WeWork Plans to File for Bankruptcy as Early as Next Week
wsj.com
wsj.com
Really a marker that we are at an end of an era of excess — glad that I got to enjoy the ride of other people’s money, even if only in a slight way.
There are some that are always a little sparse to be sure, like the Navy Yard in Brooklyn, but I’ve been to 75+ in the past year or so in 5 different countries and for the most part they are well used and the permanent office parts are really full.
Not saying it’s financially sound but the core product is real.
If I had to guess I would assume the issue is spending from boom times and debt. Theres an actual business there too.
The Portland location I go to has been packed as a result.
Even their EBITDA is negative, so debt is not the (only) issue. Perhaps they have locked themselves into long-term overpriced rental agreements?
The idea being that the landlords (and everybody) knows that the commercial real estate market is super depressed, so if WeWork disappears the landlords may be stuck with an empty building for years.
They have historically been one of the biggest movers in Chinese and Indian Growth VC, and have a significant presence in American Growth VC too.
They made oodles of money off Slack and DoorDash for example, and their 2010s investment phase was thanks to them being flush with profits from Alibaba and Tencent.
At the end of the day, compared to most other Growth Funds, they tend to hire some solid investors who know how to find capable operators.
Though, lapses of judgement do happen a la Neumann, but that's like saying anyone who invested in Pivotal or Joyent is dumb. This is VC. It's not guaranteed returns. There's a reason why it's called VENTURE capital.
[0] - https://pitchbook.com/news/articles/softbank-earnings-vision...
Their hits have more than made up for their misses.
The WeWork product is fantastic and I’ve tried all alternatives. I’m in a different city basically every week and if they go under or stop being basically the same I’ll seriously mourn the loss.
It’s that WeWork is SO MUCH better run. The keycards work the website works and has current accurate information and so on.
Regus/Spaces makes the DMV look like an elite customer service organization. The second time you book on their app and end up at a building under construction you’ll say the same.
Things that have happened to me at Regus:
1. Asking the floor manager to practice his singing more quietly across the hall (seriously) 2. The rep supposed to be giving the tour forgetting to turn up and calling me several hours later to apologize 3. Someone loudly telepreaching from the next room every day in the style of shouting
As a former coffee-shopper, I can definitely tell you the experience working from there vs a coworking space such as wework is night and day. It might be fine if you manage to find a good coffee shop and consistently abuse their space, but doing that in random new locations is tough.
https://www.regus.com/en-us/united-states
There is also codi and several others
As a private, non corporate costumer, I’m sad to see them go.
“Ghost town” probably depends on your location and country. The ones here are sometimes so full that if you don’t book in advance, you can’t get a seat for on-demand
I think the fundamental problem is they over-expanded too quickly and charge too much, leading to an oversupply of locations and a huge pile of leases in the debt column. They're glorified Regus and drank their own KoolAid that they were a unicorn rather than a business.
Technology is not going to improve where people are and aren't willing to commute.
Success of the corporation has nothing to do with the success of the founding shareholders, if being used as a conduit: something to draw a salary from, something to sell related property to, something to sell your shared of. Authorize more shares to be created to replenish holdings. Vest at whatever speed you want (30 days? Why not)
Neumann understood that, his employees and sycophants should have understood that but did not. I’m currently with a company where all the employees have never been in a “tech startup” and think we are one, when we’re not. I’m the only one that seems to have experience with a tech VC backed tech startups to tell the difference.
I think its weirder that there aren’t more of him. Like, people either get too risk averse or comfortable at sort of outdated amounts of money. Or they create companies with this wide ensemble cast of characters for clout, which is also very outdated and unnecessary for what these companies do, which also prevents them from having flexibility on how to direct the conduit to their pockets. But its all so outdated, given the expansion of the money supply there should be way more Neumans, way more Bill Hwangs a version that didnt get margin called and liquidated everything successfully.
I think what Twitter was expecting is what was strange.
(Demo’d a dilapidated house in a historic district once, in and out in a day with no permits or city approval)
So because yoi got away with doing something illegal other should do illegal things?
Not an attorney, not your attorney. The intersection of reality and the legal framework is tricky. Determine your risk appetite, prioritized potential outcomes, and second order effects. Then act.
https://news.ycombinator.com/item?id=37668438
(not out here willy nilly knocking down historic buildings, sometimes there are no great options, only competing least worst options)
I hope at least my local wework (in Brooklyn) doesn't get shut down! More and more people are coming in to use hot desks, though the private offices are still half empty.
intuitively, a shared office space makes sense to me. I find it really useful as a remote employee to get out of the house a couple of days a week, and for my employer it's pretty cheap and is a perk which helps them hire from all over the world, also cheaper than hiring american engineers.
Is it just a pricing issue? Hot desks are about 250 USD/month
>Except in 2018 the firm lost $1.6 billion, which is likely understated.
These are the financial facts from the article. Tell us the math of your 2023 WeWork and compare to how much their lease must be, etc.
These seem to be the latest numbers:
https://www.statista.com/chart/19025/wework-revenue-and-loss...
3.3B revenue
5.3B expenses
That's a big problem.
I believe that the information revolution will last 300 years -- from PCs to the internet and on to AI. How do I make SoftBank into a corporate group that will keep growing for 300 years? Understanding that an organization can't be sustained with just one technology, one business model or one leader will let it prosper for a long time.
- SoftBank Group chief Masayoshi Son, 2019 https://asia.nikkei.com/Editor-s-Picks/Interview/I-had-a-cha...
Wall Street Journal article from 2019: https://www.wsj.com/articles/weworks-ceo-makes-millions-as-l...
Accessed via: https://archive.ph/jzsxI
https://techcrunch.com/2019/01/16/we-company-ceo-in-hot-wate...
Scene from "The Founder" "You have a miniscule revenue stream, no cash reserves, and an albatross of a contract....
What you ought to be doing is buying up plots of land, then turning around and leasing said plots to franchisees, who as a condition of their deal should be permitted to lease from you and you alone. This will provide you with two things: One, a steady, upfront revenue stream. Money flows in before the first stake is in the ground. Two, greater capital for expansion. Which in turn fuels further land acquisition, which in turn fuels further expansion. And so on and so on. Land... That’s where the money is. (BEAT) And control."
Uber and Airbnb outsourced the risks of these assets.
If some cars or flats are suddenly no longer in demand, there is no cost to them.
If WeWork had functioned like an Airbnb for offices, underperforming locations would have been less of a problem.
[1] https://investors.wework.com/news-and-events/press-releases/...
The "exploiters" Uber and Airbnb were at least able to build a sustainable business. WeWork was a scam from day one.
The only parties that really got fleeced here were Softbank and their totally unclothed VC siblings who bought Neumann's messianic complex like rubes. Building owners by and large seem to have been treated fairly?
I would argue the gig economy has been worse, since those who got fleeced were largely working people being squeezed and having massive externalities and liabilities dumped onto them.
That's part of the deal.
Their share of the profit is disproportionate to the risk they take
Then, after Enron reported good quarterly numbers, this fake fund would simply sell the stake back to Enron, with the CFO taking a gigantic management fee for orchestrating the charade.
Public companies have been banned from doing this, but I guess anything goes when you're private.
Uber and Airbnb don't do that, they are just the service for others to rent out their assets.
So the risk of running costs in times of low business activity, such as a pandemic, is not on their side.