Perhaps you, a non-tech-savvy regular moron, have walked past a “WeWork” location in your city and wondered to yourself, “What the hell is so special about this stupid office space company? Turns out you were right!
In the Wall Street Journal today, Eliot Brown breaks down the business cult of WeWork, a company that rents out office space, but somehow pretends it is in the tech business, not the real estate business. Here is something to consider when thinking about how smart all those zillionaire tech investors are. As you read this (bolding ours), keep in mind that WeWork is currently valued at $20 billion:
Others in the real-estate industry and some Silicon Valley investors say the company’s well-crafted image belies the mundane nature of its business. IWG PLC, an office-leasing company with a business model similar to WeWork’s, manages five times the square footage and has about one-eighth the market value.
Boston Properties Inc., the country’s largest publicly traded office landlord, owns five times the square footage that WeWork manages and has a market capitalization of $19 billion.
So the WeWork math is:
(Small office company)+ (Free tequila tastings)= HUGE OFFICE COMPANY.
Is there an explanation for this seemingly insane valuation placed on a millennial rent-a-desk operation? Sure.
“We frankly are our own category,” said Artie Minson, WeWork’s president and chief financial officer in an interview. “We use real estate and services to empower our community.”
Everything is different now!