WeWork Raises 'Substantial Doubt' About Its Future (bloomberg.com) 43
WeWork warned there's "substantial doubt" about its ability to continue operating. The company cited sustained losses and canceled memberships to its office spaces. From a report: The co-working business will focus over the next 12 months on reducing rental costs, negotiating more favorable leases, increasing revenue and raising capital, WeWork said in a statement Tuesday. The warning comes mere months after WeWork struck a deal with some of its biggest creditors and SoftBank to cut its debt load by around $1.5 billion and extend other maturities. Its bonds trade at deeply distressed levels. The company's 7.875% unsecured notes due 2025 last changed hands for 33.5 cents on the dollar, according to data from Trace. The market cap of WeWork, once valued at $47 billion, fell below $300 million on Wednesday.
They were still around? (Score:1)
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Yes, yes they do [rawstory.com].
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Look at Bud Light: it is almost certain some in the company thought that partnering with that transgender person for an ad campaign was a terrible idea, but they did not say it out loud for fear of being called bigots. Or they did say it, and were called bigots, which taught the others a lesson. Their deluded, woke-bubble-dwelling, millennial/GenZ marketing campaign lady probably genuinely thought that promoting woke values would bring the company more money, because she probably has no friends among their
Wait⦠(Score:5, Funny)
They havenâ(TM)t gone out of business yet?
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Maybe the last person leaving forgot to turn off the light. It happens.
Again? (Score:5, Interesting)
How many times has this happened now?
I'm okay with that... (Score:4, Interesting)
What's not to like about this?
Not Sure about Co-Working as a Business Plan (Score:5, Informative)
Time will tell, but this one has the impending WebVan dot-com-bust smell...
Re: Not Sure about Co-Working as a Business Plan (Score:5, Insightful)
I think the model works well for independent contractors who seek their own clients. It's a cheap way to get access to a professional setting where you can meet clients; way better than meeting at Starbuck's or a home office. And it's great for networking with other professionals, either for traditional career growth or for bringing in additional contractors for large or complex jobs.
That said, the addressable market for these kinds of professionals is far more limited than WeWork's real estate holdings.
Re: Not Sure about Co-Working as a Business Plan (Score:4, Informative)
I know a lot of small businesses were using such services (think teams of 20 people or less). It was fairly attractive when it meant you didn't need to rent out an entire floor to get access to facilities like kitchens, conference rooms, phone booths, and so on—not to mention that building maintenance was built-in.
(This was all pre-pandemic, mind you. Obviously, a lot of things are different now.)
But from what I remember, WeWork's problem wasn't a lack of customers, back then. It was that its business model wasn't what everyone assumed it was. We all thought they were leveraging some kind of algorithm to find amazing real estate deals and then pouncing on them. What it turned out they were doing, though, was going in on shockingly shitty real estate deals and then renting them out to customers at a loss, just to show the markets they were "growing" so they could secure more investment. Darn close to a Ponzi scheme.
I think the original CEO was forced out but allowed to stay on the board. I don't know what they've done to course-correct since then, but a lack of customers in light of work-from-home seems like a pretty bad problem for any real estate company to have.
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I think the original CEO was forced out but allowed to stay on the board.
He also owned a good portion of the properties rented through those "shitty deals," making it even more unattractive from an investor's standpoint.
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I think the model works well for independent contractors who seek their own clients. It's a cheap way to get access to a professional setting where you can meet clients; way better than meeting at Starbuck's or a home office. And it's great for networking with other professionals, either for traditional career growth or for bringing in additional contractors for large or complex jobs.
That said, the addressable market for these kinds of professionals is far more limited than WeWork's real estate holdings.
And there in lies the problem in their business model. I've had a few meetings/days in the WeWork office down in St Katherine docks (that's in London) before the plague and the offices have been very nice, beer on tap, barista run cafe, free drinks and snacks. It looked very expensive.
Now if you're targeting cheap sole traders, you're either massively under-pricing or not selling anything, either case it's going to be a loss.
In my experience the businesses running out of this office were small operat
Re: Not Sure about Co-Working as a Business Plan (Score:3)
Yes and:
If I'm adamant that I don't want to return to in-office presence, that pretty much makes me adamant that I don't wanna commute to a WeWork site either.
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I've been very skeptical of this business model since it started hitting the news a few years ago. Who is this supposed to serve? If I am 100% work from home, a $150 per month price tag to commute somewhere else to sit at a cafeteria table and be around a bunch of noisy non-teammates seems like it removes all of the work from home benefits.
That person might not actually want to work from home. Some people do find the physical separation help with the work vs life balance.
Especially if you're some kind of remote contractor, I suspect it could be a good networking place as well.
If this is for startups, how many of those are there with deep pockets to pay for premium office space (WeWork has to be profitable above their own costs for the space) who wouldn't just find a traditional lease arrangement?
Time will tell, but this one has the impending WebVan dot-com-bust smell...
Co-working space are surprisingly expensive. In theory, they should be similar if not cheaper than traditional office space. Pretty much any office space needs meeting rooms, a lunch area, and at least a little bit of buffer for growth. The meeting rooms and lunch areas
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I've been very skeptical of this business model since it started hitting the news a few years ago. Who is this supposed to serve?
Well, since WeWork owns a bunch of those co-working spaces... I expect it's supposed to serve WeWork.
It's seems like a pretty typical dot-com plan. They put together a nice Powerpoint-worthy business model that brings in lots of money - but no one is supposed to take a critical look at whether the intended customers will have any actual motivation to give that money to them.
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WeWork never had any trouble filling it's spaces. There are plenty of companies wanting workspace without paying for a full office. WeWork's problem from the beginning was corporate excesses bleeding profits. You just don't buy corporate jets [businessinsider.com] before the income can support it and this wasn't their only excess
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For slightly more rent you get to rent a "private" office if the idea of four glass walls means "private" to you. You get to pay more to have a decal placed at eye-level for more privacy, and also pay more for keycard access instead of metal keys.
WeWork isn't a pleasant workspace. It is loud, too. The glass walls, wood floors, and unfinished ceilings make a WeWork office as loud as a subway station.
I will say the networking and community events were a nice perk but they didn't happen often enough, maybe
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Why do you argue with a religious fanatic?
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Environmentally "friendly" policies permeates the WeWork commercial offerings and while they cut meat from the menu, the CEO was seen eating a rack of lamb and flying employees back and forth to his mansion by helicopter.
They implemented a TON of IoT stuff that doesn't work in their spaces to monitor everything from CO2 levels to trash production. These policies they implemented skyrocketed pricing, made people feel spied upon, they even removed trash cans and reduced cleaning services from offices to "redu
Don't they also have a lot of real estate? (Score:3, Funny)
I think another big problem not mentioned in the summary, is as far as I remember WeWork had actually bought a lot of commercial real estate... seemed like a great idea at the time but with values taking and loan rates rising that has to be really hurting them.
It's funny, I would assume that shared working spaces would have somewhat come back into popularity, since lots of people do like going somewhere to work if not an actual office, but maybe people really have gotten too used to just working at home all the time and they prefer it (I know I do).
Re:Don't they also have a lot of real estate? (Score:4, Interesting)
...but maybe people really have gotten too used to just working at home all the time and they prefer it (I know I do).
Hear, hear! Before the official end of the pandemic, we got recalled back to the office for one day a week, expressly so we wouldn't lose our office space due to lack of presence (company politics). My unspoken response (again, company politics) was, "Let them take it! I don't need or want it, as I have everything I need at home."
That one day is, by far, shittier than the rest of my working week combined. Working in an office (even the best office) sucks so badly compared to working from home that I considered quitting my job to find one that was 100% work from home. One of our newer programmers did just that.
In the end, I just decided to suck it up for one day out of the week, since I'm only a decade away from retirement, and with a wife and kids for whom I'm providing a stable and safe life. If I were younger and unbound by responsibilities, I would have bolted from the job for another 100% work from home one.
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From their current 10k it looks like they own about 1/4 of their spaces: $3.86B worth, but they probably can't get anything close to that value with sales in this market.
I think they also own spaces is some of the markets being hit the hardest by decline, so that figure may be facing a 70% haircut if they try to sell properties!
Business Model (Score:5, Funny)
Guess it should be called "We Don't Work"
Re:Business Model (Score:5, Funny)
"We Broke" ?
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We between jobs.
Holding Rights to Rent Next Year (Score:3)
WeWorks is valued today as holding rights to real estate that may come back sometime in the next 15 years, if someone can convince cube farms and teams rooms in expensive shit covered hoods are the new hotness. Going out of business would be a relief all the property owners who they have contracts with. The sooner these glass towers can be converted to self storage vaults for old betamax tapes, bell bottom jeans and figurines the better.
I would rather work from the fly over nation trailer park with a job that I work with my hands.
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WeWork doesn't hold real estate, they rented from other commercial entities, during COVID they simply broke those leases. The problem is complete and utter incompetence and mismanagement, focused on ESG scores so the CEO from BlackRock can feel like he changed the world, over their (paying) customer base.
A REIT run by the sort that ran Uber... (Score:2)
What could possibly go wrong in the wake of COVID-related WFH changes and a drastic increase in interest rates...
WeWork == Best tech pump/hype & dump scheme ev (Score:2)
It's quite impressive the way the founder got an initial big wig investor on board and they together used those resources to hype WeWork even more. It's basically a 1-to-1 replay of the dotcom hypes of the late 90ies/early 2000s. Only with even more absurd funding rounds and a gainful exit in record time. Quite impressive in a strange immoral way.
Just get a new name (Score:2)
WeDon'tWork.