WeWork Skips $95M in Interest Payments
nytimes.com
nytimes.com
For the last few years, I've been scratching my head how they are even staying open. Almost all of the centrally located ones around the City have been like ghost towns. Sometimes it seems there are only 2-3 people in the whole building, especially Monday and Friday.
In the last 3-4 months they are finally getting back to how they were. Struggling to get rooms, phone booths, hot desks etc and a bit of buzz is returning. I really think return to office is finally a thing after the summer.
My experience with their sales teams has been abysmal. I must have contacted them 5 times asking about upgrades, and I've never once had anybody follow up properly - e.g. email trails go dead, no availability for viewings etc.
They also seem to have quite restrictive opening times at this point.
Edit: https://help.wework.com/s/article/en-us-articles-11500388166...
Ancedatally, companies are gradually increasing the number of days people need to be in the office.
I'm happy I'm permanently WFH and don't have to deal with all this crap.
Awesome. They just gained a customer. It's probably the best time to work there.
Many people who work there will also have their own lockable offices.
WeWork was executing a strange vision of how "creative" work should be done while ignoring the ordinary needs of office workers. Open-plan couches instead of soundproofed phone booths.
Still don't know how they can go on though.
Imagine paying to be in an office crowded with people. The stockholm syndrome is strong.
For a lot of buildings they cut the monthly membership price in half about 6 months ago. It’s led to the WeWork I go to being absolutely PACKED most days now.
Me and like 2 other people would have an entire floor to us. Then some time around early last year it went from empty to nearly impossible to find a free spot.
My go to place was Merchant Square, Paddington. I had to stop going there because I couldn't find a single spot (not hyperbole). Then Hammersmith, which got filled up too and the last one was Holborn, which was relatively free until I left London.
They were able to show me the available offices, and then I never heard anything else afterwards. No follow up.
The company is nearing bankruptcy, but nobody is closing when deals are right in front of them.
That model works poorly in good times, and never works in bad times.
In the broad sense I understand - if paying would cause a going concern for the lendee, the le der would rather get something tether than nothing.
But in this case, the article even said the wework has cash on hand and a credit line. Why wouldn't any one given lender try to cash out in full and run for the doors, and leave all the other lenders who renegotiated holding the bag? Simply get a legal order forcing wework to pay in full while they still have the ability to (even if it meant paying YOU in full would make it so they wouldn't be able to pay OTHERS later).
If wework owes you $100M that you demand repayment on, and they owe $1B in total, they may not want to declare full bankruptcy just for your 10% of the total debt. In which case you can get a court order to be paid in full, since they was the terms of the original debt contract.
“Fuck you, sue me.” Which takes time.
It's not valid business practice. Wework should be put in the hands of an official receiver.
The whole "stick it to the man" vibe of one class of capitalist being a parasite on another kind of capitalist, and in the end it's shareholders and tax payers who suffer.
On the one hand, it's still playing within the legal rules of the business system. And one might expect sophisticated lenders to account for this possibility in their contracts and financial terms. I.e., to price in this risk.
On the other hand, it's at odds with my intuitive notion of honorable conduct. On a personal level, I see obligations to others as carrying moral weight.
Simple transactions cost far more, take way more time. Lots of resources wasted in vetting, and lots of price premiums to account for inevitable losses due to corruption.
And it's easy to do... "If you are late paying the due amount, even by one day, then the amount payable increases by 25% immediately, followed by 5% more each day until paid".
That way if anyone plays chicken with anyone else by paying late, at least when bankruptcy proceedings are begun the payable total will be far larger, and so a bigger piece of the pie will be theirs.
This is trying to arbitrage the inefficiency of courts. Technically, everyone in society can do this, but it raises the costs of transacting considerably and reduces societal trust.
A high trust society where you do not have to worry about dragging everyone to court or having to fund courts for many more cases will waste less resources on dispute resolution.
In TV, the buyer (cable or satellite TV business) and the seller (content owner) never had an agreement after a certain date, so the channels disappearing is not a similar situation.
I certainly agree that not paying suppliers etc. is problematic behaviour but this isn’t an example of that.
the founder of WeWork took bajillions of dollars from investors and did all sorts of related party shennanigans to take more, then took half a billion dollar payout just so he'd fuck off finally.
I have encountered them not paying office rent or contractors if they think they can get away with it. The scary thing is they do get away with it. Everything is a negotiation, all the time. It is very tedious.
I guess it is unpopular to say but I like WeWork and I'm rooting for them. We were very very early users before even their NYC Flagship at 175 Varick. Those early days were really memorable. They provided something no one else did. I think the model makes sense over the long term with some austerity, so I'm rooting for them.
Spend 30 seconds interacting with the inept criminal organization that is Regus/Spaces and you’ll appreciate WeWork even more.
Context: https://www.google.com/search?rls=en&q=regus+billing+reddit&...
They deserve failure. I believe the model does work and that some other company content to work on a smaller scale will find plenty of success with it. Here in NYC there are already a number of them.
(Regus similarly has access to lounge, coworking and office memberships worldwide 4000 locations).
Is that true? Perhaps Wework did / does some unique things I'm unaware of.
As per [0] - co-working spaces started ~25 years ago, and by the time WeWork was founded (2010) there were at least 300 co-working spaces operating in the USA.
[0] https://helio.se/en/magazine/the-colorful-history-of-coworki...
They'd often provide pretty bare-bones service - no fancy coffee, just a fridge where everyone had to label their own milk.
They'd have mostly small/single-person offices which people worked in alone with the door closed. I've heard some people find a 'community' at wework offices, a bunch of closed doors of course provides no such thing.
And they mostly rented space to permanently small businesses, like one-person accountancy companies. Which is a fine way to make a living! But co-working spaces weren't a place you'd expect to network with people whose businesses were going to the moon.
Yes, they provided more office space for you on Softbank's dime. Funnily enough, this isn't sustainable.
Of course the model, broadly speaking, makes sense. There are loads of boring, CRE rental providers. e.g. Regus. Which never had valuations in the billions, nor billions of VC inflow to subsidise the offering. WeWork is piss poor execution on a thin margin business.
> I dislike this "negotiate by brinkmanship" approach intensely
WeWork is walking an extremely tight rope with a very narrow window of time and not a lot of options.
Things could go in many directions (merger, acquisition, bankruptcy, extension) and this is the last time the current management/shareholders will have any kind of say/leverage in what happens.
Do you just expect them to do nothing and wait for inevitable implosion and the subsequent wipe out of shareholders, mass layoffs and probably either the end of the brand or a restructured version that will be a shell of its former self.
Btw speaking of Elon, he was in a very similar spot this time last year. Mass exodus advertisers dropping already bad financials of a cliff with looming interest payments.
> and in the end it's shareholders and tax payers who suffer
This makes it look like a good vs bad situation when in reality its an already bad situation where you multiple stakeholders fighting for who loses the least.
Considering it has a lot to do with how much money you have to throw at lawyers, and arbitrary things like how well staffed the courts are with judges, my characterization would be anything but “close to nature”.
That said, even when/if (lol) they get there its still part of the capitalism just like how hiring a good salesman or marketer is part of capitalism.
In other words, a society without consequences leads to "too big to fail" banks and other systemic distortions.
Those who invested billions into WeWork need to suffer the consequences and equally those who gave out leases to such institutions needs take their medicine too.
Anyone with an outstanding debt can ask a bankruptcy court for this...
The fact nobody has done so means nobody thinks it's worth it.