Archinect
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Wework(ed) until it didn't

Volunteer

Article in WSJ today: "Adam Neumann has bought properties and leased them to his co-working startup, sparking conflict of interest concerns....Corporate governance experts say Mr. Neumann’s ownership of buildings he leases to WeWork is unusual for a large company. Corporations typically bar executives from similar arrangements, given that companies risk paying too much in rent or leasing buildings they ordinarily wouldn’t.....Neumann has also recently sold millions of dollars of his start-up stock holdings."

 
Jan 16, 19 7:20 am

Business model: redecorate office space in decent areas and cut it up into little pieces that rent out for large multiples. It's been a real estate play from day one, all the PR about "community" is just bullshit. Hey - look, a shared coffee bar! 

A Bloomberg article says he's making $100m a year renting personally owned real estate to WeWork. Since he's the majority shareholder he seems to be pretty well insulated from lawsuits, although investor SoftBank could give him a bit of trouble. The problem with that is they are already billions in and won't get it back if they blow up the company.

Another American hero, scamming everyone in sight for personal gain. The more he "makes" the more he is admired, it doesn't matter how he made it.


Jan 16, 19 10:35 am
thisisnotmyname

By today's standards, Neumann's only mistake was getting caught. WeWork's concept is nothing new, Regus and others have been doing it for decades. WeWork simply figured out they could hype shared office space as something new and innovative and attract other (ignorant) investor's money.

SneakyPete

American hero? I'm not finding that to be true in my research.

Sorry, Israeli hero. But much admired by rabid capitalists everywhere.

Rusty!

WeWork has ambitions much higher than shared office space. Their ultimate plan is that you live in a WeLive building, drop your kids off at WePlay pre-K, grab lunch at WeEat, and of course one day you will get cremated at WeGone. 

It's a full life integration system that Mussolini would be proud of. 

WeWork is a terrifying company. I am aghast that so many Architects have no issue of working for them in house. 

Jan 16, 19 12:48 pm

I agree, Rusty. WeWork (now the WeCompany, I think) is terrifying. When I saw Sorry To Bother You it seemed clear to me that WorryFree is WeWork.

That said...I don't know anything about the other partners, but the Archinect Sessions conversation between Paul and Miguel McKelvey was REALLY good and made me feel like Miguel truly believes in trying to build a better world for more people through his work. 

https://archinect.com/news/art...

Maybe Neumann is the problem (NEWMAN!).

Jan 16, 19 1:01 pm
thisisnotmyname

WeWork does have some very capable people working for them on the design and construction side. They picked up a lot of good people when they acquired Case Inc.

jla-x

What’s so bad about it?  They are filling a need.  Who are the ones losing something because of their gains?  There is a false narrative out there that every economic success comes at someone’s expense.  

Jan 16, 19 1:37 pm
jla-x

Economics is not a pizza party.

randomised

They provide a service that wasn't really there, at least not that structured or organised. Nobody is forced to rent a desk at We Work, you can continue working out of your local coffee shop if you want.

Rusty!

jla-x, if you can't envision potential danger in a 40 BILLION dollar real estate conglomerate from NYC, then you should stop practicing architecture. Just do something else that is more instinctual to you.

thisisnotmyname

WeWork uses its deep pockets to bid up the price of rental spaces in cities where it locates. Other tenants with viable businesses are displaced by an artificially rich company that makes no profit and probably never will. A lot of NYC landlords will be hurt when WeWork runs out of cash.

jla-x

If you can’t envision the potential danger in the leftist rhetoric that many in this profession spew, as well as the recent crop of “progressive” dildos that are getting elected to office in cities like NY, then you should stop practicing architecture because what they want to do would be a complete disaster to the profession and society at large.

jla-x

If nyc is making special concessions for them, as they did for amazon, I’m 100% against that, but you people need to stop demonizing these new “disruptive” industries. They are actually contributing to a more decentralized economy which is good.

Rusty!

jla-x only a free market libertarian buttmunch could somehow connect effort at 'real estate monopoly' with 'decentralized economy'. WeWork has displaced, and continues to displace a lot of architectural practices in NYC. Landlords are going insane at hoping to land the next WeWork location. I hope "thisisnotmyname" is right and that WW is heading at a financial cliff. They brought nothing new to the market except sheer desire to dominate. There have always been other companies offering office shares.

Janosh

It really isn't exclusively a leftist criticism - no one hates them more than the commercial real estate brokers and building owners. They are using anti-competitive techniques to lock up large chunks of real estate, and depriving individual building owners of their normal power in lease negotiations. WeWorks biggest exposure is that all their revenue is month to month - the hedge is that through volume they force landlords with vacant or under occupied buildings to give them no penalty outs that they can exercise if office demand drops out.

jla-x

Janosh, yes it’s a trumpian argument as well. He likes protectionism too.

randomised

If nobody would rent a desk at WeWork, sure. But they make available affordable desk or office space for a lot of small business or one man/woman shops in buildings that were un or under occupied, for people that were forced to either work from home, rent a place they actually couldn't really afford or work from a Starbucks. Somebody dares to take on real estate developers and land lords with a better business model (also for their users), I say Godspeed to them.

jla-x

Rusty, WeWork offers smaller space for people who cannot afford an entire office serving small business startups, freelancers, etc. People rent it for this reason. What’s the problem? How do you stop it? What rules do you apply that will curb their ability to do this? No subletting? Once a law like that is on the books it’s very hard to get rid of it. Do we want to stifle future businesses that may be structured around other models via subletting to stop one manifestation of it that has no identifiable victims? This imo is one of the few rare occasions where architects are in the position of affecting program in a unique way. Rather than celebrating it, for what it is, we focus on negative aspects. Luddite

Rusty!

randomised, I wish I had such simple and naive outlook on life. I genuinely wish I did.

Steeplechase

As someone who has never paid attention to WeWork, what exactly is it that they are doing that is so problematic and should potentially be outlawed? Are they using sweetheart deals from local municipalities to secure property?

mightyaa

Not only that jla, but it serves the sort who work nationally. With the right subscription, I'd have office space available in every major metropolis as well as space internationally for a simple monthly fee.. That's the real market; those roaming freelancers who need something more than a outdated awful hotel "business center".

randomised

But it is that simple, they provide cheap desk and office space in an easy and accessible manner that no one else could before them. If I want to rent a small office with them it takes just a few minutes to arrange and I can get out of it within minutes too, without ridiculous fees, down payments etc. Try that with your land lord or even your mobile phone provider...you need to simply look at it from a user perspective., not from the perspective of speculative property owner, screw them and their empty office buildings as "investment". What do I care that they lease the property from their main shareholder, if I can easily pay the subscription or cancel etc. They bring cities back to life by bringing in small start ups and creatives to city centers that are unable to fill their properties the traditional way, by simply providing a better business model than others.

Rusty!

randomised, it is not really what they are, but what they want to be. End game is to force you into dealing with them. Amazon seemed pretty harmless as well a decade ago. First step is to create more demand. How do you create demand for jails? Arrest more people. For homeless shelters? Make housing unaffordable for the poors. For work share spaces? Make traditional office unobtainable for small operations. But but, people want to do business with WeWork. Sure. Wait till they have to. That's da dream.

jla-x

Exactly mightyaa. Another benefit is mental health of sole proprietorships not feeling socially isolated, collaboration, cross pollination of different companies, referrals, etc...

Steeplechase

Rusty!, what company would not want to have the greatest market share? What level of real estate holdings constitutes too much?

Rusty!

Steeple, what WeWork is doing in terms of office shares is hardly new or original. They have plenty of competition in NYC, and they are not going to establish a monopoly here. But their global expansion model, if all goes well, could create a juggernaut that twarfs GAFA. WeLive is another one of their concepts that I really hope fails. All of this is in super early stages. But in only 8 years they are valued at 40 billion. Alarm bells should be going off.

jla-x

You sound paranoid Rusty. It’s going to be ok....WeWork takes over the world of office sharing and then branches out into condos and sandwiches...doesn’t sound like much of a dystopian sci-fi plot.

randomised

Yes, sandwich sharing! That's why they're cut into neat triangles.

jla-x

But but but...the sandwich industry will be devastated! People will buy 5$ foot longs, cut them into 8 pieces, and sell each piece for 1$. That’s a 3$ profit!!! This is not what the founding fathers intended when they wrote the constitution! They never could have known that 5$ foot longs would be a thing :)

threeohdoor

According to the article, the shadiness is that one of the owner's is double-dipping real estate endeavors, and then transferring some personal risk (triple net lease) to the company that he operates. For a private company, this is merely shady. If WeWork ever goes public, this behavior would not fly at all.

SneakyPete

The straw is strong with this man.

Bench

Echo Steeplechase - can anyone explain what is it others are alluding to here? (Genuinely don't know)

Jan 16, 19 4:19 pm
jla-x

yuck


Jan 17, 19 2:20 am
liberty bell

I mean, have any of you actually seen Sorry To Bother You? The parallel is so clear. WeWork/Live/Learn/Shop/Drink/Communicate/Marry/Birth/Die


is clearly the overall goal. THAT is what scares me. 

Jan 17, 19 8:19 am
Steeplechase

No, I have not. So the concern is that they want to be too big and may be overvalued at the same time?

Amazon, Google, Kraft, Proctor & Gamble, the media monopolies, Apple, Exxon, Walmart .... this is not fiction, this is reality. They control information to limit your choices and manipulate you. You are a data point and profit center.

Terrible film btw, started out interesting but slowly became unwatchable.

Rusty!

Miles, you forgot Facebook, that gifted us our benevolent commander in chief. We are already living in dystopian nightmare, where half of us will die of measles and other half will drown in floods. Conglomeration of industries is having all kinds of wild consequences. There are flat earthers in year 2019? lots of them. Architecture and construction is one of the most fragmented industries in existence. And I love that it's that way. Potential conglomeration of real estate is a direct threat to our industry. Call me paranoid. I don't care.

jla-x

What’s too big? How do you stop business from getting too big? If you can’t answer those questions it’s a useless conversation.

jla-x

I’m much more concerned with automation, but again, what can you do to stop it? Ban technology?

Rusty!

jla-x, all of us come to this site for useless conversation, gah. US has busted monopolies in the past, from choo choo trains, to phonelines, to computer browsers. It is less inclined to do so now. Europe is slightly better at dealing with monopolies. But in any case WeWork is not a monopoly by any means whatsoever. It's just what their ambitions are. Their ambitions are scary.

thisisnotmyname

The investor class needs to figure out that the business models of a lot of these "disruptor" companies are pure bullshit and stop funding them. The government can't really legislate common sense.

jla-x

Rusty, different times. Companies can pick up and move overseas. We no longer need specific locations to operate. Imo, expanding the governments power to do such things poses a far greater threat. The medicine is worse than the disease.

jla-x

And FB is slowly falling out of style. My 15yo told me that no one uses it anymore. They are all about Instagram now. These tech companies don’t seem to have a very long lifespan

Steeplechase

Facebook owns Instagram. A lot of large corporations are buying up smaller brands but not advertising the new parent company to maintain the important image of a small(er)
company.

Tom's Toothpaste (former natural boutique brand) is owned by Colgate.

Volunteer

Don't worry. SoFi bank was going to put 20 billion into Wework, they are now down to 2 billion (with loads of strings) while they figure a way to exit the business and get their earlier money out. It's over.

Jan 17, 19 9:18 am
thisisnotmyname

WeWork has about 3.2 billion in cash on hand, so their bankruptcy is at least a year or so away, assuming they do nothing in the interim to get more funding or cut expenses. I understand as well that they have very smartly written their leases with landlords in such a way that WeWork can close down and walk away individual locations with very little penalty and liability to the parent company. WeWork might carry on in a downsized iteration. No matter what happens, it looks like Neumann walks away with a lot of money and real estate.

Volunteer

Yes. But. In many instances Neumann and partners buy the buildings before they lease them to Wework. In those instances Wework is on the hook for the lease payments to Newman and partners whether or not the buildings have tenants. That means whatever cash Wework has can be drained to Neumann in the case of a recession. Those lease payments are designed to cover Neumann and partner's note to the bank and leave a tidy sum besides. This can go on as long as Wework is solvent.

I'm betting on lawsuits from minority shareholders.

tintt

billion dollar idea: a cowork space with quality, built-in, drop-in childcare 

Jan 17, 19 8:33 pm
Rusty!

infinity dollar idea: childcare doesn't cost $1500+/m. It's free in Quebec. And they do just fine. Your comment confirms that Americans are beyond fucked. Slave mentality.

randomised

But if the childcare is at the cowork space, you don't need to drive all around town, just simply take your kid to work. Should also include a doggy daycare to top it off, so you can walk your own dog during lunch.

jla-x

Good idea. And makes breastfeeding easier for new moms that have businesses. They can take breaks to feed baby, play with them for a little, and go back to office and get work done.

jla-x

I’d add a good cafe into there too, and a bar! It’s really annoying to have to drive to find lunch, drive back...it eats up a lot of break time.

jla-x

The cool thing is with this model that it allows for a decentralized ownership class. Imagine this....you have a more specialized coworking space for AED...a couple small arch firms, engineering, landscape, interiors, graphics, art studios....common spaces for collaboration...Like a voltron design collaboration.

Non Sequitur

Rusty, childcare in Quebec is not free... it's $8 per day. Mine, just across the river, is $45 per day.  But, on the + side, I get to claim that I don't live in Quebec, so that's a win and probably worth the extra $.


Rusty!

jla-x, do you work for WeWork? That's the only explanation for this level of fanboyism. And how do you yet again make an asinine connection again? This time between decentralized ownership and a defacto single corporation controlling everything.

Rusty!

Non Seq, childcare in NYC ranges between $1700-2500/m. I don't know how people do it. Architect friends with young kids all seem a little more nutty than usual, and appear to be broke a lot.

jla-x

Rusty, no I don’t. I work for myself, and have rented coworking space from other companies when I was first getting started. My wife still rents coworking space. It fills a need. It’s efficient. We work does it well. Key phrase “does it well.” Often, when companies get good at something they dominate the market. They succeed. Some people see this as a problem. To me it’s illogical to punish competence. If they are not competent they will eventually crumble. That’s fine, but let the fucking market work.

Rusty!

jla-x, it seems like you are jumping to conclusion that if anyone is critical of a business model that somehow they clearly want to regulate it via government sanctions. Unless someone specifically makes that suggestion, you should not assume it. It derails discussions. For instance I think Amazon is second coming of satan, but I don't see the need for any government intervention. I try to explain to people the benefits of also supporting your local businesses and economy.

jla-x

Rusty, I’m with you on that.

jla-x

And one interesting thing that’s happening with the younger generation is just that. Look at the beer industry. Local breweries are crushing the big crappy beer companies like Budweiser. We just can’t impose regulations that will have unintended consequences. How we react to these things will set a stage for the direction we move in. With all the technology on the horizon I have been optimistically predicting for a long time that the 21st century will be all about the revolution of decentralized industry small factories, micro digital fabrication, etc... my pessimistic predictions, involving automation, are probably equally as likely, but I’ll save that for another thread.

Rusty!

Independent breweries add up to 12% of beer market, which is still better than 0%! Luckily rest of the industry is not dominated by a single entity, so you still have proper competition. That 12% wants to go up but big guys keep gobbling up little guys. Also Samuel Adams is responsible for definition of "independent". Definition keeps changing so that no one bigger than them is "independent". I assume everyone is drunk at all times.

axonapoplectic

the "sharing economy" is starting to look like shades of the 2000/2001 dotcom bust.

Jan 18, 19 8:10 pm
sameolddoctor
Wouldn't it be better if we stop acting like 2-bit artists and assume that all moneymaking is wrong?
Jan 19, 19 12:07 am
Volunteer

Wework's next big thing: Wesleep!

Jan 20, 19 9:29 am

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