
WeWork Rivals Pitch to Win Back Market Share, Try Not to Gloat - pseudolus
https://www.bloomberg.com/news/articles/2019-10-04/wework-rivals-pitching-to-win-back-market-share-try-not-to-gloat
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jeffshek
I'm not quite sure if I really agree with the premise of this article. This
isn't some type of Uber vs. Lyft analogy. WeWork dwarfs all the other
coworking spaces. Customers aren't going to leave WeWork because they fear it
going out of business (after-all that's the point of month-to-month). The
turnover happens from unhappy customers.

This also seems to imagine given all their recent troubles that WeWork isn't
going to dramatically improve operations. WeWork has never gone back to make
things efficient since inception, so it wouldn't be a huge surprise if there's
a lot they've left on the table. WeWork owns so many leases from landlords;
the landlords might be strong-armed into concessions.

It's not unreasonable to expect a lot of their metrics are going to improve
(and cut costs drastically down), especially with a new set of management.

I just signed up for WeWork in Lima, Peru this week. There's definitely
customers. Everything is clean/organized. Although, the music is definitely a
bit distracting ...

~~~
jillesvangurp
Exactly, WeWork is turning into a normal business with competition. I think of
them as similar to a hotel chain. Hotel chains basically own or lease real
estate that they rent out on a per night basis to individuals. The reason the
hotel business has multinationals owning large amounts of hotels world wide is
because that kind of scale provides certain benefits in terms of operational
cost, brand recognition, etc.

WeWork bootstrapped a multinational with hundreds of locations world wide
using investor money and are now serving hundreds of thousands of users that
apparently like them enough to pay a premium for using their space. So far so
good. But it's something that others can copy and there are a lot of smaller
and bigger competitors starting to offer similar services that are showing
healthy growth.

The premise of WeWork's valuation is that it can continue to charge a premium
because of their scale. However, if other competitors emerge, it becomes
exactly like the hotel business and they'll be competing on price and quality.
Given enough competing spaces, their customers will simply flock to the ones
with the best price and offering.

That is going to limit the ROI for investors and probably is causing them to
have second thoughts about dumping billions in it. Hence the IPO withdrawal.

~~~
derefr
> Given enough competing spaces, their customers will simply flock to the ones
> with the best price and offering.

Just waiting for “Expedia for coworking spaces” to come and commoditize them
:)

~~~
speedplane
> Just waiting for “Expedia for coworking spaces” to come and commoditize them
> :)

I've been waiting for this too, but the more I think about it, the less likely
I think it'll actually happen. People spend at least 5 days and 40 hours a
week in their work environment, often across many years. In contrast, when
traveling, you spend just a handful of hours in a flight or a few days in a
hotel. When you're spending a short time on something, you're less likely to
see details, and commodification is easier. When you spend days, weeks, years
in a place, tiny minutea jump out and no two spaces are exactly the same.

As a comparison, think about residential real-estate. There still has been
very little commodification of residential real-estate, because neighborhoods,
amenities, schools, safety, light, and even the color of the grass play a
factor.

Work-spaces are less extreme, but similar dynamics play out. Even if thousands
of WeWork copy-cats pop-up around the world (as is currently happening), I
wouldn't expect serious commodification.

------
User23
I've always been extremely skeptical of commercial real estate investment
schemes based on the heuristic that the AM airwaves are full of advertisements
for them.

WeWork has been outed as a fraud for months, probably longer [1]. But hey Adam
Neumann proves the greater fool theory is still alive and well, so there's
that.

[1] [https://www.zerohedge.com/news/2019-07-19/they-are-
guarantee...](https://www.zerohedge.com/news/2019-07-19/they-are-guaranteed-
go-bust-wework-founder-cashes-out-700m-ipo-looms)

~~~
freddie_mercury
Zerohedge also said that Tesla and Deutsche Bank were frauds.

~~~
willhslade
Give them time.

------
jackvalentine
Using VC backing to predatorily price your product (like the free rent in this
article) is basically dumping, isn't it? I don't know how long we'll tolerate
that kind of behaviour.

[https://en.wikipedia.org/wiki/Dumping_(pricing_policy)](https://en.wikipedia.org/wiki/Dumping_\(pricing_policy\))

~~~
dantheman
It's not dumping because it's the primary market. Dumping is leveraging your
primary market capacity to expand to another market. No one has ever
successfully kept their prices low, drove out the competition, and then raised
them.

~~~
john_moscow
Being sarcastic here, but many companies' primary market these days is the
cash-burning-pocket investors.

------
ineedasername
Their IPO disclosure said they _could_ profitable if they halted growth, so t
seems we'll get a chance to see what happens when they try and hit the
"profit" button. Hopefully it's a big button. And the should have, like, a
whole bunch of people help them hit that button really hard? Maybe twice, just
to be sure.

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neonate
[https://outline.com/FTzKZw](https://outline.com/FTzKZw)

------
duxup
WeWork is going to keep doing their thing for a while.

I wouldn't expect there to be much opportunity for rivals until WeWork has to
start cutting amenities to cut costs and so forth.

------
loquor
How are the CEO's actions not illegal? Renting your own spaces to your own
company, cashing out before IPO, loaning yourself company money - none of this
is illegal??

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colordrops
I don't understand the title.

~~~
dang
Have a comma.

------
blhack
Is there anybody here who actually uses these spaces? How do you justify the
costs?

If I was an early investor in a company, and I learned that they were spending
those sorts of amounts on office space, I would be furious.

~~~
JohnJamesRambo
Amazon using doors as desks back in the day is in stark contrast to startups
using WeWork space now.

~~~
HeWhoLurksLate
Amazon using doors was an expensive thing to do _that they mainly did for the
image it brought them_.

[https://news.ycombinator.com/item?id=21133408](https://news.ycombinator.com/item?id=21133408)

~~~
ericd
I don't think it's that expensive? Hollow core doors are cheap (~$30 at HD),
flexible, huge, durable, and feel nice. I love my door desk.

~~~
jdavis703
How can something be flexible and durable? As someone who accidentally punched
a hole through a hollow core door, I can definitely say I’d never consider
placing expensive equipment on one.

~~~
ericd
I meant flexible in terms of what it allows you to do (although it does flex a
bit as well).

But to your question, ductile (non-brittle) metals tend to be more durable
than brittle ones.

