
WeWork has a new CEO who is a real estate exec - finphil
http://social.techcrunch.com/2020/02/01/report-wework-has-a-new-ceo-and-hes-a-real-estate-not-a-tech-exec/
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cs702
And the company now seems to be valued as a real estate -- not a "tech" \--
business...

...which makes sense, because WeWork _is_ a real estate business, albeit one
with an unproven model.

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toast0
Subletting is a pretty well proven business model. IWG, formerly Regus, has
been offering office space in a substantially similar manner since 1989.

The model works, if the short term leases balance out the long term leases and
other costs.

~~~
chrisseaton
> IWG, formerly Regus, has been offering office space in a substantially
> similar manner since 1989.

Have you ever been to a Regus? Most souless depressing places on earth.

WeWork was substantially _different_ in quality.

~~~
braythwayt
One of the problems we encounter when comparing companies and their
product/service offerings is when we compare a self-sufficient business to a
venture that is subsidizing its offering with investment capital.

Uber was amazing in the early days, the cars were better than taxis, I
remember getting driven around in a Mercedes and not having to pay a premium
for the nicer car. And there were cars always available, because the drivers
were getting good money for every ride.

It turns out that these nicer features weren’t a consequence of software and
maps and efficiently matching rides with cars, it was as simple as raising
billions of dollars, and running the business at a loss.

I suggest it’s the same with WeWork. Their nicer offices weren’t a question of
vision or aesthetic taste or efficiencies from technology. They were nothing
more than spending Softbank’s billions of dollars and running at a loss.

I accept that you feel they were offering a higher-quality experience, but we
have to come to grips with the fact that it was an illusion. They were never
going to magically reach enough scale that they could break even or make money
offering that service at that price to that “demographic” of customer.

I feel like WeWork is in some way in a worse situation than Uber, DoorDash,
and other “gig economy” businesses. Those businesses can squeeze their
employees (that they classify as independent contractors in order to maximize
the misery they can inflict).

Who can WeWork squeeze? Nobody. The gig economy is nothing more than rolling
back any and all protections for workers, but dressing it up as technological
progress.

What is WeWork’s story? There’s nobody to squeeze, no regulations to flout in
order to cut costs. There’s no inefficiency that iPads and WiFi and digital
services get rid of.

So naturally, now that the money hose has been turned off, the squeeze is on
WeWork and its customers.

~~~
chrisseaton
But I think WeWork can grow the market.

Before I'd never consider going to a co-working space. Might as well go and
sit in a grotty cupboard. Now I'm inspired to give it a go.

~~~
toomuchtodo
The question you should ask is: If Regus couldn't grow the market beyond where
it's at, what gives WeWork a competitive advantage that it could.

~~~
braythwayt
Another way to put it:

What’s easier? Regus learning how to offer free espresso and decorate their
offices for the startup crowd? Or WeWork learning how to spend less money than
it earns in revenue?

~~~
rchaud
Is Regus struggling with so much excess capacity that they need to try to
attract companies with 'startup culture'? I'd think they'd want predictable
cash flows from tenants, rather than a VC-funded company that might cease to
exist in 12 months.

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mharroun
I once interviewed at wework for an engineering manager position....the
projects they were working on were.... asinine... I couldnt nearly keep a
stright face on what I felt they were pissing money away on. Funny I didnt
pass the first in person :).

Sorry I dont see value in spending millions in some ar rig to project how an
office space may look. It would take thousands of buildings decked out to
make.the cost worth it... how stupid...

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sidcool
Can you share some details of the projects?

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ArjA
Never really understood how WeWork was considered to be a “tech company” when
in reality, at least to an outsider looking in, it was always a real estate
company. I guess being a real estate company doesn’t attract as many investors
and hype as a tech company does. Maybe I’m wrong and they are a tech company
but it really does not appear like it. Makes way more sense for them to have
some one with real estate experience run them rather than some tech exec.

~~~
tootie
By that note, Uber is a taxi company and Netflix is a TV broadcaster. Which is
pretty much true.

~~~
catdog
True but on the other hand the technology they develop plays a central role in
how they operate which sets them apart from the traditional taxi
company/broadcaster.

WeWork seems to just rent out real estate and at least on the surface it does
not look like tech is defining fundamentally how they do it.

~~~
ethbro
It all comes down to demand for me. These legacy+tech companies create
additional demand by virtual of their tech.

Uber services opportunities that couldn't be serviced by traditional taxi
companies (on demand, low latency rides).

Which makes the crux of these businesses "Does your technology create enough
additional, currently-unserved demand to hit your growth targets?"

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derision
Makes sense because it's a real estate - not a tech - company

~~~
ravenstine
Granted, most "tech" companies probably aren't tech companies. We just
consider them tech for the following reasons:

\- They're headquartered in Silicon Valley or some city like San Francisco,
Portland, or New York.

\- They have an app.

\- They are adjacent to actual tech in some way.

\- They portray the image of being innovative in some way.

WeWork has all of those, making them a "tech" company in the eyes of
journalists and the average person, though for the life of me I don't know why
someone would install the WeWork app.

~~~
WilliamEdward
WeWork is clearly less of a tech company than even this, because their app
(which every company has now) is essentially no more technologically
interesting than doing it all on paper. Uber for example would never exist
without the app and its GPS technology. A clear difference imo.

~~~
ragebol
Only reason why Uber can't be on paper is due to the time factor inherent to
the service: you need a taxi quickly and an office can be slower. I don't
consider taxi companies as tech companies. Tinder also hasn't created any new
technology AFAIK, could also work on paper.

~~~
derision
Tinder's matching algorithms, regardless of your opinion on whether or not
they work, couldn't be feasibly done in paper.

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pl0x
This new CEO looks like another Softbank shill and will be a blow for culture
at WeWork.

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ethanbond
Why would WeWork deserve to keep any of its culture?

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pembrook
The mass media pile-on to the WeWork story has been ridiculous and overblown.

I keep hearing references to Theranos and Enron as if the two companies are
even comparable (they are not).

Theranos was an outright fraud. WeWork has over 500,000 paying customers in a
fully viable real estate business as proven by Regus.

The supposed loss of “massive value on the order of Enron” was fictional as
WeWork is a private company. This was the risk taking of a few institutional
investors who wanted that kind of risk! Venture funds lose money on a majority
of their picks. So obviously Softbank’s largest-in-history 100B venture fund
is going to have largest-in-history venture losses.

It’s actually a good business at its lower valuation now! Ask Regus how
valuable 500,000 customers with that kind of growth rate would be to them.

~~~
notahacker
> Ask Regus how valuable 500,000 customers with that kind of growth rate would
> be to them.

I guess their 3bn market cap is a pretty good indication of what that kind of
customer base is worth to them, given that they have acquired it without
incurring massive losses per desk to do so. That's still a good deal north of
WeWork's down round...

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pembrook
Regus is valued at 3b because they’re only growing at 5-6% per year.

WeWork was growing at 10x that, however who knows now that this PR disaster of
the century has happened.

With the ouster of Neumann now and a sensible CEO I wish they had gone public
so I could invest. It’s a perfect contrarian scenario. I doubt you’ll see this
much negative sentiment about a growth-stage company again for a long time.

~~~
notahacker
I feel the reason Regus is _only_ growing at 5% per year being because of
their insistence on charging occupants more than they rent the space for
probably matters here...

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pembrook
Or...maybe it could be because nobody knew Regus even existed prior to all
these articles about WeWork coming out and mentioning them.

And most people still don’t know they exist!

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sokoloff
Regus owns Spaces, which I suspect a lot of people in the market for WeWork
type space would have heard of (or would turn up in the first page of their
search results).

