Comment by tptacek | Hacker News Reader

Comment by tptacek | Hacker News Reader

Parent Full thread

In a lot of markets, WeWork is a great deal. We just moved from Chicago West Loop WeWork to our first real office; we got what I think is a pretty amazing deal on our new office and it is still very difficult to beat the package WeWork puts together.

But that's not the critique being leveled at WeWork here; the critique is, WeWork can't in the long run be profitable at these rates. In a lot of their spaces --- maybe all of them? --- they're overstaffed. They're premium-everything (I wanted the couches from the first floor at WeWork West Loop and asked where they got them; they were custom-designed!). Free beer on every floor (this turns out not to be a win, but it's still part of their cost basis). Most importantly: they site these things in marquee locations that they have to be paying a mint to lease.

I'm happy to take full advantage of the largesse of Investor Storytime Economics, but unless you're Amazon, the music has to stop playing at some point. WeWork is not Amazon.

Beer aside, every WeWork I've ever been in seems to have dozens of fridges stocked to the brim with rancid milk. It's weird that they have custom furniture but can't even get their shit together on the most basic issues.

I don't think they provide the milk, just a place for people to store their own. Despite the fact that all the WeWorks I have personal knowledge of appear to be horribly overstaffed, the staffing at WeWork is not very effective.

Ahh the NYC ones all stock milk from local dairies, I assumed the others would be the same.

THANK YOU. At first I was very confused as to why there were so many half-full milk jars in the fridge but it soon made sense. I don't think this is WeWork's "fault" in that Ronnybrook milk only seems to last about two hours after opening, but they should really buy another brand.

Wait, he didn't fix the milk. He just pointed it out. The rancid milk is still there. Why are we thanking him? :)

It's not just the opened ones. Every time I go into a WeWork I usually end up opening several things of milk to see if there are any that haven't gone bad, and there almost never are. It's like they're turning off the refrigerators at night or something.

It's literally been a problem for several years. The company even acknowledged the problem on Twitter at one point, but didn't bother fixing it.[1] It shouldn't be that complicated to provide non-rancid milk for the coffee. Even in my home fridge milk lasts two weeks after being opened, and that's several degrees warmer than it would be if milk were the only thing being stored in it.

[1] https://twitter.com/i/web/status/840264145467518978

A bit of deflection on part of the company too. "it sounds like this is an ongoing issue for you"

>they were custom-designed!).

I used to work at a VC funded company that had a $10,000 custom couch (which sucked, totally uncomfortable, the custom dollars went into the shape/making it fit) and prolly 10x that spent on custom lighting fixtures (also terrible, ridiculously dim for a work space, but looked nice). In a super high rent urban area. I assume they make up the difference with glass walls and giant open spaces. This is (unfortunately) how offices are built these days.

Do you think they can figure out a way to still be around in ten years?

It's so much better than traditional offices that it'd be a shame to lose it. Hopefully there's a sustainable business model.

What would you say are the pros/cons of moving to your new office?

The West Loop WeWork is nice because it's about a 3 minute walk from the redline subway to the front door. That matters during winter -- Chicago winters blow. So I was wondering if you managed to get a spot close to public transit too. (And if so, how'd it end up ~cheaper than WeWork? Prime locations tend to come at a premium.)

We're still in Fulton Market, on May and Hubbard, a short walk from the Blue Line on Grand. I'm not entirely sure how we got this office in this specific location, but I think it had to do with the building itself being on the market.

I should be clear: it's hard to compete with WeWork for the 4 people we have in this office (I think we pay slightly less here than we'd pay for 4x WeWork berths) --- but having our own office is a phenomenally better deal as we hire more people, since we'll be paying the same amount of money in rent but can easily park another 10 people in this space comfortably.

So I should clarify that I think WeWork is an amazing deal for very small companies and, in particular, for solo worker locations. Part of the problem with WeWork is that it's precipitously less of a good deal as your company grows.

Just as with many highly valued startups, you can think of WeWork as valued for the possible future business model rather than it's current one. If WeWork is able to transition to a business services company with essentially a captive market (its tenants), it'll be a very profitable company. Other such companies have a high customer acquisition cost. WeWork is betting it's more efficient to rent office space and have a mailing list than to pay Google for those same eyeballs.

That makes sense but if people are trying to level set it's worth knowing that WeWork is 0% of the way towards monetizing its subsidized tenant base this way. There's a "WeWork Services Store", sure, but there's nothing remotely interesting in it.

> custom-designed

So are the plastic chairs you get at Walmart. This is a fixed cost. Custom design them once, order a million of them and leverage economies of scale.

> Free beer

Beer by the pallet is $2.30 a can, rent is around $2200. Even if you drink 2 cans a day, its still only about $350 a month in costs. Even if it's a loss, it's a good loss leader and the economies of scale will eventually work out. Their potential for profit is when people start saying, WeWork, feed us! and they charge such and such to manage the whole food delivery and make a nice premium on that, and whatever other services you guys would want.

We priced out comparables from similar vendors (I really liked those couches) and suffice it to say the unit costs you were getting were not competitive with Wayfair. They're high-end leather modular sectionals. It's not cheap.

2.30 a can? I bet they can get a better deal than that.

Reply on news.ycombinator.com