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Comment by bearcobra | Hacker News Reader

IWG is bigger than WeWork in terms of square footage, locations and revenue

I mean, have you been to a Regus space? It’s not in the same ballpark (regarding modern amenities), in the smallest way.

Yes, but Regus (now called IWG) runs Spaces, which is catching up quickly with WeWork. Unlike WeWork, their balance sheet is amazing. WeWork will have to endure a staggering restructuring.

No, but it is a sustainable business, so they've got that going for them.

Having worked closely with oil & gas I’d be curious how Regus would do without “that client”.

The ones in downtown LA are mighty close to a WeWork feel.

The one in downtown proper, or the one at The Row? As someone mentioned in another comment, Spaces picks property that doesn't command a price premium vs. WeWork where it's always a prime location.

When I was at a Regus space years ago, we had an amenity I never saw at WeWork - solid, opaque walls.

IWG is no longer bigger on revenue given WeWork's far higher growth rate.

IWG is at around $3.1 to $3.2 billion per year in revenue, trailing four quarters, with slow growth. They did $1.6 billion in revenue in the first half of 2019.

WeWork did $1.54 billion in revenue for the first six months of 2019 with a fast growth rate. Unless WeWork's business has done a complete 180 and is suddenly contracting (there is no information indicating that is happening), they have likely caught and surpassed IWG on quarterly revenue at this point and will have higher revenue for all of 2019.

> IWG is no longer bigger on revenue given WeWork's far higher growth rate.

WeWork can’t afford much more revenue at this rate:

WeWork IPO filing shows it's losing nearly $5,200 per customer https://www.cbsnews.com/amp/news/wework-ipo-office-sharing-p...

Whereas IWG actually earns a profit on its revenue:

WeWork Is Valued 10 Times Greater Than This Profitable, Public Rival https://www.wsj.com/amp/articles/wework-is-valued-10-times-g...

The argument is that WeWork can stop losing money at nearly any time it wants by halting new facility growth and focusing on filling what it has, as most of it's losses stem from growth projects. At least, that's the theory. It seems we'll get a chance to see what happens when they try and hit the "pivot to profit" button. Maybe they should have, like, a whole bunch of people help them hit that button really hard? Maybe hit it twice, just to be sure.

It’s reasonable to assume if they could have hit a button to demonstrate profitable unit economics or profit in long running spaces, they would have amended the S-1 to show this as the IPO valuation was collapsing.

This ability to turn on profitability was decently spelled out in their S-1. It was too late to amend it further to reemphasize the point because investors had already massively soured on the deal and would not take mere assurances at face value.

In order to overcome that, WeWork needs to take time, at least a quarter or two, to hit that button and show they're at least on a course to profitability. Before they can get back to IPO land and hope for even a $15 to $20 billion valuation, they need to demonstrate the truth of their statements on turning profitable. Even then I'd place that at the high end of a valuation, 7.5x to 10x revenue is still enormous for a real estate firm

> there is no information indicating that is happening

I mean, aside from their CEO being pushed out and their IPO being shelved because they were losing money hand over fist. Which means they can't raise the $7 billion they wanted to continue expanding.

They were buying growth. They can't afford to buy growth anymore. So it's entirely possible that they'll shrink. And that's not even counting all the negative press, which has to be discouraging potential clients.

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