Market will teach these companies a lesson
Right after their sleezeball CEO and all their VCs cash out, leaving small time investors holding the garbage at the end.
WeWork IPO Shows It's the Most Magical Unicorn
51–60 of 176 posts
Re: WeWork IPO Shows It's the Most Magical Unicorn
#52WeWork's business model makes more sense when you realize it's probably just a scheme for transferring VC money directly into Adam Neumann's pocket. He owns a number of the buildings that WeWork is leasing: https://www.bizjournals.com/sanjose/news/2019/01/16/wework-c...
No longer true; he transferred them to a fund owned by the company:
https://www.businessinsider.com.au/wework-ark-fund-to-buy-co...
Re: WeWork IPO Shows It's the Most Magical Unicorn
#53Tangent: the article includes a chart titled "Unicorns Gored" with the caption, "Many of the highly valued young technology companies have not done well as public companies". It features 9 relatively recent tech IPOs, including Lyft, Dropbox, Spotify, and Snapchat. All of the companies have a negative delta in terms of initial stock price, from -47% to -2%, except for Pinterest, which is +77%. I actually had forgotte…
I think there's an irritation at Pinterest clogging up search engine results, which may lead to some antipathy towards it on HN.
Re: WeWork IPO Shows It's the Most Magical Unicorn
#54Earlier quoted context omitted.
Don’t want to overgeneralize, but women seem to be more likely consumers (of things) & regular users of social media. [I’m sure niche exceptions abound] I don’t know if anyone has run the numbers, but I’d expect ladies to more valuable on all kinds of KPIs of a good customer. My feel is that men gravitate towards large purchases around a hobby or two (bikes, outdoors, cars, computers, video games). While women are mo…
The stats do back you up on this point. Women make about 80% of purchasing decisions in the US [0]. [0] https://health.oliverwyman.com/2019/01/women-in-healthcare-m...
That article is specifically about healthcare, where women are 65% of the workforce (according to the same link).
Re: WeWork IPO Shows It's the Most Magical Unicorn
#55Tangent: the article includes a chart titled "Unicorns Gored" with the caption, "Many of the highly valued young technology companies have not done well as public companies". It features 9 relatively recent tech IPOs, including Lyft, Dropbox, Spotify, and Snapchat. All of the companies have a negative delta in terms of initial stock price, from -47% to -2%, except for Pinterest, which is +77%. I actually had forgotte…
Another way in which Pinterest is an outlier in this list is that its user base skews heavily female (>80% according to one source: https://www.omnicoreagency.com/pinterest-statistics/ ). I wonder whether some "Moneyball Factor" could be at work, in that this led to it being underpriced for its potential. Snapchat users also skew somewhat female, but they are also quite young compared to other sites, and "youth" may…
Young women are paying dividends apparently, check out the Becky / Basic index - performance year on year is spectacular.
Re: WeWork IPO Shows It's the Most Magical Unicorn
#56Magical indeed. From the chart in the article it looks like for the most recent half-year they were paid $1.35B in rent and spent $1.23B to operate their properties, which works out to just $120MM in operating income for the year, let's say $250MM for the year. Per the S1 they already have around $4B of debt which looks like it costs them about $80MM per year in interest. That leaves about $170MM in plausible "earnin…
Digging into those other costs is informative as well, the numbers for 2018: Pre-opening location expenses $350MM Growth and new market development expenses $475MM Sales and marketing expenses $370MM One could make some sort of argument that the first two categories are long-term investments, but the last one really stands out to me: they spent $37 on sales and marketing for every $25 they "earned".
But I am sure they have great parties.
Re: WeWork IPO Shows It's the Most Magical Unicorn
#57I feel like something must be seriously wrong with capitalism if it can keep creating these startups and funnelling endless hundreds of milions into them so they can accumulate debt, lose money, and achieve absolutely nothing of value.
I loved working at WeWork in Singapore for my remote ex-employer, and will definitely do it again with my own cash if I need to work by myself. All the other Coworking spaces (a dime a dozen in this town, I tried them all) had issues with something or the other.
I think they do create something of value, and so do ridesharing companies (I love using them and hate the experience of hunting for taxis).
Maybe it’s incorrect to look at just short term revenue/profit figures when deciding if these companies are creating wealth for their users...
Re: WeWork IPO Shows It's the Most Magical Unicorn
#58Zoom is also up 50% since it went public in April, and Crowdstrike is up 70%. I don't really get the sense in comparing a bunch of companies with disparate financials and very different industries. The We Company is a real estate company trying to convince people it's a tech company. This list mixes B2C and B2B companies, SaaS platforms with monthly recurring revenue with companies with advertising-based business mod…
I would expect something described as a real estate company to be long, well, real estate. As I understand it We is short real estate.
Re: WeWork IPO Shows It's the Most Magical Unicorn
#59Magical indeed. From the chart in the article it looks like for the most recent half-year they were paid $1.35B in rent and spent $1.23B to operate their properties, which works out to just $120MM in operating income for the year, let's say $250MM for the year. Per the S1 they already have around $4B of debt which looks like it costs them about $80MM per year in interest. That leaves about $170MM in plausible "earnin…
Digging into those other costs is informative as well, the numbers for 2018: Pre-opening location expenses $350MM Growth and new market development expenses $475MM Sales and marketing expenses $370MM One could make some sort of argument that the first two categories are long-term investments, but the last one really stands out to me: they spent $37 on sales and marketing for every $25 they "earned".
Their sales and marketing was $370m/$1350m or 27% of revenue. Is that in line with industry norms?
I think it makes little sense to express Sales & Marketing expense as a percentage of Net Income...
You could express it in terms of New Revenue Growth, to get a feel for customer acquisition cost, and then look at churn to get a feel for lifetime value and payback periods... if you wanted to analyze them like a "SaaS" type business.
Re: WeWork IPO Shows It's the Most Magical Unicorn
#60Earlier quoted context omitted.
Digging into those other costs is informative as well, the numbers for 2018: Pre-opening location expenses $350MM Growth and new market development expenses $475MM Sales and marketing expenses $370MM One could make some sort of argument that the first two categories are long-term investments, but the last one really stands out to me: they spent $37 on sales and marketing for every $25 they "earned".
Their sales and marketing was $370m/$1350m or 27% of revenue. Is that in line with industry norms? I think it makes little sense to express Sales & Marketing expense as a percentage of Net Income... You could express it in terms of New Revenue Growth, to get a feel for customer acquisition cost, and then look at churn to get a feel for lifetime value and payback periods... if you wanted to analyze them like a "SaaS"…
What industry are we talking about? Most commercial real estate used for offices spends almost nothing on marketing (they put a sign in the window perhaps).
I don't think SaaS is at all relevant. Typical SaaS gross margins are upwards of 60%. WeWork's gross margins are under 10%.
Edit: found a source[1] that states "5% of broker’s cut is standard" for commercial real estate marketing expenses, with a broker getting about half of the commission which is around 2.5%. Even if you went with 10% of a 10% commission rate that would only be 1% of the total.
[1] https://www.calicomarketing.com/commercial-real-estate-budge...