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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?

#31

Post by secabeen »

netaustin wrote: post #14
manishsharan wrote: post #11

Short Answer: he is riding the Gig economy just like Uber etc. Most viable businesses with a steady revenue stream can afford to rent office space and furnish it on their own. But the self employed folks -- the web designeers, SEM experts, and various other professionals without a steady employer need a place to work. For some, working from home is not an option due to regulation or family consideration etc. For most…

The"real business" of WeWork et al seems to be selling an entrepreneurial vibe to big companies. Lots of folks in my distributed company work at WeWorks around the country, and most of their neighbors work for big companies. One of my colleagues is almost fully surrounded by a Dish Network call center. WeWork will even custom build for big customers — in fact, their Enterprise landing page is a good an index to their…

The question is, why would a F500 company rent space from WeWork at a double-digit markup when they can do it themselves? This is not super hard or special stuff, and F500 companies need to do it enough that they can maintain the expertise.

If the answer is "wework allows us to be elastic with real estate as our needs shift", then WeWork will be in for a lot of hurt at the next recession. If the answer is "we are using a lot more remote or geographically-diverse staffers, and WeWork allows us to have small office space available all over the world", they might do okay. The single-company WeWorks described in the article lean towards the former, though.

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

#32

Post by cangencer »

cutenewt wrote: post #18
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.

I'm curious what Regus' take is on WeWork (i.e. strategy). In other words, did they start a hip new WeWork-killer? Attempt to compete on price? Have special retention marketing campaigns to stave off clients from going to WeWork.

See https://www.spacesworks.com/ which is basically Regus with a different brand name.

I am using their co-working in Copenhagen since a few months and quite happy so far.

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

#33

Post by wbronitsky »

avip wrote: post #24
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".

Came here to literally type "he didn't" thank you for doing it first!

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

#34

Post by dpau »

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!

mind blown. although i think you should focus on car garages and backyard sheds for that authentic start-up experience. for extra, clients can have their garage pre stocked with technical-looking equipment and stray wires hanging everywhere.

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

#35

Post by tshanmu »

GCA10 wrote: post #25
olivermarks wrote: post #9

Earlier quoted context omitted.

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.

AFAIK, we work does not own the offices, they rent from another company owned by the CEO probably

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

#36

Post by scarface74 »

conanbatt wrote: post #28
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..

Yahoo also thought it was doing well when most of its profit was coming from unprofitable startups funded by VCs. Guess what happened when VCs stopped investing in startups in 2000?

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

#37

Post by spaceman_2020 »

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…

So many of these unicorns seem so stupidly simple in hindsight.

I'm in St Petersburg right now and the taxi outside the train station quoted an initial rate of EUR 50 to drive a grand total of 6km (after haggling, "just" EUR 30).

I booked an Uber (operated under Yandex Taxi in Russia now) and the total price was just EUR 5

Take stodgy, often scammy, and downright consumer unfriendly industries, add transparency and accessibility to them, and viola - you have a unicorn.

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

#38

Post by joecot »

sharadov wrote: post #30
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?

Given the office makeup others have described (small startups and freelancers), and the networking events, it might give them an opportunity to convince their neighbors to host with them. Probably not entirely worth it, but if you need office space anyway, that is a slight marketing advantage. And given that GoDaddy hosting is really just reselling AWS servers, they need all the help they can get.

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

#39

Post by delfinom »

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…

At the same time, just because large companies are renting space doesn't mean they are still profitable. In fact one can argue that WeWork may be underpriced enough that it attracts said companies to exploit it.

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

#40

Post by enahs-sf »

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.”"

what's the liquidation preference on their energy and spirituality?
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