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WeWork's woes dominated the financial news last year. Now, itsissues may bring more scrutiny on startups in real estate,according to Cody Vichinsky, co-founder of Bespoke Real Estate.

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"You see this golden child, like WeWork, that on paper lookslike it's a game-changing business model," Vichinsky says. "Then itfails, and the investment that went into it was just unbelievable.How, after all that investment—they have billions of dollars toplay with—are they collapsing?

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If anything good came out of WeWork's problems, it madeconsumers and investors more skeptical of the models used by theseunicorns.

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"I think it's a good thing for businesses that are extremelydisciplined and are old school in the way that they manage theirbalance sheets and offer value to their employees," Vichinsky says."I never understood the concept of massive investments going into acompany that's not even profitable in the hopes that it will be. Ithink it's a big wake up call, not just for the real estate sector,but in general." That said, Vichinsky says he isn't opposed tochange or new ideas.

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"You're seeing an influx of very creative, very smart people whoare trying to come up with a formula or several formulas that areeventually going to change the way the business functions,"Vichinsky says. "But I think WeWork and a lot of these other'unicorn companies' shed light on the fact that a lot of this stuffis smoke and mirrors and a lot of it just doesn't make anysense."

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Another problem with some of these new entrants is, according toVichinsky, they don't add anything new to the mix.

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"Real estate is the last frontier in which real disruption hasyet to take place," Vichinsky says. "It still operates on a lot ofthe fundamentals that it did a century ago."

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Vichinsky thinks a lot of these companies would fair better ifthey focused on the basics.

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"You have to focus on the actual architecture of the model andseeing how it can offer more value to the consumers or have ahigher margin," Vichinsky says. "Or else, you're going through thesame motion, and it's just the same bag of tricks with a differentface."

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Being the brokerage business, Vichinsky has been closelyfollowing Compass. The brokerage firm drew scrutiny when it laidoff 40 people, about 1.6 percent of its staff.

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"They're going on a shopping spree through acquisition,"Vichinsky says. "A lot of people scratch their head and say, 'Youknow, they've spent a tremendous amount of money, the burn rate oncapital is fantastic, and the splits that they're offering to theseagents are huge. So, what's the long-term sustainability?'"

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Leslie Shaver

Les Shaver has been covering commercial and residential real estate for almost 20 years. His work has appeared in Multifamily Executive, Builder, units, Arlington Magazine in addition to GlobeSt.com and Real Estate Forum.