This is the place where literally every one has the wifi password "P@ssw0rd" (or something similar, I forget) and instead of just connecting an HDMI cable to your laptop in the conference rooms you have to download some spyware that only works on Windows and Mac (despite the fact that their primary client is tech companies, many of whom use Linux or other OS's). Also never try printing, that just doesn't work, and the conference rooms are impossible to book if you're at an even slightly popular location. They also have a crappy website that they claim "builds community" or something, but everyone I've ever worked with just dreaded going on it because it meant wading through advertising and spammy posts from the handful of companies that actually tried to use the forums just to get a little customer support for the wifi or whatever was going wrong that day (and there was always something). I've worked in WeWorks a lot, sadly, but never again if I have any say in the matter. There are plenty of cool one-off coworking spaces that do a much better job. The downside of course is that you can't drop into one in any city, but that's what coffee shops are for.
It seems like their isn't much benefit to brand loyalty here - I would imagine it is easy to simply do a google search for a short term work place in a new city if you need a change of scenery from the coffee shop!
I think it would be amazing to see a co-working brand have locations absolutely everywhere, like 24 hour gyms. One price gets you into any of them and they're all the same. It would help with customer retention because they've already paid $300/mo to get in, so if they move or travel they're not paying someone else. They're sticking with you.
I'm surprised WeWork locations are so few and far between, while Snap Fitness has a location on every other corner. There can't be that much more overhead to a co-working space versus a 24 hour fitness center.
It's not impossible, but I'm not sure a one-price-fits-all makes the most sense. Let's say I travel mostly in the mid-west. I go to lots of co-working spaces for my three-hundred-per-month. You, mean while, live in new england. You travel to lots of spaces, too. Here's the difference: it is significantly more expensive to operate a space in new england. Food is pricier, land is much pricier, the list goes on. For a unified price, I would 1. have to charge mid-westerners more and coastal customers less, and 2. Lose some money from mid-wester customers which could have been made from them.
Better price discrimination -> better profits; businesses seek to do this every day with tiers, regional pricing, etc. Why would I throw all this away?
> I'm surprised WeWork locations are so few and far between, while Snap Fitness has a location on every other corner. There can't be that much more overhead to a co-working space versus a 24 hour fitness center.
Different business models. The gym gets you to pay your monthly fee based mostly on the aspiration that you'll go to the gym. Most people would ditch their coworking subscription if they don't use it almost every day, since there are plenty of alternative options (unlike the gym, which is the only place to get that kind of equipment).
Are they so different though? There must be more than a few "wantrepreneurs" renting space from WeWork, and at the other end of the spectrum, Equinox and other high end gyms are a couple hundred dollars a month, and I'm sure they're underutilized by some members, same as a regular gym.
Gyms have many more members than capacity. They would have to dramatically raise the price if people actually used their memberships. OTOH co-working spaces likely have much higher utilization since pretty much everyone goes to work.
Not only that, for the people who do show, they are expected to be there less than 1/5th as long as a WeWork member would show up. So now you're well above an order of magnitude difference in occupancy rates.
The 1/5th as long isn't as relevant as the peak - I guess gyms have a peak in the evening after working hours. Duringnthe peaknit doesn't matter if people stay half an hour or four hours ...
I'm surprised WeWork locations are so few and far between
Where are you located? They have 562 locations, In many large cities, (SF, NYC, Phil - in Mexico City too) at least you can't go a more than a few blocks without getting a WeWork. Its pretty ubiquitous for me when I travel, but I've got a limited circle of cities I hit
St Louis and Indianapolis are listed on their website as "coming soon". That still leaves Madison and Milwaukee WI, Grand Rapids, Kalamazoo, and Lansing MI, Cincinnati, Akron, Cleveland, and Toledo OH, Louisville KY, Springfield IL, South Bend IN, I could keep going.
All of those cities each have multiple co-working spaces so the market is there.
While not as prevalent as gyms, regus let’s users use all their locations.
Regus is old school from before coworking space was a term. They call themselves an office hotel, if I remember correctly. But they do have an area with coffee and tables where you can plug in a computer and work.
Was in a Regus office years back and you could pretty well book a desk/office for a day anywhere in the world - some of which are in pretty cool locations (if you're into architecture).
If only everything could be homogenous everywhere, so the very few people who have the opportunity to work wherever they like could avoid momentary inconveniences!
Yes, but not everyone does, and not everyone who has a Snap Fitness membership actually uses it. If that statement held true, Snap Fitness would have a US membership of ~330 million people.
Well, of course. But exercising can be marketing to everyone. Everyone is potentially in that target market.
The same can't be said for WeWork.
This is an obvious difference that answers the question to why you don't see WeWork everywhere you see gyms. Even my tiny hometown has a 24-hour fitness. Whether everyone uses their Snap Fitness membership is irrelevant, but notice how just about anyone can be guilted in to a gym membership.
I always liked this idea and wish the https://www.atlantacoworking.club/ or similar clubs, collectives, or co-ops would do something similar (instead of it being run by any individual coworking space).
Deskpass.com lets you drop into any coworking space in their network. It looks like they are up to 11 cities. You pay a subscription and then the coworking spaces get a flat fee for the day when you actually show up to their space.
I know someone who seems to do nearly everything from coffee shops. He maps out a variety in each city, so he knows which are suitable to host potentially noisy meetings (he usually imposes on Starbucks for that), which are good coworking spaces, and which are really nice ones he can hide in and get stuff done by himself. He then spends all day wandering between them.
I used to do this as well and it was pretty great. If I worked remote again I'd probably start a co-op with a few friends or other businesses so that we could collectively rent an office (or just use one of the local coworking spaces if it was just me). When I travel though, I'd go right back to the coffee shops.
I'm working at client office, at one of the WeWork spaces in Jakarta, Indonesia.
My work notebook runs Windows 10, never have any issue with printing. And regarding connecting to printers/TVs in conference rooms which requires the installation of another apps, I think it has something to do with charcing your office's quota.
For the number of engineers they have you'd think they'd have figured out how to build a decent wifi network with some actual security in it. Instead every WeWork has the same password for the wifi (literally a variant on `P@ssw0rd`) and it is super easy to spy on other people's connections. The hilarious thing is they actually built a secure wifi network for their staff, so they clearly recognize the need.
They also use the dumbest access points- they don't support roaming and connect you to the least congested point regardless of speed. It used to be a morning ritual of mine to toggle wifi on and off again until I had a decent connection.
Our WeWork was so close to another WeWork that the WiFi networks interfered with each other, and caused the WiFi to drop out every hour or so. Took them a month to fix.
That's a reasonable position to take for networks in general like coffee shops, but if I'm paying WeWork to provide office infrastructure, I expect the network to not be malicious, just like I expect not to need to boil and chlorine-treat the water I get from their water fountains.
Application layer security doesn't just mean VPNs. What websites are you connecting to with sensitive information that don't use HTTPS with HSTS preload nowadays?
Here's one from just yesterday: the password reset form for sched.com, which the Linux Foundation uses for schedules, is HTTP. I had to follow this link to upload my slides for a talk I'm giving at a LF conference next week.
Yes, the ideal, which we should all be actively working towards, is HTTPS. That doesn't mean that the world is already there.
What is a "proper service" in this case? Many company networks routinely allow access using fairly straightforward and rarely rotated passwords. Of course, access to actual company resources like email require 2FA etc.
But as others note, the main purpose of having a password at all is to stop casual passersby from leeching off your network.
So now there’s significant complexity to getting on the network. Seems like a poor choice for a co-working space. And, as I say, plenty of large companies with competent IT departments don’t seem to think that’s necessarily.
And how about when you’re having a meeting with outside people who need to get onto a network?
Most universities and schools have a similar setup. No idea how WeWork works but I assume you have some sort of user account already (how do you pay them otherwise?) that you can use to authenticate yourself. Then your AP just needs to talk to a auth gateway (usually RADIUS) which then talks to your actual auth backend (LDAP, AD, or whatever online login form they use).
For guests you either generate guest account or just have a guest network. We don't care if guests fight over the guest network because there aren't that many of them around at any one time... the problem is that actual WeWork customers shouldn't be fighting over insecure APs.
Every WeWork member has a dedicated account which is tied to their company and badge (which is used for building access). This account is also used for reserving rooms.
Fair enough. Although I'm familiar with quite a few situations where most people just use a single network for wireless (whether employees or guests) and confidential company resources are put behind SSO and/or VPN using 2FA.
Others do have separate networks of course and maybe that makes sense in the case of something like WeWork that probably has more people who aren't employees/paying customers coming in and out and getting on the network than the typical company office does.
I think the problem is that providing internet access is part of WeWork's core product. It doesn't matter if your accountant's office just has one shitty wifi connection for everyone -- you'd still go visit them even if they didn't have wifi. But literally the entire point of WeWork is renting space to work, with internet. They should be held to a higher standard in this regard, IMO.
> So now there’s significant complexity to getting on the network
Not really, every OS (even Network Manager does a good job) has support for the WPA enterprise login flow. You basically get 1 prompt to trust a cert, then enter your username + pass (usually tied to AD) which you can save to your OS keychain. I've never had to fiddle with the one at my corporate network since first signing in months ago.
I don't know about the actual security benefits, but I do know it stops the typical "capture the handshake & game over"
> And how about when you’re having a meeting with outside people who need to get onto a network?
You set up a crappy rinky-dink "FooBarGuest" network with a PSK that has no real access to the rest of the network and pretty much can just be used for web browsing.
I could have sworn there was a DH key negotiation? And I worked in WiFi for a decade, a decade ago... Sorry, obviously I have not had enough coffee yet today.
I think you can also do it with WPA2-Enterprise, so a common trick is to set up enough infrastructure to let your users use EAP-TLS or something, and IIRC EAP sets up a per-client session key in the handshake. The public LinkNYC wifi network, for instance, has both an open network and an EAP-TTLS one that you can download a provisioning profile for.
I thought I knew this stuff, but now I'm not so sure anymore. If I take care to only visit https sites, what's the risk in being on an open network or a network with a stupid password?
They can see what domains I connect to and when, but that's it, correct? No MITM, no further snooping, right?
MITM for HTTP and DNS are the main threats. An attacker can use one of these vectors to inject malicious JS into pages for you.
Otherwise, it depends on what else you use the network for. Maybe you set "SSL optional" in your mail client so your email password gets fired off in plaintext. Maybe your special radio streaming app is vulnerable to RCE. Maybe the latest Windows update accidently started sending your keylogs (ahem, "telemetry") over an unencrypted channel.
A favorite attack vector is various auto-updating software on your computer that downloads updates or update metadata over HTTP. For the longest time Sparkle (an update framework used in Mac apps such as VLC, iTerm, ..) defaulted to HTTP.
Once an attacker is in your network, it's more or less trivial to make that software connect to a malicious update server.
You need some password to have encryption at all. This is just a better alternative to open networks with captive portals.
I think it's perfectly fine to expect some risk connecting to someone else's network. At least they didn't make it an open network. If you're a person that wouldn't connect to the internet in a cafe without a VPN, you shouldn't either at a WeWork.
I don't see the issue. The password isn't to protect you against other WeWorkers, it's to exclude people on the outside.
Personally, I think any attempt at them to provide serious security on the shared network would be a really bad idea. It'd make people feel comfortable but somebody would find a hole and suddenly have access to a ton of devices.
If security is an issue, just use a VPN/Wireguard.
Your first point is actually part of my point- the fact that they have a single password means excluding people on the outside is basically impossible. If someone has a lease at WeWork but then leaves there's no way to keep them off the network without changing the password for everyone. Since the password is really simple (like, "easy to guess" simple), and since it's possible that people have shared it publicly, their network is not that far away from just being an open wifi network.
And yes, we did setup a VPN for all of our employees to use while we were in the WeWork office. I don't think that changes my point that the WeWork network is not setup well at all.
In addition, enterprise WPA (802.1x) doesn't work like that. In WPA-Personal, if you have the password (PSK) and capture the handshake (easy), you have easy decryption of any other clients' traffic. In WPA-Enterprise, all the connections are segregated (because the handshake uses your certs and mutual auth).
As the provider of the overall service/experience, the major issue that their clients should have is that they might not be actively letting renters/users know of the risks and advising on the steps that can/should be taken if their Wireless network is intended for privacy sensitive material (e-mail login, credit card, etc).
The Wi-Fi at the WeWork I'm at is blazing fast, even in an open office with a 4 or 5 dozen laptops + cell phones connected.
I can get 20-40MB/s, not the fastest I've seen, when I was plugged into gigabit at MSFT I could basically saturate my network card, but far faster than my home connection and good enough for any possible need my development laptop has.
TBF to your complaints, I am mostly stationary, and the WeWork labs floor I'm on doesn't have very many walls, but I've roamed video calls before and not had an issue.
(The space I'm in is super new though, it was constructed last November, so that may be part of the difference as well?)
My experience is with the WeWork in Berkeley. If we had a good connection our speed was great, but we would have to toggle wifi on and off to get that connection.
The Verge simply doesn't get it. WeWork will leverage their real estate assets and come up with an AI-based cryptocurrency to monetize their community base. They will call it "The Country of We." Just wait for it. The time will come.
I'm tired of my WeWork. I'm tired of the relentless positivity ("Thank God for Mondays!") and faux corporate cheerfulness.
I freelanced because I wanted out of that corporatism where I'm reminded that I don't just have to work; I have to be happy while doing it.
WeWork's championing of "makers" and "creativity" and all that gobbledock might work for some people, but I just want a space to work out of that has good WiFi and quiet people. I don't need to be told that I have to be happy doing my work, or that my work is important or world-changing.
What's so structurally fascinating, in a very morbid way, is the difference between the balance sheets of the most heavily-funded late stage companies.
I have an opinion but regardless of it, if a no-asset/no-liability company is losing money and the music stops, they can cut costs and survive. It's messy but it happens.
WeWork is a completely different beast. It's occupancy costs + G&A are 105% of revenue. If it can't sustain its losses with free flowing capital it can't cut long-term liabilities as easily as headcount and perks (again, this is morbid), so its only option would be bankruptcy.
So in this case it would seem that the most rational way to invest in it, if you absolutely had to, would be in its debt. I have to assume, though, given this ridiculous structure, that the opco would be shielded.
Man, we can't predict the future but it's pretty clear that if something does go wrong, it would be an AIG-level mess to unwind the complexities.
One of the founders pulled $700m out of the company, bought properties with that money, and now leases them back to the company. This could've been a solid company if it owned the properties directly.
I think it's the trend of bringing tech to an existing market. When that stops, we'll probably stop calling it tech companies.
Uber is the perfect example of a "tech company" - they brought technology (and in this context "tech", arguably, means "the internet") to an industry that was previously dominated by standing on a street and waving down a cab/taxi.
However I think it is rather pithy to just call them a taxi company with an app, right? There's a lot of tech "magic" involved in Uber from the real-time connections on a such a massive scale, to the geo-fencing, price/route estimations, and the massive amounts of infrastructure management and maintenance needed to bring that to however many millions of people use the service.
I agree, I don't see how wework is a tech company other then the fact they probably service mostly tech companies. I was stationed at wework for a while, I liked it. But I don't see how tech is involved
WeWork to me seems similar to a chain gym. Both have shared physical facilities and manage a membership database that allows you to get in (and also provide WiFi). Yes, there's computer systems involved, but any company of any reasonable size is using computers these days.
But we don't call, say, banks tech companies. A huge portion of their business requires sophisticated technical infrastructure they create themselves, but we just call them banks.
And there are plenty of normal taxi companies with similar systems to Uber's.
>But we don't call, say, banks tech companies. A huge portion of their business requires sophisticated technical infrastructure they create themselves, but we just call them banks.
I understand your criteria for classification but I'll attempt to explain why others think of Uber as a "tech company".
Others' viewpoint: Yes, virtually every company uses technology but not every company is birthed by technology:
- the Uber founders (Travis K and Garrett C) were software programmers, not taxicab owners.
- the product they worked on was a smartphone app instead of buying a car with a taxi medallion and driving around for fares.
- the type of investors that funded them (e.g. Benchmark Capital) were VCs that specialize in the tech sector.
- the type of companies Uber has acquired[1] so far are tech focused (e.g. machine learning, geospatial, etc).
Yes, 100-year-old banks always have ongoing modernization with evolving technology (e.g. Citi and Chase have developed smartphone apps) but Uber's birth was programmers playing around with smartphones.
Another example of the perception difference is eBay vs Sotheby's/Christie's. eBay is typically called a "tech company" but Sotheby's/Christie's are called "auction houses". If eBay brings together buyers & sellers in a marketplace... and Sotheby's/Christie's also has an auctions marketplace... why is "tech company" more often attached to eBay rather than Sotheby's/Christie's? (Both Sotheyby's & Christie's have websites for users to place bids so they develop technology as well.) Probably because eBay was born on the internet by a software programmer named Pierre Omidyar.
I'm not saying you have to agree with all that but just trying to explain the "hidden taxonomy" that some of the others (including the news media) use to label certain companies as "tech company".
One description I’ve heard is that “tech companies”, as the term is often used nowadays, are organizations where software engineers and their work are respected and considered first class citizens. As compared to a company that might heavily use tech, but only as a necessary evil cost center. Never mind that the company would absolutely fall apart without its tech.
As someone who has worked in banks most of my career, I would classify most banks in the latter category.
Hmm. I worked for a web development company; it called itself a "digital agency". It was once pointed out to me by a director that the purpose of the firm was marketing, not making websites. The developers were generally treated as fungible resources; graphic designers, on the other hand, were stars.
This director was a smooth salesman. He fancied himself as a graphic designer, of course; his major technical accomplishment was the ability to make Flash websites.
There's a ton of tech involved in all kinds of companies: hotels, airlines, hospitals, insurance companies, anything really. None of them are "tech companies".
In many ways, banks were the original hybrid tech companies. VERY early adopters of software, mainframes, databases and so on. But because they were so early we don't call them tech companies, probably because there wasn't a concept of a 'software tech' company back then and they were evolutions of older companies that didn't use software to run their businesses.
In my mind, the main feature of a tech company is the ability to scale due to almost zero marginal costs, compared to other companies which need much more time and resources, which is also why tech companies can have such huge profit per employee numbers.
That's very specific to software that doesn't need much support. I think Intel is probably considered a tech company and they certainly can't scale at near-zero marginal cost.
>However I think it is rather pithy to just call them a taxi company with an app, right?
Perhaps you mean reductive? A pithy statement would be one which has identified the core of something or is very meaningful despite being terse. It is very positive.
Definitely agree with you about Uber. Here's one clear way to see that Uber is a tech company.
Imagine the senior management was all abducted by aliens tomorrow, and you had to replace them very quickly. Who would you rather bring in. A bunch of senior execs from Google or a bunch of former Taxi company managers? Which group do you think could run Uber better?
Well I think the obvious answer makes it pretty clear that Uber is a company with tech at the very foundation of its DNA.
It's a logical extension of the ponzi scheme that exists in the venture capital/startup world in tech. The fact that so many startups fail is irrelevant to the early investors in these companies, as long as you get in at or before Series A you have a good exit 90% of the time. Just force some artificial growth and wait for the next round of investors.
Everyone who comes later... not so much. Very few good outcomes. So they're now just adding some more levels to the pyramid to try and push the scam down the line to the IPO market.
It should be illegal, and would be if we had a functional SEC instead of what is effectively an empty building.
VCs get management fees typically 2% of fund size. VC incentives are misaligned with LPs. Very similar to hedge funds. As long as they keep raising the money keeps flowing and they can delay showing a return. Whether the fund fails is irrelevant. There’s an endless supply of rich LPs like there’s an endless supply of kids with a “startup”.
I worked in the gig economy space for two years. Literally, the only reason to be a "tech company" is to claim you simply provide the technology and aren't responsible for how people use it (aka employment law)
I agree on WeWork, but Uber is clearly not a taxi company. They're closer to being a mobile app developer, though that still feels like it falls short of an accurate description.
I mostly agree with you, but I think what's happening here is reminiscent of the e-commerce vs brick&mortar debates from years ago. Ultimately, Amazon started as an e-commerce business that has a whole ton of brick and mortar capital and infrastructure.
For a long time, tech companies wanted to do everything virtually (apps, cloud, etc) and people NOT from the tech industry had an understanding of the brick & mortar world and harnessed tech to create a boom of some kind.
I think Uber is like that, in that the level of tech needed -- not just an app, but a global infrastructure that has to stay up and takes payments in a lot of countries -- when married with the real world, created a kind of behemoth.
They're also financial structure jockeys, and We is more contracts & funding and not really all that much tech.
> but a global infrastructure that has to stay up and takes payments in a lot of countries
To play devil's advocate though, that's just the 'back office' updated to replace manual book keeping with automatic software. (Well, 'just'.)
I think we can usefully describe companies as both 'tech-heavy company in the <domain>' and '<domain> company that uses tech' depending where the emphasis should be for a particular sentence.
Uber made the right call in that it's asset-light; they don't long-term lease medallions or have long-term contracts with landlords (any more than a similarly sized technology company would). The We subsidiaries, on the other hand, are dreadfully asset-heavy. They can't just pack up and move out of a city that's underperforming. And as we all know, agile is as much about knowing when/how to stop doing something as it is about moving fast in doing new things. My only sadness is that this is so apparent that it will be immediately reflected in We's price, and there's likely not much opportunity to short these guys.
Uber is a taxi company that replaced the taxi industry's global pain point: dispatchers, with an app. Secondary: medallions (which are eventually coming back via regulation).
How they populate their inventory of drivers is not particularly special. You used to be able to drive a hack for a few hours and lose money doing it, too. That part hasn't changed, you can just lose that money driving your own car now.
They provide a service that lets you summon a car and driver to take you somewhere for money. From the user's point of view, the only structural differences are that you use an app instead of your voice and payment is easier. It's dramatically different on the back end than a traditional taxi company, but the service is the same.
Because they develop their app in house they are an app dev and not a taxi co? Are all taxi companies that have apps and develop them in-house app companies and not taxi companies?
Are their revenue coming from apps or from rides? That's the clue.
It's a property company that's planning tracking everything people do in their buildings.
>WeWork's latest acquisition is a small software company with 24 employees. Euclid is a spatial analytics platform...Euclid's website says the company is "focused on redefining the workplace experience of the future." Translation: optimizing every aspect of the physical workplace so workers are their most productive. Euclid does this by tracking how people move around physical spaces. Its technology can track how many people showed up to a meeting or to that after-work happy hour. The company can see where employees tend to congregate and for how long. It's all done over Wi-Fi.
A hell of a taxi company with that many engineers and research and development areas. But I agree on WeWork as a real estate company. They are not creating anything.
If your revenue isn't driven by your technology, then you aren't a tech company. If it is, then you are. There's tons of software companies that make money by selling (directly, or by charging licensing, usage fees, etc) for their software.
WeWork isn't selling software, or any other form of technology. They're renting property.
So if Uber's model was subscription-only software that enabled ~unlimited~ fair usage many rides, it would be a tech company, but as it is it isn't?
I'm not disagreeing with the conclusions about WeWork and Uber, I just think it's hard or not possible to define what it is, and what does it really mean anyway: to varying degrees any company in any sector is enabled by 'tech'.
>if Uber's model was subscription-only software that enabled ~unlimited~ fair usage many rides
I have no idea what this sentence means. But if Uber was a company that sold software to taxi companies then they'd be a tech company. As it is they sell car rides, not software, and so are a taxi company more than they are a tech company.
I mean that if Uber provides the same service, but the pricing model is such that you pay for the software instead of the car ride directly, it's suddenly a 'tech company'?
If pricing model is how we categorise a company as a 'tech company' or not then I don't see that it's a useful category.
Yeah its mostly a factor of what VCs they tap and their portfolio companies coupled with how a company spends. High burn high growth Draper Capital? Tech company.
> ...The We Company, used to be called WeWork, but it changed its name. The new name was owned, Bloomberg’s Ellen Huet reports, by We Holdings LLC — so WeWork paid $5.9 million to acquire “we” and changed its name last month. We Holdings — you guessed it! — manages stocks and assets owned by… WeWork’s founders.
That's a huge conflict of interest. How would something like that be approved?
Approved by whom? Someone might look at it after the fact, but nothing stops a company from buying or selling with its shareholders. (In fact it's quite common for private companies to pay owners for things like office space.) But yes, it should be at fair market value; you're not supposed to buy something for one price just to flip it to your company for a higher price (effectively taking compensation as a capital gain).
Putting aside the fact that it's absolutely asinine that "we" can be trademarked at all, $5.9 million seems like a pretty hefty price tag for a relatively unknown trademark.
Edit: I pulled the trademark[1] on USPTO. I don't know much about IP law but it looks like the mark was only registered in December 2018. And WeWork "rebranded" as the "We Company" in January 2019.[2] Am I reading the trademark info wrong or is that suspicious timing? Could Dec. 17, 2018 be the date WeHoldings LLC assigned it to We Work Corp.?
That's my point. The LLC owners / WeWork shareholders should have recused themselves due to conflict of interest and the board should have shot it down. This seems really sketchy to me, an end run to get money out of the company.
My lasting impression of the year-ish I spent at one of their NY locations was:
- The coffee was free, and great
- The person behind the front desk had recently graduated from Princeton and seemed way too smart for the job and bored
- The beer on tap was free after 5, was locked up before then, and was invariably some weird fruity craft beer that probably cost a lot
- Printing a single page involved first waiting in line for 5-10 minutes and then entering a 10-digit code into a really crappy office printer touch screen, then manually re-authorizing the job you had just set to print. Like DMV level inefficiency
All told, general impression was, "wow, they actually pulled off getting a tech valuation for a real estate play".
Article author was confused by the org charts and diagrams, but it looked to me like the founders are setting the public company up to be machine for transferring investor money to themselves while maintaining voting control and without delivering any additional value.
Can someone better versed in finance explain to me how this is not a blatant flimflam to grab the IPO cash?
The structure of the company is mostly about making sure that Adam Neuman can minimize his tax burden while maximizing his compensation. It's not really about stealing the IPO cash, but on the other hand nobody is better positioned to take advantage of the value generated by the company than Adam Neuman, and you can be sure, based on the history, that the governance of the company will be driven by primarily what is good for Adam.
I don't really see a significant difference between "stealing the IPO cash" and restructuring multiple business entities such that the company's new valuation is predicated on increasing revenues, yet those additional revenues will actually be siphoned off via increased expenses to more closely held companies, rather than reinvested into the public entity, or distributed to its shareholders.
Who is dumb enough to fall for this nonsense?
I get that a lot of public companies make shady sweetheart/nepotism deals with private companies part-owned by their executives and board members, or friends and family of same, but why would you willingly be principal for an untrustworthy agent?
The question you need to be asking is "who is corrupt enough to fall for this nonsense?" The IPO will probably distribute the flaming bag of poo to various pensions, ETFs, and other funds where a PM can be leveraged as a single point of failure.
> I am just going to drop The We Company’s org chart here because it honestly leaves me speechless...
Indeed, I suspect that kind of a weird org chart of inter-related legal entities is pretty typical for a real estate company... because, as the OP suggests, that's really what they are.
Also morbidly fascinating is why real estate companies are so much more into compartmentalizing themselves into all these LLCs/LPs/corps. Most of the time they seem to do it to maximize the tax advantages and entitlements (and contain losses) in specific locales. In California, most commercial buildings are held by a trust designed to never transfer majority control, to preserve Prop 13 property tax breaks.
I think it also pertains to how individual deals sometimes include additional investors or other parties to the deal/transaction, e.g. the parent company partners with another local company for a specific deal and thus creates a separate LLC/LP for just that deal.
I'm not very knowledgeable about WeWork... but what exactly do they bring to the table that wasn't being done before business wise? They just seem to have office space like any other company that might.
Presumably the properties they bought or lease or whatever were somewhat profitable before ... but now WeWork owns them and ... doesn't make money?
That seems, bad.
I'm skeptical of say Uber's long term sustainability but at least with their app and business model they were doing something different that maybe could eventually pan out (ok it won't... but there's something there). But WeWork just seems like office space leasing ... on top of office space leasing, except they lose money...
They're planning on tracking workers within their buildings.
>WeWork's latest acquisition is a small software company with 24 employees. Euclid is a spatial analytics platform...Euclid's website says the company is "focused on redefining the workplace experience of the future." Translation: optimizing every aspect of the physical workplace so workers are their most productive. Euclid does this by tracking how people move around physical spaces. Its technology can track how many people showed up to a meeting or to that after-work happy hour. The company can see where employees tend to congregate and for how long. It's all done over Wi-Fi.
I don't think this kind of tracking will have any positive impact on employee productivity, and it could have the opposite effect of being demoralizing. Unfortunately, I'm sure there's lots of unethical companies that would love to have this kind of data on their workers.
The thing is that the big owners of office space don't want to be bothered with doing anything. They have made vast sums of money for decades by doing as close to nothing as possible -- they just hold the real estate, and rent it out only to people who are willing to sign 5-year leases. In most cases they would rather let it sit empty and appreciate quietly rather than renting it out for less than 5 years.
WeWork has come in and made a relatively tiny business by installing a "front door" to this office space. They allow the property owner to continue to do absolutely nothing, while making the property easier to consume with shorter leases, a common access pattern for WiFi, coffee, etc. and a modern billing system.
The money made by WeWork, to these property owners, approximates to zero. They hold collectively trillions of dollars of real estate and some vegan weirdos want to make $50B off of them? They don't care. They'll just sit around watching their property appreciate without having to care a whit about what's going on inside.
As far as I can tell the only benefit they provide over other smaller coworking spaces (most of which are a lot better) is that there are a lot of them. You can get a mebership at a WeWork in Austin, then pop into the one in Tokyo to get some work done while you're visiting. That being said, that's probably not worth the expense, terrible technology, or loudness of weworks for most people.
They don't seem to focus much on the 'digital nomad' side of things either, so I am not sure if that is a big part of their benefits! I'd imagine most of their customers only use local weworks.
Yah, absolutely. It's the only benefit I can think of (and it's not really a benefit, coffee shops and other coworking spaces with a day pass exist) and I've never heard them advertise it. They only advertise "community building" nonsense. I'm not saying that no company has ever made vital connections or new leads in a wework, but I'd be willing to bet money that it's a very, very low number. Nowhere I've ever worked has engaged with any other company just because they were both in a wework other than maybe playing a game of ping pong with some random people in the lobby or similar.
I remember a lot of the office sharing type companies selling that whole having an office anywhere thing as a big selling point and then ... they didn't mention it.
I also suspect it just wasn't a common thing people did.
There are a lot of companies that have small remote Wework offices for sales/support/short term projects. For larger companies that have a bunch of these, Wework has the advantage of being simple and standardized and available in most cities.
You can say that about pretty much any start-up, though in public most founders are all about the mission and changing the world (insert "HBO Silicon Valley" meme here).
So I'm trying to look into IWG (which the article claims is WeWork's primary rival) since it looks like they'll have less competition in a year or two. It looks like they're traded in the London Stock Exchange. Google seems to claim that they're owned by Berkshire Hathaway Energy but I can't find any evidence for that.
Until recently I thought part of WeWork’s allure was they were a real estate play underneath the office value add.
Incredible to me this isn’t the case and they have this type of status. Especially with the recent “exposé” showing the CEO owns some of the buildings WeWork is leasing from.
There's a real estate play, but it's the CEO who's benefiting, not WeWork itself. A lot of the properties WeWork occupies are leased from Adam Neumann himself, or an entity he owns.
"I think this and remote work are the best bull case for WeWork.
In 2025, every Fortune 500 company will have 10k+ remote workers, and every purchasing department will approve a reimbursement for WeWork with no questions asked."
> "[...] every purchasing department will approve a reimbursement for WeWork with no questions asked."
I think this is just a smidge over-optimistic, considering what I know of finance teams at companies I've worked at, past and present.
Here in Midwest population centers, remote work is starting to become more widely adopted from a "work from home" perspective. The moment there's an expense report attached to pay for another office space, you're coming into HQ and that remote work arrangement is going to be reviewed rather quickly.
I just wonder why banks continue to loan to this company? Their expenses are pretty consistently double their income. They grow by selling the product for way too little. Do they expect that customers are going to stick around if they double their prices?
WeWork can't crash and burn fast enough. Maybe it will be a trigger for the next crash, when people realize the other "tech" companies are not tech companies. Most "tech" companies are marketing.
Did you read the article? It's not saying that it's a soap opera because it's not a tech company, it's saying it because of the crazy family that runs it and the questionable financials around it.
I don't disagree with the notion that WeWork is a shady "tech" company but this article is terribly written and hard to follow. I couldn't even make it halfway through.
> The thing _begins_ with an epigram: “We dedicate this to the energy of we — greater than any one of us, but inside all of us.”
Yeah, every S-1 I have read starts with marketing materials. How is this at all relevant?
> I am just going to drop The We Company’s org chart here because it honestly leaves me speechless
Do not just add random images to your article and not explain or discuss them. The org chart was not even relevant to what you were discussing.
I basically gave up after that because it took the author 4 more paragraphs to even fully state their "soap opera" thesis.
I liked the article. And agree with it's premise. Softbank has apparently driven up the valuation of We to $47 billion or so for no apparent reason.
The entire company structure exists to serve the founder. The company even paid $4 million to buy the rights to "We" from him so that they can change their name from WeWork to We.
The org chart was absolutely relevant. It was evidence that the company was structured in an incredible way that's just waiting for disasters to enfold.
I absolutely agree that it is relevant to the discussion but not where/how the author introduced it. The image is just distracting and confusing without any sort of commentary. The author even plainly states that they don't understand it in the caption:
> This is the planned structure for The We Company after its IPO, as it appears in its S-1 form. I’d try to explain it, but I don’t understand what the fuck is happening.
If you don't get it but you want readers to be aware of it then either just link to it or put it at the end after you have made your argument. Don't place it at the beginning before you have even fully explained the premise of the article.
