WeWork is Goop with computers

The commercial real estate company would love for you — but more importantly, investors — to believe that it's an innovative tech company.

Picture of brick building with WeWork logo on it.

If dividing rooms into smaller rooms is tech, and installing draft beer bars into rooms is tech, then yes, WeWork is tech.

Image: Eloise Ambursley/Unsplash and Protocol

Well, here we are again. Another week, another looming, existential question about the nature of a maybe-possibly-tech company.

If you've watched the documentary, or read a single piece of literature about it, or even walked by a WeWork office and seen its crisp and clean wooden interior, you'd be led to believe that yes, it's tech. It looks nice, and it has an app! WeWork, the coworking space now known as The We Company, has the shiny veneer of tech.

But WeWork technically is … a commercial real estate company. Is that considered tech? Experts and many, many, many other publications say no, it's not really tech — at least not according to a few key points and features needed for a company to be considered tech. The Protocol newsroom weighed in anyway.

This has been lightly edited for length and clarity.

Anna Kramer: is wework tech?

Megan Rose Dickey: oooohweeeee

Megan: yes and no

Anna: respond in the thread megan lol

Karyne Levy: THREAD!


Issie Lapowsky: reply all

Kate Cox: okay, first, I hate you

Kate: But secondly: no. It's property management that was sold like a startup. Leasing full-service office spaces is not dramatically changed by using an app to check people in at the door.

Owen Thomas: I remember the company going to great lengths to persuade me that it was tech, including opening a "West Coast headquarters" in the Salesforce Tower that was largely dedicated to housing engineers. I'm not quite sure what those engineers did!

Jane Seidel: it's got the tech startup aesthetic and a charismatic leader so it seems that's all it needs!

Megan: those engineers built the internal wework social network that no one used, obvi

Kate: Also, full disclosure: I worked in one for four months while the company I worked for was having its space renovated, and neither the WiFi nor the printer ever worked. Techless tech.

Jane: megan is that a real thing

Anna Kramer: so is tech really just the aesthetic?

Megan: YES!

Megan: did u not watch the documentary jane


Kate: It is a real thing, they tried to get us to use it

Megan: jeez what have you been doing during quarantine

Karyne: ugh should we have watched the documentary to prepare for this discussion?

Karyne: i did not know there were prereqs to being in this thread

Jane: my takeaways were: these parties are like camp for adults, adam neumann is a taurus because of course he is [Editor's note: What's that supposed to mean, Jane? — a Taurus]

Owen: I vaguely recall that the conference-booking software worked, when I was in a WeWork.

Owen: I also got the scoop on a startup that LinkedIn bought because they were right next door and Ramona the Love Terrier kept wandering over to say hello to them, lulling them into a false sense of security and familiarity.

Karyne: isn't this going back to what we talked about last week? where something is a "disruptor" (ew) or an "innovator" then it makes it 1 degree tech? what is the bar of tech something has to reach to be tech? is 1% enough?

Jane: it is literally a commercial real estate company

Karyne: once we had a conversation about whether Compass is tech

Jane: but i'm also trying to think of other real estate companies that have become so ubiquitous

Kate: It's a company that wanted tech money

Amber Burton: i agree, jane! it just has tech sprinkled on top

Tomio Geron: If dividing rooms into smaller rooms is tech, and installing draft beer bars into rooms is tech, then yes

Amber: The Wing also tried to do this in its own way

Karyne: i just read a thing — bc i decided to do research (google) rather than watch the documentary (cheating) — that wework said the word "tech" 123 times in its filing

Karyne: does saying the word "tech" make it tech?

Jane: omfg is THE WING tech..............

Owen: To be fair, many startups don't have much more than fancy offices and kombucha on tap and therefore claim to be tech.

Amber: Don't get me started on the wing lol

Karyne: the wing is tech because it duped everyone and made lots of money

Jane: if that is the qualifications for a tech company..............

Karyne: everything is tech

Anna: i think the idea of tech is just sexy so they wanted to look like tech, and they succeeded at that, but that doesn't actually make them a tech company

Karyne: now i'm knee deep in its S1

Karyne: please help me

Karyne: they call themselves "space-as-a-service," which makes them a SaaS company tbh

Kate: I'll throw you a rope Karyne, it's only $1.49 per foot extended. rope as a service.

Karyne: you are a RaaS company

Jane: where's Hirsh when you need him

Owen: Could effective investment in and deployment of technology have made WeWork a better business?

Owen: Or could it have taken its in-house technology and sold it to other real estate firms, and made a profitable business out of that?

Kate: I don't think anything related to tech was either (1) its draw or (2) its problem.

Kate: Also "space as a service" is the same thing that drove me bonkers when Zoom tried to launch "hardware as a service." We have a word for that, it's called RENTAL.

Karyne: you're disrupting the disruptors

Tomio: Wasn't it always a capital play? Throw money at buildings and hope it works out in the end?

Owen: There are a lot of inefficiencies in real estate. I think that's the draw. The fact that you're not locked into a long-term contract and can expand (or contract) as needed was appealing to startups.

Owen: But the problem was that those customers always hit a wall where there wasn't enough space available in a WeWork at any price for what they needed, so they moved out and got their own space.

Karyne: so are we saying .. wework is not tech?

Chris Fong: My two cents: WeWork is Goop with computers.

Biz Carson: So, you could argue that their technology was making it more efficient to scale the office size you needed without entering into a bunch of multi-year leases?

Megan: that's the headline right there: wework is goop with computers

Karyne: is goop tech

Jane: not nOW karyne

Karyne: sorry!

Owen: I don't think that constitutes a technology, just a business practice. Its business practices were beneficial for some startups.

Jane: hm ok biz you've got a point? i guess if a company is able to scale massively because of tech... it's a little bit tech

Owen: I don't know: Private equity helps a company scale massively, but that's not tech — that's just money.

Megan: perhaps we should come up with an ABC test for determining if something is tech

Jane: megan ur onto something i think

Megan: i know

Megan: 😈

Kate: If everything that uses tech to scale is tech, then literally all businesses operating in 2021 are at least a little bit tech. Which, you know, is an argument I've made before and would make again -- "tech" is not a silo, it's pervasive. But I don't think that makes WeWork a tech company.

Owen: It's kind of maddening to be tech-adjacent, to see how your business enables tech companies to succeed but isn't tech itself.

Owen: And I can see how that madness spreads: Why can't we be tech, when there's so much tech around us?

Tomio: There's is this tech? But there's also: can we sell this to investors as tech?

Jane: right it matters less if a consumer thinks it's tech, and more that the ppl with the money think it is

Jane: good thing we are spending time every week talking about this

Megan: boooo

Karyne: yeah like, if you can sell it as tech, then it's probably tech.

Megan: capitalism suuucks

Anna: hahah perfect place to end it

Megan: fin.

One hour later:

Issie: agh so mad i missed this convo!

Image: Yuanxin

Yuanxin Technology doesn't hide its ambition. In the first line of its prospectus, the company says its mission is to be the "first choice for patients' healthcare and medication needs in China." But the road to winning the crowded China health tech race is a long one for this Tencent- and Sequoia-backed startup, even with a recent valuation of $4 billion, according to Chinese publication Lieyunwang. Here's everything you need to know about Yuanxin Technology's forthcoming IPO on the Hong Kong Stock Exchange.

What does Yuanxin do?

There are many ways startups can crack open the health care market in China, and Yuanxin has focused on one: prescription drugs. According to its prospectus, sales of prescription drugs outside hospitals account for only 23% of the total healthcare market in China, whereas that number is 70.2% in the United States.

Yuanxin started with physical stores. Since 2015, it has opened 217 pharmacies immediately outside Chinese hospitals. "A pharmacy has to be on the main road where a patient exits the hospital. It needs to be highly accessible," Yuanxin founder He Tao told Chinese media in August. Then, patients are encouraged to refill their prescriptions on Yuanxin's online platforms and to follow up with telehealth services instead of returning to a hospital.

From there, Yuanxin has built a large product portfolio that offers online doctor visits, pharmacies and private insurance plans. It also works with enterprise clients, designing office automation and prescription management systems for hospitals and selling digital ads for big pharma.

Yuanxin's Financials

Yuanxin's annual revenues have been steadily growing from $127 million in 2018 to $365 million in 2019 and $561 million in 2020. In each of those three years, over 97% of revenue came from "out-of-hospital comprehensive patient services," which include the company's physical pharmacies and telehealth services. More specifically, approximately 83% of its retail sales derived from prescription drugs.

But the company hasn't made a profit. Yuanxin's annual losses grew from $17 million in 2018 to $26 million in 2019 and $48 million in 2020. The losses are moderate considering the ever-growing revenues, but cast doubt on whether the company can become profitable any time soon. Apart from the cost of drug supplies, the biggest spend is marketing and sales.

What's next for Yuanxin

There are still abundant opportunities in the prescription drug market. In 2020, China's National Medical Products Administration started to explore lifting the ban on selling prescription drugs online. Although it's unclear when the change will take place, it looks like more purely-online platforms will be able to write prescriptions in the future. With its established market presence, Yuanxin is likely one of the players that can benefit greatly from such a policy change.

The enterprise and health insurance businesses of Yuanxin are still fairly small (accounting for less than 3% of annual revenue), but this is where the company sees an opportunity for future growth. Yuanxin is particularly hoping to power its growth with data and artificial intelligence. It boasts a database of 14 million prescriptions accumulated over years, and the company says the data can be used in many ways: designing private insurance plans, training doctors and offering chronic disease management services. The company says it currently employs 509 people on its R&D team, including 437 software engineers and 22 data engineers and scientists.

What Could Go Wrong?

The COVID-19 pandemic has helped sell the story of digital health care, but Yuanxin isn't the only company benefiting from this opportunity. 2020 has seen a slew of Chinese health tech companies rise. They either completed their IPO process before Yuanxin (like JD, Alibaba and Ping An's healthcare subsidiaries) or are close to it (WeDoctor and DXY). In this crowded sector, Yuanxin faces competition from both companies with Big Tech parent companies behind them and startups that have their own specialized advantages.

Like each of its competitors, Yuanxin needs to be careful with how it processes patient data — some of the most sensitive personal data online. Recent Chinese legislation around personal data has made it clear that it will be increasingly difficult to monetize user data. In the prospectus, Yuanxin elaborately explained how it anonymizes data and prevents data from being leaked or hacked, but it also admitted that it cannot foresee what future policies will be introduced.

Who Gets Rich

  • Yuanxin's founder and CEO He Tao and SVP He Weizhuang own 29.82% of the company's shares through a jointly controlled company. (It's unclear whether He Tao and He Weizhuang are related.)
  • Tencent owns 19.55% of the shares.
  • Sequoia owns 16.21% of the shares.
  • Other major investors include Qiming, Starquest Capital and Kunling, which respectively own 7.12%, 6.51% and 5.32% of the shares.

What People Are Saying

  • "The demands of patients, hospitals, insurance companies, pharmacies and pharmaceutical companies are all different. How to meet each individual demand and find a core profit model is the key to Yuanxin Technology's future growth." — Xu Yuchen, insurance industry analyst and member of China Association of Actuaries, in Chinese publication Lanjinger.
  • "The window of opportunity caused by the pandemic, as well as the high valuations of those companies that have gone public, brings hope to other medical services companies…[But] the window of opportunity is closing and the potential of Internet healthcare is yet to be explored with new ideas. Therefore, traditional, asset-heavy healthcare companies need to take this opportunity and go public as soon as possible." —Wang Hang, founder and CEO of online healthcare platform Haodf, in state media China.com.

Zeyi Yang
Zeyi Yang is a reporter with Protocol | China. Previously, he worked as a reporting fellow for the digital magazine Rest of World, covering the intersection of technology and culture in China and neighboring countries. He has also contributed to the South China Morning Post, Nikkei Asia, Columbia Journalism Review, among other publications. In his spare time, Zeyi co-founded a Mandarin podcast that tells LGBTQ stories in China. He has been playing Pokemon for 14 years and has a weird favorite pick.

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