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WeWork: Now a $5B Co-Working Startup

wsj.com

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Re: WeWork: Now a $5B Co-Working Startup

#21

Post by pbreit »

mbesto wrote: post #12
7Figures2Commas wrote: post #5

> “If I showed you their cash-flow statement, you would not compare it to a real-estate company,” said Henry Ellenbogen, a portfolio manager at T. Rowe Price. “You’d compare it to a brand or tech company—maybe Chipotle or Uber.” > WeWork said its December revenue puts it on an about $150 million annual revenue run rate. It also said the month’s annualized operating income puts its valuation at roughly 100 times incom…

> Landlords typically trade between 18 times and 20 times earnings This is my favorite part. So WeWork is "trading" at 33x on projected annual earnings and yet these contracts can easily be broken. When it all falls down (it will, but probably less dramatically than we've seen in the past) this type of business will be hit the hardest. Not having fixed cost structures are typically why so many tech startups can be va…

You mean "33x on projected annual revenues"! Huge difference and far worse.

Re: WeWork: Now a $5B Co-Working Startup

#23

Post by eli »

pbreit wrote: post #19
melling wrote: post #13

Earlier quoted context omitted.

Sign up. It's a little over $1 a day.

Which is kind of a ripoff, dontcha think? That's about what I pay for all my internet access and triple that of Netflix, Hulu, Amazon Prime & NY Times.

Well, it's not a ripoff if the articles are worth it to you. Regardless of what other unrelated media services cost.

Re: WeWork: Now a $5B Co-Working Startup

#24

Post by melling »

pbreit wrote: post #19
melling wrote: post #13

Earlier quoted context omitted.

Sign up. It's a little over $1 a day.

Which is kind of a ripoff, dontcha think? That's about what I pay for all my internet access and triple that of Netflix, Hulu, Amazon Prime & NY Times.

It really depends on how much you value the content. I pay for the WSJ. People need to earn a living. We fight for McDonalds employees to earn a fare wage but we complain because we don't want to pay for newspapers. There's nothing wrong with "premium content".

Re: WeWork: Now a $5B Co-Working Startup

#25

Post by etjossem »

melling wrote: post #13
etjossem wrote: post #9

Paywalled. I wish the submission link went to the full article.

Sign up. It's a little over $1 a day.

For the frequent WSJ reader, several hundred dollars a year makes sense. For a casual reader, it doesn't - but they still want the opportunity to convert me to a frequent reader. That's why they offer previews via search engines, etc.

Re: WeWork: Now a $5B Co-Working Startup

#26

Post by francesca »

WeWork did a great job of capitalizing on the move to smaller more agile companies. I don't think that "startup hype" is going to die. It's cheaper than ever to start a company and the market for tech companies is excellent right now. It's not easy to do, but getting $1-3MM in funding is accessible to talented people and once they get that in the bank, they're not going to open an office-- they're going to WeWork. This is huge for their business and it also enables the creation and maintenance of small companies who want to do things lean until the build a market and revenue stream (or maybe in some cases, adoption to drive further venture investment).

I've seen WeWork do great things for companies in NYC by just giving them a place to work and a community to work with.

Still, WeWork is not just another. They are actually a next-generation Real-Estate company! WeWork makes it clear that working is not just about your desk. It's also about your environment, the other people you interact with, the events that come to your space, the coffee you have (and in the case of WeWork, the architecture and design of your floor!). This is very cool for the future of company/working culture.

Re: WeWork: Now a $5B Co-Working Startup

#28

Post by dimva »

This company provides inspirational, collaborative, nice office spaces for very high prices (compared to traditional office space). Their outsized profits will encourage competitors to enter the space and undercut them on price. Is there a way they can defend against that?

- Their events provide some sort of network effect and marketing

- The current group of startups provides some sort of network effect

Still, their customer base consists almost entirely of price-sensitive, savvy, early-adopters, so any new competitor would be known about without having to do much marketing, and could start without all the nice events in the beginning if the price is lower.

I just don't see how this business is defensible long-term...

Re: WeWork: Now a $5B Co-Working Startup

#29

Post by interstitial »

infecto wrote: post #8
7Figures2Commas wrote: post #5

> “If I showed you their cash-flow statement, you would not compare it to a real-estate company,” said Henry Ellenbogen, a portfolio manager at T. Rowe Price. “You’d compare it to a brand or tech company—maybe Chipotle or Uber.” > WeWork said its December revenue puts it on an about $150 million annual revenue run rate. It also said the month’s annualized operating income puts its valuation at roughly 100 times incom…

I have a hard time understanding why you would not compare this to real-estate. Its certainly not a brand or tech play. If the market slowed it would certainly take a hit. Most of these places have monthly contracts and its highly tied to how well the economy is doing. With that said, I really do appreciate the services these kinds of places offer. While they charge above market rate for sq.ft., they make up for it i…

The funny thing is during the 2004-2008 bubble, you were not allowed to compare real estate to real estate.

Re: WeWork: Now a $5B Co-Working Startup

#30

Post by mbendett »

dimva wrote: post #28

This company provides inspirational, collaborative, nice office spaces for very high prices (compared to traditional office space). Their outsized profits will encourage competitors to enter the space and undercut them on price. Is there a way they can defend against that? - Their events provide some sort of network effect and marketing - The current group of startups provides some sort of network effect Still, their…

@dimva, what company are you mentioning in this comment? WeWork?
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