11 ms·

WeWork Warns of Possible Bankruptcy

124 points by JonoBB 3y ago

abi 3y ago
Sad about this because I have a hot desk membership in New York, and it's an amazing experience that I'd probably pay more for honestly.
- paulcole 3y ago
  Funny you mention paying more, but they actually cut prices for many members recently. In the past 6 months, WeWork split their buildings into 2 tiers. The All-Access pass at one tier is $149 and the other is $299. $299 also gets you access to both tiers of buildings. I only go to the locations here in Portland and went from paying $299 a month to $149. They didn’t advertise this change to me, I had to find out from a friend who just signed up. I emailed the salesperson and asked why I wouldn’t make the change given my situation. He just replied defeatedly, “I’ll start the paperwork.”
  - abi 3y ago
    Oh wow. Did not know about this. Thanks for the tip!
- idontwantthis 3y ago
  What makes it amazing?
  - abi 3y ago
    Really great space to work in. And in NYC, there's probably like 30/40 WeWorks so it's very convenient when you have meetings around the city.
    - muttantt 3y ago
      Spent the last few months in NYC and also enjoyed the large variety of Weworks to pick from each day. But a common theme was how empty most of them were and devoid of rented offices. Some of them even shut down entire floors for the time being. Man I wish I would have shorted this stock, and I kept thinking about it each time I visited another ghost town Wework.
shaoonb 3y ago
My company recently moved from a wework equivalent to a much cheaper serviced office. A few less of the flashy features and perhaps a slightly less prestigious address (5 minutes down the road) for a third of the price.
- thisgoesnowhere 3y ago
  The idea that this was a tech company because they have a integrated portal for management of your office subscription was always laughable. The multiples were ridiculous for what basically is a internet connected REIT.
Ajay-p 3y ago
I feel most awful for Softbank. WeWork was such a terrible investment.
mnd999 3y ago
Should I look forward to season 2 of WeCrashed?
WJW 3y ago
> The spectacular collapse of a company once valued by SoftBank at $40 billion has been years in the making, but is still surprising given the number of large commercial buildings around the world that don the company’s name. Is it actually surprising? If you too many assets that you bought with variable interest rate debt, then going bankrupt in a higher-interest-rate environment is exactly what I would expect.
- LatteLazy 3y ago
  Did they actually buy buildings? I thought they just took long term leases from owners and sold short term to their customers? I once read an article saying that for all the tech bs, weworks was basically just a (at the well timed) commercial rent play: fix low rent and then charge rising rents as the market goes up. I might be wrong though? I remember thinking it was like a bank (exposed to time risk) but with property...
  - jsemrau 3y ago
    It might have worked on 2008 levels and then ride the elevator up. But to fuel the growth story they needed to go international where they could not enjoy the same once-in-a-lifetime opportunity.
  - WJW 3y ago
    > fix low rent This is not so easy as it sounds at scale, landlords aren't stupid. AFAICT, the main model is that WeWork simply charged more per desk/office/unit of surface area than they paid in rent to the building owner. This can intuitively work because they rent office space in bulk but rent out individual desks, and prices for individual "items" are almost always higher than buying in bulk. Obviously that model only makes a profit if you can maintain high occupancy rates though, and with COVID and rising interest rates the demand for expensive pay-as-you-go office space fell through the floor. Through that lens WeWork is indeed like a bank: they rent long-term and rent out short-term. Companies like that are very vulnerable to a "run" where all the short term renters suddenly leave but the long term liabilities don't.
  - dzader 3y ago
throwoutway 3y ago
The story of WeWork is fascinating and sad to watch (for the employees). Adam got his but his employees didn't. The financial numbers are pretty sad too. - Market cap below $500 million. - Lost $700 million in 6 months this year - Lost $2.3 billion in 2022 - Roughly 3 billion in debt - Total liquidity of only $680 million (only 1/3 is cash).
- kwanbix 3y ago
  What is crazy is that he was able to raise 350 millions from a16z for what is basically a simple property management company. After all the sh*t he did. And then you go to a16z with an idea, and they reject it because it is not innovative enough. Then VCs wonder why 80% of their investments fail to produce the expected money on average. https://techcrunch.com/2022/08/16/how-a16zs-investment-into-adam-neumann-further-solidifies-the-concrete-ceiling/ https://techcrunch.com/2022/08/16/how-a16zs-investment-into-...
  - dralley 3y ago
    Reminds me of Matt Levine's fantastic Moviepass article https://www.bloomberg.com/opinion/articles/2019-08-07/moviepass-worked-out-great https://www.bloomberg.com/opinion/articles/2019-08-07/moviep...
    - kubanczyk 3y ago
      archived as https://archive.is/tX1c5 https://archive.is/tX1c5
- ramraj07 3y ago
  Don’t forget that the VCs backed him again on a somehow even shadier, blatantly dystopian startup idea with a metric ton of money again [1]. 1. https://fortune.com/2023/07/11/adam-neumann-new-company-flow-compete-wework/amp/ https://fortune.com/2023/07/11/adam-neumann-new-company-flow...
  - Aeolun 3y ago
Eddygandr 3y ago
Honestly surprised WeWork is still around after that documentary on it in 2021
- 93po 3y ago
  i've never even heard of it before so i doubt it's very mainstream
  - Eddygandr 3y ago
    Fair point! It did win an Emmy and is distributed by Hulu though so it’s not super fringe.
    - DropInIn 3y ago
      I only watch a couple documentaries a year and I saw it the year it released.... Frankly I'm a little saddened so few who consider themselves "in the know" about these things didn't at least know of the doc...
      - Eddygandr 3y ago
        HN is my favourite site by far (I lost my login details to my old acc but have been here for quite a few years), but, HN users tend to be very vocal on areas they don't really "know". My wife is an MRI researcher and I share most threads on that topic, normally saying some comment seems really cool, where she quickly shoots it down as flawed. If it isn't directly related to programming I have a large salt shaker nearby :) To be fair I know I do the same no matter how much I try not to!
        DropInIn 3y ago
        Oh it wasn't a comment on HN users but people in general. So often someone will spout off on a topic as though they know a great deal but when I start actually trying to have discourse on it I discover they actually know very little. Dunning-Krueger type thi g I'm sure, but it's just so common as to be mentionable.
marcopicentini 3y ago
I liked the spaces but their price are crazy expensive. It makes not sense to spend so much for a wood desk and a chair.
goeiedaggoeie 3y ago
They also carry long overvalued leases on their books at a time commercial real estate is in the dumps still. Some of my friends have been climbing hard into Commercial REITS now for a few years, hoping for that big upswing in office work to boost them.
PedroBatista 3y ago
Should have happened in 2021 but our "brightest VC minds" thought it would be a good idea to burn even more "free" money on this pit. To be fair, WeWork is just another roll of the dice company from the Uber era of free money. Let's pump it up and become too-big-to-fail! It appears WeWork wasn't big enough.. And they can blame COVID all they want, but the business model was already showing sights of failure before 2020. Yes, COVID accelerated this but it was not the cause.
- fredgrott 3y ago
  We need to be more detailed about this as it highlights a demographics problem underlying it.... 1. Free Money was the tail end of boomers investments pools 2. There will be a 12-year gap until the next investments pools increase from the new workers entering the working market. 3. Next investments pool increase from the new worker cohorts group will be smaller than the boomers. All this indicates that the strategy of throw money at getting monopoly of market is sun setting and VCs will now have to have the slow growth strategy in their toolbox. That also means potential founders now need to have that in their toolbox, things to look for: 1. Founders getting creative and partnering up with older experienced people in the domain they are creating their product in.
  - mynameishere 3y ago
    Am I the only one who just stops reading any comment if it contains the word "boomers"? It's entered a tidy lexicon with "lol" and "This." and [any smiley].
    - codingdave 3y ago
      While "boomers" is sometimes used mockingly, it also describes an actual generation of people who do have a significant impact on society, and do have enough common ground to make discussion of that generation useful in sociological dialogue. So no, I do not stop reading at the word "boomer" any more than I stop reading at the word "millennial".
  - jt2190 3y ago
sarreph 3y ago
In my opinion the writing for a way out of this mess has been on the wall for a long time now, post-Covid. This is with the only viable, but still heavily under-utilized product they have left: hot-desking and community workspaces. Having rented multiple dedicated offices from WeWork I can attest that the corridors are become more and more like a post-apocalyptic landscape as the tenants — no longer taking advantage of introductory rents — move out one after the other. Go to the hot-desking spaces floors and you’ll find it bustling and sometimes not even possible to get a seat somewhere. Why they haven’t aggressively cut underperforming locations and consolidated more hot-desking space into the better buildings is beyond me. Especially in the current work environment where arrangements with companies are flexible and the line between home and work becomes ever blurred. It seems like the perfect base to start on to build a new offering for companies that can provide employees with hot-desks on a flexible basis.
- mirekrusin 3y ago
  They probably enter into long term lease for the building they can’t get out overnight?
  - sarreph 3y ago
    Good point - goes to show it’s always easier to criticise behemoths like this from the outside. However, I wager that they have had long enough to plan around this one - _surely_ there are a non-negligible amount of leases they can trade or sell on / do something with as most WeWork locations are in highly desirable spots.
    - rcme 3y ago
      Isn’t this a microcosm of the broader story with commercial real estate? Values are down massively. Trying to break the lease is like realizing those losses for WeWork.
    - JumpCrisscross 3y ago
      > they have had long enough to plan around this one WeWork’s core model has always been borrowing long and lending short; they are inherently vulnerable to a sharp spike down in commercial rents. Apart from financially hedging that, or penning fancy outs when they signed their leases, it’s tough to see how even prescience a few years ago could have saved them. And that’s amidst Silicon Valley’s attitude in 2021-22 that the Fed couldn’t—not wouldn’t, couldn’t—raise rates or else America would go bankrupt or some nonsense.
rvz 3y ago
It doesn't matter what happens to WeWork. Adam Neumann and the other VCs already exit scammed out of it with their millions and additionally dumped on retail. They successfully got away with it, despite knowing that the business has hundreds of millions of dollars of losses pre-IPO, which was over $900M+ [0]; the biggest of all red flags as I said 4 years ago. [1] This company could only exist in a cheap money era with decades long quantitate easing. Now just look at the ship sinking faster as the interest rates are now much higher with no cheap money this time. WeWork is the gold standard of unprofitable companies who are good at losing money whilst pretending to be a 'tech company' or 'tech startup' and was just used as a vehicle for an IPO at an extremely inflated valuation before the bubble burst. [0] https://www.cnbc.com/2019/08/14/wework-releases-s-1-filing-for-ipo.html https://www.cnbc.com/2019/08/14/wework-releases-s-1-filing-f... [1] https://news.ycombinator.com/item?id=21213365 https://news.ycombinator.com/item?id=21213365
- JumpCrisscross 3y ago
  > Neumann and the other VCs already exit scammed out of it with their millions and additionally dumped on retail Given the outright fraud prevalent in today’s tech landscape, it’s difficult to call WeWork a scam. Stupid, yes. But fraud; for that we lack evidence.
  - NoGravitas 3y ago
    It's a commercial property management company that identifies as a tech company to get dumb investment money. Maybe not outright fraudulent, but definitely scammy.
    - JumpCrisscross 3y ago
      > Maybe not outright fraudulent, but definitely scammy Scams are attempts to defraud. No fraud, no scam. If it feels scammy, that means (or should mean) you sense fraud. I know this seems pedantic. But drawing clearly that line--between fraud and blind optimism--seems like a good takeaway from this past cycle.
benjaminwootton 3y ago
I have had 4 or 5 attempts with them at upgrading offices. For instance, from the ad-hoc membership to on-demand, then from on-demand to a small office. Their sales staff just don’t seem interested. It’s been a “please take my money” situation for much of the last 3 years.
danvoell 3y ago
Would also be interested to know what % of Spacs have shown success.
- HWR_14 3y ago
  For who/what do you mean? You mean SPACs that actually acquired a company? SPACs where the initial SPAC investors (pre-acquisition) made money? Those that have a solid company behind them, regardless of if investors made/lost money on the price movement since it announced? People who bought SPAC shares post-acquisition where the price went up? (For pre/post acquisition investors, I assume you mean retail investors).
whywhywhywhy 3y ago
Company I work at went from a trashy long and cramped room in a WeWork where the toilets were always breaking and the elevator buttons didn't line up with the floor numbering because it was two buildings stuck together to a two floor small warehouse style building, same area for less than WeWork cost. Even without the push from some to WFH WeWork was a terrible product in the 3 WeWorks I've had to work in.
FredPret 3y ago
This company is an anomaly in the capital markets. Investors should do their due diligence or they’ll get taken in by an idiot or charlatan and lose their shirt. Just look at their financials: $3.7b in the hole and continual losses pulling them ever further into the red. Even operating cashflow is negative. [0] [0] valustox.com/WE
voxadam 3y ago
WeWork's most recent 10-Q where the warning comes from: https://www.sec.gov/ix?doc=/Archives/edgar/data/0001813756/000181375623000059/we-20230630.htm https://www.sec.gov/ix?doc=/Archives/edgar/data/0001813756/0...
leroman 3y ago
Several years ago while hustling as a single founder, I hoped to get a desk in a private office (anything but open-space), so I would have a place to come to to focus on work, socialize and feel at work.. So I went to see what WeWork have to offer. There I saw a nice floor with nice looking private offices, finally taken to what they thought might be relevant for me, they showed me a tiny space where half a diner table is hung on the wall and over a diner sofa with the second wall behind the sofa, (now-days these types of rooms are used for private 1 on 1 meetings and zoom calls..) for the price of what I would pay a private office of say 2/3 people (pre-WeWork shared office spaces). Just the audacity of the person showing me this for this price struck me how greedy and disconnected WeWork are, got me so insulted I would never check them out again. This is what you get when you get an MBA type business management constantly looking for ways to up the contract prices like its a B2B SaaS business (not that I'm saying this makes more sense there..)
- JumpCrisscross 3y ago
  > how greedy and disconnected WeWork are…what you get when you get an MBA type business management constantly Apparently not greedy nor MBA enough!
- itsoktocry 3y ago
  >This is what you get when you get an MBA type business management constantly I love how HN blames MBAs for everything. This was greedy "tech people", nothing more nothing less. Maybe if a few of the characters in this saga had MBAs they would have been able to better judge the value of the business, as opposed to gut and vibes. After all, it was the MBAs who pulled the IPO, while the tech crew continued to push this garbage on the public.
  - derstander 3y ago
    > I love how HN blames MBAs for everything. > This was greedy "tech people", nothing more nothing less. It's hard to talk about WeWork without talking about Adam Neumann. And looking him up, it seems that he does have a degree in business -- albeit only in 2017 -- rather than a degree in something like computer science or engineering. And prior to WeWork, he apparently founded a children's clothing company: not exactly a "tech people" industry. So I'm not getting tech people vibes from him. [1] https://techcrunch.com/2017/06/05/weworks-adam-neumann-is-graduating-from-college-today-15-years-after-he-started/ https://techcrunch.com/2017/06/05/weworks-adam-neumann-is-gr... [2] https://en.wikipedia.org/wiki/Adam_Neumann https://en.wikipedia.org/wiki/Adam_Neumann
seydor 3y ago
that will be a lot of furniture
rchaud 3y ago
VC capitalism over the past decade resembles the free spending era of Communist central planners tasked with rapidly industrializing their economies. 1) Dump enormous amounts of zero-interest capital into {{ sector }} 2) Entrust leadership to charismatic politicians rather than domain experts (Adam Neumann) 3) Craft a PR narrative emphasizing innovation and diminishing critics (Softbank "Vision Fund", "swinging for the fences", "transformational" ) 4) Construct Potemkin villages to show the world that all is well (going public) 5) ...followed by eventual rapid decline and collapse WeWork is the most egregious example, but the same fate awaits the likes of UberEats and Lime and what have you.
- JumpCrisscross 3y ago
  It makes sense to divide late-stage, large-cheque VC from classic early-stage, small-cheque VC in the same way we separate money-losing, unlevered PE from classic cash-flow positive, leveraged PE. (Hint: the latter are the same.)
- thisgoesnowhere 3y ago
  The similarities are startling, it's all a consequence of reducing power to a small set of people who progressively lose touch with what the market actually needs. It doesn't matter if its "public" or "private" it's the concentration that causes the negative effects. Made more annoying by how difficult it is to explain that simple concept to the pseudo libertarian crowd that tends to congregate here.
- shrubble 3y ago
  Your accurate post made me think of a great blog title... "A Canticle For Potemkin"
bhouston 3y ago
I do not understand why Adam Neumann got that massive exit settlement from We Work? > WeWork founder Adam Neumann received $245m in company stock [....] In addition to the $245m grant, Neumann received $200m in cash, was able to refinance $432m in debt on favorable terms, and allowed a finance company controlled by the former chief executive to sell $578m in WeWork stock. [1] That guy got incredibly rich creating a company that was clearly not viable and seems likely to bankrupt. Corporate government seems to be non-existent here. Who are the people that are left holding the bag? Hopefully it is mostly just private money like the Saudis + SoftBank (if they screw up, they suffer the consequences, that is great) and not public pension funds. Otherwise, the public fund managers should go after this complete lack of governance and oversight. [1] https://www.theguardian.com/business/2021/may/27/wework-founder-adam-neumann-enormous-exit-package https://www.theguardian.com/business/2021/may/27/wework-foun...
- hn_throwaway_99 3y ago
  Still more amazing to me is that he got a16z to invest 350 million into his new real estate debacle just after all this. This dude must really be a master hypnotist or something.
  - geodel 3y ago
    Nah, this time Andreessen thought real estate is really eating the world :) So jump in early.
  - zer8k 3y ago
    I've been around a few of these people in my life (albeit not nearly as successful). One guy in particular got people to invest millions in his sinking ships. Some people have a reality distortion field around them. Pair that with a half decent pedigree (school, neighborhood, city) and while money was cheap it was fairly easy for them to get whatever they wanted. It's sometimes surprising how shocking simply knowing people is.
  - matthewdgreen 3y ago
    If you think the goal of investing in these companies it to be ultimately profitable and make huge earnings, investing in successful con men doesn’t make any sense. If you think the goal is to cash out by dumping the company on a bigger sucker (or even better, retail investors) then obviously you’re going to seek out the biggest huckster. Look at what investment funds do, not what they say.
nologic01 3y ago
The era of cheap money is frequently invoked to explain this grand fiasco but macroeconomic variables have the same relation with any specific project that climate change has with an unusual heat wave. Due diligence, focus on good governance etc are more directly influential in weeding out dodgy propositions and these behavioral aspects need not be closely correlated with any risk-free momey rate.
dschuetz 3y ago
What does WeWork actually sell? I mean... what is their source of revenue, or is it just dumb me and it's my own fault that I don't know that?
- WJW 3y ago
  Working space. You can rent a single desk or multiple, and they charge you money every month. Bog standard stuff, has been done a million times all over the world. The problem for WeWork is that they chose to grow incredibly fast, positioned themselves a a very high-end premium type of service, and funded it all with lots of debt and VC (mostly SoftBank) investments, despite nearly every financial professional warning them that they were over-exposed and any small disruption to their earnings would cause huge troubles for the company. Then COVID happened, interest rates started rising and the demand for expensive rented offices dried up. Now they have a ton of bills and not enough paying customers to cover them all.
  - dschuetz 3y ago
    Ah, essentially they are selling office desks to start-ups who don't need them anymore post-covid. Sounds bulletproof to me /s. I think that many fast-growing start-ups have decided that it's cheaper and safer to work from home, so maybe WeWork needs to start working and look for other sources of revenue. or do nothing and implode.
    - HWR_14 3y ago
      No, you're misunderstanding. First, they sold a lot to established companies who would get a whole office in the building to seem cool. I believe that's where most of the profits came from. The startup/hotdesking was there as well, but I don't believe it was as profitable. Otherwise, WFH would be a boon to them. Companies have paid for WeWork desks for their WFH employees/meetings to avoid needing office space. They would be doing great now. The problem is their business model was to sign long-term leases with buildings and short-term leases with their customers. So they are paying 2018-2020 rates on office space, but leasing out at spot rates of 2023 office space.
walthamstow 3y ago
My company has an office in a London WeWork. They are drastically attempting to control costs, e.g. things like the air con "not working", more like they don't want to turn it on because it's expensive. I expect that they will renegotiate the lease on this building to more favourable terms. It's either that or the building goes empty.
easton 3y ago
I go to one about once a week to get out of the house (paying the ad-hoc rate), and they make it impossible to get a membership or even talk about how much a single person office would be (guessing out of my price range, but I actually have money to spend on it so I'd like to talk). Maybe if you could give them money they wouldn't be in trouble.
sersi 3y ago
I got 3 month for free with WeWork just before covid (hotdesking only). I went there 2-3 times and found it to be a significantly worse working environment than even a starbucks. The chairs were extremely uncomfortable, the acoustics of the room made it noisy. Really didn't see the point and can't imagine how they can get people to use them. It might be different in other locations but at least the two locations I've visited in Hong Kong were really not great.
- ulfw 3y ago
  Same. Got a subscription from work. Never really used it. The few times I tried them in HK they were horrible. Only the New Street building was nice enough but for some reason they were allegedly always 'full' (they clearly weren't) and wouldn't let me in. Enough nice cafes in the area that are more comfy and have friendlier personal.
NoGravitas 3y ago
The TrashFuture episode on WeWork was a delight, and I was actually surprised to learn WeWork was still around: https://www.podchaser.com/podcasts/trashfuture-543791/episodes/i-identify-as-a-tech-company-f-47170019 https://www.podchaser.com/podcasts/trashfuture-543791/episod...
cgeier 3y ago
I'm somewhat surprised by this. I'm currently working out of a WeWork and not only was it hard to get an office there, but they are constantly expanding the location I'm in and just opened the fourth location in a 1.5km radius. Cost is also rather high for a very small office (supposed to be for 4 persons, but if with 3 people it feels very crowded). The business of renting office space en masse and renting it out in smaller, much more expensive parts seems rather lucrative to me. I'm in Hamburg, Germany for reference.
- weard_beard 3y ago
  Let's say I start a lemonade stand. I sell lemonade for a pretty big markup... say €3 a cup. I add lots of ice to it as well, this is not a good deal for lemonade for the customer... but people seem REALLY thirsty and I am getting a good flow of customers. A local businessman approaches me and says he will lend me money to expand operations. He offers me €5 million. I take his money and I use €1 million to expand operations, I use €3 million to invest in the rights to every street corner in town, and I pocket €1 million. Then the value of the contracts for every street corner in town plummets. Suddenly these street corner contracts are worth €700,000 and I paid €3 million. Now my business is worth €1.7 million. €3.3 million disappeared and I owe that businessman + interest. If I sell lemonade for €3 a cup, but I'm only getting 50 customers a day with my expanded operations it will take me 60 YEARS just to pay down the principle. Even if my product is expensive. Even if it seems like, for a lemonade stand, I'm doing well. Debt, the value of my assets, and mismanagement or corruption can vastly outweigh these factors.
  - cgeier 3y ago
    To stay in your metaphor: I'm saying I see long queues at all lemonade stands and lots of sold lemonade in my area. This perception doesn't fit with the lemonade business's (WeWork's) EBITDA being negative. The value of assets (which I doubt WeWork has a lot to begin with, I would assume they rent as well) and the amount of debt doesn't factor in there.
    - weard_beard 3y ago
boeingUH60 3y ago
I secretly root for Adam Neumann or any other entrepreneur that hustled their way into hundreds of millions and left VCs holding the bag in the free money era circa 2020...VCs were the ones doing the pump and dump for too long, and someone needed to give them a taste of their medicine. I'll never admire Neumann because he squandered over $18bn(!), but there's a bit of poetic justice in how he took SoftBank for a ride..
drumhead 3y ago
It's not like temp office space companies didn't exist no one knew the risks. They'd been around for years and the pitfalls were well known. But this is what happens when you have lots of cheap money, low returns and massive fomo. Will they learn from this? Of course not, the AI bubble is currently being pumped up and I'm sure there's going to be a few more wonder industries to lose a fortune in just round the corner.
ChrisArchitect 3y ago
[dupe] More discussion over here yesterday: https://news.ycombinator.com/item?id=37055563 https://news.ycombinator.com/item?id=37055563
catboybotnet 3y ago
They're not bankrupt yet? I thought the pandemic basically killed the business.

124 points by JonoBB 3y ago

abi 3y ago

Sad about this because I have a hot desk membership in New York, and it's an amazing experience that I'd probably pay more for honestly.

paulcole 3y ago
Funny you mention paying more, but they actually cut prices for many members recently. In the past 6 months, WeWork split their buildings into 2 tiers. The All-Access pass at one tier is $149 and the other is $299. $299 also gets you access to both tiers of buildings. I only go to the locations here in Portland and went from paying $299 a month to $149. They didn’t advertise this change to me, I had to find out from a friend who just signed up. I emailed the salesperson and asked why I wouldn’t make the change given my situation. He just replied defeatedly, “I’ll start the paperwork.”
- abi 3y ago
  Oh wow. Did not know about this. Thanks for the tip!
idontwantthis 3y ago
What makes it amazing?
- abi 3y ago
  Really great space to work in. And in NYC, there's probably like 30/40 WeWorks so it's very convenient when you have meetings around the city.
  - muttantt 3y ago
    Spent the last few months in NYC and also enjoyed the large variety of Weworks to pick from each day. But a common theme was how empty most of them were and devoid of rented offices. Some of them even shut down entire floors for the time being. Man I wish I would have shorted this stock, and I kept thinking about it each time I visited another ghost town Wework.

shaoonb 3y ago

My company recently moved from a wework equivalent to a much cheaper serviced office. A few less of the flashy features and perhaps a slightly less prestigious address (5 minutes down the road) for a third of the price.

thisgoesnowhere 3y ago
The idea that this was a tech company because they have a integrated portal for management of your office subscription was always laughable. The multiples were ridiculous for what basically is a internet connected REIT.

Ajay-p 3y ago

I feel most awful for Softbank. WeWork was such a terrible investment.

mnd999 3y ago

Should I look forward to season 2 of WeCrashed?

WJW 3y ago

> The spectacular collapse of a company once valued by SoftBank at $40 billion has been years in the making, but is still surprising given the number of large commercial buildings around the world that don the company’s name. Is it actually surprising? If you too many assets that you bought with variable interest rate debt, then going bankrupt in a higher-interest-rate environment is exactly what I would expect.

LatteLazy 3y ago
Did they actually buy buildings? I thought they just took long term leases from owners and sold short term to their customers? I once read an article saying that for all the tech bs, weworks was basically just a (at the well timed) commercial rent play: fix low rent and then charge rising rents as the market goes up. I might be wrong though? I remember thinking it was like a bank (exposed to time risk) but with property...
- jsemrau 3y ago
  It might have worked on 2008 levels and then ride the elevator up. But to fuel the growth story they needed to go international where they could not enjoy the same once-in-a-lifetime opportunity.
- WJW 3y ago
  > fix low rent This is not so easy as it sounds at scale, landlords aren't stupid. AFAICT, the main model is that WeWork simply charged more per desk/office/unit of surface area than they paid in rent to the building owner. This can intuitively work because they rent office space in bulk but rent out individual desks, and prices for individual "items" are almost always higher than buying in bulk. Obviously that model only makes a profit if you can maintain high occupancy rates though, and with COVID and rising interest rates the demand for expensive pay-as-you-go office space fell through the floor. Through that lens WeWork is indeed like a bank: they rent long-term and rent out short-term. Companies like that are very vulnerable to a "run" where all the short term renters suddenly leave but the long term liabilities don't.
- dzader 3y ago

throwoutway 3y ago

The story of WeWork is fascinating and sad to watch (for the employees). Adam got his but his employees didn't. The financial numbers are pretty sad too. - Market cap below $500 million. - Lost $700 million in 6 months this year - Lost $2.3 billion in 2022 - Roughly 3 billion in debt - Total liquidity of only $680 million (only 1/3 is cash).

kwanbix 3y ago
What is crazy is that he was able to raise 350 millions from a16z for what is basically a simple property management company. After all the sh*t he did. And then you go to a16z with an idea, and they reject it because it is not innovative enough. Then VCs wonder why 80% of their investments fail to produce the expected money on average. https://techcrunch.com/2022/08/16/how-a16zs-investment-into-adam-neumann-further-solidifies-the-concrete-ceiling/ https://techcrunch.com/2022/08/16/how-a16zs-investment-into-...
- dralley 3y ago
  Reminds me of Matt Levine's fantastic Moviepass article https://www.bloomberg.com/opinion/articles/2019-08-07/moviepass-worked-out-great https://www.bloomberg.com/opinion/articles/2019-08-07/moviep...
  - kubanczyk 3y ago
    archived as https://archive.is/tX1c5 https://archive.is/tX1c5
ramraj07 3y ago
Don’t forget that the VCs backed him again on a somehow even shadier, blatantly dystopian startup idea with a metric ton of money again [1]. 1. https://fortune.com/2023/07/11/adam-neumann-new-company-flow-compete-wework/amp/ https://fortune.com/2023/07/11/adam-neumann-new-company-flow...
- Aeolun 3y ago

Eddygandr 3y ago

Honestly surprised WeWork is still around after that documentary on it in 2021

93po 3y ago
i've never even heard of it before so i doubt it's very mainstream
- Eddygandr 3y ago
  Fair point! It did win an Emmy and is distributed by Hulu though so it’s not super fringe.
  - DropInIn 3y ago
    I only watch a couple documentaries a year and I saw it the year it released.... Frankly I'm a little saddened so few who consider themselves "in the know" about these things didn't at least know of the doc...
    - Eddygandr 3y ago
      HN is my favourite site by far (I lost my login details to my old acc but have been here for quite a few years), but, HN users tend to be very vocal on areas they don't really "know". My wife is an MRI researcher and I share most threads on that topic, normally saying some comment seems really cool, where she quickly shoots it down as flawed. If it isn't directly related to programming I have a large salt shaker nearby :) To be fair I know I do the same no matter how much I try not to!
      - DropInIn 3y ago
        Oh it wasn't a comment on HN users but people in general. So often someone will spout off on a topic as though they know a great deal but when I start actually trying to have discourse on it I discover they actually know very little. Dunning-Krueger type thi g I'm sure, but it's just so common as to be mentionable.

marcopicentini 3y ago

I liked the spaces but their price are crazy expensive. It makes not sense to spend so much for a wood desk and a chair.

goeiedaggoeie 3y ago

They also carry long overvalued leases on their books at a time commercial real estate is in the dumps still. Some of my friends have been climbing hard into Commercial REITS now for a few years, hoping for that big upswing in office work to boost them.

PedroBatista 3y ago

Should have happened in 2021 but our "brightest VC minds" thought it would be a good idea to burn even more "free" money on this pit. To be fair, WeWork is just another roll of the dice company from the Uber era of free money. Let's pump it up and become too-big-to-fail! It appears WeWork wasn't big enough.. And they can blame COVID all they want, but the business model was already showing sights of failure before 2020. Yes, COVID accelerated this but it was not the cause.

fredgrott 3y ago
We need to be more detailed about this as it highlights a demographics problem underlying it.... 1. Free Money was the tail end of boomers investments pools 2. There will be a 12-year gap until the next investments pools increase from the new workers entering the working market. 3. Next investments pool increase from the new worker cohorts group will be smaller than the boomers. All this indicates that the strategy of throw money at getting monopoly of market is sun setting and VCs will now have to have the slow growth strategy in their toolbox. That also means potential founders now need to have that in their toolbox, things to look for: 1. Founders getting creative and partnering up with older experienced people in the domain they are creating their product in.
- mynameishere 3y ago
  Am I the only one who just stops reading any comment if it contains the word "boomers"? It's entered a tidy lexicon with "lol" and "This." and [any smiley].
  - codingdave 3y ago
    While "boomers" is sometimes used mockingly, it also describes an actual generation of people who do have a significant impact on society, and do have enough common ground to make discussion of that generation useful in sociological dialogue. So no, I do not stop reading at the word "boomer" any more than I stop reading at the word "millennial".
- jt2190 3y ago

sarreph 3y ago

In my opinion the writing for a way out of this mess has been on the wall for a long time now, post-Covid. This is with the only viable, but still heavily under-utilized product they have left: hot-desking and community workspaces. Having rented multiple dedicated offices from WeWork I can attest that the corridors are become more and more like a post-apocalyptic landscape as the tenants — no longer taking advantage of introductory rents — move out one after the other. Go to the hot-desking spaces floors and you’ll find it bustling and sometimes not even possible to get a seat somewhere. Why they haven’t aggressively cut underperforming locations and consolidated more hot-desking space into the better buildings is beyond me. Especially in the current work environment where arrangements with companies are flexible and the line between home and work becomes ever blurred. It seems like the perfect base to start on to build a new offering for companies that can provide employees with hot-desks on a flexible basis.

mirekrusin 3y ago
They probably enter into long term lease for the building they can’t get out overnight?
- sarreph 3y ago
  Good point - goes to show it’s always easier to criticise behemoths like this from the outside. However, I wager that they have had long enough to plan around this one - _surely_ there are a non-negligible amount of leases they can trade or sell on / do something with as most WeWork locations are in highly desirable spots.
  - rcme 3y ago
    Isn’t this a microcosm of the broader story with commercial real estate? Values are down massively. Trying to break the lease is like realizing those losses for WeWork.
  - JumpCrisscross 3y ago
    > they have had long enough to plan around this one WeWork’s core model has always been borrowing long and lending short; they are inherently vulnerable to a sharp spike down in commercial rents. Apart from financially hedging that, or penning fancy outs when they signed their leases, it’s tough to see how even prescience a few years ago could have saved them. And that’s amidst Silicon Valley’s attitude in 2021-22 that the Fed couldn’t—not wouldn’t, couldn’t—raise rates or else America would go bankrupt or some nonsense.

rvz 3y ago

It doesn't matter what happens to WeWork. Adam Neumann and the other VCs already exit scammed out of it with their millions and additionally dumped on retail. They successfully got away with it, despite knowing that the business has hundreds of millions of dollars of losses pre-IPO, which was over $900M+ [0]; the biggest of all red flags as I said 4 years ago. [1] This company could only exist in a cheap money era with decades long quantitate easing. Now just look at the ship sinking faster as the interest rates are now much higher with no cheap money this time. WeWork is the gold standard of unprofitable companies who are good at losing money whilst pretending to be a 'tech company' or 'tech startup' and was just used as a vehicle for an IPO at an extremely inflated valuation before the bubble burst. [0] https://www.cnbc.com/2019/08/14/wework-releases-s-1-filing-for-ipo.html https://www.cnbc.com/2019/08/14/wework-releases-s-1-filing-f... [1] https://news.ycombinator.com/item?id=21213365 https://news.ycombinator.com/item?id=21213365

JumpCrisscross 3y ago
> Neumann and the other VCs already exit scammed out of it with their millions and additionally dumped on retail Given the outright fraud prevalent in today’s tech landscape, it’s difficult to call WeWork a scam. Stupid, yes. But fraud; for that we lack evidence.
- NoGravitas 3y ago
  It's a commercial property management company that identifies as a tech company to get dumb investment money. Maybe not outright fraudulent, but definitely scammy.
  - JumpCrisscross 3y ago
    > Maybe not outright fraudulent, but definitely scammy Scams are attempts to defraud. No fraud, no scam. If it feels scammy, that means (or should mean) you sense fraud. I know this seems pedantic. But drawing clearly that line--between fraud and blind optimism--seems like a good takeaway from this past cycle.

benjaminwootton 3y ago

I have had 4 or 5 attempts with them at upgrading offices. For instance, from the ad-hoc membership to on-demand, then from on-demand to a small office. Their sales staff just don’t seem interested. It’s been a “please take my money” situation for much of the last 3 years.

danvoell 3y ago

Would also be interested to know what % of Spacs have shown success.

HWR_14 3y ago
For who/what do you mean? You mean SPACs that actually acquired a company? SPACs where the initial SPAC investors (pre-acquisition) made money? Those that have a solid company behind them, regardless of if investors made/lost money on the price movement since it announced? People who bought SPAC shares post-acquisition where the price went up? (For pre/post acquisition investors, I assume you mean retail investors).

whywhywhywhy 3y ago

Company I work at went from a trashy long and cramped room in a WeWork where the toilets were always breaking and the elevator buttons didn't line up with the floor numbering because it was two buildings stuck together to a two floor small warehouse style building, same area for less than WeWork cost. Even without the push from some to WFH WeWork was a terrible product in the 3 WeWorks I've had to work in.

FredPret 3y ago

This company is an anomaly in the capital markets. Investors should do their due diligence or they’ll get taken in by an idiot or charlatan and lose their shirt. Just look at their financials: $3.7b in the hole and continual losses pulling them ever further into the red. Even operating cashflow is negative. [0] [0] valustox.com/WE

voxadam 3y ago

WeWork's most recent 10-Q where the warning comes from: https://www.sec.gov/ix?doc=/Archives/edgar/data/0001813756/000181375623000059/we-20230630.htm https://www.sec.gov/ix?doc=/Archives/edgar/data/0001813756/0...

leroman 3y ago

Several years ago while hustling as a single founder, I hoped to get a desk in a private office (anything but open-space), so I would have a place to come to to focus on work, socialize and feel at work.. So I went to see what WeWork have to offer. There I saw a nice floor with nice looking private offices, finally taken to what they thought might be relevant for me, they showed me a tiny space where half a diner table is hung on the wall and over a diner sofa with the second wall behind the sofa, (now-days these types of rooms are used for private 1 on 1 meetings and zoom calls..) for the price of what I would pay a private office of say 2/3 people (pre-WeWork shared office spaces). Just the audacity of the person showing me this for this price struck me how greedy and disconnected WeWork are, got me so insulted I would never check them out again. This is what you get when you get an MBA type business management constantly looking for ways to up the contract prices like its a B2B SaaS business (not that I'm saying this makes more sense there..)

JumpCrisscross 3y ago
> how greedy and disconnected WeWork are…what you get when you get an MBA type business management constantly Apparently not greedy nor MBA enough!
itsoktocry 3y ago
>This is what you get when you get an MBA type business management constantly I love how HN blames MBAs for everything. This was greedy "tech people", nothing more nothing less. Maybe if a few of the characters in this saga had MBAs they would have been able to better judge the value of the business, as opposed to gut and vibes. After all, it was the MBAs who pulled the IPO, while the tech crew continued to push this garbage on the public.
- derstander 3y ago
  > I love how HN blames MBAs for everything. > This was greedy "tech people", nothing more nothing less. It's hard to talk about WeWork without talking about Adam Neumann. And looking him up, it seems that he does have a degree in business -- albeit only in 2017 -- rather than a degree in something like computer science or engineering. And prior to WeWork, he apparently founded a children's clothing company: not exactly a "tech people" industry. So I'm not getting tech people vibes from him. [1] https://techcrunch.com/2017/06/05/weworks-adam-neumann-is-graduating-from-college-today-15-years-after-he-started/ https://techcrunch.com/2017/06/05/weworks-adam-neumann-is-gr... [2] https://en.wikipedia.org/wiki/Adam_Neumann https://en.wikipedia.org/wiki/Adam_Neumann

seydor 3y ago

that will be a lot of furniture

rchaud 3y ago

VC capitalism over the past decade resembles the free spending era of Communist central planners tasked with rapidly industrializing their economies. 1) Dump enormous amounts of zero-interest capital into {{ sector }} 2) Entrust leadership to charismatic politicians rather than domain experts (Adam Neumann) 3) Craft a PR narrative emphasizing innovation and diminishing critics (Softbank "Vision Fund", "swinging for the fences", "transformational" ) 4) Construct Potemkin villages to show the world that all is well (going public) 5) ...followed by eventual rapid decline and collapse WeWork is the most egregious example, but the same fate awaits the likes of UberEats and Lime and what have you.

JumpCrisscross 3y ago
It makes sense to divide late-stage, large-cheque VC from classic early-stage, small-cheque VC in the same way we separate money-losing, unlevered PE from classic cash-flow positive, leveraged PE. (Hint: the latter are the same.)
thisgoesnowhere 3y ago
The similarities are startling, it's all a consequence of reducing power to a small set of people who progressively lose touch with what the market actually needs. It doesn't matter if its "public" or "private" it's the concentration that causes the negative effects. Made more annoying by how difficult it is to explain that simple concept to the pseudo libertarian crowd that tends to congregate here.
shrubble 3y ago
Your accurate post made me think of a great blog title... "A Canticle For Potemkin"

bhouston 3y ago

I do not understand why Adam Neumann got that massive exit settlement from We Work? > WeWork founder Adam Neumann received $245m in company stock [....] In addition to the $245m grant, Neumann received $200m in cash, was able to refinance $432m in debt on favorable terms, and allowed a finance company controlled by the former chief executive to sell $578m in WeWork stock. [1] That guy got incredibly rich creating a company that was clearly not viable and seems likely to bankrupt. Corporate government seems to be non-existent here. Who are the people that are left holding the bag? Hopefully it is mostly just private money like the Saudis + SoftBank (if they screw up, they suffer the consequences, that is great) and not public pension funds. Otherwise, the public fund managers should go after this complete lack of governance and oversight. [1] https://www.theguardian.com/business/2021/may/27/wework-founder-adam-neumann-enormous-exit-package https://www.theguardian.com/business/2021/may/27/wework-foun...

hn_throwaway_99 3y ago
Still more amazing to me is that he got a16z to invest 350 million into his new real estate debacle just after all this. This dude must really be a master hypnotist or something.
- geodel 3y ago
  Nah, this time Andreessen thought real estate is really eating the world :) So jump in early.
- zer8k 3y ago
  I've been around a few of these people in my life (albeit not nearly as successful). One guy in particular got people to invest millions in his sinking ships. Some people have a reality distortion field around them. Pair that with a half decent pedigree (school, neighborhood, city) and while money was cheap it was fairly easy for them to get whatever they wanted. It's sometimes surprising how shocking simply knowing people is.
- matthewdgreen 3y ago
  If you think the goal of investing in these companies it to be ultimately profitable and make huge earnings, investing in successful con men doesn’t make any sense. If you think the goal is to cash out by dumping the company on a bigger sucker (or even better, retail investors) then obviously you’re going to seek out the biggest huckster. Look at what investment funds do, not what they say.

nologic01 3y ago

The era of cheap money is frequently invoked to explain this grand fiasco but macroeconomic variables have the same relation with any specific project that climate change has with an unusual heat wave. Due diligence, focus on good governance etc are more directly influential in weeding out dodgy propositions and these behavioral aspects need not be closely correlated with any risk-free momey rate.

dschuetz 3y ago

What does WeWork actually sell? I mean... what is their source of revenue, or is it just dumb me and it's my own fault that I don't know that?

WJW 3y ago
Working space. You can rent a single desk or multiple, and they charge you money every month. Bog standard stuff, has been done a million times all over the world. The problem for WeWork is that they chose to grow incredibly fast, positioned themselves a a very high-end premium type of service, and funded it all with lots of debt and VC (mostly SoftBank) investments, despite nearly every financial professional warning them that they were over-exposed and any small disruption to their earnings would cause huge troubles for the company. Then COVID happened, interest rates started rising and the demand for expensive rented offices dried up. Now they have a ton of bills and not enough paying customers to cover them all.
- dschuetz 3y ago
  Ah, essentially they are selling office desks to start-ups who don't need them anymore post-covid. Sounds bulletproof to me /s. I think that many fast-growing start-ups have decided that it's cheaper and safer to work from home, so maybe WeWork needs to start working and look for other sources of revenue. or do nothing and implode.
  - HWR_14 3y ago
    No, you're misunderstanding. First, they sold a lot to established companies who would get a whole office in the building to seem cool. I believe that's where most of the profits came from. The startup/hotdesking was there as well, but I don't believe it was as profitable. Otherwise, WFH would be a boon to them. Companies have paid for WeWork desks for their WFH employees/meetings to avoid needing office space. They would be doing great now. The problem is their business model was to sign long-term leases with buildings and short-term leases with their customers. So they are paying 2018-2020 rates on office space, but leasing out at spot rates of 2023 office space.

walthamstow 3y ago

My company has an office in a London WeWork. They are drastically attempting to control costs, e.g. things like the air con "not working", more like they don't want to turn it on because it's expensive. I expect that they will renegotiate the lease on this building to more favourable terms. It's either that or the building goes empty.

easton 3y ago

I go to one about once a week to get out of the house (paying the ad-hoc rate), and they make it impossible to get a membership or even talk about how much a single person office would be (guessing out of my price range, but I actually have money to spend on it so I'd like to talk). Maybe if you could give them money they wouldn't be in trouble.

sersi 3y ago

I got 3 month for free with WeWork just before covid (hotdesking only). I went there 2-3 times and found it to be a significantly worse working environment than even a starbucks. The chairs were extremely uncomfortable, the acoustics of the room made it noisy. Really didn't see the point and can't imagine how they can get people to use them. It might be different in other locations but at least the two locations I've visited in Hong Kong were really not great.

ulfw 3y ago
Same. Got a subscription from work. Never really used it. The few times I tried them in HK they were horrible. Only the New Street building was nice enough but for some reason they were allegedly always 'full' (they clearly weren't) and wouldn't let me in. Enough nice cafes in the area that are more comfy and have friendlier personal.

NoGravitas 3y ago

The TrashFuture episode on WeWork was a delight, and I was actually surprised to learn WeWork was still around: https://www.podchaser.com/podcasts/trashfuture-543791/episodes/i-identify-as-a-tech-company-f-47170019 https://www.podchaser.com/podcasts/trashfuture-543791/episod...

cgeier 3y ago

I'm somewhat surprised by this. I'm currently working out of a WeWork and not only was it hard to get an office there, but they are constantly expanding the location I'm in and just opened the fourth location in a 1.5km radius. Cost is also rather high for a very small office (supposed to be for 4 persons, but if with 3 people it feels very crowded). The business of renting office space en masse and renting it out in smaller, much more expensive parts seems rather lucrative to me. I'm in Hamburg, Germany for reference.

weard_beard 3y ago
Let's say I start a lemonade stand. I sell lemonade for a pretty big markup... say €3 a cup. I add lots of ice to it as well, this is not a good deal for lemonade for the customer... but people seem REALLY thirsty and I am getting a good flow of customers. A local businessman approaches me and says he will lend me money to expand operations. He offers me €5 million. I take his money and I use €1 million to expand operations, I use €3 million to invest in the rights to every street corner in town, and I pocket €1 million. Then the value of the contracts for every street corner in town plummets. Suddenly these street corner contracts are worth €700,000 and I paid €3 million. Now my business is worth €1.7 million. €3.3 million disappeared and I owe that businessman + interest. If I sell lemonade for €3 a cup, but I'm only getting 50 customers a day with my expanded operations it will take me 60 YEARS just to pay down the principle. Even if my product is expensive. Even if it seems like, for a lemonade stand, I'm doing well. Debt, the value of my assets, and mismanagement or corruption can vastly outweigh these factors.
- cgeier 3y ago
  To stay in your metaphor: I'm saying I see long queues at all lemonade stands and lots of sold lemonade in my area. This perception doesn't fit with the lemonade business's (WeWork's) EBITDA being negative. The value of assets (which I doubt WeWork has a lot to begin with, I would assume they rent as well) and the amount of debt doesn't factor in there.
  - weard_beard 3y ago

boeingUH60 3y ago

I secretly root for Adam Neumann or any other entrepreneur that hustled their way into hundreds of millions and left VCs holding the bag in the free money era circa 2020...VCs were the ones doing the pump and dump for too long, and someone needed to give them a taste of their medicine. I'll never admire Neumann because he squandered over $18bn(!), but there's a bit of poetic justice in how he took SoftBank for a ride..

drumhead 3y ago

It's not like temp office space companies didn't exist no one knew the risks. They'd been around for years and the pitfalls were well known. But this is what happens when you have lots of cheap money, low returns and massive fomo. Will they learn from this? Of course not, the AI bubble is currently being pumped up and I'm sure there's going to be a few more wonder industries to lose a fortune in just round the corner.

ChrisArchitect 3y ago

[dupe] More discussion over here yesterday: https://news.ycombinator.com/item?id=37055563 https://news.ycombinator.com/item?id=37055563

catboybotnet 3y ago

They're not bankrupt yet? I thought the pandemic basically killed the business.