WEBVTT - WeWork CEO John Santora Talks Benefitting From Tariff Uncertainty

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news been.

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<v Speaker 2>Very mixed for earning so far this week.

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<v Speaker 3>Large corporations from PEPSI to p ANDNG cutting their outlooks

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<v Speaker 3>due to Trump's tariff policy. One company, however, thinks they'll

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<v Speaker 3>benefit from the uncertainty.

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<v Speaker 2>We Work, which.

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<v Speaker 3>Provides coworking spaces for companies and individuals. It's hoping that

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<v Speaker 3>market risks will help it bounce back from bankruptcy. Joining

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<v Speaker 3>us now is that we work?

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<v Speaker 2>CEO? John Santora, John, it's good to see us, sir.

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<v Speaker 2>Thanks for being mid morning. John, give me the strategic

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<v Speaker 2>cup date.

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<v Speaker 3>What is the strategy now and how has it changed

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<v Speaker 3>in this certain period for the company compared to a

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<v Speaker 3>very uncertain period for the company a number of years ago.

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<v Speaker 4>So where we work stands today. We're a maturing company.

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<v Speaker 4>We're a company that has no debt. We're investing in

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<v Speaker 4>our portfolio around the world. We're investing in our members

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<v Speaker 4>and our people. So it's a very different place today

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<v Speaker 4>than it has been in the past.

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<v Speaker 2>Does it rely on a different kind of business?

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<v Speaker 4>Our business is flexibility, right, and to be able to

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<v Speaker 4>provide from one to one thousand seats for companies for

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<v Speaker 4>the entrepreneurs that's always been a part of our business.

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<v Speaker 4>Right it's about twenty five twenty seven percent of our business.

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<v Speaker 4>Then you have the smaller and mid sized companies fifty people,

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<v Speaker 4>hundred people, and then you have that whole enterprise platform

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<v Speaker 4>that we have which has been really growing the last

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<v Speaker 4>year or so.

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<v Speaker 3>Are you finding those changes are coming because of what

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<v Speaker 3>developed during the pandemic coming out of the other side,

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<v Speaker 3>It's not what forced the issue for the latch of enterprises.

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<v Speaker 4>I think if you look historically during different markets, right,

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<v Speaker 4>there's always that downturn, there's always that need to sub

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<v Speaker 4>lease space. We always take too much space, and good

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<v Speaker 4>times we'd get rid of too much space, and bad

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<v Speaker 4>times we fill that gap. So giving them twenty or

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<v Speaker 4>twenty five percent of their portfolio, that's flexible increase it,

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<v Speaker 4>decrease it without taking the hit to your books, without

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<v Speaker 4>writing off that space and writing off all the capital,

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<v Speaker 4>and being able to provide uh I that flexibility in

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<v Speaker 4>markets around the world is key.

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<v Speaker 5>So where are we right now with respect to the

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<v Speaker 5>ends certainty that we hear from corporate executives around the country,

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<v Speaker 5>is this a time where they want to ramp up

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<v Speaker 5>their flexibility and increase their footprint with you this or

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<v Speaker 5>pull it back because they actually see that as a

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<v Speaker 5>lever that they can pull without being seen too much.

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<v Speaker 4>This is a time any pores, A recession or whatever

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<v Speaker 4>is not good for any company. Right for us, our

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<v Speaker 4>clients are saying, I'm going to with the pause. I'm

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<v Speaker 4>not sure if I'm going to take more space, I'm

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<v Speaker 4>not sure if I'm going to cut back.

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<v Speaker 1>They pretty much are pausing.

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<v Speaker 4>With us, and that doesn't cost them anything.

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<v Speaker 1>Right, they stay in.

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<v Speaker 4>Our spaces, they'll move, they'll adapt in different markets.

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<v Speaker 1>We talked about it. You talked about India earlier on

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<v Speaker 1>the show.

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<v Speaker 4>We're seeing a big move out to India with our

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<v Speaker 4>clients in all the big banks, all the financial institutions

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<v Speaker 4>are growing their presence in India. The clients you mentioned,

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<v Speaker 4>Apple and so forth, they're all looking to take more

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<v Speaker 4>space in India. But are they going to take ten

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<v Speaker 4>and fifteen year leases with the uncertainty of what's going

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<v Speaker 4>on in the market, look to a player like us

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<v Speaker 4>to give them that flexibility.

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<v Speaker 5>Just to be clear, are you seeing stasis when it

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<v Speaker 5>comes to leasing right now?

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<v Speaker 1>Or are you seeing.

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<v Speaker 5>Leases increase in places like India and decrease in places

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<v Speaker 5>that previously have been popular. I'm wondering whether it's even

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<v Speaker 5>some of the Northeast cities.

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<v Speaker 4>I think it's a little too early to tell what

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<v Speaker 4>the long term effect will be. But you know, in

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<v Speaker 4>discussions with CEOs and CFOs, are you willing to make

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<v Speaker 4>that fifteen year commitment to a market today? With the uncertainty,

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<v Speaker 4>you have to pause. You have to think about it.

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<v Speaker 4>You have to think whether or not to invest that

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<v Speaker 4>major capital in a market, at least for this short term.

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<v Speaker 5>You have to step back in the go go days

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<v Speaker 5>of we Work. I remember that every time a building

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<v Speaker 5>was getting rebranded, it was going to be a WEE work.

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<v Speaker 1>When I was walking around.

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<v Speaker 5>The city and there was this massive expansion plan and

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<v Speaker 5>then there was a retrenchment.

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<v Speaker 1>Are you back in expansion plan?

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<v Speaker 5>Are you looking for acquisitions in terms of properties or

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<v Speaker 5>are you kind of happy with your footprint and just

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<v Speaker 5>expanding in other ways.

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<v Speaker 4>Yeah, we have a really good footprint now it's been restructured.

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<v Speaker 1>We're in the markets we want to be in.

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<v Speaker 4>We're in the markets that are our members want to

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<v Speaker 4>be We're in the right product Over time, though, for

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<v Speaker 4>the first time in the history of the company. We're

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<v Speaker 4>going through a traditional lease exploration, so we'll look to

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<v Speaker 4>upgrade in some markets. We may look to leave a market,

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<v Speaker 4>but that's.

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<v Speaker 1>Going to be a rare, rare, rare case.

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<v Speaker 4>We like the markets that we're in, so we're gonna

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<v Speaker 4>do some upgrades here and there.

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<v Speaker 5>During the pandemic, we saw a number of companies move

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<v Speaker 5>from New York to Florida. Are you seeing companies still

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<v Speaker 5>leave New York?

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<v Speaker 4>You know, I'm not grounded in real estate and grounded

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<v Speaker 4>pretty much in New York real estates where I've always

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<v Speaker 4>lived in New York and always worked out in New York.

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<v Speaker 4>The New York market is the It's the capital of

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<v Speaker 4>the world, right It's the capital of finance. It's the

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<v Speaker 4>capital of most companies. Their headquarters are there. A lot

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<v Speaker 4>of companies or headquarters are there. It will always have

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<v Speaker 4>a presence, it will always be important.

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<v Speaker 1>They'll always be headquarters.

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<v Speaker 4>There be some changes though over time, people will adapt.

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<v Speaker 1>When it comes to.

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<v Speaker 5>New markets that are across the US, are you seeing

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<v Speaker 5>more of a build up.

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<v Speaker 1>No, we're not West West Coast.

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<v Speaker 4>Yeah, we're not seeing that much. We're seeing markets start

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<v Speaker 4>to return. I was in San Francisco three times so

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<v Speaker 4>far this year. We're seeing that market start to return.

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<v Speaker 4>We're seeing people on the street, we're seeing buildings start

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<v Speaker 4>to fill up.

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<v Speaker 3>Finally cleaned up Basisi. Are you happy with progress?

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<v Speaker 1>They've made progress. They've definitely made progress.

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<v Speaker 2>One needs to change that. How do they fix this mess?

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<v Speaker 4>I think I think part of it is, you know,

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<v Speaker 4>it's security, it's safety.

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<v Speaker 1>Right.

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<v Speaker 4>People need to feel safe when they're going to work.

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<v Speaker 4>They need to feel safe as they're walking the streets.

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<v Speaker 4>They need to feel safe on the subways and the

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<v Speaker 4>transit systems.

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<v Speaker 3>John it's going to see you, sir, great. Thanks, thank

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<v Speaker 3>you for having me. John Son soa that we work

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<v Speaker 3>CEO