The Property Industry Is Falling Out of Love with WeWork
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Re: The Property Industry Is Falling Out of Love with WeWork
#2Unicorn playbook:
1. Jump on hot tech trend threatening to disrupt industry
2. pay way too much for customers
3. get lots of VC money and use VC money to pay way too much for more customers
4. grow gargantuan
5. transform into basically every other non-tech big player in the industry because zero marginal cost only works in few industries
Re: The Property Industry Is Falling Out of Love with WeWork
#3I was using space at a WeWork like company. This company was leasing office space from a building managed by CBRE. If you have any familiarity with CBRE, then you know that a shared office environment is totally against everything CBRE does. I do not know how long this particular shared office was there, but it recently closed back in October because of friction with CBRE.
I don't think the shared office space concept is a bad one, but landlords/building management companies will fight it for a long time. I'd imagine it to be an easier time for the shared office space companies to buy a building rather than trying to release a leased space.
Re: The Property Industry Is Falling Out of Love with WeWork
#4The existing commercial office space system seems very inefficient for small to medium-sized companies. You lease space, spend a ton renovating it to look "on-brand," then move a couple of years later. The next tenant renovates the space again to match their brand.
Each remodel comes out of a "tenant improvement budget" given by the landlord, but that has to be recouped in rent over the duration of the lease, so it's not really free money to the tenant.
Having offices that have already been remodeled to be nice enough, and just being able to lease a flexible number of desks could deliver huge savings - in time and cost to growing companies.
Re: The Property Industry Is Falling Out of Love with WeWork
#5Unicorn playbook: 1. Jump on hot tech trend threatening to disrupt industry 2. pay way too much for customers 3. get lots of VC money and use VC money to pay way too much for more customers 4. grow gargantuan 5. transform into basically every other non-tech big player in the industry because zero marginal cost only works in few industries
You forgot the part about disregarding laws/regulations and trying to grow fast enough so that by the time the regulators start to apply pressure you have enough money and clout to fight back, all while preventing the smaller guys from doing the same thing you did.
Not saying that WeWork is doing that, but it's definitely a time-honored Silicon Valley approach. Just look at the recent faux pas from Robinhood with their "checking & savings" accounts that got them bitch slapped nearly instantaneously by regulators, forcing Robinhood to withdraw the announcement and update it to a "cash management" account with details to follow.
Same for companies like Amazon. Grow super fast and ignore tax laws regarding nexus so you don't pay sales tax. And run a massive loss for years on end until you can figure out how to subsidize your losses through another profitable venture which you hope to achieve. They did with their AWS/cloud business and that makes the company as a whole barely profitable. But subsidizing your massive retail business losses with your high cloud margins is supposedly illegal. Number of regulators anywhere to be found? Zero. And don't forget to have an advantage against all the third party sellers because you can undercut them since you also sell millions of products and don't face the platform/marketplace fees, equating to illegal competition. Must be nice to be a big player.
Re: The Property Industry Is Falling Out of Love with WeWork
#6I was using space at a WeWork like company. This company was leasing office space from a building managed by CBRE. If you have any familiarity with CBRE, then you know that a shared office environment is totally against everything CBRE does. I do not know how long this particular shared office was there, but it recently closed back in October because of friction with CBRE. I don't think the shared office space concep…
If you have any familiarity with CBRE, then you know that a shared office environment is totally against everything CBRE does
CBRE Launches New Coworking Brand, Hana: https://allwork.space/2018/11/cbre-launches-new-coworking-br...
Re: The Property Industry Is Falling Out of Love with WeWork
#7Unicorn playbook: 1. Jump on hot tech trend threatening to disrupt industry 2. pay way too much for customers 3. get lots of VC money and use VC money to pay way too much for more customers 4. grow gargantuan 5. transform into basically every other non-tech big player in the industry because zero marginal cost only works in few industries
You forgot the part about disregarding laws/regulations and trying to grow fast enough so that by the time the regulators start to apply pressure you have enough money and clout to fight back, all while preventing the smaller guys from doing the same thing you did. Not saying that WeWork is doing that, but it's definitely a time-honored Silicon Valley approach. Just look at the recent faux pas from Robinhood with the…
Amazon was not unprofitable. They just constantly reinvested their profits back into their company instead of hording cash.
Re: The Property Industry Is Falling Out of Love with WeWork
#8Unicorn playbook: 1. Jump on hot tech trend threatening to disrupt industry 2. pay way too much for customers 3. get lots of VC money and use VC money to pay way too much for more customers 4. grow gargantuan 5. transform into basically every other non-tech big player in the industry because zero marginal cost only works in few industries
You forgot the part about disregarding laws/regulations and trying to grow fast enough so that by the time the regulators start to apply pressure you have enough money and clout to fight back, all while preventing the smaller guys from doing the same thing you did. Not saying that WeWork is doing that, but it's definitely a time-honored Silicon Valley approach. Just look at the recent faux pas from Robinhood with the…
Same for companies like Amazon. Grow super fast and ignore tax laws regarding nexus so you don't pay sales tax.
Need to point out that Amazon did not ignore tax laws regarding nexus. They took advantage of a Supreme Court decision on nexus laws (Quill) that resulted in them not having nexus in most states. They were forced to change their stance because at some point it was clear that they had surpassed the Quill factors that had earlier protected them.
Moreover, you have the order of subsidies wrong. Amazon subsidized AWS with its retail earnings. The reason Amazon didn't show profits for years was because it reinvested its gross sales income in building up AWS and other ventures.
But the other stuff about third party sellers, etc. is spot on.
Re: The Property Industry Is Falling Out of Love with WeWork
#9I was using space at a WeWork like company. This company was leasing office space from a building managed by CBRE. If you have any familiarity with CBRE, then you know that a shared office environment is totally against everything CBRE does. I do not know how long this particular shared office was there, but it recently closed back in October because of friction with CBRE. I don't think the shared office space concep…
If you have any familiarity with CBRE, then you know that a shared office environment is totally against everything CBRE does CBRE Launches New Coworking Brand, Hana: https://allwork.space/2018/11/cbre-launches-new-coworking-br...
How does this fit with https://www.hanahaus.com which already exists?
(note: I've never used Hana though I walked through the one in Palo Alto just out of curiosity, and it simply looked like a random co working space).
Re: The Property Industry Is Falling Out of Love with WeWork
#10I was using space at a WeWork like company. This company was leasing office space from a building managed by CBRE. If you have any familiarity with CBRE, then you know that a shared office environment is totally against everything CBRE does. I do not know how long this particular shared office was there, but it recently closed back in October because of friction with CBRE. I don't think the shared office space concep…
Why would a building owner disagree so staunchly with a leasee subletting to smaller offices? Can you fill me in on their motivation?