Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

How Did WeWork’s Adam Neumann Build a $47B Company?

nymag.com

Post reply on HN
Print view View original

201–210 of 212 posts

Re: How Did WeWork’s Adam Neumann Build a $47B Company?

#201

Post by tptacek »

scarface74 wrote: post #181
tptacek wrote: post #82

Earlier quoted context omitted.

I'm not a believer in WW's business model, but this is an overly-cynical take. We're a company that "started" in WeWork, have our own office now, and in fact moved a different office of ours from a private space in Long Island to a WeWork in Manhattan. What WeWork offers to small businesses is quite valuable: an instantly-obtainable month-to-month lease, at relatively reasonable rates, with all standard office amenit…

It does not, on the other hand, seem fair to suggest that WeWork isn't offering something that people want. If WeWork isn’t charging people enough to be profitable, there is no way of knowing whether WeWork is offering something people want - at a price they are willing to pay.

That is indeed a good summary of the 3rd graf of my comment.

Re: How Did WeWork’s Adam Neumann Build a $47B Company?

#202

Post by rightbyte »

Bakary wrote: post #187
rpmcmurphy wrote: post #157

Ah, the magic of financial engineering. Mr. Neumann will cash out of his fictional decacorn in dribs and drabs and never have to work again. Everyone else will be left with a bit pile of shit (aka a commercial real estate venture that bet on ever upward growth and got ripped to shreds in the secular downturn).

It's not like they were working hard to make the world a better place, but investing in the hopes that they would be richer without too much work. It's hard to feel sorry for them. They are on the same level as Neumann but he happened to be cannier.

The laught is on us when pension founds buy at the IPO.

Re: How Did WeWork’s Adam Neumann Build a $47B Company?

#203

Post by puranjay »

rchaud wrote: post #116
spaceman_2020 wrote: post #37

Earlier quoted context omitted.

So many of these unicorns seem so stupidly simple in hindsight. I'm in St Petersburg right now and the taxi outside the train station quoted an initial rate of EUR 50 to drive a grand total of 6km (after haggling, "just" EUR 30). I booked an Uber (operated under Yandex Taxi in Russia now) and the total price was just EUR 5 Take stodgy, often scammy, and downright consumer unfriendly industries, add transparency and a…

> So many of these unicorns seem so stupidly simple in hindsight. The "stupidly" part comes in when you realize that maybe the cabbie had a better grasp of the economics of his business when he accepted your bid of 30 EUR. The gig economy people driving you for a fraction of the 5 EUR you paid might come to the same conclusion sooner or later.

I've traveled widely enough to know that at least at tourist centers, airports and train stations, the traditional cab driver business model is built on scamming unsuspecting tourists.

Re: How Did WeWork’s Adam Neumann Build a $47B Company?

#204

Post by puranjay »

JohnJamesRambo wrote: post #159
delfinom wrote: post #39

Earlier quoted context omitted.

At the same time, just because large companies are renting space doesn't mean they are still profitable. In fact one can argue that WeWork may be underpriced enough that it attracts said companies to exploit it.

Reminds me of when Michael Scott tried to start his own paper company and was selling paper so low it was bankrupting his company. He didn’t understand it until an accountant consultant type pointed it out.

But hey, he got a $60k exit and landed back in an "executive" role at the company. Now that I think about it, that episode was prophetic of the startup scene

Re: How Did WeWork’s Adam Neumann Build a $47B Company?

#205

Post by puranjay »

sokoloff wrote: post #176
xkcd-sucks wrote: post #125

Earlier quoted context omitted.

Real estate is a real pain in the ass for small startups; it eats up like several man-months of companies that have no people dedicated to stuff like this. I do think wework is bullshit, but thinking back to the process of moving a company your point makes sense. And in earlyish-stave companies the CEO / bigwigs are most involved with moving and corporations' decisions are no more economically rational than those of…

WeWork is better than opening a satellite office in pretty much the same way that renting a hotel room is better than buying a house in a location that you're visiting. Once you've proven you have traction and it's going to be sustained, it makes sense to transition to your own real estate (owned or leased), but in the early days, it's better to wildly "overpay" for temporary, flexible, easy space.

WeWork, at least in my area, has also picked office spaces right next to metro stations. This real estate is hard to find and several of the companies working out of WeWork advertise how they're located right next to the metro exit.

I'm just saying that this entire community feels very bearish on WeWork, but there is some method to their madness

Re: How Did WeWork’s Adam Neumann Build a $47B Company?

#206

Post by zimpenfish »

bigzyg33k wrote: post #196
zimpenfish wrote: post #167

Earlier quoted context omitted.

> it was just terrible. Tiny offices, lots of visual distractions, lots of noise, many parties. I wouldn't ever do it again. Same (London, Shoreditch). Additionally we had relatively frequent and loud noises from the ceiling ("eeeeeNNGNGNGNGNGNNG") which they couldn't fix. But not once did they suggest we move offices to any one of the 30+ empty ones downstairs.

I actually know why this is! If you're referring to the WeWork I think you are, it shares a building with Scape, a student accommodation I used to live in - the kids who live there are fairly loud, and the plumbing is quite weird and noisy

Yeah, that's what the engineers claimed but then it was only happening in our small office and it would alternate between "very frequent" and "gone for days" which makes their explanation somewhat unbelievable.

Re: How Did WeWork’s Adam Neumann Build a $47B Company?

#207

Post by Traster »

dmode wrote: post #27

The biggest revenue opportunity for WeWork is big corporations opening smaller office location in cities where just want to staff a small field office or operations office. Example, Uber opening an office in let's say Columbus. Now instead of Uber going on a real estate hunt, they can simply rent out space in WeWork Columbus which gives them flexibility to scale or shrink depending on business. It is essentially abst…

I'm sorry but I don't see how what you're describing is different to any of the existing office rental companies out there and if WeWork were valued like them it'd be a completely different story.

Re: How Did WeWork’s Adam Neumann Build a $47B Company?

#208

Post by JohnJamesRambo »

puranjay wrote: post #204
JohnJamesRambo wrote: post #159

Earlier quoted context omitted.

Reminds me of when Michael Scott tried to start his own paper company and was selling paper so low it was bankrupting his company. He didn’t understand it until an accountant consultant type pointed it out.

But hey, he got a $60k exit and landed back in an "executive" role at the company. Now that I think about it, that episode was prophetic of the startup scene

Hahaha I didn't even think about that.

Re: How Did WeWork’s Adam Neumann Build a $47B Company?

#209

Post by ralph84 »

scarface74 wrote: post #180
ralph84 wrote: post #145

Earlier quoted context omitted.

I agree WeWork is overvalued, but the whole thesis behind an index fund is you can’t reliably pick winners and losers. If you can, there’s no need for an index fund. There were plenty of naysayers calling FANG overvalued at their IPOs as well. If you didn’t hold those stocks for the last 10 years you missed out on most of the overall market’s gains.

No there really weren’t people saying FANGs were overvalued at their IPOs. Facebook - was profitable and only IPOd because they had to. They had too many investors. Apple - IPOd in the 80s Amazon - maybe Netflix - wasn’t seen as a tech company. Their business was just shipping DVDs. Google - was a clear leader and already profitable at their IPO.

We can leave Microsoft and Apple aside because their IPOs were so long ago, but there were certainly many periods in their history where a "tech savvy" investor would have wanted to drop them from an indexed portfolio because growth had stalled and they had no exciting new products on the horizon to justify their valuation.

On to FANG IPOs. If there weren't people saying they were overvalued at their IPO, their underwriters would have done a very bad job.

Facebook[0] - 'The problem is that the smart money on Wall Street simply doesn't think the company's prospects justify the $105 billion that the offering price implied. And no wonder. That values the company at 108 times 2011 earnings, requiring almost ridiculous financial growth to make sense.'

Amazon[1] - 'Online bookseller Amazon.com's push to sell some 3 million shares for as much as US$13 per share would value the company at $300 million - a pretty penny for a firm that lost about $6 million last year. And Amazon.com's prospectus suggests those losses could grow larger. Bill Bass, an analyst at Forrester Research, attributed the high valuation to "Internet inhalant" - the extra high that Net-related stock offerings can carry with investors. "Some people smoke Internet inhalant and their judgment gets bizarre," Bass said.'

Netflix[2] - 'Netflix is not profitable with an accumulated deficit of $141.8 million. The company had $4 million in operating losses on $30.5 million in revenue for the quarter ended March 31 on $20.4 million in operating losses on $17.1 million in revenue for the same time period the year before.'

Google[3] - '"Although Google enjoys faster growth and higher profitability, we see several risks to its valuation, which may mean the stock ultimately trades at a discount to its peers," says Susquehanna Financial Group analyst Marianne Wolk.'

[0] - https://www.sfgate.com/business/article/Facebook-IPO-undersc...

[1] - https://www.wired.com/1997/03/amazon-com-high-on-ipo-so-is-i...

[2] - https://money.cnn.com/2002/05/23/markets/ipo/ipos/index.htm

[3] - https://knowledge.wharton.upenn.edu/article/lessons-from-goo...

Re: How Did WeWork’s Adam Neumann Build a $47B Company?

#210

Post by nolok »

wetpaws wrote: post #188
thedrbrian wrote: post #124

Earlier quoted context omitted.

Even worse Uber might have paid the cabbie another €5 to take the job.

$10 is still less than $30

Add the taxes, add the commercial insurances (how many Uber has one?), add the much higher maintenance for a car that runs all day every day,...

Just because those drivers don't factor in things in legal or financial hindsight doesn't mean they won't need it, or that it won't go seriously wrong when that need gets called on.

Post reply on HN