WeWork opened its first co-working space in 2010. It signs long-term leases with landlords , kits them out and then offers clients short-term contracts . The proposition—furnished offices on short-term leases, compared with the multi-year standard in commercial real estate—was not new. But WeWork’s competitors lacked its cool factor—as well as its seemingly endless venture funding, much of it from SoftBank, a Japanese tech-investing group. Soon WeWork’s dizzying ascent seemed unstoppable.
Like lots of well-capitalised startups, the company put growth ahead of profits. It is more disciplined now. Future lease obligations are $36.6bn, down from $47.2bn in 2019. Management agreements—whereby landlords bear the capital-expenditure costs, WeWork attracts tenants and provides services, and the two share revenue—make up a larger portion of its portfolio than in 2019. These yield smaller profits but come with less risk than leases for which WeWork is on the hook.
: in January it said it would be profitable by the end of the year; now it says profitability will arrive in 2022. So far investors have not evinced the horror of two years ago. They seem to view the $9bn valuation as roughly fair, and much more realistic than at WeWork’s last flotation attempt.
Love the chart showing community-adjusted exuberance
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