At one point I was an independent tech consultant down the street from one of their spaces, basically their prime customer profile. It was way too expensive for what you got.
What some people may not realize is that "executive suites" have been around forever, however they were never looked at as a "hypergrowth" SV/hot startup. This is where you get a small office among many others and there's a shared receptionist.
When I looked at WeWork, sitting at a table all day with other people and no privacy was about the same price as executive suites. They've also apparently had a business model where they don't own the spaces, so the underlying landlords can squeeze them at any time.
Was this the company where the CEO owned the trademark and was leasing it back to the company?
In any case just a company that, with a cursory inspection, IMHO showed no promise from day 1.
I mainly agree with you but want to throw a different angle on it. There is a lot of value in marketing and brand awareness. Like, when you mentioned "executive suites" - it makes sense to me but isn't something that is on my radar as a human being.
So like let's say my house got too crazy to work from, without being aware of WeWorks, it would seem like something I just have to suck up and deal with, but with awareness of WeWorks (and the associated concept of co-working spaces) my mind would at least go there. So maybe I'd shop around from the different co-working options based on location and price but wouldn't even occur to me to look at exec suites.
So all that is to say - I agree with you on the business, but that the existence of WeWorks may have widened the audience for that type of service with We itself getting the largest share of that business (same as Uber gets the most rides just by being the most associated name with taxis right now)
None of this is to say that We is "worth it" in valuation or as a service, I have no idea. Just point out the impact of marketing/awareness.
> So like let's say my house got too crazy to work from, without being aware of WeWorks,
Is this a hypothetical? Because if you did run a business out of your home, you absolutely would know about short-term rental offices. Pre-covid, it was normal to meet in person at both offices if the size of the contract is large enough.
>What some people may not realize is that "executive suites" have been around forever, however they were never looked at as a "hypergrowth" SV/hot startup.
Regus was/is the main player in that space, and it certainly wasn't startup territory at all. WeWork took a very different angle to it, as they were looking to capture small startups that wanted to be in a kind of "incubator" type set up. The buildouts and the target clientele were different concepts than had been tried in that market. I'm not saying that WeWork didn't/doesn't have issues, or that the idea was profitable at it's core, but it was a different take and seen as quite "disruptive".
>They've also apparently had a business model where they don't own the spaces, so the underlying landlords can squeeze them at any time.
WeWork leases have single purpose entities on nearly all their leases with few guarantees from WeWork the company. That basically means that the landlord is holding nothing next to nothing. In fact, it's WeWork that could back out of a lease pretty easily leaving the landlord with little recourse, not the landlords that could squeeze them. And even then, the only squeeze the landlords have would be when renewing a lease, and landlords don't have the upper-hand there at all right now.
One of the things that WeWork did was buy up significant chunks of square footage in well located buildings that had trouble filling that square footage, then WeWork offloaded a lot of the initial capital expenditure for the buildouts onto the landlord. Some of these leases had break even points for the landlord outside of 5 years, which is quite long for leases that big.
So if WeWork goes under or backs out of a given lease, the landlord is left with a huge amount of space, that they likely can't lease, and will likely take a significant amount of capital to either A) break it up, or B) make it amenable for another company to lease out. That means that the landlords are likely going to give WeWork as long a leash as possible, because they don't want that space back.
The writing is on the wall though, and WeWork has been going downhill for years now. It was arguable whether it was a good business model before the pandemic, but I can't imagine it making sense in a post-pandemic world.
While WeWork clearly were squandering SV investor money, don't underestimate how much real estate fat cats made out on these deals. They got these seemingly sweetheart WeWork leases on the books, marked up valuations for the remaining space in the building, and sold the dream to other investment firms to make out like bandits.
> I can't imagine it making sense in a post-pandemic world.
Maybe I'm missing something obvious, but I think it makes more sense. If companies would rather not get invested in holding real-estate long-term in an uncertain economic and work climate, then having a much more flexible office situation makes a ton of sense. If the business they're starting doesn't work out, they're not left holding the bag on real-estate that they'll then have difficulty unloading.
If you hired WeWork for a reliable context-switch to help you focus on work, a more affordable alternative could be virtual co-working spaces like https://www.flow.club/.
I know most of the time as an independent consultant, the physical space to get away from your house is the reason why you pay WeWork, but if it's about structuring your work day, more focus, more energy from other people around you, and potentially meeting a person or two, virtual co-working offers all of that.
What some people may not realize is that "executive suites" have been around forever, however they were never looked at as a "hypergrowth" SV/hot startup. This is where you get a small office among many others and there's a shared receptionist.
When I looked at WeWork, sitting at a table all day with other people and no privacy was about the same price as executive suites. They've also apparently had a business model where they don't own the spaces, so the underlying landlords can squeeze them at any time.
Was this the company where the CEO owned the trademark and was leasing it back to the company?
In any case just a company that, with a cursory inspection, IMHO showed no promise from day 1.