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WeWork IPO Shows It's the Most Magical Unicorn

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Re: WeWork IPO Shows It's the Most Magical Unicorn

#81

Post by mrhappyunhappy »

thrav wrote: post #32
microtherion wrote: post #15

Earlier quoted context omitted.

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…

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…

My own observations of women around me seems to indicate as much. Many smaller purchases while I empty our accounts :)

Re: WeWork IPO Shows It's the Most Magical Unicorn

#82

Post by [deleted] »

danso wrote: post #7

Tangent: 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…

[deleted]

Re: WeWork IPO Shows It's the Most Magical Unicorn

#83

Post by skewart »

kolbe wrote: post #37

What I don't get is how small some of these numbers are. Weren't some of the figures being tossed around valuing it at $40bn? And their revenues are in the low single digit billions. It's one thing to get sucked in by a company like Uber who does $50b+ in rides, and think how valuable they could be if they figured out how to earn a meaningful chunk of that pie, but WeWork earns virtually no money, and exists in one o…

The optimistic case for WeWork is that they have a shot to become an extremely powerful player in the office real estate market. The idea is that they could get to a place where most big companies looking for office space would prefer to do it from WeWork because it's better than leasing directly from a building owner. And most building owners would prefer to lease their space to WeWork because it's better than trying to lease directly - after all, at this point everyone looking for office space is going to WeWork so it's tough to find companies who want to lease directly. Once they're in this position they'll be able to bully building owners into leasing to them at very favorable rates - who else are the owners going to lease to?

The idea is that WeWork can do in real estate what cloud infrastructure-as-a-service providers like AWS and Azure are doing in computing. Most companies find it easier to build on AWS instead of running a data center directly. And data center hardware providers find they kind of have to accept the big cloud providers' terms because they don't have a lot of other people to sell to these days.

In order to believe this optimistic case for WeWork you have to believe that they are providing a useful abstraction on top of leasing office space the traditional way, and you have to believe that they won't face any deadly competition. Personally, I'm skeptical of both of those, but I think the best case for WeWork providing a really useful abstraction hinges on two things: 1) a secular shift in the way people work leading to highly flexible office arrangements (e.g. instantly spin up an office in Berlin, run it for two months, then shut it down) becoming much more attractive; 2) WeWork being able to structure lease terms in ways that are better for corporate accounting somehow (i.e. it's not a better product at the end of the day, but it looks better on the books). The best case for them winning out over competition comes down to them getting such a big lead in the amount of space they offer and brand recognition that nobody can challenge them - hence the rationale for burning a ton of money quickly to open as many locations as possible as soon as possible.

I'm skeptical and I'd argue WeWork is more likely to end up like MoviePass than AWS. (MoviePass had pretty much the same idea and playbook - burn money to get to scale and market power quickly then dictate terms to the suppliers who have been eating into your margins - and it didn't exactly turn out well.) But anything is possible.

tl;dr Long-term investors hope that if WeWork can achieve a dominant position in the global office market then they can increase their margins by both lowering their cost to acquire space and increasing the rents they charge. If they pull that off then they can rake in hundreds of billions of dollars and be worth trillions.

Re: WeWork IPO Shows It's the Most Magical Unicorn

#84

Post by mrhappyunhappy »

dougmwne wrote: post #12
danso wrote: post #7

Tangent: 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…

Ouch, HN showing off its gender bias I guess. Pinterest is also supposed to be popular with dads, so we must be showing off our age bias as well.

Popular with dads? Really? I'd love to see some evidence. I actually though Pinterest died off because I haven't heard anything about it in a long time. There were times long ago where I'd search for some project inspiration, but Pinterest image results felt like a cancer that needed to be removed from existence.

Re: WeWork IPO Shows It's the Most Magical Unicorn

#85

Post by [deleted] »

wallawe wrote: post #13
danso wrote: post #7

Tangent: 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…

Maybe it could be attributed to the fact that the majority of HN users are male while the majority of Pinterest users are female. Interesting observation

[deleted]

Re: WeWork IPO Shows It's the Most Magical Unicorn

#86

Post by tomhoward »

jngreenlee wrote: post #77
tomhoward wrote: post #69

I have a bit of knowledge of the co-working industry. I’m good friends with the founder of the first and long-dominant tech/creative co-working space in my Australian city, and I served on its advisory board in the past couple years, through what turned out to be a distressed sale of the business to its landlord, after it became insolvent and unsalvageable. There are several fundamental flaws with the concept that ma…

I really like your analysis here and it made me think. Ultimately, for control of many of these issues, a localist approach is superior..understand the local culture, etc. Maybe a coworkery in La Jolla would have surfboard racks and a tacit understanding that surfing comes first...so allowance for wet gears (and showers) might be needed. Maybe a location in Boulder has community climbing gear and/or a bouldering wall…

> So, does scale lend _any_ benefit? Certainly the "network" of locations might help...but what % of tenants are really and truely jet-setters off to many major cities, versus those that stay close to home and just need a regular space out of the house. I don't think scale is that vital in this view.

Spot on here. They are building for a world in which everyone is location-and-asset-independent. Don't need a car because we have Uber/Lyft. Don't need a home as we have Airbnb. Don't need an office as we have WeWork. Etc.

But the market of people who live that way is still small, and I think it will always be somewhat small, or at least limited. (It becomes much harder to live that way once you have a family, for example.)

And can they really end up opening spaces in all the places where location-independent, digital nomads want to go - e.g., all those beach resort towns in Thailand and exotic villages in Central/South America?

But even if they do, independent digital nomads are not the people who will sustain the business anyway, as independent freelancers are more costly to acquire and service, and harder to retain. Their bread-and-butter is mid-sized teams (5-20) and satellite staff for interstate/international companies.

They're often described as the Starbucks of office space [1].

But Starbucks doesn't succeed in every region it enters - certainly not ours [2], as we have our own many-decades-old coffee/cafe culture in which people much prefer independent cafes over large chains.

I'm sure this mentality will apply to co-working spaces just as much as cafes, in many places.

[1] https://www.inc.com/sonya-mann/wework-company-year-2017.html

[2] https://www.cnbc.com/2018/07/20/starbucks-australia-coffee-f...

Re: WeWork IPO Shows It's the Most Magical Unicorn

#88

Post by kjksf »

dikdikvandik wrote: post #78
tomhoward wrote: post #69

I have a bit of knowledge of the co-working industry. I’m good friends with the founder of the first and long-dominant tech/creative co-working space in my Australian city, and I served on its advisory board in the past couple years, through what turned out to be a distressed sale of the business to its landlord, after it became insolvent and unsalvageable. There are several fundamental flaws with the concept that ma…

This is really interesting. What are the profit margins like? Can't imagine it would be easy to substantially undercut any traditional office space.

It's almost a different business like AWS vs. colocation of your own servers.

Traditional office space is long term leases.

Coworking spaces give you month-to-month.

With traditional office space, you're responsible for maintenance, like cleaning. You have to hire people and manage them.

Coworking spaces do cleaning for you.

Coworking spaces also try to do more things for their customers, like hosting events.

Yes, you probably pay more (although there are economies of scale) but the product you get is different enough that direct price comparisons are not applicable.

Re: WeWork IPO Shows It's the Most Magical Unicorn

#89

Post by erikpukinskis »

tomhoward wrote: post #86
jngreenlee wrote: post #77

Earlier quoted context omitted.

I really like your analysis here and it made me think. Ultimately, for control of many of these issues, a localist approach is superior..understand the local culture, etc. Maybe a coworkery in La Jolla would have surfboard racks and a tacit understanding that surfing comes first...so allowance for wet gears (and showers) might be needed. Maybe a location in Boulder has community climbing gear and/or a bouldering wall…

> So, does scale lend _any_ benefit? Certainly the "network" of locations might help...but what % of tenants are really and truely jet-setters off to many major cities, versus those that stay close to home and just need a regular space out of the house. I don't think scale is that vital in this view. Spot on here. They are building for a world in which everyone is location-and-asset-independent. Don't need a car beca…

> Don't need a home as we have Airbnb. Don't need an office as we have WeWork. Etc.

> But the market of people who live that way is [A] still small, and [B] will always be somewhat small

I agree with A, but not B. To me this is a classic disruptive tech scenario. Right now living in hotels and working in coffee shops is strictly worse than having a home and an office for almost everyone.

A few people who have very special needs are well served by coworking.

However, all of the different metered rental propositions (metered office rental, metered car rental, etc) offerings are getting better and better. They are all pretty bad but you can imagine what it would take for them to be great.

Will those experiences eventually catch up to long term home/office leases? Maybe. If enough services like that get good you open up interesting possibilities like a company that only exists for a week but can do everything a fixed company can do.

I find it difficult to predict what can and can’t happen here, so I think your “people will never want this” assessment is too hasty. If there are enough early adopters who will hold on and provide feedback and a small amount of revenue, that could produce something quite compelling over the next decade.

Re: WeWork IPO Shows It's the Most Magical Unicorn

#90

Post by brokensegue »

laurex wrote: post #74
lifeisstillgood wrote: post #39

The City of London is having a skyscraper boom at the moment - two major 100+ floor buildings are going up and you can hardly turn a corner without some crane or building work going on. I personally (and without any empirical evidence) think that there is no way London needs this much more office space, partly because "Brexit China Tariffs", but mostly because remote working and "just not in the office five days a we…

I had a previous job where the owner bought a building in NYC and made the top floors apartments, one of which I was offered at a low rate. I am very glad I said no, because imagine the golden handcuff scenario of having a below-market place to live ONLY if you keep working for a person/company who, at least in that case, turned out to be pretty creepy.

Doesn't FB own nearby housing that it rents to its employees
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