Why WeWork wouldn't be profitable?

WeWork / R&D lordmunch
Oct 9 44 Comments

Regus is a profitable Co working company with less revenue (3.2B 2018).
Why do you think WeWork won't be able to pull it off?

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TOP 44 Comments
  • Compass LInR08
    Shouldn’t you be telling us???? No wonder you guys went down the drain.
    Oct 9 1
    • Amazon / Eng 🦄..
      Compass vs WeWork

      Fight! Fight!
      Oct 13
  • WeWork / R&D lordmunch
    OP
    I think we can be profitable, there's huge demand for the product, and Regus showed profitability exists in the model.
    But wanna hear what you think
    Oct 9 9
    • F5 Networks RRA
      You're correct that I didn't know that. But I didn't hear about them and I have heard a LOT about WeWork. Leaves a bad taste and taints the brand.
      Oct 9
    • WeWork / R&D lordmunch
      OP
      It was a different decade, 2003
      Oct 9
    • WeWork / R&D lordmunch
      OP
      You might have been 17
      Oct 9
    • F5 Networks RRA
      I'd still have been old enough to not fall for the Neumann scam. Unlike you.
      Oct 9
    • New / Mgmt
      xsAS42

      New Mgmt

      PRE
      PARC
      xsAS42more
      Wework is most likely upside down on most building deals and leases. They also seems to spend more on interior design and accommodations/amenities than other coworking spaces. There are also a high number of competitors in all major cities now, and bare bone commercial landlords know the market and are less inclined to play nice. Also Neumann has tainted the brand heavily and remains on the board. He can't pull a Donald Trump and just keep going because this isn't his daddy's company that got handed down to him, there are a large amount of powerful shareholders and debt holders here. It was an actual business.
      Oct 9
  • F5 Networks RRA
    Bad leadership, for one...
    Oct 9 0
  • Amazon KajsIq
    First, realize that you are not a tech company. This realization is going to solve problems for companies like Uber, Lyft, WeWork. Amazon.com (not AWS) is also not a tech company and it realized that way back, which is why it is afloat.
    Instead of pouring money into engineering, spend money for what matters- your product and what customers want.
    Engineering can be outsourced rather than paying 180k base to engineers in Seattle. Seattle is an expensive market for hiring engineers currently.
    Oct 9 3
    • E*Trade / Finance cbEV72
      Amazon is valued as tech firm, it’s ratios are like top tech firms
      Oct 9
    • Amazon KajsIq
      That's mainly due to AWS
      Oct 9
    • E*Trade / Finance cbEV72
      I’m not sure about that. Aws alone can’t explain your P/E ratio for instance.
      Oct 9
  • Amazon / Eng Batman!!!
    1. Regus CEO doesn't rent his property to Regus for personal gains.
    2. Regus didn't buy right to it's name from a shell company its CEO setup to pocket quick profit.
    3. Regus isn't trying to raise world consciousness or any other cult stuff.
    4. Regus doesn't fancy around as a tech company and burn money like no one's business.

    I know its old news that came out, but it's just the way company was setup and run. Huge liabilities that the company holds. Maybe company can turn around but looking at the liabilities and cash needs, chances are slim.
    Oct 9 1
    • E*Trade / Finance cbEV72
      I think at the moment the view is that they’re still a going concern. Some tough cost cuts and rethinking of business model is in order. They should be valued as real estate firm in my opinion.
      Oct 9
  • Twitch have
    Are you an engineer at WeWork? What do you actually build? I’m genuinely curious what engineers at WeWork do.
    Oct 9 2
    • Amazon KajsIq
      They have a zillow-like website for finding office spaces, which offer 360 views of the spaces. They also build some of the software/hardware for smart offices I guess. Figured this out from their job descriptions. Definitely sounds some interesting work.
      Oct 9
    • WeWork / R&D lordmunch
      OP
      Specifically our team works on automating billing processes to make better customer experience, reduce manual work for scalability, (i.e. increase margins), reduce risk, help global growth, and more
      Oct 10
  • OpenTable Meliodas
    Because WeWork’s expenses exceed its income.
    Oct 9 0
  • E*Trade / Finance cbEV72
    The answer is expenses. You got to cut expenses now that you’re not trying to raise world consciousness
    Oct 9 3
  • HBO
    Grunt_

    HBO

    BIO
    Username is an insult for Jonah Ryan (Veep!) that didn’t make it to air.
    Grunt_more
    It would give me more confidence if WeWork had a better handle on their financials and their plan to become insanely profitable.

    I suspect they’ll undergo a similar transformation as Uber- leadership and executive culture more palatable to wall st.
    Oct 10 1
    • Amazon dodobsj
      U r not far Hbo. Att has 150 b in debt
      Oct 15
  • If their debt is structured poorly (aggressive growth), plus lack of growth in small businesses, I could see how profitability is impossible in the short term.
    Oct 9 1
  • WeWork can be profitable if it runs at low cost (as low as possible) and expands a lot. Its margins, for the properties themselves, are positive as far as I know.

    However, I think it would take a very long time before it returns to its one sky high valuation.
    Oct 9 2
    • LinkedIn / Eng phatman
      That won't be the case in a recession when their short-term tenants leave.
      Oct 9
    • I could see it going the other way in a recession too. Maybe companies will give up their traditional leases and opt for cheap co-working spaces instead.
      Oct 9
  • GrubHub groggyfrog
    At the end of the day it is rental business and your customers are price sensitive. You can’t really up sell your product/services too much, or you risk being undercut. Hence, keeping operation costs reasonably low as you capture a larger market share is crucial imho. Unfortunately, many SoftBank backed startups seem to have embarked on the path to acquire as many users as possible irregardless of cost, in hopes of going public ASAP.
    Oct 9 1
    • Twitch have
      SoftBank is as rogue as WeWork
      Oct 9
  • New / Eng
    500k

    New Eng

    BIO
    https://ShiftLeft.academy
    500kmore
    It can definitely be profitable. But then it's a slow growing real estate business not a "tech company" with high economy of scale. This won't justify the high valuation.

    Being profitable means nothing for the employees (stock wise) if that's what you intended to ask.
    Oct 9 0
  • Billups / Eng EVDD84
    On the bright side, since your business model heavily features owning big tall properties in urban areas, you’ll make out like bandits if you’re still around when the rest of the world literally goes underwater.
    Oct 9 2
    • AT&T MsdR32
      *leasing buildings*
      Oct 10
    • Billups / Eng EVDD84
      No. WeWork buy pretty much all of their spaces before renting them out. Their competitors often franchise or sublet, but so far WeWork seem intent on making sure they own the room(s) they’re ruining.
      Oct 10
  • Kong dkWj15
    Profitability isn't We co's problem, your valuation is. Your shareholders are going to be underwater against the valuation for years to come. Profitability can be attained, sure, but to get profitable and exceed the insane valuation? It won't happen, which is why your investors are going to cut bait and try and recoup as much of their investments as possible. Sorry to say, but this is the truth.

    VC and Cap tables are structured so that last money in is first money out. By slashing and burning, your last money in (SoftBank) can recoup some of its investment, so that's what they'll do.

    Another big problem is the way that leases were purchased. Unfortunately, there's going to be a lot of associated pain from WeWork failing in the commercial RE sector.
    Oct 17 0
  • Billups / Eng v3749474
    Just saw your TV/streaming spot. Wrong audience. Narration on the ad indicates you’re talking to people who directly make decisions on behalf of their company — owners, founders, CEOs. If that’s true your target audience is probably on no-ads streaming plans anyway. Should probably try to pick a format they’ll see.
    Oct 12 0
  • Ericsson Pkeman
    Al9
    Oct 9 0
  • Capital One / Finance Rexxar
    Flat out, you’re selling an expensive product. I can have a home office for a lot cheaper. Or I can just use my companies office. Cool idea, niche market. I was telling people around me wework would fail for over a year.
    Oct 9 0

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