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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?

#81

Post by mosdl »

secabeen wrote: post #31
netaustin wrote: post #14

Earlier quoted context omitted.

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 usi…

Shorter leases. Hedging against the future.

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

#82

Post by tptacek »

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…

I'm not a believer in WW's business model, but this is an overly-cynical take. We're a company that "started" in WeWork, have our own office now, and in fact moved a different office of ours from a private space in Long Island to a WeWork in Manhattan.

What WeWork offers to small businesses is quite valuable: an instantly-obtainable month-to-month lease, at relatively reasonable rates, with all standard office amenities (most notably Internet access) included. You can decide you need an office for your business on a Monday and have a better office on Tuesday than most of your local peers. Even better, you can quickly scale that office up to completely private offices or down to shared space.

To put it gently, the jury is still out on whether WeWork is charging an amount, given its number of subscribers at each level of service, to make the company profitable. It seems totally fair to predict that it'll turn out to be a house of cards.

It does not, on the other hand, seem fair to suggest that WeWork isn't offering something that people want.

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

#83

Post by dsr_ »

"Hey, would you buy 1 50-billionth of my company for a dollar? Sign this, please. Thanks."

I can probably manage to avoid a down round for a while, but only if I don't run out of cash or accidentally IPO.

(Every month: "Hey, would you buy 1 (1.2x previous valuation)th of my company for a buck? Sign here. Thanks!")

"Revenue is flat but market cap is increasing 20% month over month!"

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

#84

Post by burtonator »

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…

> 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.

VCs are paying the rent silly. It's VCs all the way down.

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

#85

Post by sharadov »

weworkfromhome wrote: post #68
a13n wrote: post #57

Earlier quoted context omitted.

To be fair the number of people who are able and willing to pay even $200/mo for co-working space is MUCH smaller than the number of people who are able and willing to pay $10/mo. Plenty of people would prefer to pay $10 to sit in someone's apartment for 7 hours, just like every day millions of people pay $5 to sit in a cafe for a couple hours. This becomes more obvious when you leave the rich tech bubble of SF.

I’m not clear on the numbers you’re thinking about: is that $10 per month or $10 per day? The former is impossible (that’s... 1/300th of what Airbnb-ing would earn) and the latter is equivalent to the cost of a formal co-working space. As the existing startups have proven, there’s no market for individuals renting houses to work from, the economics don’t work. A day pass at WeWork is cheaper than every listing on Vru…

I looked at Vrumi and the cost is ridiculous! $20/day/person tops, I go to Hacker Dojo in the Bay area and it's a decent place with good wifi, nothing fancy and its about that much.

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

#86

Post by harryh »

avip wrote: post #47
wbronitsky wrote: post #33

Earlier quoted context omitted.

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

There are 3 ways to gain Karma in this place: be first, be smarter or cheat.

Now, I don't cheat. And although I like to think we have some pretty smart people in this message board, it sure is a hell of a lot easier to just be first.

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

#87

Post by harryh »

empath75 wrote: post #26
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.

Their unit economics are positive, not negative.

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

#88

Post by SI_Rob »

weworkfromhome wrote: post #52
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 suggestion is made every time there's a thread about WeWork and it's just not viable. There are startups in this space already and the reality is always borne out: it's simply not worthwhile to rent out space in your home to an individual. You can get a monthly membership to WeWork for Every one of the startups in this space either disappears, or pivots their focus to larger spaces designed for meetings, events…

I think one of the components that drives the success of AirBNB, the ability to "live" for a couple weeks in, say, a former hermitage just outside Naples or a beachfront condo in the Seychelles, would also be viable for small teams or full time remote workers. Essentially it's just AirBnB but with some additional minimum guaranteed service levels for infrastructure (security, internet, privacy, pricing structured around a minimum 10 day work week block for fixed contract lengths, similar to short term commercial lease terms) for remote workers.

Another consideration is that private homes-as-workspaces can offer some incidental cost savings in the form of things you get with residential zoning like (usually) free parking and a car-based commute that does not follow urban congestion patterns. Say you need to work within 40 minutes of Paris or downtown LA in order to make the odd off-hours mixer or client meeting, but your daily workflow can be conducted entirely within a single dedicated space out in the burbs, priced comparably to the shared desks at a WW location and more comfortable or in a more walkable area than a typical industrial park.

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

#89

Post by rowathay »

jeremyjh wrote: post #76
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!

That works great for apartments zoned as commercial or mixed-use. I don't think that is common.

But this company would disrupt! Things like zoning laws aren’t cool, so we’ll move fast and break them!
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