The actual problem with WeWork

This isn’t the way to do investment at all. But it is my immediate reaction to WeWork.

Adam Neumann is handsome. Therefore the business is shite.

That is, good looking will get you a long way in raising money, creating PR, establishing a company. It gets you nowhere in producing a profit. I(t’s possible to suggest that the handsomeness has got him that far but it won’t get him that bit further.

So, the investment’s a crock.

Yes, I know, weird way of looking at it but…..it does accord with human psychology at least.

17 comments on “The actual problem with WeWork

  1. Chris Dillow’s been making no similar points about looks (and height) for some time.

    ISTR him quoting some research.

  2. The business is shit simply because its a very basic idea with nothing that marks it out from any current or future competitor, nor any great reason to expect it to survive once capital stops being thrown at it.
    All the PR puff about “spiritualism” isn’t going to change that one bit. I’d be quite surprised if there isn’t some out and out fraud behind it all.

    I also note, despite his ‘handsome’, his wife is old and not flash at all. What does that say about his business?

  3. So…. he’s setting up as a commercial property landlord? Is that it? That’s so 16th century, who does he think he is, British Land? Or does he aspire to Grosvenor Group?

  4. Observer: “Rebekah, née Rebekah Paltrow, sister of the actor Gwyneth.”

    She’s her cousin…. and doesn’t look anything like her and for that reason I will not be investing, i’m out.

  5. “So…. he’s setting up as a commercial property landlord? Is that it? That’s so 16th century, who does he think he is, British Land? Or does he aspire to Grosvenor Group?”

    AIUI they aren’t buying the land or buildings, they’re taking out long leases on one side and short rental agreements on the other. It’s a recipe for disaster in a downturn.

  6. Despite all the spiritual, be excellent to one another crap even the guardian is sceptical. They should be, WeWork looks dodgy from top to bottom. A valuation that dropped from £65 to £15 billion before the shares are even sold!
    Not including the dodgy loans to the boss and the fact he owns some of the buildings his company has leased. Oh, and he was paid £15 million, if I remember correctly, for the naming rights of WeCorp. Who pays the boss to name his own company?

  7. “AIUI they aren’t buying the land or buildings, they’re taking out long leases on one side and short rental agreements on the other. It’s a recipe for disaster in a downturn”

    That’s not such a problem. Fairly standard risk in the property and other leasing businesses. Long term inbound leases aren’t so different from borrowing 75% of the cost of a property on long term loans. The repayment cash flows are similar.

    The real conceit is the idea that there isa super-profit in renting to start ups who want flexible short term leases. Sure, that sort of lease commands a premium rent, but there are risks that property is left vacant and the premium rent allows for that. If it was such a super market, the rest of the property industry would be offering competitive leases and wiping out the margins, so you can forget the $45 billion valuation. Even the Duke of Westminster is only worth a fraction of that.

    Moreover this is a company masquerading as something in the tech world, where long term losses seem to be acceptable. But this is a property company that has been losing money for the last 9 years. Property investments should be profitable from year 2 (after year 1 setup costs).

    Dog. total dog

  8. “It’s a major dent to Neumann’s dream to build a multibillion-dollar global space-sharing real estate firm built on the trust and community spirit of “we” and the vision “to elevate the world’s consciousness”.”

    Strip away the new age bullshit, and they rent office space. Buy a building, rent out bits of it. Why do they even need to be a huge company? What value is scale adding here? I know companies with 3 buildings in Swindon who do hotdesks or offices. And at least with Regus, there’s things like being able to drop in and use another Regus hot desk space.

  9. WeWork is like crime in multi-story car parks.

    The business model is just Regus + bullshit.
    The corporate governance is appalling.
    The founder has already taken $700m out of the business.
    The valuation is nonsensical.

    Anyone investing needs their head examined.

  10. Martha Lane Fox of lastminute-dot-com fame fits into this pattern. Listed on the stock market at 380p per share, first day price reached 511p, and five years later it was taken over by Sabre for just 165p. But at least it was a viable business model.

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