Since we’re talking about WeWork, more or less, an investment thesis that’s related:
- The basic business model of long-term leases subdivided into smaller is in itself not flawed, the asset-liability duration mismatch notwithstanding, depending on the rate environment and economy, which both seem to be supportive.
- What’s flawed is the notion that this represents a network with effects, which it isn’t, at least not on the grounds of shared ideals or beer that’s served on tap, despite all efforts by the company to build (and bill) itself as such.
- It is a service offering (with ideals and beer thrown in), around long before WeWork, and in demand worldwide for WeWork and for others.
- Because at massive scale – while moving fast and breaking things, with excess and excessive funds and valuations, all circularly rooted in that false network premise – the unit economics fall apart, this is not indicative of bugs in the basic model.
So, what if… such a business were operated, grown, and funded on its proper profile…
And as a piece that’s a strategic asset in the flywheel, as it were, of a true large network base…
Even as loss-leader if need be, or a profitable enough offering where other pieces from the network get tied in…
Then the end result that WeWork aimed for would survive, but in the proper sequence…
With the large network base as lead and underpinning, followed by the office model as a product in the mix.
It only needs a platform deep and rich enough to afford the big investment… maybe with a long-term view and inclination to combine its online with an offline presence… ideally also with some opportunity to throw a free subscription in for all the tenants (rather than beer and ideals)… something valued, a bundle with a lasting hook… like say, an entertainment and free shipping package for its retail purchases, which, everyone knows, are comprehensive…
Speculative Fiction 