Running the numbers here. WeWork has 12.500 employees with 500 locations. That means on average 25 employees per location. That sounds absurd for workspace management, especially since construction / renovations / cleaning are most likely outsourced.

Let's cut them some slack and assume that half the workforce is focused on expansion (6250 employees) and that one in 25 are secretarial or HR (i.e. not related to daily operations of a workspace). That STILL means >10 workers per location full time.

No wonder the financials don't add up.

Surely WeWork has most of their employees in just a few HQs? I'd guess they have a lot less than 25 people per WeWork coworking office.

Sorry in case I wasn't clear. I meant that, on average, 25 WeWork employees manage / oversee a single WeWork location, not that they actually work in that location.

I've been to a location and it seemed more like <6. Maybe <12 if they run shifts. (I could be very wrong). The other 13 would be at the HQ, doing coding or marketing or something

I have no idea how many people it takes to negotiate global real estate deals, maintain locations, etc.

IWG plc which is their major competitor has 9,000 people so I'm not sure it's that crazy. Might explain why they want to trim 25% also!

https://en.wikipedia.org/wiki/IWG_plc

IWG has ~3500 locations though, so on average say 3 people per location. WeWork has closer to 25, so basically 10x people per location managed.

IWG has a lot of franchised sites, but so does WeWork, as far as I know China + India are franchise operations or something similar.

When I was in a WeWork (not a good experience fwiw; not horrific, but definitely not good), the cleaning staff seemed to be WeWork employees. Direct hires too, which I liked.

It takes ~11 people to staff two 24/7 desks. That’s just having two people in desks 24/7. 10 workers per location isn’t too too wacky.

Are WeWork offices 24/7? I thought they were only open certain times of the day.

And yet, I had to call / email dozens of time to get a hold of WeLive leasing agent to rent a ~$4,000 month studio apartment

What is the right number of workers per location?

There's not one number, obviously. But if you look at a large hotel, maybe 10? Then again, WeWork isn't nearly as large as a large hotel and doesn't provide equivalent services. >10 on average per location (being generous!) is overkill.

(Remember, excluding cleaning staff)

I work in a company which rents a floor in a large downtown office tower and I think the number of people working there is less than 10 including cleaning staff. There is 1 security guard who I see around often and someone is usually in the management office and at the end of the day a pair of janitors come around.

I've also visited WeWork offices before and you're right that they have a lot of extra employees. They usually have multiple people at the front desk checking people in, then there are people who are going around to make sure the kegs are full and the shared spaces haven't detoriated into pigstys (this is different from a typical office where Janitors come around once a day or sometimes less than that).

Do not forget that you need about 5 employees to fill a single 24/24 365/365 work position. About 3 for a 2x8 position.

At least at my location in SF, WeWork is not open during non-business hours. You can have office access if you as a business are leasing office space, but there's nobody there.

I first heard of WeWork a few months ago. Seemed like just another company (admittedly I did very little to look into it). How is it that this company went from filing for public offering to laying off up to 25% of it's work force (along with a ton of other things I can't think of specifically at the moment) in just a few short weeks?

The “How I Built This” on WeWork[1] was fascinating. Basically the 2008 financial crises increased vacancies in trendy places a lot. WeWork grew up with the trends in coworking. But really has turned into a very fancy middle man for turning buildings into beautiful coworking office spaces. The brand for a while had some cache, but the thing is many are realizing that they can also build beautiful coworking spaces and there’s no magic secret sauce IP or tech that makes WeWork special here. In this context, WeWork has only gotten weirder and full of itself... they just seem disconnected from reality from what they are while at the same time losing money hand over fist.

1 - https://www.npr.org/2018/08/31/643774290/wework-miguel-mckel...

> there’s no magic secret sauce IP or tech that makes WeWork special here

Indeed; they don't really have a moat. For customers who travel a lot, there might be some network effects, but I suspect they're the minority.

I think there could be something to economies of scale, but in the How I Built That podcase, they brag about every space is bespoke!

I’d pay for a version of WeWork that let me camp out for $10 get self serve coffee but was drab, boring, and decidedly antisocial

Basically a library next to a coffee shop?

More libraries need to sell coffee :)

> The brand for a while had some cash...

Couldn't resist fixing that for you. The little pun (homonym?) has some explanatory power for the company's current position.

Though the OP misspelled cachet, so I guess it should be "The brand for a while had some cash, eh?" :)

https://www.profgalloway.com/wewtf and https://www.profgalloway.com/wewtf-part-deux, more or less. Once you drop a S-1 and everone gets to look in your laundry basket, any number of things can happen.

They were counting on a big chunk of cash from the IPO that they could use to pay the interest on their massive debts and keep expanding and developing to keep the growth/valuation story alive. This was all undone when outside investors saw the S-1 had no clothes. Those debt payments still need to happen though, and no one buys the valuation story anymore so something has to give.

> How is it that this company went from filing for public offering to laying off up to 25% of it's work force...in just a few short weeks?

The wewtf link someone else posted is good, but essentially, it was burning through cash in order to grow. Its private investors (mostly Softbank) were OK with that, but the public markets weren't. They also didn't like management and corporate structure). Not being able to raise cash to continue hypergrowth and having faced a reckoning about the true business prospects and valuation, they have to cut back.

> ...focus on our core business, the fundamentals of which remain strong

I actually buy this line. At the end of the day, they're getting money for a product, so there's a business there. The main risk with We is that there's a recession, occupancy drops to 50%, and they're stuck with the leases. But that's not a unique risk.

> The main risk with We is that there's a recession, occupancy drops to 50%, and they're stuck with the leases. But that's not a unique risk.

What is unique is how massively overexposed they are to this risk.

Investors drove up the IPO valuation to make a big exit, then everyone realized the price was bullshit and it fell apart.

Matt Levine wrote a lot about WeWork in his Money Stuff newsletter. Start with the one from Sep 3.

Two ways. Gradually, then suddenly.

> Minson and Gunningham are also looking to sell some of the companies WeWork purchased in recent years, as well as the Gulfstream G650 the company bought last year for $60 million

That is just obscene.

http://nymag.com/intelligencer/2019/09/what-happened-at-we-w... is a really good read.

Neumann does come away as a bit over the top:

> “I rarely give away my power, and when I do, it’s to my wife,” who he said was “99 percent right,” according to multiple people who watched the speech. Neumann concluded with yet another moment of life coaching: “Change your inner self. Change the world.”

> "The S-1 detailed the extent to which Neumann controlled his company, and had benefited personally from his position: he had bought buildings in which WeWork then took out leases, and received $5.9 million in exchange for selling a set of We-related trademarks to his own company. One clause called for Rebekah to name a successor in the event of Adam’s death. The entire thing was dedicated, in an epigram, “to the energy of We — greater than any one of us but inside each of us.”"

Was almost an inevitability it seemed like with all the other news, IPO ended etc. While this is a huge deal, is it really going to change anything about the underlying business?

Let's say there's only 10% of employees or some very low number. Would then the Real Estate deals put in place vs. the Revenue received for re-leasing them pencil out positive?

I'm no expert, but...no.

Lot's of lay offs happening lately. I know two people at two different semi-hot tech startups that are laying off people.

I wouldn’t correlate the two. Despite the focus on brand to imply the contrary, WeWork isn’t a tech company. They’re a real estate lease flipping company.

We Don't Work.

WeOuttaWork

I hope everyone can take break from the we-work-bashing for a few minutes and agree that regardless of screwy business models, almost four thousand people being laid off is sad. I suppose everyone is partially responsible for understanding the viability of his company and taking that risk in an informed fashion, it's still not a good thing.

> I suppose everyone is partially responsible for understanding the viability of his company and taking that risk in an informed fashion

Nah, I'd say leadership is clearly at fault. Layoffs are pretty much always failures of leadership.

That's the whole point of leadership according to Simon Sinek. Leaders are granted privileges and power and in return must stand by the decisions they have made. Without that they aren't leaders but merely authorities.

In reality though, leadership means creating Dutch Books out of your portfolio of projects and making sure any statements you make can be retroactively debated into alignment with whatever reality ended up producing. It’s a game to do this as long as you can before you get the hot potato resignation / layoff, spend 6 months relaxing on cushy severance, and then hire an expensive executive search firm to do PR and put you back on some interview circuit for the next leadership gig.

Very similar to professional sports coaching (and collegiate coaching in the US).

I think employees are at fault for empowering him and drinking the kool aid. Though I heard they pay really well, so maybe that's a sign a lot of people were passing on them because the business looked sketchy.

Or increase the WeWork bashing: the need for these layoffs is a sign of failure. I’ve said it before in a different situation, and someone took the time to find me on Twitter to tell me what they thought: layoffs in startups (or companies pretending to be a startup) indicates that maybe those seats shouldn’t have been warm to begin with.

>everyone is partially responsible for understanding the viability of his company and taking that risk in an informed fashion

Why?

When you join a company, especially a start-up, that is clearly and publicly losing a massive amount of money, there is some onus on you to be aware of the risk.

I assume parent meant that if you work at a company, it is your responsibility to know whether the company will last for the time you intend to be there. Without knowing the risks involved, if the company goes under and it is clear that it's a scam, you losing your job is partially your responsibility.