The sole drawback is they're an unmaintained dump and working in one is an utterly miserable experience. I had the very very unfortunate experience of working at 995 Market and these worthless idiots couldn't even get their elevators to regularly work, and just plain didn't give a damn. Who doesn't enjoy a nice 15 minute break while you wait for an elevator (both ways)? The offices are tiny and LOUD. Some other idiot decided to make the floors hardwood; a single person in heels walking down the long shared corridors goes CLACK CLACK CLACK. The walls are transparent glass so you are distracted by every bit of movement. There's no sound insulation so you get to listen to the office 3 doors down discuss their thanksgiving plans. I really can't say enough bad things about it.
But hey, there's lemon water in the kitchen! (In a leaky carafe that makes a puddle on the counter every day. Naturally.)
There's a reason why landlords like long term leases and I can't imagine wework is immune to the pressures of a down market.
Our company eventually left, in part because we employees made it clear we were very unhappy inside wework.
At a conference I attended recently, one of the WeWork chief data scientists presented on their process for analyzing cities and determining venues for expansion. The detail with which WeWork acquires and analyzes public and private demographic data is incredible. Based on their information, they are making highly targeted decisions about property acquisition. From my perspective, when compared to any other real estate entity, I can wholeheartedly say that what they are doing the right thing.
Also note McDonald’s burgers are not very different than burger kings, and Starbucks is not better than any other chains. The secret sauce doesn’t have to be in the actual product.
At year-end 2016, McDonald's had ~37k restaurants, of which ~15% were company-operated and 85% were franchised. (The filing expresses a long-term goal to be ~95% franchised.) Of the franchised restaurants, ~70% were "conventional franchisees". Under both the company-operated and conventionally franchised models, McDonald's "generally owns the land and building or secures long-term leases".
I believe it is this real estate-focused setup that drives the comparison between WeWork and McDonald's in various comments.
You can get a desk in Oakland for $340/month or a private office for $730/month. If I had a small apartment in a city and worked primarily freelance, I'd consider something like that, if only for the quality of life.
Working from home hasy many perks. But the downside is that you get actually lazy.
I should move out to an office for the sake of my mental and physical health.
First, here (tel aviv) the basic wework costs range from $150 to $600 depending on location and frills (eg private office). This sounds like pretty standard pp office costs. They tend to be well liked by the people who work there. Well kept, well located, social, etc. Unless paying money for office workspace is ipso facto a luxury good, this seems like a regular good. Money for services at market rates.
Second, people working there range. There are some are "startups" without definitional grey areas but these're just some of the tenants. There are external employees of regular companies. All the work from home people that prefer a shared office, at least part of the time. Apartments and cafes are still active, but it turned out there's room in the market.
The way I see this is (1) internet has created more demand for flexible offices. (2) The older versions of this were pretty crappy, so these guys moved in.
As to wework as an investment... IDK. But, you could say that about a lot of companies. As a company offering a product to a market for a price, seems like a fine company. The product is sensible. People like it. It will vary geographically, but seems perfectly plausible that wework-like offices will grow to house 1m workers.
Wework opertionalizes all of things putting them in position of being able to arbitrage this disconnect in the market.
They lease large commercial (multi-story) offices from owners and building management companies and rent out to 100s of small businesses in the same space.