[colechristensen]

Wait how is We not cashflow positive? Do they have occupancy rate problems? It's not like their space is cheap or undercutting rivals, where is all of the revenue going?

Real estate isn't SaaS where you have to pay a lot of developers to build a usable product and then scale your customers to pay for it, you can make money owning one unit.

[jjeaff]

Ya, it's not like a software startup at all. You have to pay "developers" to build out all your new physical locations. You need to scout those locations, then you need to market and advertise those locations locally, furnish them, staff them, and then run them in the red until you get enough tenants to break even.

One would think they are profitable on a per location basis. But just losing lots of money overall due to huge growth.

[throwawaytoday5]

Before changing jobs, I was in a WeWork location at DTX in Boston. There were many rooms that were empty, but Puma was paying for an entire floor so maybe they were making the difference up with large corporation clients?

[pbreit]

"Mature locations" are cash flow positive. But lots of $$ being invested into expansion.

SaaS economics are much easier since marginal costs are $0. WeWork has to commit to very large lease expenses and then find tenants to move in at higher rates.

[koolba]

It’s really easy to be cash flow negative when you do not have to be cash flow positive.

Even with the rates being inline with competitors and cost of real estate, they have an incredible amount of corporate overhead vs a localized management company. Honestly I can’t see this business model ever working out as short of travel locations there’s nothing they’re bring to the table vs the added costs. It’s a shell game and the third shell is being lifted.

[swampthinker]

They paid their inside sales team insane commissions relative to industry standard, plus overall staff bloat to masquerade as a tech company.

[wastedhours]

I can't find the piece, but one article said they also paid brokers essentially the entire initial contract cost vs the traditional ~15% (might've missed that number, but it was a very small percentage compared to 100).

Very concrete example of growth over profits - am not sure what the profitability timeframe would be on that model if we even try and look at it logically.