I've been spending time at a WeWork recently, working through a startup that my business partner and I hope to launch later this year.
More to come on the company soon, I hope. But for now let's focus on what it costs us to work at WeWork. Short version: next to nothing.
A year at WeWork comes free with the American Express Business Platinum credit card, and the card now costs $595 for the year. So, we've marveled at how we're getting a decent Manhattan spot to work at for less than $50 per month per membership.
I'd like to think we're brilliant. But also, the financials that WeWork released this week shed some light on what's going on.
Between 2017 and 2018, WeWork reports that its revenues jumped from $886 million to $1.8 billion. The company has $6.6 billion in cash reserves. Yet, it also took $2 billion in losses during 2018.
Separately, we've learned that of WeWork's 400,000 members, "at least 30 percent of whom are employees of large existing businesses."
Why burn through so much cash? Why practically give away office space?
Perhaps it's because WeWork seems like one of those fun companies that gets into an industry, and then insists later that it's in another industry entirely.
From my personal perspective as a cut-rate consumer, it's in real estate. But WeWork doesn't see it that way.
(In fact, it doesn't even plan to call itself WeWork much longer. Reportedly it was going to rebrand as The We Company, although I haven't actually seen this change myself, yet.)
Instead, it views its business as now something much grander: "'office culture' as a service," as the New York Times recently put it.
It's probably not a surprise that the rebranding and re-industry-ing come as WeWork is reportedly planning to go public later this year.
I'll bet you wish you'd thought of that, right? So, is this really a business than real estate?
I don't know, but WeWork certainly is not the first unicorn to operate at a deficit for years, while sprinting to dominance and scale.
As long as they're giving me a place to build a company in Manhattan for much less than the cost of a single night in a hotel, I'm not going to complain. Heck, they don't even have to throw in the culture.
Here's what else I'm reading today:
- This lawsuit does not pass the smell test. (Worker sues boss for $1.2 million over flatulence.)
- Here's what happens when you find a hidden camera in your Airbnb.
- A Southwest Airlines Boeing 737 Max on its way to be grounded had to make an emergency landing, supposedly for a different reason than the cause of the crashes.
- TikTok is erasing its creators' creations if they can't prove they were old enough to make them.
- McDonald's just paid $300 million to create the most advanced menus ever.
- The Trump administration is now suing to strike down Obamacare, with no replacement set.