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A good part of your thesis is that they can leverage scale to deliver good returns to investors. I'm pretty skeptical about this. It's easy to write "Scale! Scale! Scale!" but without concrete examples of how this scale is going to generate returns, it's not a strong argument.
Trivially, I could build the world's largest clothing factory, but unless I can explain how that factory is going to return on clothing quality, cost, or speed...I'm not getting anywhere. I think wework is a bit like this. We both agree that there is demand for coworking.
Take WeWork vs. GreenDesk (https://www.greendesk.com/ ). It does not take sophisticated software to run a coworking space. Greendesk uses off-the-shelf software plus a single front-desk/manager and a few maintenance people. It's significantly cheaper than WeWork.
WeWork has more locations all over the world than Greendesk, and that's scale and that's an advantage. Over the long run, maybe we'll see more and more people living an itinerant life and WeWork can capture that market better than GreenDesk can because of their scale.
However, most coworking customers tend to stay in one place most of the time, so WeWork's scale isn't very useful. Unless WeWork is consistently leasing properties from the same real estate companies, I'm not sure they have much bargaining power on account of their "volume."
Compare WeWork leasing space from a building's landlord vs. Walmart buying from a supplier. Walmart has way more leverage because they can purchase significantly more units than even the second largest potential customer. WeWork is not like that at all.
WeWork is about as good as any other anchor tenant, Saks, Nordstroms, Sears, JCP. Retail is going through hard times, but a lot of people rightfully say the same time of things about WeWork. Where else does WeWork's scale deliver an advantage?
WeWork needs toilet paper, employees, maintenance workers, security services, food supplies, etc. These things are mostly local. A savvy local operator like GreenDesk can probably get all these things at around the same cost as WeWork. I don't see a return to scale here.
After thinking about it, WeWork's return to scale kind of sucks. People will conflate scale with brand. WeWork does have that going for it, but in the long-run, once they hear about GreenDesk, they go for the cheaper option. These are small-time entrepreneurs remember!
WeWork in a lot of ways is like a restaurant chain. PF Chang's must compete with the Chinese restaurant down the way. PF Chang's certainly makes money, but I think you can leverage brand in food much better than in coworking. Putting things in your body vs. where you work.
So in summary, absent gross financial mismanagement and fraud, I do think that WeWork is absolutely a long-term viable business, but I don't think it's the huge moat amazing business it bills itself out to be and, like there are cheap local restaurants.
There are also chain restaurants that do well, though it's worth mentioning they're both tough industries. Yes, they have a scale advantage and a brand advantage, but they're much weaker than claimed. Their tech advantage is almost non-existent. /end
Actually, 1 more point: If I were WeWork, with so much capital raised, I'd buy the real estate. I can get better returns on whatever benefits my presence has to local real estate prices and I don't have to worry about the landlord raising rates at the termination of my lease /end
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