How Can an 11-Year Old Company Lose $844m on $661m in Revenues? WeWork Shows How

https://wolfstreet.com/2021/11/15/how-can-an-11-year-old-company-lose-844-million-on-661-million-in-revenues-wework-shows-how-having-lost-13-3-billion-on-10-6-billion-in-revenues-in-4-years/

by ckastner • 5 years ago

32 11 5 years ago

wolfstreet.com

xhkkffbf• 5 years ago

Yes, I realize that We Work is a very questionable business model, but it's a bit unfair to evaluate it during the pandemic. I'm sure many investors are betting on people wanting to leave their home to work. If corporations downsize and give up their office space, that could me a big jump in customers. Once the pandemic fades.

dahdum• 5 years ago

Even if that happens and they reduce vacancy from 44% to 10%, it looks like each location will still barely cover the location operating expense, with nothing leftover to cover the others. In my admittedly naive view it’s a pretty gory sight.

gregoriol• 5 years ago

It seems to be a common feature of startups nowadays, thinking of Uber and many others: disruption by just burnin money

ckastner• 5 years ago

The pre-pandemic numbers are just as bad, though.

silexia• 5 years ago

While we are on the topic of people paying lots of money for something that appears to not have much value...

-Modern art was sold by a billionaire recently for tens of millions of dollars per artwork. The art and question is literally just colored lines on a page.

-Bitcoin and other cryptocurrencies we're supposed to be new currencies. No one uses a currency, so now people call it a "asset". It burns thousands of times. More energy than traditional electronic currencies that are actually used.

-Lots of very high Price to Sales ratio Nasdaq stocks. Shake shack, Zillow, and a long list of other companies that may be nice businesses but are not worth more than 10x their annual revenues as market cap.

peter303• 5 years ago

WeWorks business model is easy to clone. It also has no advantage of scale. In my city there are many mom-and-pop coworking spaces that easily compete with WeWork.

dmwallin• 5 years ago

That's not entirely true. Having a national presence can pay off in terms of being able to sign deals with larger clients.

ttymck• 5 years ago

That's true, but WeWork also competes with national office space companies (Regus, Premier) -- so national presence is not exactly a unique competitive differentiator.

rchaud• 5 years ago

Once a company receives funding at a scale rivaling that of state subsidized enterprises, there's a good chance it'll encounter the same pitfalls.

- operational ineffiency due to lack of pressure to make profits

- lack of competitiveness due to ability to undercut rivals on price, thabks to the endless amount of runway provided

- lack of a reality check internally as the company is seemingly always expanding, always hiring.

How Can an 11-Year Old Company Lose $844m on $661m in Revenues? WeWork Shows How

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