost everyone.
A few people who have very special needs are well served by coworking.
However, all of the different metered rental propositions (metered office rental, metered car rental, etc) offerings are getting better and better. They are all pretty bad but you can imagine what it would take for them to be great.
Will those experiences eventually catch up to long term home/office leases? Maybe. If enough services like that get good you open up interesting possibilities like a company that only exists for a week but can do everything a fixed company can do.
I find it difficult to predict what can and can’t happen here, so I think your “people will never want this” assessment is too hasty. If there are enough early adopters who will hold on and provide feedback and a small amount of revenue, that could produce something quite compelling over the next decade.
Maybe it's just the WeWork I've been it, but it was every bit as loud and distracting as a Starbucks. The glass fishbowl offices constantly remind you other people are walking around you. You see them, they see you. In addition, the one I was in had the bright idea of installing hardwood floors everywhere. Men and women in dress shoes and high heels would "clop clop clop" all day long.
You also never want to mix sales people with engineers. Or any job title that requires a good percent of the day socializing. Sales people are on the phone nonstop, usually running a script quite loudly. That's not even something you could get away with at most Starbucks. But WeWork on the other hand...
> I agree with A, but not B
Being a digital nomad is fun for a few years and then you want to settle to have relationships. Humans are social animals. This is unavoidable. Also, people want possesions, most people want to have their own touch on their own places because it makes them feel better. Home, sweet home is not just a place where you store your off season clothing.
Yep, fair enough, and that's (part of) the bet WeWork is making and is what we'll watch play out over the coming years/decades. I don't feel strongly either way, I'm happy to wait and see.
This is the "Stand on Zanzibar" / "Future Shock" world, and it looks alarmingly plausible. Alarming because all those things are so fragile to cashflow issues and the general insecurity problems of being a renter rather than an owner. And plausible because of what's currently happening with AirBnB: because it enables arbitrage between the "residential" and "hotel" prices, it has the potential to force all residential prices up to hotel levels.
It’s easy to look at current trends and extrapolate from there but when I think of Wework, I am reminded of the time when selling ones home and moving to a shared boarding house was commonplace. Trends reverse, often quite quickly.
I co-own a 15-18 desk space and while we have churn, our setup costs were not especially high, we don't have staff (we are tenants ourselves) and we largely ignore the competition. We would be one of the more expensive spaces but uncompetitive on facilities/services - I think we have attracted people because we're simpler and quieter.
A single WeWork in one city is risky due to fluctuations in real estate, economics, labor supply, competition, etc. a thousand locations are less risky, since the company can still exist even if a local market tanks for a year.
I mean, yeah there is a lot of climbing in Boulder, but a MUCH better resource would be a daycare. You'd have line out the door if you had a daycare in Boulder. Childcare costs in CO are crazy high, like ~$40k/year for 2 kids.
We live in a small town in Colorado that has never provided work opportunities in our field, but we've always been successful working remotely.
Small town co-working has provided a huge value for us: no commute, we're out of the house, camaraderie, friendship and support. Maybe this is an example of a profitable co-working.
I know that in these past 8 years the owner has done very little recruiting and the desks are nearly always full.
Yep, sounds very familiar.
Our space was like that when it was the only one in town, and it was the go-to place for self-selecting people who wanted to connect with other like-minded folk.
But our city has four million people, and startups/freelancing became super-popular and demand for co-working shot up (our space actually had to turn many people away at its peak), but then the whole industry became fragmented, and our space (indeed, any space), stopped being the go-to place for "people like us".
They might not be able to do that well, but at scale, they can have most of that into effective processes. They are the only one who will have international comparison and dozens of addresses inside a city, so they can tell what to do near the historical center vs. the up-coming industrial run-down.
Having a great place to work is increasingly important and as you say, it’s hard to do. But it’s the one thing that you can do to attract workers that isn’t paying 5% more than competition — so unless WeWork isn’t 5% of salary more expensive than having your own office.
On a more cynical note, companies have been trying to treat support staff and strategic-decision-making executives differently: the cleaning staff, cooks at many tech companies are external contractors seemingly for that reason. That separation is being disputed when there’s a close tie between support and the main company. Having a brand like WeWork would severe that tie.
I don't think this is the case in a lot of WeWorks anymore, i work in a WeWork and the majority of companies are now bigger corporates.
Goldman Sachs just took 2 floors in the WeWork next to us.
It's actually quite hard to find a largeish Co-Working space in London as it moves so quickly and so much space is being taken by corporates buying entire floors.
As far as I can tell, WeWork is not really a coworking business. It's a large-scale office space leasing business that uses coworking as advertising.
A friend in ICT who will remain nameless has found a bookshop in a disused chapel near his home (and mine!) which holds great promise, but as a space its limited to maybe 2-5 people and would never be economically viable. But still, towers of books outside, and a congenial bookshop keeper to bum coffee off..
[0] - https://www.curbed.com/2019/3/26/18280774/wework-real-estate... for instance
It's the only way to get tenants that will stick around long-term, thus solving the retention problem.
With this in mind, I can see their approach being to offer a Google/Facebook-like full-service campus-style workplace, but for companies that are way too small to provide this themselves.
We'll see if it works!
Traditional office space is long term leases.
Coworking spaces give you month-to-month.
With traditional office space, you're responsible for maintenance, like cleaning. You have to hire people and manage them.
Coworking spaces do cleaning for you.
Coworking spaces also try to do more things for their customers, like hosting events.
Yes, you probably pay more (although there are economies of scale) but the product you get is different enough that direct price comparisons are not applicable.
Personally, when I entered a WeWork for a meetup I felt it's interesting design etc, but it feels like it sucks out your soul. It's like comfy and cold at the same time. Premium Mediocre maybe is the right term for that, not sure.
"The financial disclosures make it clear that WeWork — which, it should be said, is a commerce office leasing company and not truly a tech company"
Lots of tech companies (eg uber) take VC funded losses to grow at tech startup rates. This can create unsustainable business models and mask sustainability issues. But...
..But, in tech, the potential payoff driving all this investment flow is getting to a monopoly (in the Thiel sense). Out of this world business models like Google's or FB's that generate massive revenue with near-zero marginal costs. Software economics, basically. The winners win incredibly big. This makes the massive-multiple investment case rational.
Tesla, WeWork and such have much more normal, non-software-like economics. WeWork will never lease office space for that much above market rates. No matter how good Tesla's cars and/or manufacturing tech gets, they are never going to sell cars at a 40% margin^. That's why Elon had to sell all the Tesla share and take loans. It takes a lot of resources to build factories and cars. Office space can be leased, so WeWork hasn't needed as much financing, but it comes out of operating margins instead.
You basically cannot achieve software startup money-machine goals with atoms and marginal costs.
^Self-driving aside.
I personally (and without any empirical evidence) think that there is no way London needs this much more office space, partly because "Brexit China Tariffs", but mostly because remote working and "just not in the office five days a week" is becoming a thing.
Turning that sterile office space onto more live/work/mix-it-up space, perhaps floors 1-20 as office and 20-40 as apartments or something, will almaot certainly be a feature of the next twenty years.
And all that office space and living space and mixed something or other we don't quite get, all that will need to be sold and packaged and marketed.
And so, long story long, whilst WeWork may look like a joke, may be a "lose money on each sale but make it up in volume", something like WeWork may just be the Hoover or the Pullman coach of mixed live work office buildings. Because mixed live work office buildings will be the Pullman coaches of tomorrow's cities - cities have a new brighter car free future, where Barcelona's mega-blocks will meets the density of skyscrapers. But it needs ... looking after.
Putting a millions tons of glass and steel pointing straight up is an awesome technical achievement
Making that tower somewhere that families can live, love, shop and work is a different skill set entirely.
It won't look like building service companies do today. It might just look like WeWork
(Thank you, normal cynical and cutting remarks will resume shortly)
Which buildings? According to this [1] there isn't a single building in London (completed, under construction, or even proposed) that is 100+ floors. The tallest building in London (The Shard) only has 80 floors and there are currently no buildings planned that would be taller.
1: https://en.wikipedia.org/wiki/List_of_tallest_buildings_and_...
The City is not a place families typically want to live because it has very little green space - and it's largely not a place marketed to families. High-end residential space in the City is essentially marketed at two groups: single people in their 20s/early 30s working nearby, and people for whom it's a second home near work. In my opinion, those markets are enough to sustain it for many years to come - they're likely to grow and what's more they have disposable income which will support the retail/etc element in a way homes for families these days don't.
The commercial real estate boom in the City is the latest in a long, long list of such. Unlike Canary Wharf, which has been very careful to manage space so that almost every square foot is always occupied except in the deepest points of recessions, real estate in the City has had a large speculative element to it for at least the time I've been observing the market (since the 90s), and I don't see anything different here.
There's a long-term growth story and a cyclical element. Long-term growth is about a move eastwards as the West End gets filled up/businesses get priced out. The cyclical part this time to me seems to combine an element of that with it being a "signalling" location for certain types of business about who/what they are.
The obvious counterexample to your point is the Barbican. Much of the Barbican is owner occupied and the vast majority of the flats there are privately owned (ie not local authority/housing association). I'm not sure but I think the Barbican still houses the majority of residents of the City proper.
Paying for an office space is an extremely inefficient use of resources, especially when plenty of cafe space - or just, you know, your living room, kitchen - or garage - are useful even for teams of 20+ because will be rare to need everyone in a single space at once, and then you can just rent something larger for that event.
I kind of have a challenge with myself to work towards launching the fastest growing projects/platforms using as few resources as possible. whether I'll reach that goal is moot, though - it's more or less a mantra for me to pay attention to whether I am rushing or not.
Killed by housing costs and a mature industry.
Who can rent most of a house right out of school (HP), or bang around in their childhood home (Apple) in SV? Not only are the costs prohibitive, but most residents are from somewhere else, so no childhood home in existence anyway. Moving to SV is done to parachute in to the success that previous generations had to create for themselves.
Oversimplifying a bit, but the point is that both the economics and the demographics have swung way far away from "scrappy young geniuses" to "Ivy League careerists." It's almost a different universe, and would be completely distinct by now had Starbucks not been invented.
Maybe part of the difference is related to supply and demand: potential employees have other opportunities, so why should they make sacrifices for companies they don’t own more than 0.5% of?
So you would have avoided Apple and Amazon then?
There are also of course very nice garages, attached to nice houses - and very talented people who can maximize the resources available to them at any moment because they have a very clear plan to understand the strategy, path they must take. Keeping costs low by reducing real estate costs is in part why fully decentralized companies exist and work so well - they can scale very efficiently, however I believe that fully decentralized in the long-term won't work due to limited fluidity; spatial organization is important if not critical in certain respects.
Please be wrong, please, please, please...
If I just can telecommute I don't want my workspace being my live space and my neighbours being my coworkers.
That can may be a thing if you are living by your own, living in a foreign city and without family. I can't see it other way.
It's why weird companies with funny CEOs might try things that a serviced office corporation might not and might build an environment that's better for us all.
It would be rare I admit.
Without detracting at all from a really interesting speculation, this does sound like the opening crawl of a hopepunk Judge Dredd film.
I don't really get the sense in comparing a bunch of companies with disparate financials and very different industries. The We Company is a real estate company trying to convince people it's a tech company. This list mixes B2C and B2B companies, SaaS platforms with monthly recurring revenue with companies with advertising-based business models. Almost none of these organizations are reasonably comparable.
https://www.businessinsider.com.au/wework-ark-fund-to-buy-co...
Is it suppose to be better because it "looks" better because with my minimal understanding there isn't a difference.
When the company owns the properties, that ceases to be the case, as there is no conflict of interest between property owner and occupier as they are one and the same.
He is (and was) still always legally obliged to act bona-fide in the interest of the company (i.e., act as much for the benefit of minority shareholders as his own).
It was just harder to scrutinise when he was both the majority shareholder of the company, and landlord for some of its properties. That is no longer the case.
Now, if WeWork goes belly up, Neumann doesn't get to keep the buildings.
Pre-opening location expenses $350MM
Growth and new market development expenses $475MM
Sales and marketing expenses $370MM
I think it makes little sense to express Sales & Marketing expense as a percentage of Net Income...
You could express it in terms of New Revenue Growth, to get a feel for customer acquisition cost, and then look at churn to get a feel for lifetime value and payback periods... if you wanted to analyze them like a "SaaS" type business.
I don't think SaaS is at all relevant. Typical SaaS gross margins are upwards of 60%. WeWork's gross margins are under 10%.
Edit: found a source[1] that states "5% of broker’s cut is standard" for commercial real estate marketing expenses, with a broker getting about half of the commission which is around 2.5%. Even if you went with 10% of a 10% commission rate that would only be 1% of the total.
[1] https://www.calicomarketing.com/commercial-real-estate-budge...
On a personal note, I’ve been a happy user of Regus for nearly a decade and I can’t imagine switching to WeWork. The WeWork offices I’ve been to are large open offices or glass-walled. They have better kitchenettes but not astronomically better. And the whole vibe feels very unprofessional, one step up from a coffee shop. And they cost a lot more. I don’t get it.
The first time I’ve heard about WeWork, I was excited precisely because I thought Regus was hogging a necessary service.
I've also used Regis occasionally when a WeWork wasn't nearby. It was like stepping back 30 years into the past. Instead of getting my corporate-allocated portion of predictable factory-generated open office space, I got what was equivalent to a random left-over desk at your weird uncle's small town real estate agent office 25 years ago.
The whole Regis experience felt like something from the mid-90s. It was a whole different thing than WeWork. The crowd skewed 30 years older and heavily into non-tech industries, the architecture was very "90s small office", etc. I honestly felt like I would turn a corner and see someone using a Packard Bell 486 with a giant CRT. That's how much it reminded me of working in offices in the 90s.
I'm not saying one is good and the other is bad depending on what you need. WeWork often comes off as a parody of itself and can be a ridiculous place to work. But WeWork is also something that most people in their 20s think is a "fun place" where you just "hang out with your friends" where as the Regis offices would probably feel like an old school work prison to them.
I think WeWork is probably a ridiculous business in the long run and I'm not convinced they are even a "coworking" business at all, but I'm happy to spend their VC money to get free office space as long as they want to give it out. Likewise, I can also totally understand why Regis would never excite any investor.
1. The old fashioned office feel at Regus is not necessarily a bad thing. I’m able to focus much better in a Regus office. And I feel like I’m actually getting what I’m paying for (if I want beer, I’ll go to a supermarket). I’ve never had client meetings in either place, but from what I’ve seen Regus is much more the kind of place I’d want to bring clients to if I wanted to give a good impression. This kind of feels like a parallel to the open office versus cubicle debate. Open offices are undoubtedly trendier and more community driven and just feel cool, but if you want to actually be productive and get work done then open offices are kind of a step backwards.
2. Regardless of what’s better in our differing opinions, the business models are more or less the same, so it feels like Regus could be a useful case study when thinking about WeWork. I still find it confusing how most articles about WeWork imply it’s the first company to do what it’s doing at scale and therefore it’s in uncharted tech startup growth mode territory.
I first had to have a sales call with someone who didn't really seem to know what they were talking about, then he wanted me to come and visit, then it became apparent that he was talking about the wrong location. The space was a very boring environment with a cheap fit-out. The price wasn't great.
I ended up working in a local co-working space. I walked in off the street and the owner showed me around. I said I was only there for a short period and he suggested some custom pricing. He was friendly and knew what he was talking about, the office manager was friendly and again had answers to everything I wanted to know and more. The space was interesting and felt nice to be in, while still providing a good working environment to put my head down and work in.
I've never worked in a WeWork, but I've visited a bunch, and they always strike me as much closer to the latter than the former.
The idea is that WeWork can do in real estate what cloud infrastructure-as-a-service providers like AWS and Azure are doing in computing. Most companies find it easier to build on AWS instead of running a data center directly. And data center hardware providers find they kind of have to accept the big cloud providers' terms because they don't have a lot of other people to sell to these days.
In order to believe this optimistic case for WeWork you have to believe that they are providing a useful abstraction on top of leasing office space the traditional way, and you have to believe that they won't face any deadly competition. Personally, I'm skeptical of both of those, but I think the best case for WeWork providing a really useful abstraction hinges on two things: 1) a secular shift in the way people work leading to highly flexible office arrangements (e.g. instantly spin up an office in Berlin, run it for two months, then shut it down) becoming much more attractive; 2) WeWork being able to structure lease terms in ways that are better for corporate accounting somehow (i.e. it's not a better product at the end of the day, but it looks better on the books). The best case for them winning out over competition comes down to them getting such a big lead in the amount of space they offer and brand recognition that nobody can challenge them - hence the rationale for burning a ton of money quickly to open as many locations as possible as soon as possible.
I'm skeptical and I'd argue WeWork is more likely to end up like MoviePass than AWS. (MoviePass had pretty much the same idea and playbook - burn money to get to scale and market power quickly then dictate terms to the suppliers who have been eating into your margins - and it didn't exactly turn out well.) But anything is possible.
tl;dr Long-term investors hope that if WeWork can achieve a dominant position in the global office market then they can increase their margins by both lowering their cost to acquire space and increasing the rents they charge. If they pull that off then they can rake in hundreds of billions of dollars and be worth trillions.
I agree network effects will come into play - the more WeWork can capture the demand side, and abstract it away from the supply side ("who else are the owners going to lease to"), the more powerful they'll become over the supply side. But are commercial owners organized enough to resist?
1/2 billion to build that baby.
You get biscuits and beer and a nice location but you don’t need any of it
A bunch of these valuations seem pretty BS, but it's not going to hit companies, it'll hit investors that think they're going to make 1000% RoI on the next WhatsApp clone... granted the market is still rewarding them so until it comes down I don't know if we can really consider it to be too foolish.
The 401(k) is the only retirement program we have. At the end of the day when companies go public and then go bust the money is often coming from the collective public in some way.
You are right, it’s a very small detail. But it’s one of those cogs that turn while making the rich richer by extracting value from the public.
The founder of this company is a billionaire. A man that runs a company which makes no money is a billionaire. Where did the money ultimately come from? Who pays the bill? He’s added no value to society by any objective measure, he’s just taken.
Individuals pass through just as many disruptive phases as any other entity. A person at the age of 5 and at the age of 50 is only 'the same' in a legal sense.
I would guess it will collapse, as tenants leave and it can’t pay for its rental costs.
But on the flip side, in a recession landlords become much more open to renegotiating terms, and more people freelance or start their own business when they lose their jobs. So it’s possible WeWork could somehow claw their way out of it.
The interview, soft paywall: https://www.businessinsider.com/wework-ceo-adam-neumann-busi...
I don't like this pattern, more than VC funded startups they are more like QE funded startups, regurgitating your own devalued money as a favour. Uber comes to mind, too.
How are these anti-savvy CEOs getting this much money in the first place? What investor looked at this kind of model and went...oh hell ya, Imma dump money into that.
Massive real estate speculation you say? Shrinking capital gains you say? No downside risk of massive customer fallout or systemic risk of market downturns you say?
Oh...you're saying all those things are totally possible and very likely! Well in that case just take 75% of all my money for your little scheme.
I think they do create something of value, and so do ridesharing companies (I love using them and hate the experience of hunting for taxis).
Maybe it’s incorrect to look at just short term revenue/profit figures when deciding if these companies are creating wealth for their users...
[0] https://hn.algolia.com/?query=pinterest&sort=byPopularity&pr...
Snapchat users also skew somewhat female, but they are also quite young compared to other sites, and "youth" may lead to it being highly priced.
[Being an old dude, I never use either of these]
I don’t know if anyone has run the numbers, but I’d expect ladies to more valuable on all kinds of KPIs of a good customer.
My feel is that men gravitate towards large purchases around a hobby or two (bikes, outdoors, cars, computers, video games). While women are more likely to spend in smaller amounts across a wide variety of categories.
I also may just be full of shit.
[0] https://health.oliverwyman.com/2019/01/women-in-healthcare-m...
https://www.reddit.com/r/investing/comments/9n31xf/introduci...
https://www.reddit.com/r/wallstreetbets/comments/a1jokv/beck...
Mugatu off of finance twitter calls this "white chick beta":
there aren't a lot of good traders here, but its an engineering blog
I actually use Pinterest. It's just how often does the opportunity to mention Pinterest comes up?
My pins are fashion (boots, athletic wares, etc..) and haircuts.
This is why it's not particularly loved on HN, and this is also why the tech stack is nothing special (it's not bad, it's just not special).
What is special is the unbelievable product market fit. Engaged Pinterest users 1) spend a shitton of time on the app (hours a day) and 2) interact very positively with ads (this is VERY purposeful and part of the product first company style).
I think their recipe makes for a great company, but it's not the most fun for engineers to work on (those things don't always if ever correlate).
Even their github https://github.com/pinterest, elixir isn't even in their top programming languages.
It could be the secret sauce language kind of deal. Or they've moved away from it.
It is a pleasure to see you outside of elixirforum.
AFAIK, Pinterest rewrote the logic of their notification system into Elixir and also used it to rebuild their rate limiter.
This is the main piece I've seen open sourced: https://github.com/pinterest/elixir-thrift
And I don't just mean brides and mothers, but everyone involved with the wedding/baby shower/birthday party planning process: bridesmaids, mothers of the bride, future mother-in-laws, aunts, grandmothers, and godmothers. And of course everyone who's paid to be involved with those events uses pinterest as well: photographers, venues, florists, event planners, designers, etc.
My gripe with pinterest (that none of my friends seem to be bothered by) is how difficult it is to source the information that's posted. Not only does it create an environment for misinformation to spread but it makes it really hard to determine whether you're purchasing from the person responsible for the beautiful photo or if you're being led to some sort of alibaba drop-shipping site.
[0] https://hn.algolia.com/?query=https:%2F%2Fmedium.com%2F@Pint...
There's a recommendation system that I think is pretty good and people can collect other people pictures/pins in their own collections.
I don't think there is any emphasis on influencers or at least from my casual usage I don't see any. I think this is in part because people can collect other people's pins/pictures into their own collection.
We live in a small town in Colorado that has never provided work opportunities in our field, but we've always been successful working remotely.
Small town co-working has provided a huge value for us: no commute, we're out of the house, camaraderie, friendship and support. Maybe this is an example of a profitable co-working.
I know that in these past 8 years the owner has done very little recruiting and the desks are always full.