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Comment by lefstathiou | Hacker News Reader

I’ve ridden this stock down almost all the way (came in at $5 then 2.50 then again at $0.50). I am a pretty bad investor in that my top criteria is to buy stocks that produce a good or service I love and then stick with them a long time.

As an operator WeWork adds so much value to us as we staff up all over the world. I love being able to go into any city and have a fun energetic and aesthetically beautiful environment. When I look at the WFH shift, I struggle to rationalize how companies wouldn’t rather utilize flex space as needed for group huddles than commit to long term leases. Their pricing is variable which is inflation resistant. Top line growing at 20% and they removed $2bn in run rate expenses. The list goes on…

Anyway I was wrong on literally every account. This was a huge (and expensive) lesson for me. Stocks always have room to go down no matter how low you came in at.

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> "I struggle to rationalize how companies wouldn’t rather utilize flex space as needed for group huddles than commit to long term leases."

Because larger companies have a stable enough need for space, even in the remote realm, to make it worthwhile to have long-term leases. Even if offices become group-meetup spaces rather than more traditional desk space, it still makes sense to run your own if your scale justifies it. A company like Microsoft for example has enough persistent need that they should just reformat their existing holdings to be group-meetup-y. They have no need for an intermediary like WeWork.

Which leaves the market only to companies too small to justify running their own offices - which coincidentally is the same market WeWork targeted pre-pandemic, so remote hasn't actually changed much, much less significantly expanded their TAM.

Also worth a heavy and hearty thumbs-up on the other reply: be aware if the service you love is because the company is very well-run or has some technological advantage... or if it's because you're being sold $100 worth of goods/services for $50.

Free shit is always a good product.

That’s what I got wrong. You outgrow a WeWork at about 8-10 people which is where customers are most stable. I assumed they could adapt but the economics aren’t there.

Often the reason a company is great for customers is that it’s selling a dollar for fifty cents.

Which makes it not very desirable as an investment.

I'm with you—I love the product.

I used to work at Microsoft and loved the ability to fly to different cities and have a great workspace where everything "just works" and stimulating conversations with new people in the field. A valuable "invisible" tool of thought if you do R&D. I didn't think this could be possible if you didn't work at a bigco, but then along came WeWork.

I don't have access to their internal data so don't understand their complete model, but it seems to me they have significant value and could definitely comeback.

I bought FitBit heavy, dollar cost averaging in and at one point paid around $40 a share, and ended up losing a decent amount (I think my average price was $10 and GOOG bought it at $7), but here I am years later still wearing a FitBit and it's great. I hope the same happens with WeWork, that they survive this dip and figure out the economics (maybe getting acquired). Come to think of it, could be a good buy for GOOG–they could pitch Google Cloud heavy to all WeWork users.

Disclosure: I don't own any WeWork.

> When I look at the WFH shift, I struggle to rationalize how companies wouldn’t rather utilize flex space as needed for group huddles than commit to long term leases.

It still requires that everyone be in the same city more or less. Basically only applies to companies that had an office and now don't want one, and even then only for a while.

Once you're working fully remote anyway you're giving up one of its major advantages (geographically unconstrained hiring pool) by keeping to one city like that. If you find meeting in person to be advantageous enough to justify that, you probably should capitalize on it and just have an office.

It's one of those things that sounds good on paper, and kinda was good during some periods of the pandemic. But it's a compromised middle ground that realizes none of the advantages of committing to either approach.

Interesting, didn't short it? I see that you're an operator of a fintech info/news company? What sort of analysis did you do on WeWork?

P.S. Is the about link in your profile correct? https://finsight.com/about/our-products seems to 404.

In full transparency I didn’t do much analysis. At $5 it was trading at 1-2x revenue growing at 20% in a horrible market with a great operator. The issue is too maturities and running out of cash.

Thank you for the note on the link, updated it.

Ah. What made WeWork a great operator?

They provide an excellent, consistent service at global scale that no competitor even comes close to matching. They are a fantastic operator from the customer’s vantage point.

What is the public data about the cost of this and its sustainability as a business? Seems like a facade if unsustainable...

I would agree that its not sustainable. I only refer to the value the customer receives.

Ah, understood!

But surely now at .21…

Believe me… the thought has crossed my mind!

Appreciate the candidness!

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