Wecrashed (wework tv series) - has anyone watched it?

[Karimbo]

I was just wondering if anyone watched this Tv series. And what your take was from the business point of view.

I'm not sure if the founder was genuinely attempting to do something revolutionary in co-working spaces and get a positive ROI. Or if he was just misguided and comparing himself too much to a tech company where there was no real tech disruption factor.

At the end of the day, uber can monopolise and control ride hailing because consumers and drivers have no choice these days but to join the platform. Where as landlords and tenants will never be compelled to use wework - if the tenant feels the price is not right, they will go directly with the landlord and the landlord will always want to work directly with a tenant that is "safe" like a bank client, or government department. Not a ltd company with loss making company accounts 3 years in a row.

All the investors got screwed, I'm sure the founder found some way to make it worth their times.

Was the founder misguided or deliberately scamming everyone?

 

[Mark T Jones]

I haven't seen the series (what channel? I'll dig it out)

From reading about it, I'd say it's a mix of arrogance and greed - uncontrolled and unmanaged expansion on the back of a belief that demand was infinite

Co-working / serviced office models can and for work. WeWork didn't really disrupt or change anything, they simply exploited a niche which reached capacity

 

[Karimbo]

I watched it on Apple tv +,

The thing was that they were loss making, at one point they expanded and increased their turnover by 1.8B but they increased their cost by 1.9B

They are just leaseholders of buildings who sublet space. There's no point where they can dominate the market and then just rapidly increase their cost and become profitable like a tech company. If they ever try to do that and hike up their co-working space costs, then anyone with a bit of spare commercial space will open up co-working spaces on the cheap and undercut them.. In fact that's something they did with one of their competitors to drive then out of business. They just opened nearby and gave all their customers first year free to get them over.

The business didn't work in New York, but they just decided to keep growing all over the world from venture capital money.

The founder is worth $2B on the back of it. A lot of the investors lost their money. The founder trademarked the word "we" personally and thensold that trademark to the company for $500M

 

[Karimbo]

sorry, cant edit, it's $5.9M for the trademark, not $500M

 

[Mark T Jones]

I watched it on Apple tv +,

The thing was that they were loss making, at one point they expanded and increased their turnover by 1.8B but they increased their cost by 1.9B

They are just leaseholders of buildings who sublet space. There's no point where they can dominate the market and then just rapidly increase their cost and become profitable like a tech company. If they ever try to do that and hike up their co-working space costs, then anyone with a bit of spare commercial space will open up co-working spaces on the cheap and undercut them.. In fact that's something they did with one of their competitors to drive then out of business. They just opened nearby and gave all their customers first year free to get them over.

The business didn't work in New York, but they just decided to keep growing all over the world from venture capital money.

The founder is worth $2B on the back of it. A lot of the investors lost their money. The founder trademarked the word "we" personally and thensold that trademark to the company for $500M

The model itself is tried and tested, and it works.

What's known as a hockey-stick or J-Curve - big overheads, but solid revenue streams. Once your recurring income covers costs, it's pure profit. The key is to retain customers, have a good stream of add-ons and keep an eye on overheads.

Arguably it's more reliable than tech, because it relies on building rather than that dramatic big breakthrough. TBH I'd far rather invest in this model than in a 'next big thing' tech co.

Regus did something similar (in terms of arrogance and over-expansion). They now operate purely as a franchisor, but their franchisees can generate some decent profits

Unfortunately I don't have Apple anything...