today, where do you, where do you see whats your main focus, your, your markets? Is it U.S.? Is it global? And then in the U S at least, lets say for the next five years, maybe there
is a 10 year view, but the next three to five years, where do you see the key market positioning?
Sandeep Mathrani:
So youre absolutely right I mean the company in 2018, 2019 grew at any cost, right? I mean that was just sort of what they did. They grew very fast in
certain markets, maybe saturated in certain markets on the negative. On the positive, they also entered, or WeWork also entered into secondary markets like Nashville, Austin, Denver, Miami, Charlotte, Birmingham, Manchester, you know, just a whole
bunch of, I used the word secondary markets and that sort of gives us a foothold there. So the way we look at it is, you know, by the end of the second quarter, hopefully the rationalization of our real estate portfolio will be complete. Were
near complete now. Okay, well be absolutely complete. And from that point on the way I look at it over the next 12 months, itll be stabilizing occupancy and these properties.
Sandeep Mathrani:
And if you stabilize occupancy and you get
into that 80, 85% occupancy essentially you get back to that sort of five-ish billion dollars of revenue, giving us about a billion dollars of free cash flow. Again, weve been at 80, 85% occupancy
throughout WeWorks tenure except for the pandemic. So I think my near term focus, you know, over the next 12 months is to focus on what I have and stabilize it. The secondary aspect of it is to build the all access product, which is our
digitization of real estate, where you can find a subscription and visit any one of our properties, which has been highly successful. We have over 15,000 members in that aspect. And the third aspect is what Im getting to is, you know, do we
get into an asset light business which will be more management agreements, joint ventures and which weve already done even though we dont talk about it quite a bit, but how do we grow that business? And in growing that third part of the
business, you know, which of the markets we look at, I would say the big markets, you know, they there may be strategic growth areas in certain pockets, if you will, but I would say the big cities whether it be the Londons the Pariss,
the New Yorks Bostons, Washington DCs, Chicago, LA San Francisco. I think we are in pretty good shape at least for the next three to five years. Like I said, you might see pockets and you might see us open new stock where weve
already signed leases two years ago, but not a good way of doing anything new in any form of scale in those markets.
Sandeep Mathrani:
We might focus on the boroughs of New York city we think are underserved like Brooklyn, you know, we still still believe its underserved, but yes, we
will look a lot more if the secondary markets, you know, continue to grow Nashville, grow Charlotte, grow Raleigh-Durham, grow Miami, grow Munich in Europe, grow Manchester. So, I think theres enough growth areas, and by the way, they may be
even smaller markets in the US as we start to see enterprise demand going, We are slightly different than our peers in a way, because our average size of a location is about a hundred thousand square feet and we can accommodate about a thousand
people, our peers generally about 35,000 square feet.
Sandeep Mathrani:
So we compete with them for 15,000 square feet or less, but 15,000 square feet to 100,000 square feet, if youre looking for a flexible provider WeWork is
the only place to provide flexibility, or you go to the subleased pocket, right? Or you go to a direct lease market, but if youre looking for short-term two-year lease, its hard to make the
investment for a two year lease. And then we are a turnkey solution, so when I talk about that, I look at the small markets that we dont want to pursue unless we can build an operation of scale in a market, right? If you cant build out a
hundred thousand square feet in the market in one or
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