Molson Hart

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.

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.