WeWork IPO Shows It's the Most Magical Unicorn • Hacker News Board

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

#121

Post by dillondoyle » Thu, Aug 15, 2019, 4:13 AM UTC

zaroth wrote: post #59

femto113 wrote: post #43

Earlier 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"…

Maybe that 'sales and marketing' figure includes discounts on rent to gain new tenants?

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

#122

Post by themagician » Thu, Aug 15, 2019, 5:22 AM UTC

mikeg8 wrote: post #105

ghobs91 wrote: post #51

Earlier quoted context omitted.

Right after their sleezeball CEO and all their VCs cash out, leaving small time investors holding the garbage at the end.

I’ve never understood this point of view. Shouldn’t every investor, regardless of scale, bear responsibility for their investments? If by small investors you mean regular employee 401Ks, controlled by the wealth management division of a bank, with a heavily diversified portfolio, that is still a risk the “investor” may be fine accepting. I don’t really feel bad for anyone losing money when they actively put it into a…

The thing is that most people don’t know what they are doing.

The 401(k) is the only retirement program we have. At the end of the day when companies go public and then go bust the money is often coming from the collective public in some way.

You are right, it’s a very small detail. But it’s one of those cogs that turn while making the rich richer by extracting value from the public.

The founder of this company is a billionaire. A man that runs a company which makes no money is a billionaire. Where did the money ultimately come from? Who pays the bill? He’s added no value to society by any objective measure, he’s just taken.

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

#123

Post by Phillipharryt » Thu, Aug 15, 2019, 5:26 AM UTC

lifeisstillgood wrote: post #48

professorTuring wrote: post #45

Earlier quoted context omitted.

> [...] perhaps floors 1-20 as office and 20-40 as apartments or something, will almaot certainly be a feature of the next twenty years. Please be wrong, please, please, please... If I just can telecommute I don't want my workspace being my live space and my neighbours being my coworkers. That can may be a thing if you are living by your own, living in a foreign city and without family. I can't see it other way.

Skyscrapers are only getting bigger. And while "walkability" and "going outside" are really important so too is density and density can breed innovation. It's why weird companies with funny CEOs might try things that a serviced office corporation might not and might build an environment that's better for us all. It would be rare I admit.

Ever read or watched High Rise by JG Ballard? Afterwards you might not be so keen on living in the same skyscraper as you work.

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

#124

Post by JamesAdir » Thu, Aug 15, 2019, 5:38 AM UTC

As much as I love reading all the commenets here that try to use rational and great thoughts about WeWork, they forget one thing - this company for a very long time is a classic pump and dump. Even the founder sold stocks just a while ago. There is no business reason, unique technology or anything else that will even try get close to the numbers of this company. I just hope that when it collapses it will be contained and not affect the entire technology sector.

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

#125

Post by prawn » Thu, Aug 15, 2019, 6:21 AM UTC

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…

Smaller-scale co-working is also more affordable. You don't usually have a community manager for one thing. You don't impress people with fit-out or free beer or whatever. You just provide a likeable, reasonable space for people to share.

I co-own a 15-18 desk space and while we have churn, our setup costs were not especially high, we don't have staff (we are tenants ourselves) and we largely ignore the competition. We would be one of the more expensive spaces but uncompetitive on facilities/services - I think we have attracted people because we're simpler and quieter.

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

#126

Post by adrianN » Thu, Aug 15, 2019, 6:51 AM UTC

discodave wrote: post #119

School-Cotton wrote: post #102

Earlier quoted context omitted.

Maybe it could work for founders, but as an employee I would absolutely not sign on to a company whose space is a garage. First of all, it signals precariousness and non-seriousness. Second, I can get a job at any number of companies in more comfortable settings, so why shouldn’t I? Maybe part of the difference is related to supply and demand: potential employees have other opportunities, so why should they make sacr…

> I would absolutely not sign on to a company whose space is a garage. First of all, it signals precariousness and non-seriousness So you would have avoided Apple and Amazon then?

They would also have avoided a million companies you never heard of.

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

#127

Post by randomsearch » Thu, Aug 15, 2019, 6:52 AM UTC

School-Cotton wrote: post #103

TazeTSchnitzel wrote: post #41

I 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.

Even if that’s true, why should it bother you that money is being extracted from rich VCs and distributed to other rich people in the worst case, and working- and middle-class employees and customers in the best case?

Aren’t the rich VCs cashing in on the IPOs and letting the markets take the losses? Classic bubble behaviour - pay plenty so long as someone else will pay more.

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

#128

Post by OkGoDoIt » Thu, Aug 15, 2019, 7:01 AM UTC

One thing I never see mentioned in any analysis of WeWork is Regus, which does more or less the same thing but with less fanfare. They’ve been running coworking spaces and short term office rentals around the world for a long time. Do the two companies have similar business models? Can we look to Regus’s long history to better analyze WeWork’s prospects? It’s not like WeWork invested co-working spaces, so I don’t understand why everyone acts like they did something novel.

On a personal note, I’ve been a happy user of Regus for nearly a decade and I can’t imagine switching to WeWork. The WeWork offices I’ve been to are large open offices or glass-walled. They have better kitchenettes but not astronomically better. And the whole vibe feels very unprofessional, one step up from a coffee shop. And they cost a lot more. I don’t get it.

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

#129

Post by randomsearch » Thu, Aug 15, 2019, 7:04 AM UTC

When the recession hits (more controversially the bubble pops), I’m not sure what will happen to WeWork.

I would guess it will collapse, as tenants leave and it can’t pay for its rental costs.

But on the flip side, in a recession landlords become much more open to renegotiating terms, and more people freelance or start their own business when they lose their jobs. So it’s possible WeWork could somehow claw their way out of it.

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

#130

Post by TazeTSchnitzel » Thu, Aug 15, 2019, 7:05 AM UTC

School-Cotton wrote: post #103

TazeTSchnitzel wrote: post #41

I 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.

Even if that’s true, why should it bother you that money is being extracted from rich VCs and distributed to other rich people in the worst case, and working- and middle-class employees and customers in the best case?

It isn't necessarily like that. Uber has tried to “disrupt” fair conditions for transportation workers out of existence.