
Ask HN: My startup is in a WeWork. What should we expect? - mistidoi
We rent half a floor in a WeWork in NYC. We recently priced out a move to a traditional lease. With the uncertainty about where we&#x27;ll be in 5 years, we came to the conclusion that staying in WeWork is the best thing for at least the next 18 months.<p>With all the drama around WeWork&#x27;s S-1, I find myself wondering what the possible outcomes might be... your thoughts?
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troydavis
> I find myself wondering what the possible outcomes might be... your
> thoughts?

Per the S-1, they have sufficient revenue ($1.5 billion in 1H2019, or very
roughly $3 billion annually[1]) and capital ($2.9 billion in cash &
equivalents) to service the leases and location operations ($1.3 billion in
1H2019) for the near future, if not indefinitely. Even including SG&A, it’s
still fairly close to cashflow breakeven (roughly $3.0 vs $3.8 billion
annually) given their revenue growth rate.

What they don’t have is enough capital to continue expanding - building out
new locations and paying leases before they generate revenue - as fast without
raising more capital, or to service the leases if customers defected. But as
an exiting customer, that’s not a big deal for you.

Basically, at least for the next year or two, I think it’s likely that nothing
will change. Beyond that, it’ll depend on their plans to raise more capital
and to address locations which aren’t at operating profitability.

Once they figure out a strategy, the locations at highest risk of closing
would be those with the lowest occupancy rates, which probably opened in 2019.
They’d need to buy out or renegotiate the lease (from a fairly weak
negotiating position) to do that, though. As long as revenue continues to
grow, I think it’s more likely they’d stop opening new locations or raise
capital on bad terms rather than paying to close existing locations.

tl;dr: little or nothing is likely to change in the next year or two. If your
location is more than half full, nothing is likely to change unless a
recession occurs and revenue drops (which was also a risk before their
valuation reset).

[1]: “It took us more than seven years to achieve $1 billion of run-rate
revenue, but only one additional year to reach $2 billion of run-rate revenue
and just six months to reach $3 billion of run-rate revenue.“ (S-1 page 3).
Their run rate is probably higher than $3b right now.

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mistidoi
Thanks so much for this thoughtful and well-argued answer. I really appreciate
it.

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cloudytoday
I've considered getting a WeWork space...but haven't yet for myself.

But I totally wonder how it will affect all those startups and independent
people.

