[mamonster]

You are misrepresenting what WeWork was and wasn't. The way you put it above makes it seem like WeWork business model had no positive unit economics at any scale and only survived through VC injection. That is absolutely not true.

WeWork's value proposition in the beginning was that Neumann(or the designer he hired) legitimately knew how to redesign/refurbish what was essentially a lackluster, old office building and make it seem like a great office. That part of WeWork was legitimate and Regus did not know how to do that(Regus still doesn't do that, at least in Europe). Now their big problem of having long term obligations with essentially short term cashflows was still a problem, but the unit economics at that stage were positive.

What set everything on fire was the fact that when they were injected with enormous amount of capital they essentially ran out of bad real estate in the markets they were in(this was the case in New York) and started going into the deluxe office buildings, where a WeWork facelift wouldn't do anything.

I can't remember the exact talk, but I saw a talk recently by some VCs that basically made the very interesting point that in certain businesses too much capital that has to be invested will eventually destroy the unit economics, and the 2 examples were Lyft and WeWork.

But yeah, the idea that WeWork didn't at some point have a legitimately differentiated, valuable offer that wasn't due to VC subsidies is not true.

[pclmulqdq]

What I mean to say is that WeWork does have positive unit economics, but that the net present value of the cash flows from their investments in buildings would never be anywhere near the amount of the initial investment (on a risk adjusted basis) used to generate those cash flows.

That doesn't mean WeWork has a bad product (they have a great product due to the capital available to spend) or bad unit economics (most of those investments are probably decently cash flow positive), it just means it's a bad business.

This is a case where "unit economics" doesn't tell the full story.