[kelnos]

From what I've read, the WeWork locations in their mature markets are profitable, but they've been investing heavily in new/immature markets. Despite We's bizarre straddle between being a real estate company and trying to be a tech company, it's a fairly standard growth play: burn money now in order to gain more market share over time.

If they wanted to, they could slow down on new purchases/rentals/construction and likely become profitable without too much trouble. But that would of course be at the expense of growth.

Not saying they're a great company or that they deserve a crazy high valuation, but suggesting that they're unprofitable because they have a bad business model is missing the whole picture.

[mkohlmyr]

Perhaps the whole picture might also include their astronomical lease obligations..

If they are going to have to shut down all these sites the second the market slows down (or indeed as soon as the obligations are due), perhaps one might argue it was imprudent to open them to begin with.

Any marketing benefit gained by being "everywhere" is surely undone when they have to publicly shutter a large portion of their locations.

[rgoldste]

Not disputing, but could you please provide a link or two that argues they are profitable in existing markets? I’ve only looked at their S-1, and there wasn’t hard information (e.g. single building operating statements) for me to conclude this.

[brainflake]

The difference lies in their enormous existing lease obligations. Most corporate leases are for 10 years and they have very large payments that must be made, so it's not like they can just easily scale back in the loss-making locations.

[egdod]

Their income stream is month-to-month and can disappear quickly in an economic slowdown. Their lease liabilities have a timescale of years.

[wwthrowaway]

As an ex-employee I am indifferent to WW’s success or failure, but to set a few things straight, very few of their members are on month to month deals. The larger deals they do for corporates are often multi-year commitments.

As long as a sophisticated large corporate sees a net benefit of being in a wework they will stay.

As an analogy, everyone knows running servers on AWS is more expensive per unit of compute than running your own hardware, however, there is a genuine value for a company to hand off the running of an office space (and the capital investment on buildout) to a third party in exchange for predictable monthly opex.