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WeWork Cash, Amazon Code, Quarantine Leases, and Radical Localism

Dror Poleg
Dror Poleg
3 min read
WeWork Cash, Amazon Code, Quarantine Leases, and Radical Localism

1. Who let the kids in? 300 million children are suddenlyhomeschooled across the world. Some parents can't wait for this experiment to end. Others might find that it's been good for their children and for the family as a whole. Schools are always looking to cut costs and will likely adopt new ways of keeping students engaged and cutting their real estate costs.

2. Is Localism the new Nationalism? Technology is enabling cities to become self-sufficient in unprecedented ways. They can produce more of their own energy, grow more food, re-use more wastewater, and recycle various resources. They can also collect more data and decide which companies — and why government agencies — they wish to share it with. Everyone's talking about Covid-19's impact on global trade and supply chains. It will likely also encourage individual cities within the same countries to become less dependent on infrastructure they do not control.

3. Walmart, powered by Amazon? The online retail giant is planningto open-source some of the software behind its cashier-less stores and inventory management.  Amazon is trying to get Walmart, Target, and other retailers to pool some of their resources for everyone's benefit. This generous offer comes with an implicit threat: Join the alliance, or see Amazon share its technology with dozens of other small retailers who can nibble at Walmart & co's margins.

4. The Long Tail Goes to Church. Over the past two decades, our media landscape fragmented from a handful of hit channels / shows / movies / albums to an endless list of influencers, micro-publishers, and independent creators who make a living off-of small but committed audiences. A fragmented physical landscape enables a fragmented physical landscape, with spaces focused on niche communities. This is true for niche hotels, bars, stores, coworking spaces, apartment projects, and even houses of worship. I expect it will soon apply to whole (new) cities as well.

5. When citizens sneeze, the government catches the call. Israel is experimenting with various ways to fight the virus. Mossad spies managed to secure 100,000 test kits for the tiny country (they should have brought toilet paper instead). Israel also "unleashed" its other defense capabilities to track the whereabouts of suspected virus carriers. Citizens who walked by a verified carrier receive text messages notifying them that they should stay home and expect a visit from a medical professional.

6. Leasing in Quarantine. The residential market is gridding to a halt. Individual buyers are terrified. Professional buyers are waiting for things to get worse. And individual sellers don't want to let anyone visit. The leasing market is proving that it is possible to make deals without physical inspections. Common, a co-living operator, reports that 32% of its leases over the past three months were signed after a virtual tour. Over in China, virtual apartment visits increased  35 times at the heigh of the coronavirus shutdown in February. There is no reason for virtual leasing no to keep growing once the crisis is behind us, expanding beyond students and roommates to other demographics and property types.

7. Remember WeWork? The flexible office giant's turnaround is taking an unexpected... turn. With so many urban employees working from home, it'll be interesting to see how WeWork fares in 2020. I expected the office market to be more flexible, more serviced, and more branded in the morning after Covid-19. But it'll be a while before morning arrives, so WeWork needs to survive and — ideally — use the crisis to get out of some of its liabilities and renegotiate others.

This week, the company managed to buy itself more time. WeWork sold NYC's Lord & Taylor building to Amazon for $978 million. The company likely lost some money on the sale, but it managed to increase its cash during a very tricky period. More importantly, Softbank is pulling back its $3-billion offer to WeWork shareholders. This means SoftBank now has a little more cash to use for WeWork's actual business, instead of just transferring it to Adam Neumann and other shareholders.

8. Bonus Content
🗞 How is Covid-19 affecting New York City? I wrote a business + personal overview for Estates Gazette.

👓 How can America beat Coronavirus? By doing the opposite of China. A short piece I published earlier this week.

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