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How Did WeWork’s Adam Neumann Build a $47B Company?

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Re: How Did WeWork’s Adam Neumann Build a $47B Company?

#21

Post by empath75 »

hdpq wrote: post #16

I'll just go on the record to say that I think WeWork is the biggest deck of cards that is begging for a collapse. I've only been to a handful of locations, but they never seem busy and I'm not sure how they're making rent. Plus, not to mention, back in my day, when you did a startup and got funding from your rich uncle (not Uncle Rich), you grew your startup from your apartment, and when you outgrew that space, you…

The whole unicorn bubble seems to be ruthless exploitation of the sunk cost fallacy.

Re: How Did WeWork’s Adam Neumann Build a $47B Company?

#23

Post by spaceman_2020 »

My WeWork has three kinds of clients. The first kind sit in the dedicated desk area, work 10-12 hours/day and rarely leave the space for community events. They're either serious consultants/freelancers or just starting their own startups.

The second kind sit in the shared desk area and basically dick around all day. They attend all the community events and use WeWork as mostly a networking/dating hub. Who they network with, I have no clue.

The third kind are companies with satellite offices in WeWork. GoDaddy works out of my space and has taken over an entire floor. Curiously, these are now the largest client type by far. Three floors in my space were earlier dedicated to independent workers and small startups.

But now, WeWork opened three more floors of space, and of the six floors, four are occupied entirely by large companies.

Re: How Did WeWork’s Adam Neumann Build a $47B Company?

#24

Post by avip »

mdorazio wrote: post #2

Cynical answer: he convinced VCs that his particular brand of shared office space was better than everyone else's, actual revenue be damned, and they believed him . That's it. Straight from the article: "Neumann declared that WeWork’s “valuation and size today are much more based on our energy and spirituality than it is on a multiple of revenue.”"

A more cynical (and arguably more accurate) answer would be "he didn't".

Re: How Did WeWork’s Adam Neumann Build a $47B Company?

#25

Post by GCA10 »

olivermarks wrote: post #9
GCA10 wrote: post #8

Earlier quoted context omitted.

So IWG plc, which has a British stock-market listing and does business mostly as Regus, had 2018 revenue of £2.5 billion and a current market cap of about £3 billion. It thus trades at about 1.2x annual revenue. WeWork's multiple is way higher.

WeWorks multiple is irrelevant when it is losing money every quarter. This current era is redolent of the dying embers of the dot com boom - over leveraged loss makers trying to go public to pay back vast sums of borrowing from investors

This gets tricky. Yes, some loss-making businesses never turn profitable. But others do (i.e. Amazon). And when it comes to real-estate companies, the rather goofy U.S. tax rules mean that even quite robust companies will engineer huge depreciation losses when they actually are doing fine.

WeWork might still be way overvalued in the private markets. But it could also be a lot healthier than its reported losses.

Re: How Did WeWork’s Adam Neumann Build a $47B Company?

#26

Post by empath75 »

anbop wrote: post #7

By taking an old stodgy business (commercial real estate) and bringing it in conformance with modern expectations of design, ease of transactions, lease length, and vibe. The real estate owners couldn’t be bothered to do this because they make too much money by doing nothing to bother with doing something for an extra $47b (a rounding error on the value of global commercial real estate) The huge fundraising rounds ar…

They're signing expensive long term leases and then renting them for the short term at a loss, which is like exactly the opposite of how it's supposed to work.

Re: How Did WeWork’s Adam Neumann Build a $47B Company?

#27

Post by dmode »

The biggest revenue opportunity for WeWork is big corporations opening smaller office location in cities where just want to staff a small field office or operations office. Example, Uber opening an office in let's say Columbus. Now instead of Uber going on a real estate hunt, they can simply rent out space in WeWork Columbus which gives them flexibility to scale or shrink depending on business. It is essentially abstracting away the real estate inefficiencies. There is a definitely a market for it. But not sure whether it is worth $47bn

Re: How Did WeWork’s Adam Neumann Build a $47B Company?

#28

Post by conanbatt »

spaceman_2020 wrote: post #23

My WeWork has three kinds of clients. The first kind sit in the dedicated desk area, work 10-12 hours/day and rarely leave the space for community events. They're either serious consultants/freelancers or just starting their own startups. The second kind sit in the shared desk area and basically dick around all day. They attend all the community events and use WeWork as mostly a networking/dating hub. Who they networ…

> But now, WeWork opened three more floors of space, and of the six floors, four are occupied entirely by large companies.

This was interesting to me. I've seen wework turn corporate often. Startups are great candidates: they want to offer good offices and not worry about big moves, contract negotiations, get good branding, etc.

But that is a small market..

Re: How Did WeWork’s Adam Neumann Build a $47B Company?

#29

Post by ChainOfFools »

sharadov wrote: post #15

I have the next billion-dollar business idea, an " Airbnb for coworking spaces". Convert your existing house to a co-working space. Looked at Wework, already pay too much for rent in the Bay area. I work from home, and would not mind the company. Got good coffee and great beer as well!

This is actually a pretty good idea, I'd expect AirBnB doesn't attempt something along these lines in the next couple years.

Re: How Did WeWork’s Adam Neumann Build a $47B Company?

#30

Post by sharadov »

spaceman_2020 wrote: post #23

My WeWork has three kinds of clients. The first kind sit in the dedicated desk area, work 10-12 hours/day and rarely leave the space for community events. They're either serious consultants/freelancers or just starting their own startups. The second kind sit in the shared desk area and basically dick around all day. They attend all the community events and use WeWork as mostly a networking/dating hub. Who they networ…

It's interesting that godaddy would opt for a wework rather than leasing office space and setting it up. Probably less cost and hassle?
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