[WJW]

> The spectacular collapse of a company once valued by SoftBank at $40 billion has been years in the making, but is still surprising given the number of large commercial buildings around the world that don the company’s name.

Is it actually surprising? If you too many assets that you bought with variable interest rate debt, then going bankrupt in a higher-interest-rate environment is exactly what I would expect.

[LatteLazy]

Did they actually buy buildings? I thought they just took long term leases from owners and sold short term to their customers? I once read an article saying that for all the tech bs, weworks was basically just a (at the well timed) commercial rent play: fix low rent and then charge rising rents as the market goes up.

I might be wrong though?

I remember thinking it was like a bank (exposed to time risk) but with property...

[WJW]

> fix low rent

This is not so easy as it sounds at scale, landlords aren't stupid. AFAICT, the main model is that WeWork simply charged more per desk/office/unit of surface area than they paid in rent to the building owner. This can intuitively work because they rent office space in bulk but rent out individual desks, and prices for individual "items" are almost always higher than buying in bulk. Obviously that model only makes a profit if you can maintain high occupancy rates though, and with COVID and rising interest rates the demand for expensive pay-as-you-go office space fell through the floor.

Through that lens WeWork is indeed like a bank: they rent long-term and rent out short-term. Companies like that are very vulnerable to a "run" where all the short term renters suddenly leave but the long term liabilities don't.

[jsemrau]

It might have worked on 2008 levels and then ride the elevator up. But to fuel the growth story they needed to go international where they could not enjoy the same once-in-a-lifetime opportunity.