WeWork becoming a case study in bad timing

[jducoeur]

Over breakfast this morning, Kate noticed an ad for a local co-working space, and remarked on the unfortunate timing there. Which led me to realize that things have just gone from bad to much, much worse for WeWork.

Think about it: their business model is all about leasing buildings, and then renting desks to folks who want to work in a group environment. For at least the next few months, that business model quite clearly makes no sense at all.

A bit of quick Googling turned up this Bloomberg article, which seems to indicate that yeah, the relevant power players had the same realization (or at least, started acting on it) yesterday. Apparently, SoftBank (the VCs behind WeWork) has a deal in the works to buy up to $3 billion of its stock -- it doesn't sound like they were technically planning on taking the company private, but something not far off. And now they are trying to pull out, because it's starting to look daft.

Granted, of the businesses that might conceivably go under as a result of the current crisis, WeWork is way, way down my priority list for shedding tears. I'm way more concerned about local stores and restaurants, and trying to keep patronizing them -- conveniently given additional incentive by Amazon's decision to de-prioritize non-essentials for the time being.

But still -- there's a lot of interesting stuff to reflect on here. The pandemic is a bit less awful than it might have been, because a fair chunk of the economy has already shifted to people working individually, in one way or another. But co-working spaces are an attempt for folks to create communities out of that individuality, and this is going to blow a hole in all of their finances...

Comments

[mneme]

Quite.

OTOH, whether this episode is short-term or long term, commercial landlords are going to be hit badly by the crisis, and if they are leasing to WeWork, having WeWork go under would be -really- bad for them in terms of getting an income stream back when this finally ends.

(and I'm not entirely uninvolved here; my office is and has been for a year and a half in a WeWork space my employer leases. WeWork isn't going to be attracting -new- clients for quite some time or wanting to lease/build out any new spaces, but aside from single private agents, nobody in the chain -- landlords, WeWork, the corprorate clients that are the bulk of their business -- benefits if they cease to exist over the next 6 months!). Softbank, of course, does, as it's their capital that is potentially tied up in this boondoggle.