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Comment by cylinder | Hacker News Reader

Why on earth would stripe pay a middle man like WeWork to manage their office and lease?! Stripe is looking at buying an entire building. I'm pretty sure they can handle a 15 yr lease just fine. And don't need WeWork staff to decide what their office kitchens need.

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WeWork has a "Powered by We" service that companies like Amazon use so they don't have to manage a new building. They allow WeWork to deal with everything from top to bottom. https://www.poweredbywe.com/

Because demand might be elastic and you can keep costs closer to utilization and outsource stuff you don't want to do like manage an office

Same reason companies pay Google and Amazon for cloud servers

But plenty of "non-WeWork" office space offerings have already been like that for decades. They'll provide janitors, receptionists, etc unless you opt for spaces without it to run your own.

But plenty of "non-WeWork" office space offerings have already been like that for decades.

Cynically, those companies have the downside of needing to make a profit. WeWork strikes me as the sort of company that would happily take a massive loss, just to get to brag that Stripe and Facebook use their services.

That's 100% been the case - I am familiar with the industry and they have been more than willing to not make any margin in order to get the clients they want (big names, or poach from the competition)

That strategy works great, so long as you have unlimited funding.

Facebook leases an entire WeWork building in London, but I imagine it's not their long-term plan.

No one is leasing WeWork as the long-term plan.

That's kinda the point of WeWork: flexibility.

I assume they mean using WeWork for Stripe's non-primary offices where flexibility is often more valuable.

Stripe is at a size where they can easily afford all the flexibility they need without a middleman company.

Stripe would almost certainly prefer to outsource this for places where they have a small handful of employees, and dealing with one company has a big opportunity cost buried in it that they almost certainly would be willing to pay.

If that was true then they would be, but they aren't. Companies that big can easily afford one or many full-time employees focused on office and resource management which is more than enough to figure out a few leases.

Remember this is a company that already has a major international business in one of the most regulation industries. Adding in a few real-estate deals is unlikely to be a major source of friction.

> If that was true then they would be, but they aren't.

This article (https://www.curbed.com/2019/3/26/18280774/wework-real-estate...) seems to indicate that big corporate clients are quite happy to do exactly what I described. I suspect this probably also has to do with transferring CapEx to OpEx.

Perhaps Stripe, specifically, thinks they have a better bead on this than employing someone like WeWork.

Isn't that We's end goal though? To get billion dollar companies like Microsoft, Stripe, etc. as tenants. People that don't really want to deal with running an entire building when they can just pay someone else to do it.

Yes - but that doesn't indicate that a) the demand exists for such a solution or b) that they will successfully execute on said demand.

That is already available. Ever heard of Cushman and Wakefield?

That is already available.

Of course, but I assume that WeWork offered them a better deal.

So WeWork is a property management company which charges less than established players in a very mature market. Explain the valuation then.

Something something disruptive technology driven paradigm shift and then they'll make it up in volume :)

No. Companies that big have the resources and stability do it themselves, and want control over their space as well. They have no need for a middleman other than real-estate brokers or construction companies to actually get the space.

Counterpoint: Google now outrights owns a absurd amount of buildings outright on Manhattan's West Side near SoHo. These big companies have so much money, that they stand to make even more money just holding the damn real estate for all they care if they end up not using it.

It's the same as a individuals buy vs. rent scenario for a house. Sure, rent may be cheaper, but there are long term pros just holding the property yourself if you can afford it.

Which makes sense If you run your own investments / pensions your going to want to have some commercial property investments (normally by having a certain % in funds / REITS)

'Affording flexibility' means accepting higher costs in order to get short-term leases, which is exactly what companies like We offer. Going the normal office rental route has longer-term leases and thus much less flexibility.

Companies like to brand offices as their own. Their name on the front, their corporate colours in the decor. WeWork offers the exact opposite of that. No company with its own strong brand will want to subsume that brand to that of their letting agent.

WeWork offers the exact opposite of that.

WeWork offers both services. WeWork will just as happily get you a whole building designed and decorated to your exact specs, as they will provide you with 3 desks paid for by the day.

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