WeKindaWork Photo: Ruhani Kaur/Bloomberg via Getty Images Ben: Capping off the spectacular retreat of a company valued at $47 billion just last month, WeWork announced that it was abandoning its IPO today, after finding very limited investor enthusiasm for its business of designing, building, and leasing office spaces around the world.
Ben: Yeah, I’m pretty sure I thought at the time that the poorly designed jobs website I actively tried to avoid wouldn’t last.But anyway, in WeWork’s case, a key problem is that the business model is not actually as novel as the company made it out to be. Shared short-term office-space rentals aren’t new; in fact, WeWork doesn’t even have 50 percent of the U.S. market for it, even though it has nearly 100 percent of the media and investor attention in the space.
Ultimately, WeWork is a real-estate company with all the problems that entails — significant upfront costs for buildouts of offices , costs to manage those buildings, the need to sign long leases even though their own subleases to WeWork customers are short, which exposes the company to risk in the event that the economy turns down.
And while I find it plausible that WeWork can tweak its business to become profitable, including by greatly slowing or stopping its expansion, I don’t believe it can ever be so immensely profitable as to support a valuation anywhere near $47 billion.
They never are.
No intelligent entrepreneur is going to use wework. Sorry.
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