[nora4]

I feel like for WeWork style business, it should be a race to the bottom (in terms of prices). Once the idea is validated, there would be (as there are) lots of local clones that would try to make a more cool indie version of WeWork. The resulting price-cutting and heavy competition make business rather difficult.

As such, I'm not sure where the economy of scale will come from and why should this be a sustainable business? To be fair, Starbucks and other coffee/restaurant chains also have similar general business characteristics.

Along this note, I don't understand why WeWork is a venture-backed business as opposed to a normal bootstrap business (with more emphasis on early cash-flow and less on growth) as it's usually the case with the above type businesses.

[matt4077]

There's a certain network effect, at least for some people: you can just take your business on the road and work in a different city every week.

With the name recognition they're getting, they may also get really good deals on office space: I've personally witnessed a co-working space gentrifying a whole city block. The whole block was also owned by the same investor, who apparently gave them a 50% rebate on a ten-year contract. She has easily gotten a 10x ROI on it, since rents in the rest of the buildings tripled within two years.

[nora4]

That's a great point. Hip, cool, modern entrepreneur types can easily work as agents of gentrification which as you pointed out can lead to massive increase in wealth for nearby properties owners (at the expense of previous occupants/patrons, some will argue).

[opencl]

The decreased wealth of occupants is the entire source of the landlord's increased wealth when rent increases, are there really people who will argue that isn't the case?

[nora4]

I guess purely logically, you are right. But I would be against the underlying theme behind that general type of thinking. If you take that line of thought and extrapolate it, it starts getting close to a socialistic/anti-economic progress point of view.

[mseebach]

The answer is probably the same as it is for Starbucks et al: execution is a lot more difficult than it looks like from the outside, and nailing scalable execution is an order of magnitude harder yet.