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WeWork Gets a Visit from Financial Reality

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Re: WeWork Gets a Visit from Financial Reality

#61

Post by colmvp »

grogenaut wrote: post #51
vinceguidry wrote: post #28

I hope they make it through. I have a WeWork right in walking distance and would love to work there regularly if I ever get a remote job.

What is attractive to you about it? Serious question, I’ve worked in their spaces before but we leased an entire floor and I wasn’t wowed or pissed at it. What makes you excited?

I co-work in one. The people who also co-work there are friendly, and they do have good amenities. Honestly, they upped the game of co-working spaces in my city. I don't work consistently in the office to warrant renting my own office space but I wanted a place where I could socialize instead of getting cabin fever at home. Starbucks / Cafes aren't really conducive to talking to random people either.

Re: WeWork Gets a Visit from Financial Reality

#62

Post by leesec »

zrobotics wrote: post #47
projectramo wrote: post #19

Earlier quoted context omitted.

You're right on Tesla and WeWork, but not on Uber. Uber doesn't buy and own the car, which means it requires much less capital. This small change has many implications, and the tech helps solves many of the problems that come up. I am not saying it is properly valued (over or under or whatever). Just that given the choice between an Uber (or Lyft or yourlocalapp.com) or a cab company with the same fleet, customers, a…

What sort of moat does Uber have, though? Sure, it was a slight annoyance to sign up for lyft when they moved into the city my mom lives in, but that was ~5 minutes of annoyance and some phone data. I don't care at all about Uber, there's very little customer loyalty. How will they defend their valuation if the self driving project doesn't pan out?

Even with self driving, there's effectively no difference to the consumer in experience/product whether the car drives it self or someone else does.

Re: WeWork Gets a Visit from Financial Reality

#63

Post by mcguire »

simias wrote: post #56
scandox wrote: post #5

Earlier quoted context omitted.

In 1999 there was an email going round about how ridiculous dotcom valuations were. Taking Amazon, I think, as an example it said it would have to earn more than Kodak, Boeing, Caterpillar etc to ever be worth it's valuation. There was a general sense of "it's just a bookstore". Now I know everything is more mature and the situation is different, but I also remember feeling very confident that Amazon was waaay overva…

Hindsight is 20/20. Maybe people in 1999 were wrong about Amazon but they were right about Pets.com and many others, your comment is just an example of survivorship bias. I mean, I'm sure you're not trying to argue that dotcom valuations weren't generally ridiculous. Besides, Amazon, Kodak and Boeing were never exactly in the same market. The parent is comparing companies that ostensibly offer similar services. If I…

On the other, other hand, Amazon sends currently very overvalued as a retail company. (I haven't looked at the comparative sizes of its various components.)

How long before Amazon sounds of its retail business?

Re: WeWork Gets a Visit from Financial Reality

#64

Post by [deleted] »

jon-wood wrote: post #22
_the_inflator wrote: post #13

Earlier quoted context omitted.

I don't agree with the "rubbish part". WeWork single handedly changed the way we work. It is way easier to build a tech startup with the help of a co-working space company than before. I suspect that WeWork's business model ain't the problem but it's competitors, for example in London, UK. Competition drives prices for new real estate, crashed margins.

This makes very little sense to me. They haven't "changed the way we work", they've just stuck an attractive brand on shared office space. Every city in the UK has at least one Regus building where you can rent managed office space on short term leases, they just don't also throw in copious amounts of free drink and an atmosphere more like a college party than a workspace.

[deleted]

Re: WeWork Gets a Visit from Financial Reality

#65

Post by jamesash »

_the_inflator wrote: post #13
Traster wrote: post #4

>The Gulf investors backing the Vision Fund seem to have decided that WeWork is not a tech bet but simply an aggressive punt on real estate. This is the bogey man of a huge number of current 'tech startups' - What if it turns out Tesla really are a car company! Or if We Work are actually an office rental company! OR gasp Uber is a cab company! (1) We now have a glut of companies operating in traditional markets that…

I don't agree with the "rubbish part". WeWork single handedly changed the way we work. It is way easier to build a tech startup with the help of a co-working space company than before. I suspect that WeWork's business model ain't the problem but it's competitors, for example in London, UK. Competition drives prices for new real estate, crashed margins.

Regus is valued at about 10k per desk. Wework is valued at about 160k / desk (August 2017 numbers, see Aug 25 2017 WSJ).

What does Wework do that Regus doesn't, that accounts for 16x the value?

Re: WeWork Gets a Visit from Financial Reality

#66

Post by rafiki6 »

scandox wrote: post #5
Traster wrote: post #4

>The Gulf investors backing the Vision Fund seem to have decided that WeWork is not a tech bet but simply an aggressive punt on real estate. This is the bogey man of a huge number of current 'tech startups' - What if it turns out Tesla really are a car company! Or if We Work are actually an office rental company! OR gasp Uber is a cab company! (1) We now have a glut of companies operating in traditional markets that…

In 1999 there was an email going round about how ridiculous dotcom valuations were. Taking Amazon, I think, as an example it said it would have to earn more than Kodak, Boeing, Caterpillar etc to ever be worth it's valuation. There was a general sense of "it's just a bookstore". Now I know everything is more mature and the situation is different, but I also remember feeling very confident that Amazon was waaay overva…

Who says that feeling was wrong? At that time, Amazon was a moonshot gamble. Lots of very important things needed to line up for it to be successful, primary of which was investor confidence in a company that didn't turn a profit for most of it's existence. I still think Amazon is overvalued and the market will correct it at some point.

Re: WeWork Gets a Visit from Financial Reality

#67

Post by wernercd »

scandox wrote: post #5
Traster wrote: post #4

>The Gulf investors backing the Vision Fund seem to have decided that WeWork is not a tech bet but simply an aggressive punt on real estate. This is the bogey man of a huge number of current 'tech startups' - What if it turns out Tesla really are a car company! Or if We Work are actually an office rental company! OR gasp Uber is a cab company! (1) We now have a glut of companies operating in traditional markets that…

In 1999 there was an email going round about how ridiculous dotcom valuations were. Taking Amazon, I think, as an example it said it would have to earn more than Kodak, Boeing, Caterpillar etc to ever be worth it's valuation. There was a general sense of "it's just a bookstore". Now I know everything is more mature and the situation is different, but I also remember feeling very confident that Amazon was waaay overva…

How many "over valued" "Amazons" died? Compared to the Unicorns like... well... Amazon?

It's like saying "All houses built in 1900 are built SOLID because look at all the 100 year old houses that still exist" and then completely ignoring all the 100 year old houses that don't exist...

Hell, look at the companies that were undervalued. GIANTS! Companies that will never fall... like, say, Blackberry and Palm?

Re: WeWork Gets a Visit from Financial Reality

#68

Post by JumpCrisscross »

bryanlarsen wrote: post #25
ironcan wrote: post #8

Earlier quoted context omitted.

On the flip side, if it wasn't Amazon mentioned but pets.com, they were entirely right.

I guess the right question is, was a basket containing Amazon.com, pets.com and all the rest overvalued? Amazon is up about 15X since its peak before the crash, the dow is at 3X over the same period. So as long as AMZN was >= 20% of your basket, then it was fairly valued. Sounds about right.

> was a basket containing Amazon.com, pets.com and all the rest overvalued?

Yes. This has been extensively studied. Almost every investor who deployed new capital in the late 90s lost money on those investments.

> as long as AMZN was >= 20% of your basket

You’d have to torture causality to come up with a portfolio that would have made sense in the 90s and would have been 20%+ Amazon. It wasn’t even in the top 10 most valuable public companies by market cap [1].

[1] https://en.m.wikipedia.org/wiki/List_of_public_corporations_...

Re: WeWork Gets a Visit from Financial Reality

#69

Post by cafard »

scandox wrote: post #5
Traster wrote: post #4

>The Gulf investors backing the Vision Fund seem to have decided that WeWork is not a tech bet but simply an aggressive punt on real estate. This is the bogey man of a huge number of current 'tech startups' - What if it turns out Tesla really are a car company! Or if We Work are actually an office rental company! OR gasp Uber is a cab company! (1) We now have a glut of companies operating in traditional markets that…

In 1999 there was an email going round about how ridiculous dotcom valuations were. Taking Amazon, I think, as an example it said it would have to earn more than Kodak, Boeing, Caterpillar etc to ever be worth it's valuation. There was a general sense of "it's just a bookstore". Now I know everything is more mature and the situation is different, but I also remember feeling very confident that Amazon was waaay overva…

Yes, but then Palm had a higher market cap than the rest of 3Com, which owned 80% of it. https://en.wikipedia.org/wiki/3Com#1997%E2%80%932000

Re: WeWork Gets a Visit from Financial Reality

#70

Post by gizmo385 »

sky_rw wrote: post #39
sachinprism wrote: post #9

I feel like WeWork would be one of the first companies to go under in case a recession hits the US market. Everyone who works there is probably going to decide en masse that they can do the same things from home or a Starbucks

Or better yet, realizing spending $60k/year for three years on over-priced month to month office space is not always a better solution than signing an old-school lease.

Where do you see this 60k/year figure? Estimates that I'm don't even come /close/ to 60k/year for a WeWork space.
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