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Comment by julianozen | Hacker News Reader

While this is true, the ability to get space in a new city for exactly as many employees as needed, without having to have someone on the ground who knows local neighborhoods is pretty compelling. By going with WeWork a company has reasonable assurance that the location will be in a good place, have nice amenities for happy employees, and have the comfort knowing they are purchasing the right amount of space for their current needs and can expand or contract quickly. This makes expansion much quicker and lower risk.

Sure a company doesn’t need to offer beer or kombucha or be in central working districts, but not having to figure out all this info on their own when they just need a few rooms in a remote city is what companies are paying for. Like scalable sever infrastructure, the benefit isn’t the cost savings, so much as not having to hirer experts for things outside your business domain.

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The alternative isn't having someone on the ground, it's hiring a reputable rentals agency that deals with international clients.

So, hiring someone on the ground...

You're giving a perfectly compelling reason for someone to use WeWork. Clearly there are hundreds of thousands of people for whom WeWork offers a service that benefits them. But there is no reason for me to believe that the few companies that cannot afford to pay a local expert a few thousand dollars to help them with a move is going to lead to WeWork fulfilling its $1T/year vision.

But this is also the way the world is moving – don't hirer or purchase anything that is not your companies core competency.

Don't run a janitorial service? Use contractors and hirer/fire at will [1]. Don't run a CRM service? Use Salesforce and pay per user. Don't run a server company? Use AWS and turn on/off servers. Don't run a payments company? Use Square/Stripe and never think about payment types.

Modern business is becoming (for better or worse) about owning 0 assets and only focusing on your core product. Yes, with all these things you can do it yourself, but having a company that is an expert in that service saves your business time (and often already employees the best resources in that industry).

[1] https://www.nytimes.com/2017/09/03/upshot/to-understand-risi...

Where AWS succeeds is actually in its ability to save money. Netflix has elastic demands that are negatively correlated with other users. Netflix doesn't have a system to share compute resources with say a hedge fund. Amazon steps in and allows them both to save money by having one server fulfill both their needs instead of two. The problem being solved has nothing to do with expertise. Netflix is as equipped as anyone to manage their own data center. It's not just domain expertise. It's a marketplace.

That said, there may be reasons that WeWork could entice companies to join, but there still need to be reasons. Extrapolating with a hand wave just doesn't cut it.

Well the same thing applies. WeWork can step in and allow Netflix and a hedge fund to save money on a floor in a remote destination where both companies don't know anything about the region except for how many people they plan to employ there. When one of them needs a bigger office, they move out and another company moves in

Again Netflix is equipped to have office managers, find people/firms to scout nice neighborhoods to remote cities, and stock kombucha, but all of this requires hiring people to do a job that Netflix fundamentally doesn't care about. WeWork will save money for companies not ready to commit to long term leases, and it will certainly save time for companies that don't want to have to think about this

What I'm pointing out is that Netflix is not equipped to manage a shared server marketplace. They don't manage their own servers because Amazon/Google can do it more effectively for more reasons than expertise. You seem hung up on the idea that companies just want to give up money to pay other people to do stuff they don't like.

A better analogy may be legal work. Law firms offer a way to use lawyers as companies need them, and to share these resources among multiple companies. But all corporations still hire in-house counsel to fulfill the needs they know that they have. None of them say "analyzing law isn't our expertise, so we exclusively use law firms." But almost all of them use law firms, because there are niche specialties that aren't worth hiring for, and times when more lawyers are needed to handle a particularly heavy load.

WeWork can definitely fulfill similar analogous roles in real estate. When Facebook has three people who wants to work remotely in Missoula, co-working spaces will win their business. But Facebook is never moving its campus to WeWork, and any startup with over 50 people and decent funding will realize how unnecessarily expensive it is to use a coworking space, and cut out the middle man. What's left is not a $1T/year business.

https://www.bizjournals.com/sanjose/news/2018/06/21/facebook...

> Netflix has elastic demands that are negatively correlated with other users.

No, that's not what is going on with Netflix and AWS.

Netflix stores metadata in AWS, and uses their OpenCDN for streaming traffic.

The metadata servers can autoscale, but not enough to call it elastic since it's not correlated with end-user requests.

> Netflix is as equipped as anyone to manage their own data center.

They don't think so, which is why after a 5-day outage they moved to AWS in the first place.

At a high level, you're wrong by 180 degrees. I'm guessing you thought Econ 101 can be applied anywhere, a common but wrong-headed fallacy by HN'ers.

Source: worked at Netflix.

One can definitely make a case for why companies might choose to use WeWork. But a much stronger case is to look at the actual evidence - large companies are in fact using WeWork. E.g. where I live, Microsoft has taken out tons of WeWork space, despite also having offices.

And according to the article, 40% of WeWork's revenue comes from large corporations, so this isn't a one-off thing either.

I think that's all fair. And it's actually also perfectly consistent with an opinion that there will be more distributed/remote/WFH work in whole or in part and generally more flexible working arrangements. Because a company may need fewer seats under those conditions but it wants to be flexible about what seats and facilities it has.

I'm certainly not convinced WeWork will ultimately be a beneficiary of that--especially in a downturn that will lead to companies cutting back on expenses they don't really need to incur. But the basic idea makes sense (and of course there is a long record of companies like Regus in the space, albeit with a more traditional take).

Once the market turns, and the labor pools aren't so tight, you might just see corporations stop allowing so much remote work. If you need to lay off 10% of staff, and 15% of your staff are remote, that's a easy place to start cutting. Lay-off all your remote workers, and re-hire the 5% from local employees who can work at your existing office.

I suppose it depends on the attitude of management towards distributed work. If it's something they just tolerate to attract people who might otherwise not work for them, you're probably right.

But the situation may be different if they see it as a way to attract better and/or cheaper employees and to reduce the facilities costs associated with those employees.

That said, when things go south, companies (and managers within companies) do lots of haphazard things in an effort to be seen as doing something whether or not it makes long-term sense.

Might be easier to lay off everyone on that half-full 3rd floor and save money on your lease next cycle.

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