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WeWork Isn’t a Tech Company

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Re: WeWork Isn’t a Tech Company

#21

Post by Benjammer »

dawhizkid wrote: post #13

It isn't right now, but if you buy at this valuation you're betting that they can diversify away from memberships as their main source of revenue to something more "techy." Personally I am bearish because I don't think they can hire the engineering talent to pull that off. They should've gone on a tech hiring spree long ago if that was their intention but I know of no prominent tech leaders who work there.

>They should've gone on a tech hiring spree long ago

They've been hiring (and acquihiring) like mad in NYC for the entire year. They just took over the old Spotify office near Union Square as their new "tech HQ," and all of engineering sits there now.

Re: WeWork Isn’t a Tech Company

#23

Post by JJMcJ »

A lot of "tech" companies aren't.

One reason, to avoid the scrutiny describing their actual business would expose them to more scrutiny, e.g., Uber is transportation company, not a software company.

Once the BBC described Google as an "American advertising company", now that's cold.

Re: WeWork Isn’t a Tech Company

#24

Post by nostromo »

rlucas wrote: post #20

It's a 1920s (pre-FDIC) bank, or a 2008-style risky financial instrument, like an Auction-Rate Preferred. WeWork's business model is "borrow short, lend long." That is, they accept very short term promises to pay (month to month leases from customers), and aggregate them to make very long term promises to pay (mutli year leases from suppliers). Keep the spread. This works as long as there are lots of customers who wi…

This isn't that dissimilar from lots of industries.

Every airline that takes a loan to buy a plane is banking on future demand for air travel, for example.

Or take Amazon Web Services, which is building data centers to lease out on a short term basis.

Yes, there are tremendous risks involved, depending on the lease terms. But it's not at all unusual.

Re: WeWork Isn’t a Tech Company

#25

Post by 99052882514569 »

rlucas wrote: post #20

It's a 1920s (pre-FDIC) bank, or a 2008-style risky financial instrument, like an Auction-Rate Preferred. WeWork's business model is "borrow short, lend long." That is, they accept very short term promises to pay (month to month leases from customers), and aggregate them to make very long term promises to pay (mutli year leases from suppliers). Keep the spread. This works as long as there are lots of customers who wi…

Their business is structured in such a way that the leases they signed on their locations aren't really enforceable against WeWork itself, but rather against "special purpose vehicles", I'm guessing one per lease?[1] It costs a bit in insurance but substantially limits their liability. So, in a downturn, even if "short termers are done", they can shed properties too, basically with impunity.

[1] https://stratechery.com/2019/the-wework-ipo/

Re: WeWork Isn’t a Tech Company

#26

Post by baddox »

paxys wrote: post #10

I like that WeWork is finally forcing us to have the conversation about WTF a "tech company" even is. A company that sells software? Or one that employs a lot of engineers? Or companies that use a lot of tech in their operations? Companies with a presence in San Francisco and Kombucha on tap? Are big banks tech companies? Insurance providers? Hospitals, auto manufacturers, oil and gas... What isn't a tech company?

Is it really that important to define the term precisely? It doesn't seem like the term is used precisely, so what's the point in defining it precisely?

Re: WeWork Isn’t a Tech Company

#27

Post by rolltiide »

paxys wrote: post #10

I like that WeWork is finally forcing us to have the conversation about WTF a "tech company" even is. A company that sells software? Or one that employs a lot of engineers? Or companies that use a lot of tech in their operations? Companies with a presence in San Francisco and Kombucha on tap? Are big banks tech companies? Insurance providers? Hospitals, auto manufacturers, oil and gas... What isn't a tech company?

Tech companies are defined by their VCs. The end.

More specifically by VCs which would invest in companies with horrible financials that can inflect at a quantifiable amount of capital and scale.

Re: WeWork Isn’t a Tech Company

#30

Post by barkingcat »

JJMcJ wrote: post #23

A lot of "tech" companies aren't. One reason, to avoid the scrutiny describing their actual business would expose them to more scrutiny, e.g., Uber is transportation company, not a software company. Once the BBC described Google as an "American advertising company", now that's cold.

Google as an "American advertising company" is a good summary of the jurisdiction of their head office, and where the bulk of their income comes from.
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