Hacker News new | past | comments | ask | show | jobs | submit login
WeWork’s Escape Plan Is Buried in the Books at Its Tokyo Office (bloomberg.com)
124 points by jc_811 2 days ago | hide | past | web | favorite | 31 comments





> Mori Building Co. agreed to lease two floors in its Ark Hills complex and a penthouse space at a recently opened building called Ginza Six.

This is literally some of the most expensive real estate in the city, and office space in central Tokyo is not cheap. I'm amazed that they can find enough tenants to sublet this at a profit.

That said, WeWork does have a Japan-only advantage here, because startups generally find extremely hard to lease office space there: even if they can find a landlord willing to take a punt, they are often required to pay one to two years' rental as deposit. [1] This won't help them scale outside Japan though.

[1] https://www.venturejapan.com/doing-business-in-japan/how-to-...


I used a WeWork credit to work remotely while in Tokyo around a year ago, and the place was packed. Every common seat was filled and I even felt like I was getting in the way because of how often people were going around me to banter or talk shop. Also the internal WeWork forums in Japan seemed to be a genuine social network with heavy Linked-In style participation.

I'm sure some of the hustle and bustle is due to the novelty, much like how WeWork was when it first launched in the US. However, you're right that there is a real lack of flexible month-to-month space in Japan so that may be a lasting advantage.


WeWork might be full but there is co-working space all over the city, some of them hourly or daily, most of them are not full at least when I've visited. There must be 50 or more in Shibuya alone.

I don't know how expensive WeWork is, but the co-working spaces in Shibuya are crazy expensive (like $10 per hour). There are many sento (public baths) around Japan that will let you stay for $10 for the whole day and where you can get a desk and power. When I'm travelling that's what I tend to do. Since I live in the countryside, I'm also used to being able to work at public libraries. I was really surprised that in most libraries I've gone to in big cities they specifically forbid working (or have special sections with high prices).

But anyway, maybe I haven't seen the cheaper Tokyo co-work spaces. If you have some convenient points, I would appreciate a pointer!

Edit: I'm actually in Shibuya every few months. When I'm there I work in the Shizutetsu bus station. If you see a middle aged white guy there programming, come say hi ;-)


When was the last time you looked around at coworking spaces? The market has grown quite a bit, and this has made it easier to find reasonably priced alternatives.

I don't remember the specifics off the top of my head, but I'm sure there are/have been ~300 yen/h ones in for example Shibuya.

There's a smaller one called Open Source Cafe that lies a 5~10 min walk from Shimokitazawa station - that it's off makes it quiet and nice, and they host meetups from time to time.

The market rate for a fixed-desk designated membership seems to lie around 40,000 JPY / month in the hotter areas like Shibuya and Shinjuku, which is ~20$ per day if you only go there for weekdays. I think that's quite reasonable. I think WeWork has been part of driving this change, but it's definitely overpriced as things are now.


This could explain why SoftDank viewed this as an out of the park home run they miscalculated the landscape in other parts of the world it seems

Mayoshi made his gut-call huge initial investment before WeWork opened in Japan

He was charmed - it worked on Benchmark as well but at least they didn't bet the farm in followon


Turns out Adam's reality distortion field was more of a contact buzz

Yeah though the counterpoint is that the monthly hot-desk pricing for WeWork's Tokyo stuff is, according to a calculation I did once, _twice_ the price of just renting an office in the same neighborhood (this was in Dogenzaka). This was a calculation based off of having 15-20 people to deal with.

So maybe it's for small groups? But if there's only 2-6 of you, you could go to the literally hundreds of coworking spaces in Tokyo for 20% of the price of a WeWork hot desk. And use the savings to pay for beer.

The only big-ish group I've heard that used WeWork in its initial growth is PayPay which.... is a joint venture between Yahoo Japan and PayTM.

It feels like they're running on some culture thing, but there's basically no math that makes WeWork a valuable choice. At their price points, it starts getting cheaper to just hire someone full time to manage your office space. And if you have that kind of money you can make the deposit.


It's the same thing in Hong Kong, they have some prime real estate. I wouldn't say their offices are packed, but they're always full.

Startups or anyone in need of office space on a budget just isn't able to afford a proper office, especially if you're looking for something short-term, or unable to commit to 1-2 years.


I wonder if this Japan-only advantage nudged Softbank to overestimate their global advantage.

They will also undoubtedly benefit from Softbank's reputation and connections over there.

>Moreover, SoftBank itself has been a big contributor to that high level of occupancy. The Japanese conglomerate and its subsidiaries take up about 20% of WeWork’s office space in Japan, the people said. Over the years, WeWork pushed its locations worldwide to attract corporate clients because those contracts are more lucrative and stable. But Japan had a higher proportion of enterprise customers from the start, beating the 40% global average.

WARNING, WARNING, WARNING!

It's a lot easier to be profitable when your owner buys 20+% of your services. Also easier to get more than 40% institutional customers when the boss puts his thumb on the scale for the first half of that...


>on the scale for the first half of that..

I think your math is wrong. The denominators vary for the different percents. (Edit: nope, mine was.)


Can you explain what I'm doing wrong?

Softbank buys 20% of their Japan space, so in order to get to 40+% they just need to find institutional investors for another 20+%? The denominator for both is "capacity at Japan office"


Never mind; my math was wrong.

It looks like they just need 25% of remaining office space to be institutional to hit that (20 of 80).


I think your math depends on all the office space being occupied (so that $total_customers == $office_space). Maybe that's what GP is pointing out.

That doesn't really affect your original point though.


Ah, you are correct. I think it actually strengthens my point, right?

If Softbank is renting 20% of space, and less than 100% of space is rented, then they count for more than 20% of the customer base being institutional.


Sounds right to me!

Wework is still a great investment because Wework is doing well in Japan \s.

Pay no mind that:

> WeWork entered Japan when office vacancy rates were near a decade low. The supply has tightened since to around 1%, a level not seen since the 1990s, allowing landlords to raise rents, while requiring a deposit of as much as a year’s rent.

They've got a great new product too:

> The new Passport service would give tenants flexible use of desks, community spaces and meeting rooms, amenities for which visiting customers currently have to pay extra. The service is a work in progress, but if adopted, WeWork aims to set aside a certain number of desks at all locations for Passport users, the people said. The move is aimed at increasing occupancy, the key to making locations profitable.

And forget that:

> Moreover, SoftBank itself has been a big contributor to that high level of occupancy. The Japanese conglomerate and its subsidiaries take up about 20% of WeWork’s office space in Japan, the people said. Over the years, WeWork pushed its locations worldwide to attract corporate clients because those contracts are more lucrative and stable. But Japan had a higher proportion of enterprise customers from the start, beating the 40% global average.


You missed that they have new heatmaps of office occupancy, which somehow mean that they are developing competencies in “AI.”

At least the layoffs will be humane!


The new Passport service would give tenants flexible use of desks, community spaces and meeting rooms, amenities for which visiting customers currently have to pay extra.

Ahh, those blokes came up with something, which IWG (Regus) offers for decades for a much lower price minus the "cool" factor?


Well, maybe for a little while. The big difference seems to be that WeWork Japan didn't over-buy and under-price as much as WeWork did everywhere else, and the office market is tight so they have high occupancy rates.

Well, that makes sense and all, but it says nothing about the more fundamental problem with WeWork's business model, which is whether or not it will go bankrupt when it hits its first recession, occupancy rates generally plunge, and WeWork has more short-term commitments from its customers than it has to its landlords. Perhaps there's something in WeWork Japan that addresses this, but if so, it's not mentioned in the article.


>Son, who has said his investment strategy is to focus on companies powered by artificial intelligence, is eager to move WeWork beyond its real-estate beginnings. Briefing analysts after last earnings announcement, SoftBank’s founder bristled at the suggestion that WeWork doesn’t match that profile. He said that he’s long pushed WeWork to make better use of its data, but progress has been slow. The company will now begin experimenting with AI in Japan and could be ready to introduce it more broadly in as little as six months, Son said.

This part kills it for me. WeWork pumped their valuation by pretending to be a tech business when they're actually a office rental business. Son is still pushing that, he genuinely believes a bit of machine learning pixie dust is going to push occupancy up and make the company profitable but there is no reason to believe this. Frankly, I suspect if you do create an AI that's predicting and managing your occupancy then you're better off letting it go trade the stock exchange.


Just wait until they start talking about somehow leveraging blockchains as a possible solution...

Knowing what we now know about WW's various side businesses, I'm honestly quite surprised that they never launced WeCoin when the crypto craze of 2017-18 was in full swing. But perhaps useless tokens are only the go-to option for businesses that don't have a patron saint like M. Son.

I hate to use the uber for this the airbnb for that, but.... wouldn't that have made a lot more sense for wework (sorry, riffing of AI pixie dust :)).

Uber for Office Space or AirBnB for Office space?

Why the Initech of Office Space! https://en.wikipedia.org/wiki/Office_Space


Amongst Mt. Gox?



Guidelines | FAQ | Support | API | Security | Lists | Bookmarklet | Legal | Apply to YC | Contact

Search: