I tried multiple co-working spaces and in the end I couldn’t replicate the connection or emotional obligation I felt toward real co-workers. This was despite all kinds of special events and hand holding by the spaces and forced socialization. It really feels they are doing their best to “build a community” so at some level they do know that it can’t just be a bunch of transient people who don’t really know each other. Or at least that will be quite depressing if that’s what it becomes. I hate to say it but when you’re forced to work with someone you do get to know them and bond with them.
In my time there I noticed there was a huge problem with attrition. Just like I was experiencing, other people were not making the connections and gradually deciding it wasn’t worth it and thus not coming back. Also, all the forced socialization and events had a fake and artificial quality to them that eventually became annoying to me. No, I don’t want to bake cookies with some random guy I probably won’t ever see again. I soon stopped going to the events, and I noticed most of the people who went to them were all new people. The staff all knew this and they even tried to guilt us into attending the events, which just made it even more weird & awkward.
Did anyone else have this experience? Maybe I’m just unique but I can’t help but feel these sorts of spaces may be just burning through a bunch of people trying them out and who knows where the bottom of that is? I’d like to see the attrition numbers of these places, which will ultimately tell you if it’s worth all this investment or not.
And yeah, a lot of the events these places have, while certainly well-intentioned, don't work that well in my experience. It's really not that easy to get to know people in these facilities since the expectation is that everyone be able to focus on what they are doing, so few feel comfortable striking up conversations with people they don't know. I'm sure it's regional to a degree, but that's my experience.
I currently use a coworking space because I've found no other suitable places to work, and will have to do so until I find a home with a room that can be my office. Once I move, I won't ever go back to coworking if I can avoid it. Well, maybe I would if it was $50 a month, but paying hundreds of dollars a month for a chair and WiFi is pretty excessive. Most of the perks offered by coworking spaces can be had elsewhere for much cheaper.
In there I met a Russian who worked from that location pretty much every day. We did have nice chats often and I'd say we bonded a bit. We also lunched together and such.
Nowadays I live elsewhere in Thailand but we still check up on each other through Skype now and then. And about half a year ago he visited Chiang Mai and we met once again in real life.
For most of the other people working there it would have been harder to bond, partially due to these people working only for a short time from this co-working space. But I did have a chats with many people with many different backgrounds, so that certainly was interesting.
Nowadays I work from home. Partially because there is no decent co-working space from where I live and partially because I am a bit of a loner (einzelgänger  as the Germans would say) anyways, so I don't need too many people around. Partially because I live with my GF and daughter, and that's enough for me.
What I've found to be really effective, is finding some type of event where people share the same interest as you. This is doubly so, I've found, if the people involved are really passionate about said interest and you are as well.
I've recently gotten into world music, and I've found there is a community of people really passionate about it near me, we clicked instantly, because having meaningful conversation became incredibly easy at that point.
I could see the WeWork friend making / relationship making thing working if you are all working on similar things, are all passionate about it, and can have a conversation about whatever that is. But if you're all working on different things, in different functions, I think it would be hard to make friends.
I feel like the issue isn't something that can only happen in co-working. Enforced socials without common ground are the same whether you are nominally in the same company or not.
I live in Bali, Indonesia which is a very popular place for those who work online. There are multiple co-working spots that have an amazing setup, host member lunches, encourage people to skillshare with events, etc. - it's almost a cult over here and very common for people to hang out after. If I go to a party and find out the host is a member of XYZ co-working joint, often a large chunk of the guests are also from there.
At the end I just opt'd to save my $400 monthly payment and go back to coffee shops, and have some extra cash.
Some co-working spaces do drinks on friday evening or similar, that could work for some? Another thing that might help is a common slack chat, so that it's easier to find out what people are working on etc.
It might be worth noting that I'm a young, social boy and most of the people I made friends with were at least 5 years elder to me and were slightly protective about me as well. Also I'm in India, where co-working and social culture may differ from where you are. Also worth noting that we did keep a balance of speaking and working, since you can't do both together and there were different areas people would move to depending on the intensity of their work at hand, I would almost always have company for lunch though (I even found people to commute with!).
They need to find a way to make coworking less transactional and more cooperative.
If they’re not going to be working on the same thing they need to find a reason to interact with a purpose.
This is the tough river to cross in a pay for space business. It’s why hotels aren’t collegial either. If you want it to feel good or collegial you need to build in mutual benefit or a responsibility of ownership like when a grocery coop has members do monthly work for the benefit of the coop.
I’m honestly not sure what a corporate coworking space can do to get what they’re doing to this point.
I've been speaking to a number of founders who were WeWork members, but got so much more when they moved to the Labs space.
Full disclosure: I am the WeWork Labs Manager for Portland.
At WeWork you get to meet people from many different backgrounds and companies. I met a friend who owns an insurance company (on a Microsoft stack.), another that owns a tech company for efficient travel to work (on a React stack), a group of people who have monthly subscription box companies (Shopify + CMS) and then an individual who owns an investment firm (various advice on how startups are doing in the city.)
Each individual brings something to the table and I've learned a lot from them. We hang out on weekends and drink beer together. Socializing is critical for human happiness. That's the value add for WeWork for contractors in my opinion, the space is secondary.
There are competitors, I've tried a few, but I found the WeWork space to be more professional. It costs more, but you get more in my opinion (in terms of space.) The other coworking spaces are kind of ugly, or they don't have constant events like WeWork. I'm sure this point varies heavily depending on the city. I'm sure monthly rate helps with keeping the space fresh.
I am unsure about the valuation here, but I would consider WeWork and coworking spaces the best thing to ever happen to my social life. I went from a rather introverted person to being quite extroverted and growing emotionally. This had many other factors, but WeWork contributed.
At Crossfit or fitness events, you also hear athletes introduce themselves as X from Y Box. I can't help but be reminded of when I hear religious people introducing themselves as X from Y Parish/Mosque/Synagogue. It can become a central part of your identity and one of the first labels you apply to your self.
 That's Crossfit for workout of the day
 That's Crossfit for "gym"
 That's Crossfit for someone who does Crossfit
On a sidenote, I'm reminded how many ex-Googlers blog about leaving Google akin to how someone talks about leaving a religion. Very cult-like, almost.
That's great it worked for you but i'm skeptical of it being its own business. Seems more like a side "we have extra space" type of business to me. But time will tell.
So I'm not sure how many true friends you can actually make and maintain in a co-working space.
The frat analogy is actually really good here (ignoring all the negative things associated rightly or wrongly with fraternities here to not cloud the issue).
With a frat, you are paying for housing plus a social network with events. With wework you are paying for office space plus a social network with events.
Much like frats the value of that network is highly dependent on the people and varies wildly from place to place or even the same place over time.
For some people frats are great. They have experiences and make connections they wouldn’t otherwise make. For some people they suck and provide no or even negative value
But much like a frat, don’t think the social network that WeWork provides is in anyway unique or incapable of being produced elsewhere. Also don’t think for a minute that you can scale that experience or make it repeatable across locations and cultures. Because like a frat this is ultimately built on people, not Carafes of Cucumber water with bullshit slogans about “hustle” carved into them
Wework is an office space company and right now it’s social network is not proprietary advantage. Making the IRL social network more digital may be a way to solve that, But so far they don’t seem to be doing that
I'm 100% remote and I prefer working at coffee shops, campuses (UCLA, SMCC), or libraries -- I prefer my environment to feel less like "work" and more "creative." I also get to interact with a largely diverse group of people (as opposed to mostly tech people that work at WeWork). Going to a coffee shop is also cheaper (I buy ~2 items a day), I get to meet neighbors, plug myself into my local community, and sometimes even make small talk with cute girls.
I think a good idea might be "reserving" seats at cool spots around town (coffee shops, bookstores, etc.) -- would be cheaper than a WeWork and (I think) more desireable. Think ClassPass for co-working.
Choosing a different location each day based on whim and availability is all very well for a solo freelancer, but once you scale that up to as many as two people you're going to start having problems finding space and private places where you can talk, call clients, etc. etc. Once you start getting to 3 or 4 people, forget about it. And what about people who want dedicated hardware - a keyboard, monitor, etc?
WeWork has a valuable proposition for those groups. Rent out a small office while you're in the early stage, have everyone in a room with breakout meeting rooms and phone booths available just outside. A kitchen where you can get a coffee, prepare food, etc. etc.
I still think WeWork is an insane proposition because they cost a lot and they're not that great, but let's not pretend they offer nothing over a local coffee shop.
Meh, it was fine for what it was I guess, but I think the company I was working for left wework not long after I left the company.
It can be done, remote teams much larger than that work all day every day without using their voices with each other, just Slack or git messages or whatever.
What if the money WW is burning through went to libraries to build more workspaces and conference rooms?
Getting an office lease is a huge process with a stack of contracts, pushy agents, ridiculously long leases, misleading prices, hidden costs, furnishing, and establishing all the necessary services. And if you're a small company, the owners are expected to personally financially guarantee the lease.
Think of it as "sexy startup office as a service."
Not saying it's a worthy or necessary service this world needs, but I think that's the value they provide and what companies pay for.
The prices are eye-watering, however, and don’t seem to come down much with scale. (A three-person office is about three times the price of a one-person office – at least when I last checked.)
If it's your second home that you have your morning coffee in and have a personal office that you do non physical tasks on, and occasionally have a friend or cofounder over for a beer you're looking pretty good.
That being said, I've seen newer, less "hip" flex spaces open to try and target that market.
It doesn't work for 100% of your time. 20-40% maybe but not more than that.
There are many issues with cafe work:
- Lots of cafes are bothered if you stay for extended periods of time.
- Unstable or No wifi. You have to rely on Data unless you have it unmetered.
- Not always you'll find a charging outlet for your computer. Granted, I don't have this issue with the mac.
- Sometimes, you don't find a free/available place. So... you go to search again.
I think cafes are good for breaking the mood. But not a workplace for remote workers.
If I were running my own company and employing remote staff I'd have to think about the workplace health and safety implications if they were regularly working in cafes.
It doesn't work for 100% of your time. Obviously it's going to be different for different people.
Super useful to level my focus, the people around me are in a wide mix of fields not just technology, and having a proper reserved space is a huge boon to productivity. I can have a real monitor, an ergonomic keyboard and mouse, and multiple machines setup.
I value my back, neck, and wrists far too much to work from a coffee shop every day.
WeWork Labs also offers some great benefits for startups, the mentors alone have been a great boon.
I have a home office for when I need to be "in the zone" -- 3 monitors, ergonomic chair, etc. The benefit here is that you could even write off part of your rent (if you're a contractor/freelancer).
With entire teams being here, it isn't all programmers. Sales, marketing, biz dev, and engineering are all sitting together and participating in the community.
As for @ home versus at an office, I am far more productive at an office. So much so that I have a nice home setup (I have one ultrawide instead of multiple monitors!) but it is worth it for me to commute 40 minutes to get here.
(I of course have friends who prefer their home versus an office environment!)
And this is probably me getting old but I don't know how people can spend hours hunched over a laptop in café seating, as opposed to an ergonomic office chair and monitor at eye level.
Ask any orthopedist, it catches up to them. We can all buffer it for a certain amount of time, but anybody who does this for a long time will develop issues.
I realised I was having posture issues with extended laptop use at approximately age 23 or so.
That doesn't even sound like coffee shop is the right description, that's an office that sells coffee.
No they aren’t that’s ridiculous.
What, in your opinion, should people be doing in cafes on weekday afternoons?
Not that students don't meet friends on afternoons to go for coffee, but it is rare. Especially when meeting somewhere else for free is, well, free.
People don't pay for a coffee nowadays, they pay for a place to sit and use the wifi
Alternatively, if WeWork had a spot out here in the suburbs where I could escape the noise of my lovely four year old without having to fight traffic, I'd be game.
I did a short video with them you might like - https://www.youtube.com/watch?v=JXA0q-VA2VE
We've scouted thousands of coffee shops, hotel lobbies, parks, libraries, coworking, and other public spaces.
Right now we're only operating in San Francisco, but looking to expand to other cities in the future.
Disclaimer: I work for Out Of Office
"I get to meet neighbors, plug myself into my local community, and sometimes even make small talk with cute girls." can all be done at a WeWork.
Have a look at spacious.com for your last idea.
same location, so i don't have to have a daytime spot i prefer and a night time spot thats just open.
Also you get a say in the space cuz you pay. The coffee shop might just get rid of your favorite little corner at some point.
I don't use wework, so idk.
So you can only imagine people to think and act like you yourself? It's office space without the large setup cost and time waste, what's so hard to get?
That's We Work, it's just 'out of the box' for easy, shorter term rentals. Generally.
Not affiliated with them in any way.
They have a few dedicated spaces, like Union Square in Manhattan, but mostly rent spaces from restaurants that are closed during the day I think.
My classic "FTP" comment was some feedback on a Show HN post, that I was concerned that the technology may be easy to reproduce and thus had a low barrier to being reimplemented by OS vendors or competitors. Drew addressed all my points and I acknowledged the value of the service. Completely different from this thread.
The two times I walked into one to try to get a tour in various cities I was told it was appointment only. The value proposition wasn't good enough to schedule time for a tour so that was the end of my interaction with WeWork.
Also they had tons of full time staff just sitting around. Why not just show me around like every other coworking space in the world? Just left a bad taste in my mouth.
Actually, most if not all coworking spaces are a ripoff unless you've got a small team working out of one. For individuals, it's borderline not worth it if they aren't making obscene amounts of money.
I work remotely and use a coworking space because cafes are dreadful environments for getting anything done. As has been mentioned on HN before, restaurants and cafes have been getting louder, meaning headphones must be used 99.9% of the time. Even nicer cafes have flimsy tables, bad Wifi, and lousy parking.
If space for individuals to work at is really in demand, all that cafes and chains like Coffee Bean & Tea Leaf need to do is wise-up and make relatively minor changes to their existing storefronts or possibly build secondary venues for people who want to get work done, and the idea of managing huge office buildings and paying for them with a nominal $300+ per month fee comes crashing down like a house of cards.
I would gladly work out of cafes and buy drinks and food every day if cafes would fix their existing issues. And I suspect I'm not the only one.
As soon as I get a home with a room I can set up an office in, I'll gladly cancel my membership.
You and others coming during an event or even focus hours.
Also, I imagine that their willingness to do a tour at random directly correlates with vacancy rate.
It could also be a form of decorum and filtering you out. If they're not hurting for business, they'd probably much prefer clients that responsibly schedule uses of limited resources.
Maybe wework doesn't like making money.
What cost would those problems have to the business? Would those outweigh the lost sales from refusing tours?
It's not like I was requesting to see a meeting room that was in use.
I highly value the first kind of interaction over the second.
I was one of the very first WeWork customers in New York. I was in the Chinatown building when it was still unfinished. I remember someone asking me about decor and what I thought they should do. I think it might have even been Adam Neumann himself.
- Some locations are filled with real people doing actual business and provide real networking opportunities.
- Some locations are dominated by a single startup.
- Some locations are filled with rich kids goofing off, drinking on the roof.
- Some locations are filled with scammers running all sorts of scams. (I've seen everything from bogus "information products" to outright ponzi's to fake doctors providing injections and transfusion for hangovers.)
- Some locations provide an address for otherwise illegal businesses.
I've probably been to over two dozen WeWork locations. Every one has its own vibe. They very much represent what's happening around them. I kept at least the minimum level subscription up until a year ago when I finally cancelled completely.
The problem with WeWork is, in my opinion, that you never know what to expect. You can't rely on it being quiet. You can't reliably have a serious meeting if there's going to be some idiots outside the door screwing around, or someone is going to use the meeting room across from you to host an informal audition for a porn shoot and there's a line of scantily clad women stretching down the hall.
I suspect that management knows this and it's part of the reason why they tried to drop the "work" in WeWork and just become We Company. WeWork is going to turn into something of a social club. Sure, you can work there if you want to, the same way you can work out of The Battery or the Soho House if you want. WeWork is just going to become a broadly accessible version of a social club. Pay a monthly fee and get to feel like you are part of something exclusive.
But everything rests on the edge of a knife. The underlying price sensitivity, the economics of providing the service and the rent of the space. Their model of cut-rate rents is subject to local trends and their investment in each property means that it is not easy for them to shift locations and it would be a significant loss if local landlords got out of hand. As a global company, not every market has strong renter's protections and it makes me wonder how they'll protect their assets when people realize that they could get more from them. Then there is the CEO that leased properties he owned to the We Company, making millions in the process - https://www.wsj.com/articles/weworks-ceo-makes-millions-as-l... (this bit of impropriety should raise eyebrows and raises questions about the company's ability to prevent such rolling conflict of interests going forward).
It is unclear to me how they'll position themselves for the long-term given the variability in real-estate. We are in the run-up to a recession, but after that when it's boom times again and prices rise rapidly, again, how will WeWork survive? Do they plan on buying properties during the bust? What's the long-term plan over here that ensures that they keep on top of the food chain? What is the lock for their spaces?
Edit: The company might be losing money in the pursuit for growth but the model is clear in the sense that they provide services + benefits (swimming pools, beer, massage bars etc etc) on top of leasing out space for a fixed amount X. Unlike Uber, it is easy to imagine them minmaxing this to make money. It's not hard and they lack the kind of competition (Lyft) that would trap them at this low price point as few places in the different jurisdictions that they operate in can offer similar services due to the large upfront investment involved.
If they can't make money in this boom market cycle, what makes you think they'll make money in the next one?
It could rant all day long about WeWork Potsdamer Platz, but I think I've done so on every bigger WeWork thread here before...
a) buy or rent commercial real estate
b) rent that same real estate out to people who want office space
As long as the money coming in from b is sufficiently greater than the money being spent on a, you should be good.
As far as profitability, the company is making investments now that will pay back over time. Since they are growing quickly, you'd expect them to take a loss since they have to make upfront investments in new offices (and on real estate, which they seem to be getting into the business of purchasing outright rather than taking out long term leases).
EDIT: I don't have an opinion one way or another on whether WeWork is a good business to invest in or not, but it's definitely a straightforward and easy to understand business, as opposed to say, a bank or a biotech company.
The problem with this model is that when demand for real estate falls (e.g. because of economic cycles, trends/tastes, etc.) the revenues will evaporate and the costs will remain.
If WeWork can't pay the lease on 29,000 square feet of office space, WeWork has a problem. If they can't pay the lease on 2.9 million square feet of office space, the owners have a problem.
One fairly big serviced offices company pulled the "separate entities" trick in one of the previous recessions, and some of the major landlords in that country still to this day, more than a decade later, refuse to do business with them.
I used to work at company that rented from WeWork. And we were in their awful glass cubicles, like working in a Borg ship, and we wanted some privacy, so we asked about putting up some removal decals.
They said no, it violated their brand guidelines.
Clarity, always clarity.
I have a few clients who work at WeWorks and the nitro coffee and kambucha on tap is fine and well but I wouldn’t call it lavish. Having a few hot and cold drink options for visitors is just common curtesy and basic part of doing business.
Free coffee and beer doesn't begin to compare (not that I don't think what WeWork offers is useful)
If these types of services become popular, couldn't any commercial landlord start offering these services in the buildings they already own?
I think many landlords would make awful clones and lose a lot of money, at least at first.
Which in turn raises the question: Why do WeWork bother with renting the properties? Uber doesn't rent cars, they just provide software and a network to drivers and riders, and something similar might work for renters and property owners (AirBnB for offices, essentially).
(Of working in a panopticon, but that's popular, I guess.)
I was under the impression that residential leases had protections, but commercial leases did not (if you're a business you probably have money for a lawyer to look over the contracts and take the landlord to court if needed).
Not that different than Uber. It was a great idea but it’s an easy business to copy with little brand loyalty once new entrants appear in a market.
As an investor, why would I want to go go through the rigmarole of buying shares and calculating losses for my taxes when I could just send a wad of my money to Adam Neumann every month for much the same effect.
Not only have a large amount of IPOs in recent months been heavily downgraded in initial pricing like Lyft, Pinterest, etc. They continue to drop in value day by day as they’re traded openly. I place a substantial amount of blame on SoftBank and by association, the Saudi Arabians, for unnecessarily inflating this current bubble to disproportionate levels. It will only cause the resultant crash to be all that much more damaging.
But after going through several buildings I realised that the hotdesk offer is only the frontend to their business. Most of the building occupants are sizeable companies that have decided to offload the problems that come with managing an office. Some entire floors can be corporate satellites to big enterprises.
That was my experience and the S-1 might say that the revenue distribution is different but I thought it's worth mentioning.
And recent events by these privately held companies show a keen lack of confidence in my opinion. That they’ve all chosen to IPO now at the same time gives you a strong indicator to look at. You might disagree with my final determination on what it means exactly, but the fact that it’s happening is undeniable.
As to macroeconomic indicators, I think the majority of them are largely useless as predictors and at best self-fulfilling in nature.
The economic impact can't be quantified by the drop is stock value, it occurs slowly over time, like lower payroll taxes, higher unemployment benefit costs, lower consumption etc.
The recession was pretty minor though.
Pinterest hasn't had a down day yet.
I agree with you that the increase in late-stage rounds and consequent delayed IPOs is generally a bad thing, but not sure SoftBank is the primary culprit. And certainly during the dotcom days companies went public much sooner but that didn't prevent a bubble and subsequent crash requiring a decade+ of recovery. MSFT didn't get back to their 1999 high until 2016.
Pinterest has been going up in value day by day.
Why this was done? Your guess is as good as mine. :)
What I can tell you concretely though was that Pinterest made the willful decision to lower its initial pricing of its IPO to below its valuation (75 million shares priced between $15-17 for a total valuation of ~$11 billion compared to its original supposed pre-IPO valuation of ~$12 billion). This shows a clear lack of confidence in the company. This is a fact, not an opinion.
75 million shares priced between $15-17 for a total valuation of ~$11 billion compared to its original supposed pre-IPO valuation of ~$12 billion
A company that 'low balled' it's IPO simply made a huge mistake and left a ton of money on the table.
IPO pricing is very difficult because it's hard to predict demand and market conditions.
Ideally, you want a flat, and steadily increasing price.
But if Lyft and Pinterest are already trading below IPO prices, doesn't that indicate that the public markets are taking the pre-IPO private valuations with a grain of salt?
I'd be much more worried if those stocks skyrocketed, creating a tidal wave of other IPOs with weak fundamentals hoping to cash in because of good timing.
For skyrocketing, Zoom did skyrocket (close to doubling). As did Tradeweb (more than doubled). Tradeweb doesn’t have weak fundamentals though.
Investors are looking at the present and mostly the future, not past financial marketing.
1) IPO-ing companies represent a very very small chunk of the overall economy.
2) That 'there are IPO's' is a very good signal - it makes investors 'feel' bullish and confident.
3) These companies don't carry a lot of debt. If they were able to, they wouldn't be diluting by raising equity.
4) Uber, Lift, Pinterest, WeWork - they are all mostly viable businesses. Yes, their stock price may be too high in many cases, but they are mostly viable at some level.
5) Don't blame SoftBank. SoftBank is great! It's a ton of 'kind of dumb money' from places with way too much money (Saudis) and nowhere to put it. This means startups can expand far beyond where they normally would and they are handing surpluses to consumers like you and me!
Consider: how is it bad for you for companies to be giving you stuff below market value!? It's possibly bad for other investors, but we consumers win, so long as it doesn't happen broadly and cause a bubble.
All that money we send to Saudi for Oil is coming back in the form of 'cool offices below market value'.
Uber/Lyft have unit profitability problems at current price, but once the market settles down, they can increase prices a bit and it will be ok. (Again, massive stock price not withstanding)
WeWork will work out as long as there isn't a real-estate crash. They are basically leveraged hard on long-term contracts. We don't know the details of them, but if vacancies spike they could be in a world of cash-flow pain.
So yes, the hype is a little much, regular retail investors should probably we wary of holding the bag ...
But these things will only crash if there is a recession and most things look good right now.
FYI even 'bubble conditions' often need something to pop the bubble, like a sudden increase in interest rates, or 'the ground falling out' like in 2007. Right now, there are some signs of froth, and hints of maybe a recession (i.e. at the top of the cycle) but nothing really to say it's going to pop.
Canada could have a major real estate correction, but nobody would care.
China could have a flop, but they can fudge the numbers so well it'll probably be covered up and papered over as a long term slow down. In fact, I think that's what's happening: China has many big sectors which would be in recession, but the numbers are fudged to look like 5% growth.
This money has strings attached, strings of political power, just as the Chinese Belt Road initiative. One wrong word or protest when another dozen people is executed by sword or crucified or Muslims sent to concentration camps and poof, there goes your funding, there goes your economy. If there is one foolish thing to do, it is accepting blood money from a potentially hostile foreign power.
China's 'belt and road' are political, national investments part of a grand strategy.
Softbank is just money.
If you set out to attack MBS/Saudis while taking their money, you can expect trouble, but I significantly doubt you're going to be trouble otherwise.
Whereas Chinas national loans have an entirely different set of objectives.
Softbank/Saudis are just looking to make money, like most other VCs.
After doing the work to understand the business, however, I now take a contrarian position:
WeWork is legit.
They may not be worth $47bn, and many of these non-office endeavors may prove silly, but the coworking side is here to stay. And it is transforming (dare I say, disrupting) the old line, conservative office real estate industry.
WeWork has collapsed the design-build value chain such that they can build workplaces in one-half the time as the rest of us, at a 40% discount. It’s staggering.
I swapped coworking spaces purely because WeWork took it over - they're an incredibly obnoxious company, they're expensive and they've overexpanded. This is one IPO I wouldn't touch with a ten foot pole.
In any case, I addressed their staggering competitive advantage in my original post. They can build space in one-half the time at 60% of the cost because they have a 2,000 person multidisciplinary product team made up of architects, engineers, interior designers, developers, and contractors. They've integrated the value chain like Amazon has in online retail.
They're disrupting the industrial complex of lawyers, lenders, brokers, and landlords who surround the Kafkaesque, traditional, 10-year office lease.
WeWork is not even close to overexpanding. Coworking is less than 2% of the 10 billion square foot US office market. It's going to 30% or beyond. They haven't even hit the vertical part of the S-curve.
Remember, coworking may have started with individuals like you, but now the much larger source of demand is enterprise. With actual companies WeWork and coworking are substitutes to a painful, limited-service, long-term lease.
What's your definition of "enterprise" leasing? 200+ sqm leases for 3 years?
Either way, I guess we'll have to wait for the WeWork S-1 to see whether or not your assessment is correct.
However, if my personal experience of 5 (admittedly international) WeWork offices is anything to go by, it's not. The tenants I saw were overwhelmingly 3-10 person teams (and when they exceeded that number, they moved out and traded up for a more traditional/permanent office lease).
Of course, that's just anecdotal, and hardly statistically significant. You might be right - if so, I'm guessing their S-1 will show 30%+ of revenue from longer-term enterprise leases.
But even if that's true, I still don't see it as an advantage. Serviced offices and independent coworking spaces offering "spillover" space for enterprises are a dime a dozen. I'll grant that WeWork might have an advantage in interior design & fitout - but again, so what? How many companies will pay a premium for a "WeWork designed office"? How many even care?
This is obviously a lot of speculation about what businesses want and what they're willing to pay for. Maybe you're right, maybe I'm right - who knows. We'll keep a close eye on the numbers and see which one is correct.
Or is it one of those things where all their money is in the big rentals, and the hot-desks are just for show?
As someone who has worked remotely for the last five years, I like having the option of working away from home, as I can get a bit cabin feverish. The location I work at is quite lively and friendly.
Also, the fact that everyone around me is working has the psychological effect to encourage me not to slack off. I'll usually go to my WeWork location in the morning and work straight till the evening where I stop. Previously, when working exclusively at home, the work hours was particularly murky and inconsistent.
To add, in my city WeWork usually gets prime real estate locations, so they can be easy to commute to, especially if you live in the city. And they have enough security mechanisms set up (i.e. not located on the ground floor, numerous security cameras, people at the front) where I can go to the washroom or go for a lunch break without taking my stuff. In contrast, when I used to go to the library/Starbucks to take a break from working at home, I'd always stress about finding a table/outlet a have to take my stuff anytime I took a break.
No doubt $400/month isn't nothing, but for me, the efficiency and QOL gains has been well worth it.
Sure, you can rent for much less in the suburbs, but for companies who want an office which is central and easy to commute to the price is pretty close to market rate.