[wpietri]

Right, that's the theory, which is how they got this far. But that's not a new thing; companies have been in the same business for years. WeWork's valuation is wildly out of proportion to its competitors.

WeWork probably does have an advantage specifically for tech startups. But startups are definitionally not a large market, nor are they generally a good one. When we're small, we're cheapskates. And then we pretty quickly either go out of business or become like other companies, willing and able to deal with building owners directly. It's high churn, which is expensive.

Startup investment is also pretty cyclical; anybody who was around after Bubble 1.0 knows how quickly the party stops when investors get nervous. So WeWork has a lot of long-term commitments, with no obvious way to cover them in the next recession. And since we're already in the longest peacetime economic expansion, the possibility of recession is definitely on investor's minds.

[hn_throwaway_99]

> But that's not a new thing; companies have been in the same business for years. WeWork's valuation is wildly out of proportion to its competitors.

I take issue with the "people have been doing the same thing for years" take, when most hugely successful start-ups tend to be small tweaks on established ideas. Take AirBnB. Peer-to-peer short term rentals existed on the Internet in the form of sites like VRBO since the late 90s, but AirBnB's relatively small changes (mainly ensuring that the financial transaction occurred completely on their platform) allowed for the sea change of urban short term rentals.

While I'm bearish on WeWork for the same reasons as many other people, I think there is certainly room for a consolidated business of month-to-month office rentals that offers a branded experience.

[gamblor956]

There's also the important bit where VRBO attempted to comply with local hoteling regulations and AirBnB just ignored them or even actively encourage hosts to ignore the law.

[davinic]

I used VRBO often before AirBnb existed and I never experienced anyone collecting hotel taxes or attempting to be in compliance. Do you have a source for this claim?

[gamblor956]

I used VBRO before Airbnb and hosts in vacation towns were definitely collecting local taxes. Unlike Airbnb, VBRO responded to requests for host info because they were trying to do things the right way.

[CognitiveLens]

This take makes a very clear argument, but I think it's important to question that, as a company grows, it is generally "willing and able to deal with building owners directly" - a similar argument could have been made for the early days of AWS, when it seemed like a great way for startups to avoid managing low-traffic, scalable infrastructure, but redundant for companies that had the resources to manage their own servers. AWS has shown how successful a 'platform middleman' can be, even for very large companies.

WeWork is betting on taking a similar track - sure, companies _could_ decide they want to build out expertise in leasing and managing real estate space, but it can actually help them focus on their core business more by leaving it to another company that provides the 'platform'. The growth of WeWork's enterprise offerings and general awareness of how to pitch to mid- and large-size tenants indicates that growth projections are not pinned to a startup-driven economy.

[wpietri]

For me the big difference between AWS and WeWork is that a company will always have people dedicated to figuring out their offices. WeWork isn't solving problems like "who do we have, how do we arrange them, and what kind of spaces are best for how they work". On top of that, finding and negotiating leases every 5-10 years isn't a lot of extra work. AWS in contrast eliminates entire classes of work.

Although now I think about it, perhaps demand volatility is even more important. Office space needs are way more stable and predictable than server load. Salesforce, for example, signed a 15-year lease for Salesforce tower. And there's every reason to think they'll use it. Whereas AWS and its customers benefit hugely from being able to change load both month to month and hour to hour.