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

http://nymag.com/intelligencer/2019/06/wework-adam-neumann.html

by ajuhasz • 7 years ago

157 206 7 years ago

mdorazio• 7 years ago

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.”"

thedudeabides5• 7 years ago

Anyone know what revenue for the next largest coworking space is?

phonon• 7 years ago

You mean "largest" :-)

https://en.wikipedia.org/wiki/IWG_plc

About $3 Billion in revenue, been around since 1989. Not considered hip, no glass partitions, but actually profitable.

GCA102• 7 years ago

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.

avip2• 7 years ago

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

wbronitsky2• 7 years ago

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

enahs-sf• 7 years ago

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

AnimalMuppet2• 7 years ago

Their valuation is based on spirituality? Are they a business, or a church?

I mean, they can actually be more valuable than other such companies if they get the ambience right. Maybe that's what he meant. But if they're referring to the ambience as "spirituality", I cannot take them seriously. [Edit: And if by "spirituality" they mean something besides ambience, I still cannot take them seriously.]

If I had more faith in the market's rationality, I would short them as soon as they IPO...

MegaButts• 7 years ago

If I had more faith in the market's rationality, I would short them as soon as they IPO...

Total tangent, but how much of the stock market do you think is fair? By fair I mean abiding by SEC regulations (and other obvious laws, such as regular fraud), versus unfair where people are using insider trading, trying to influence a short, or even have some ulterior motive perhaps related to politics?

Now I hope someone more knowledgeable than me chimes in with links to articles or papers, because I'd really love to learn more.

OJFord• 7 years ago

Presumably he meant 'spirit', but thought 'spirituality' sounded more elegant or whatever (despite not being synonymous).

creaghpatr• 7 years ago

But if they're referring to the ambience as "spirituality", I cannot take them seriously.

I dunno, the Catholic church is doing just fine in terms of revenues and real estate assets, and that's just one example. Then again, religious organizations get preferable tax treatment...maybe WeWork will eventually pivot to religion down the road.

chaostheory• 7 years ago

Their valuation is based on spirituality? Are they a business, or a church?

Maybe their investors saw value in their company culture?

"The Best Startups Work a Lot Like Cults" -- Peter Thiel

matz1• 7 years ago

Church can be a lucrative business too. A well run church can generate nice profit.

robertAngst• 7 years ago

In my lifetime we will learn if 'tech' companies are overvalued.

The fact that my friend, a total casual, is investing in Tesla and Apple via Robin Hood has me concerned the market is inflated with dumb money.

arcticbull• 7 years ago

The fact your friend is using a no-fee platform to invest in the second-most profitable company in the world paying out a reasonable dividend is problematic? I mean, I guess they could invest in SPY but Apple's been a solid 5-year outperform. Tesla's worth half what it was 6 months ago, so seems like a balance of risky and less-risky assets.

Now Beyond Meat, well, that's a different story haha.

exogeny• 7 years ago

He made investors believe in a non-sensical vision that is not rooted in any sort of financial or commercial reality in the middle of an insane bull market.

Simple.

warp_factor• 7 years ago

You got it slightly wrong: He made investors believe that there will be bigger more stupid investors that will eventually buy out the shares for a higher price than those investors.

(Also, see Uber, Lyft and other ponzy scheme based companies)

b_tterc_p• 7 years ago

Maybe! That’s what happened. Is it his initial plan? Unclear. Results don’t proof intentions or even competence.

anbop• 7 years ago

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 are an important part of this because the hype is important for making it seem like a cool place which is essential to the economics.

Add in some founder god complex which is not really necessary or sufficient for a successful startup but does seem to be often present.

empath752• 7 years ago

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.

harryh3• 7 years ago

Their unit economics are positive, not negative.

spaceman_20202• 7 years ago

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.

moorhosj• 7 years ago

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

And, maybe some day, actual profits.

rchaud2• 7 years ago

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

The "stupidly" part comes in when you realize that maybe the cabbie had a better grasp of the economics of his business when he accepted your bid of 30 EUR. The gig economy people driving you for a fraction of the 5 EUR you paid might come to the same conclusion sooner or later.

paulcole• 7 years ago

Most estimates put the cost of driving (in the US) at around $.50 to $.60 per mile. Assuming this is somewhat on par with Europe. Guy’s costs were likely around $1.50. After Uber’s cut he’s “making” like $3?

Take someone else’s money, spend it aggressively, pretend like you can fix things in the future, and viola - you have a unicorn.

hoodwink3• 7 years ago

Finally, some clear thinking.

arcturus173• 7 years ago

Doesn’t quite explain the cash hemorrhage or the path to profitability though.

code4tee• 7 years ago

Valuation inflation / delusion only really matters if you’re the last one left holding the bag. So long as there’s someone else willing to buy the game continues for another round.

When the music stops though things get real ugly real quick.

espeed2• 7 years ago

Valuation inflation / delusion only really matters if you’re the last one left holding the bag

Not if you're positioned as too-big-to-fail [1] and can force a government bailout.

[1] https://www.cbinsights.com/research/report/wework-strategy-t...

manishsharan• 7 years ago

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, working from a coffee shop is a very bad idea for various reason including ergonomics. WeWork fills this niche. Is this a $47B niche ? very unlikely .

netaustin• 7 years ago

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 view of the future as anything: https://www.wework.com/enterprise

I think the Short Answer is that the solo renters are the sizzle and the Fortune 500 is the steak.

secabeen• 7 years ago

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.

nugget• 7 years ago

Most viable businesses with a steady revenue stream can afford to rent office space and furnish it on their own

Yes, but do they want to?

My experience is that companies increasingly want to focus on their core competencies and nothing else, especially if the non core areas come with overhead in the form of full time employees. I could easily see non-HQ locations outsourced to a company like WeWork. For a satellite office of 50 people there is hundreds of thousands of dollars in annual overhead that could be drastically slashed by a local provider operating at much vaster scale. Less liability and variability for the employer and the employees likely end up with a better quality work environment.

ghaff• 7 years ago

It's a bit like the discussions you read around cloud provider costs vs. doing things in-house (or whatever). There are a lot of overheads associated with a big company doing peripheral tasks in-house.

For example, to your point, that 50 person satellite office probably needs a full-time office manager and then all the costs that percolate upstream associated with having a full-time office manager and another lease to manage/office to service.

It may be worth it to have your own location with your own branding etc. Or you may just want a location where a bunch of employees can work, have meetings with customers/partners, etc. with minimal hassle.

tptacek3• 7 years ago

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.

jfb• 7 years ago

It's much easier to offer people something they want if you are undercutting your competition by subsidizing your business with dumb investor money.

scarface743• 7 years ago

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

If WeWork isn’t charging people enough to be profitable, there is no way of knowing whether WeWork is offering something people want - at a price they are willing to pay.

sharadov8• 7 years ago

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!

cutenewt3• 7 years ago

How much would you be willing to rent "a desk" each month?

sharadov8• 7 years ago

I think $100 is a sweet spot.

ChainOfFools• 7 years ago

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

dpau• 7 years ago

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.

sharadov8• 7 years ago

I thought at some point why not convert the garage, that way they're not bothering me. Would have cost me 10K tops to put an AC, nice flooring in the garage.

sixhobbits• 7 years ago

Yeah I had this idea too. I stayed with some people in a fancy apartment in Zurich for a week a while back. They all left to work and I worked from their home. It was the best office I'd ever had, and was empty during work hours all week. I reckon 60% or more of city apartments are similar - seems very inefficient.

jedberg• 7 years ago

Yeah, come work at home with me! Then my children can bother you too. :)

pawelk• 7 years ago

Name it AirB2B and go get your initial founding round!

sharadov8• 7 years ago

Terrific name!

jzl• 7 years ago

Good one!

I was thinking AaaS -- Aviato as a Service.

weworkfromhome2• 7 years ago

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 <$400 in most locations, and there's lots of no-brand co-working spaces that charge less than half of that. If you can pay $200/month to have 24/7 access to a space with amenities and flexibility... why would you pay someone $10 to sit in their apartment for 7 hours until they come home and you awkwardly shuffle out so they can make their dinner? And who is going to rent their apartment out for $10/day with all the liability that comes along with it? All the pain of Airbnb, <10% of the earnings.

Every one of the startups in this space either disappears, or pivots their focus to larger spaces designed for meetings, events or shoots. For example there's https://breather.com in the US and https://www.vrumi.com in the UK. The cheapest space on vrumi is far more expensive than WeWork.

a13n• 7 years ago

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.

sharadov8• 7 years ago

Btw, when I was in LA looked at the closest Wework in Hollywood, and the parking was about $10/day. Now you are paying about $600/month.

SI_Rob2• 7 years ago

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.

jeremyjh• 7 years ago

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

rowathay• 7 years ago

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

nikanj• 7 years ago

As Uber and AirBnB have demonstrated, caring about laws is so last millennium. As long as you get big enough, fast enough, the cities will probably bend and change things to accommodate you.

_vuqm2• 7 years ago

While there are a few companies that are actually trying to build this idea with renting out homes by the hour, at Out Of Office[0] we're working on a similar concept of a more general marketplace for coworking spaces. We've scouted hundreds of locations in San Francisco, both free and bookable, that you can search for in our app. You can find coffee shops, hotel lobbies, public spaces, or book private desks, and conference rooms throughout the city.

[0] https://outofoffice.app

simonebrunozzi• 7 years ago

Interesting. Can you drop me an email at $myHNusername @ gmail? I would need to discuss a couple of things with you.

Thanks!

xenospn2• 7 years ago

That coffee cup about to fall is giving me serious anxiety.

koolhead17• 7 years ago

Nice Concept. Good Luck. :)

cmos• 7 years ago

To take it a step further, if the house owner works outside home during the day it could be mutually beneficial if you throw in taking a few breaks to walk the dog to make it an even trade. It's always better for pets to have people around all day.

hdpq2• 7 years ago

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 got a bigger apartment. (ala Silicon Valley style)

I dunno, I can't put my finger on it, but I think this whole thing is a massive game of charades...

baxtr• 7 years ago

The ones I saw were very busy, and, filled by large corporates that wanted to be hip. I think for them value proposition is that they are able to hire some hipster people who don't want to work in the old buildings and also build some marketing stories around their "labs".

That said, I "worked" in a WeWork for about 6 months and it was just terrible. Tiny offices, lots of visual distractions, lots of noise, many parties. I wouldn't ever do it again.

onion2k2• 7 years ago

I don't think it's a matter of wanting to "be hip", but a case of recruiting being a huge problem for most companies. Renting out the 'cool' co-working spaces of WeWork probably isn't their long term goal.

If BigCo has exhausted the talent in their city they have three options left: employ remote workers, pay people to relocate, or open satellite offices and pay a little more than then the local businesses to get people. WeWork is enabling the last option at scale. Renting managed office is a viable business model that's been happening for decades.

Whether there's enough of a market to make WeWork work is another question, but there might be. Anecdotally, a large insurer recently opened a new office in my city here in the UK because they've had 40 open positions in their London office for years. They've already filled half those positions. They wouldn't have done that without renting a large office on a business park.

gbersac• 7 years ago

Really? I'm working in wework Lafayette right now and I love WeWork, so many free stuff (even beer!), beautiful building in a well placed location... I love it.

zimpenfish2• 7 years ago

it was just terrible. Tiny offices, lots of visual distractions, lots of noise, many parties. I wouldn't ever do it again.

Same (London, Shoreditch). Additionally we had relatively frequent and loud noises from the ceiling ("eeeeeNNGNGNGNGNGNNG") which they couldn't fix. But not once did they suggest we move offices to any one of the 30+ empty ones downstairs.

empath752• 7 years ago

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

burtonator• 7 years ago

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.

florakel• 7 years ago

The VC will cash out with the IPO. That’s the new strategy. Drive companies to valuations higher than the market cap of many S&P500 companies and then sell them to the “free market” (Uber, Lyft). Great deal for the involved VCs and banks. Is the end result a sustainable business...? who knows...? who cares...?

mbesto3• 7 years ago

WeWork, of all of the overvalued unicorns that exist today, will likely be hit the hardest during a recession.

Just watch.

bitcoinmoney2• 7 years ago

How do I protect my VTSAX investment if we work goes public and is included in the basket??

freewilly1040• 7 years ago

I think their IPO will be dangerous for them... the myth of their inflated valuation will be gone, and they won’t be able to raise money.

bitxbit• 7 years ago

I am waiting to buy Herman Miller chairs for pennies on the dollar. Remember those days?

crawdog• 7 years ago

The number of auctions in the early 2000s was staggering! Furniture and art were the two cheapest items to buy...

1290cc• 7 years ago

Its already happening except this time its standing desks for $100 vs $1000. Keep an eye on craigslist in SF, I've picked up a few for home and keep seeing more pop up. Each time its been a tech startup that has failed, so I guess we should start worrying when its established companies listing their office furniture on craigslist.

rafkin98• 7 years ago

I do - furniture/equipment fire sales in 2001 and RE/cars in 2009. Next one will be a combination of everything ;-)

avocado4• 7 years ago

WeWork is just too expensive here in SF. Easier to just rent an office or work from cofounder's home.

boh• 7 years ago

The consensus on Wall Street has WeWork nowhere near its $47B valuation. Like Uber/Lyft, its size is more a consequence of VC investment, rather than organic growth.

Plus the management isn't particularly scrupulous with how they allocate those funds. The CEO, for instance, buys property himself and then rents it to WeWork (for a profit obviously). VCs let him get away with it because their business is no longer to fund and help create sustainable companies, but rather to gather as much money into a "unicorn" as they can and then pawn it off to the public markets who ultimately pay the bill.

jshowa3• 7 years ago

Sounds like a cult to me.

Next business idea. WeX. Just put We in front of every building name and get richer just from branding.

alfiedotwtf• 7 years ago

WeUber - Like UberPool, but everyone takes turns driving

spaceman_20202• 7 years ago

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.

conanbatt• 7 years ago

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..

scarface743• 7 years ago

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?

sharadov8• 7 years ago

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

joecot• 7 years ago

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.

vadym909• 7 years ago

its probably in a city where they dont have a presence and dont want to bother with setting on up.

hrktb2• 7 years ago

There’s a bunch of internatonal companies using wework apparently. My guess would be the same as yours: nice location in the cities, modern looking offices, the brand value, and not having to find a good office manager.

I worked in a recently furnished office two years ago, there was a sizeable effort to make it an attractive work place but it still slightly paled compared to wework in terms of pure office space.

burger_moon• 7 years ago

Amazon also uses WeWork in a few locations, including Seattle. I would imagine since they're renting out multiple floors, they're getting a better than market price.

kemitche• 7 years ago

My naive view is that it's similar to the reason some companies use AWS rather than running their own data center. That is, it's worth it to pay the premium to not have to manage their own space, and have the flexibility to scale up/down their usage a bit more quickly than locking into multi-year leases.

delfinom• 7 years ago

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.

JohnJamesRambo2• 7 years ago

Reminds me of when Michael Scott tried to start his own paper company and was selling paper so low it was bankrupting his company. He didn’t understand it until an accountant consultant type pointed it out.

dmode• 7 years ago

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

sonnyblarney3• 7 years ago

This probably true, and there's a company similar to WW in Montreal who did a presentation indicating that as well.

The thing is: there's very little competitive advantage in that.

Having 'cool decor' is less valuable to larger companies, and it's not as though other entities can't duplicate that if they want.

Other, more established firms can inch their way into copying some of WW's mojo, and compete on price, which the CFO's of said companies will appreciate.

coredog64• 7 years ago

I wouldn’t say cool decor isn’t valuable to larger companies. If you’re a stodgy, older firm you’re going to get some chunk of Millennials that will decide that your beige cubicle farm isn’t anywhere they want to work. Or you might be running investors through the office and they don’t know jack about tech but if you don’t have a bunch of kids in hoodies clustered around the kombucha dispenser then they might just pass.

JauntTrooper• 7 years ago

A good brand is a valuable form of competitive advantage. And real estate itself provides done scarcity value since each property is unique and there are limited attractive properties in high demand locations. I agree they’re in more danger from commoditization and competition than a company with strong network effects, but executed correctly they could have more natural advantage than say, a Chobani or Stitch Fix or Deciem.

Traster• 7 years ago

I'm sorry but I don't see how what you're describing is different to any of the existing office rental companies out there and if WeWork were valued like them it'd be a completely different story.

sonnyblarney3• 7 years ago

"“valuation and size today are much more based on our energy and spirituality than it is on a multiple of revenue.”"

Literally valuation based on 'spirituality'.

Not only do I call 'bubble' but also 'BS'.

Very wary of companies leveraging 'morality' in whatever form (esp. all the way up to 'Spirituality'), unless it's somehow deeply authentic (i.e. a company that makes 'green' eqipment can claim 'greeness' that's fine), and are something to be cynical about. I find it kind of repulsive.

My feeling is that WeWork must be the 'high tech startup' opportunity for all those non-tech 'Goop' reader types.

... like the NXVM of startup land.

Tony Robbins of working real estate + SoftBank.

“There are 150 million orphans in the world. We want to solve this problem and give them a new family: the WeWork family.” In L.A., Neumann told his employees that the newly formed We Company would now have three prongs — WeWork, WeLive, and WeGrow — with a single, grandiose mission: “to elevate the world’s consciousness.”

Just beautiful ...

WeWork’s size and scale could put it in a position to help deal with some of the world’s largest problems, like the refugee crisis, saying, “I need to have the biggest valuation I can, because when countries are shooting at each other, I want them to come to me.”

How does anyone take this guy seriously?

In the comments here there seems to be a lack of calling out on the so many of the gob-smacking authoritarian/hypocrisy red-flags going on here.

The guy's line is preaching morality, spirituality and inclusuion ... while doing the opposite i.e. dropping the least productive 20% staff every year? 'All dudes' in charge? (Nothign necessarily wrong there (maybe red flags), but it's definitely hypocritical)

All of the Kabbalah stuff and social preaching at offsites?

'It's like a capitalist Kibbutz' ... this is double-speak.

And that his background doesn't legitimately speak to any of this, i.e. total lack of legitimacy?

The trick to this kind personality is 1) words have no bearing on reality 2) total lack of self-awareness or consideration such that he can come across as 'honest' even when spouting garbage.

Who else could possibly be talking about 'saving the refugees of the world' like this with a straight face?

This guy is the Donald Trump of Vegans.

infinitezest• 7 years ago

I have to give you props for "Donald Trump of vegans"

bob2001• 7 years ago

yeah I'm surprised more ppl haven't commented on this as well.

'Donald Trump of Vegans' is a nice line.

Bakary2• 7 years ago

This guy is a legend. He is exposing how our world is running on bullshit fumes, and how people throw money without thinking out of greed, and becoming richer than a small nation for it. We need more of these modern day Diogenes.

naveen99• 7 years ago

I wonder what the price of a cds is on wework.

espeed2• 7 years ago

The CBINSIGHTS research report (WeWork strategy teardown) is an interesting read...

"WeWork’s $47 Billion Dream: The Lavishly Funded Startup That Could Disrupt Commercial Real Estate"

https://www.cbinsights.com/research/report/wework-strategy-t...

dlock• 7 years ago

So i work out of a competitors place here in south east asia (indonesia to be specific), for the guys here from the region they probably know who im talking about. This coworking space was initially funded by a local VC but then low and behold softbank just invested, wework is also here in indonesia. I (last year) had to downsize my startup because some areas of business didnt do so well so i moved into this coworking, decent building , upper class part of town and i have 4 rooms next to each other probably 5x3 meters each. Each room i pay 300$usd a month, got it at a 60% discount cause it was just opening and locked it in for 3 years ! But at say ~$700 a room per month full price its still a dam good price, cheaper than anywhere else by far in the area. Wework is charging 3x that amount ... i have no idea what SB's strategy is here with wework and this locally invested competitor, specially with regards to cannibalizing each other and specially in a price sensitive market, maybe things will go the way of uber and grab where the bigger more international son of softbank will leave the region so the local son can dominate. But honestly, other then cheap rent, there is nothing special about these places, i dont see any tech, auto bookings, elastic rental or anything, i came here cause i had to downsize , needed interent , place for my guys to work, strategize and refocus. Its helped us save on costs over the last year and have brought back the startup from near collapse to doing very well again. Also at the price im getting it i have no idea how they make money, even at the full price its hard to understand as i know what a floor in the place im working at actually costs ... there are also many empty rooms ... i mean its like uber to me, im using it cause its cheap and its convenient, but should a cheaper one come out in the near future, ill simply ask my guys to pickup their laptops and move next door, there is really no added value for me to use one or the other just like all the ride hailing companies ... whos cheaper will get my business, if this is the way these SB companies are going to roll over the next few years and there really is no added value, they in for a lot of hurt. But after saying that, i thank them for cheap rent and helping me get my startup back on track :)

omni• 7 years ago

Friendly suggestion: adding some line breaks / paragraphs to a post this long will make people much more likely to read it.

listenandlearn• 7 years ago

It seems like these companies are fully over valued so now they need to come up with shit to push down people’s throats for the IPOs so the investors can get out at a profit.

This is what happens when VCs keep funding these loses for a decade. We saw the same thing with Uber, pushing Uber eats as if it’s going to take over all food, meanwhile there has been like 3-5 startups already doing that at a very easy to value valuation.

Anyway, I’m not buying.

Edit: I’m referencing the following from the article

>”He is known for making bombastic pronouncements, like this one at an all-company event last year: “There are 150 million orphans in the world. We want to solve this problem and give them a new family: the WeWork family.” In L.A., Neumann told his employees that the newly formed We Company would now have three prongs — WeWork, WeLive, and WeGrow — with a single, grandiose mission: “to elevate the world’s consciousness.””

dsr_• 7 years ago

"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!"

the_arun• 7 years ago

There is a podcast for the interview Guy Raz did for “How I built this” with Miguel McKelvey https://podcasts.apple.com/us/podcast/how-i-built-this-with-... . Thought it was a pretty good startup story

rchaud2• 7 years ago

For all the criticism that modern media gets regarding journalistic standards around coverage of big business, it's remarkable that they will lead with eye-popping valuation numbers in their headlines when they know that they are more or less a fiction concocted by VCs.

danielfoster• 7 years ago

I was a member at WeWork for over a year. The company doesn’t have a direction. WeWork seems more like a hip place to look cool than get stuff done.

A few experiences I’ve had:

1. WeWork holds lots of events like “Dog of the Month.” Meanwhile, there are empty desks everywhere and the printer doesn’t work.

2. I cancelled and no one ever followed up to ask why or try to keep me as a customer (see above).

3. The spaces are always too loud and chaotic. Every attempt is made to maximize rentable space that is never rented. American Airlines offers more bathrooms per passenger than WeWork has for its tenants.

4. I was able to cancel to $550 / month dedicated desk membership and get a year of hot desk membership for FREE thanks to a new promotion with American Express. AMEX snd WeWork should not have opened this generous deal to existing WeWork customers. This is very poor revenue management and shows the shortsighted approach the company has toward growth.

ddffre• 7 years ago

It's a bubble and everyone there is afraid of saying.

rpmcmurphy• 7 years ago

Ah, the magic of financial engineering. Mr. Neumann will cash out of his fictional decacorn in dribs and drabs and never have to work again. Everyone else will be left with a bit pile of shit (aka a commercial real estate venture that bet on ever upward growth and got ripped to shreds in the secular downturn).

Bakary2• 7 years ago

It's not like they were working hard to make the world a better place, but investing in the hopes that they would be richer without too much work. It's hard to feel sorry for them. They are on the same level as Neumann but he happened to be cannier.

rightbyte2• 7 years ago

The laught is on us when pension founds buy at the IPO.

KuhlMensch• 7 years ago

Hm, I worked in a company that had hired ~140 desks in WeWork (Aldgate London). If all the floors in the world have a few large-companies provisioned and filled like that - I could. be convinced the valuation is plausible.

When you are a large company in WeWork, you set the culture (e.g. noise) and you have personal relationships with the WeWork staff - which makes things run smoother.

From reading the comments it seems many people have had lack-luster experiences. Especially those who hired a single desk and have been forced to interact with the community. And imho the community is pretty unique:

I remember knocking off work at 7pm, and hearing there was free beers. I wandered over in a work-daze. As I approached the door, it opened and out poured hi-energy EDM, accompanied by a large group of happy, shout-chatting drunks. I slid around them and entered what was more "club at 1am" - rather than "knock-off drinks". I mean there was flashing lights, a DJ, and a decent sound system. What I was most amazed by was passing multiple people who seemed to be rolling hard. It was definitely impressive, but after coding for 10 hours straight it was not what I needed, so I grabbed a fist of and Heineken backed out.

The thing that always stuck with me, was the implicit agreement by all-attending, that they were all going to go _hard_ as soon as they knocked off work. I provide no judgement, just an account of something I'd never seen in inter-office culture. Note: I never personally saw that level of revelry again.

loriverkutya• 7 years ago

I worked in a WeWork in London for 6 month (it was one of the main reason I left.) I don't even considering initial interview with anybody using WeWork after that.

perfunctory• 7 years ago

For me WeWork is a prime example of how the rich (investors) don’t know what to do with their piles of cash. We need to force (eh, inspire) them to invest in renewables instead.

dbbk• 7 years ago

He has bragged about working 20-hour days and regularly called executive meetings that would begin after midnight. “I’ve had meetings that started at 2 a.m. where he joined us 45 minutes late, but that meeting was worth millions,” a former WeWork executive told me.

This is not OK.

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

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