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If the stratospheric price/sales multiples (see above) weren’t enough to scare folks, the CEO self-dealing (the private jet, the buying of a surfing technology company, the WE trademark, the ginormous loans) and the comically nonsensical “elevating the world’s consciousness” blather has made it an easy punchline and put a lot of pressure on the IPO.
IMO, what’s lost in this is whether WeWork might actually be a good idea.
If we separate out the market and idea of WeWork from the execution, foie-gras funding, and governance disaster that is WeWork, might it actually work? (I know — easier said than done.)
Basically, if another disciplined company was in this space, could it be a really big business?
Of course, the pundit talking point in this case is “co-working is f’d in a recession.”
These tend to be the same people who’ve been predicting the tech bubble will pop for the last 10 years. Sure — a recession might hurt co-working, but is commercial real estate immune to the impacts of a recession? And might co-working actually grow as enterprises are drawn to it as a variable expense (given they’re afraid of renewing 10 year leases with landlords in a recession)?
We dug into how WeWork makes money — including its growth in enterprise — in this report.
For those interested in trying to understand if it might be a good business, it is worth a read.
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