You see that picture below; that’s a Wework office space. No, I’m not joking
Wework is in the business of coworking office space. According to deskmag.com, coworking is described like this:
“What makes coworking special? An important precondition of coworking is the exceptional situation of coworkers. They work mostly in self-determined situations: the majority are self-employed freelancers, or entrepreneurs with their employees, as well as an increasing number of employees of large companies”. http://www.deskmag.com/en/what-is-coworking-about-the-changing-labor-market-208
It sounds great, but they lost $2 billion dollars last year and it’s been 9 years now. To lose that much money in one year would be a huge blow to any company. Even Google or Amazon would feel a loss like that. Whats worse is that the concept of coworking hasn’t even been proven or widely accepted yet. Yes there has been much talk about the gig economy, and Wework is trying to capitalize on this trend which is great, but we still don’t know enough about how this is going to effect the way employers deploy their work force in the future. Plus, the coworker market, at least according to that article, is mostly freelancers at this point.
Wework is still a unique idea that is worth trying out, but building 41 billion dollars of unique office space based upon a hunch, or a hope — whatever you wanna call it — is insanity. It almost reminds you of China’s Belt & Road Initiative, where cities are built inland far from any water source and Sri Lanken seaports sit completely empty for months at a time… It’s all about that 5 year plan though right. Eventually, one day, it will work.
You could say the Chinese make up for this inefficiency with the 996 work schedule. They work very hard, much harder than us, so you could only imagine the reaction you’d get if you showed them a Wework office space..
How is our generation supposed to compete when this is our idea of work? We better start learning Mandarin sooner rather than later if this is the case..
The alcohol is free though. They even have proprietary “Wework” taps. Yes, seriously.
Of course, if you tried bringing this up to your average millennial Weworker, you’d get the typical reaction.
Remember, opinions are considered spam today, and you get blocked on social media because they could be either “fake news”, or potentially abusive (key word potentially). Just take a look at this financial post writers twitter profile. I blotted out her name and picture because, unlike the major social media platforms, I respect her privacy.
If Wework wants to come begging for billions of dollars to promote a 41 billion dollar pretend work place, that’s their right, just leave them alone, stop being so mean to them; “asshole”.
Maybe Masayoshi Son was trying to appeal to the Wolf of Wall Street culture that seems to permeate throughout every nuance of the stock market these days; or maybe that’s just what the focus group wanted, who knows.
It’s more likely that this IPO is just the climax top of this cheap money, 0% interest rates credit cycle, where everything has been so good for so long that a company would even have the audacity to try something like this.
Everybody knows this IPO is ridiculous. There is probably not one person that thinks this is a good idea, not at this price anyways. At least BYND invented their own brand of meat; ROKU went from being some cheap tv box sold in the back alley of Wal-Mart to the #1 streaming platform in the United States. What did Wework do? Invent their own brand of working? It’s just a souped-up office space..
You see, the problem with expanding a business before you even know it will work is……………………………..ehm…………………..what if your plan, that incredible all seeing vision of the future was like…………….wrong………..
Or even better, what if ………things like…………change.
Just because the concept seems like it will work, doesn’t mean it will, and that is why it is usually not a smart idea to go all in at first.
Don’t put all your eggs in one basket, or start small then work your way up, you know the sayings, but even the greatest minds are not immune to folly. People will make excuses, or look the other way, or in Weworks case, pretend some expenses don’t actually exist by inventing completely novel and unheard of internal accounting standards.
Have any of you heard of “Community-Adjusted-EBITDA”?
We have all heard of EBITDA, and some of you have heard of Adjusted-EBITDA, but Community Adjusted EBITDA? I’m guessing not.
Why you ask?
BECAUSE WEWORK MADE IT UP!!!!!
Not only are they innovating the world of working, but also accounting!! Genius! When you have no cash, just pretend you do and everything will be okay!!!
I guess General and Administrative Expense, a fundamental part of any normal business, just doesn’t count. This would conflict with their core community vision. Take a look at this.
Wework: “It’ll like……Eventually…..Work…..”.
Investors: “You lost 2 billion dollars and it’s been 9 years now”.
Millennial Financial Post/Vice/Liberal MSM Media: “That’s your opinion, and you’re hurting my feelings right now, and quite frankly…I don’t appreciate this..”
A normal business would cut growth to generate cash, or maybe even sell some assets, but because Wework is so devoted to their grand vision, and so sure it will work, doing this would be counter productive in their eyes. I guess you can understand their logic from that angle. If you know it is going to work, just find the money somewhere else, then wait for this inevitable growth to flatten out those wrinkles……..eventually…..someday……..it will work. It’s only 41 billion. Think of the market they are tapping. Everybody works, so the possibilities are almost limitless! Right?..
For more on Wework, check out this video