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WeWork Isn’t a Tech Company

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Re: WeWork Isn’t a Tech Company

#71

Post by mrtksn »

Fej wrote: post #55
mrtksn wrote: post #32

I really don't understand the negativity on HN towards WeWork. In principle, how it is different than AirBnB or Uber in regard of being a tech company? It's not like Uber or AirBnB's core compentancies are tech, I'm sure WeWork can also build a dev team making frameworks and research that some day might be used in their core business. The article argues that the difference is that Uber, AirBnB, Yelp, Twitter is a tec…

> Maybe you have an empty flat, you can turn it into WeWork location by furnishing the place Zoning, perhaps?

So? AirBnB has the exact same problem with regulators. Uber is in trouble with taxi regulations in major cities.

Re: WeWork Isn’t a Tech Company

#72

Post by cwilkes »

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?

What I got out of the article is that the cost to make one more widget for a software company is minimal, and thus is mostly profit. A non tech company has material costs (non-non consequential? :) that means their growth isn’t going to hockey stick. That seems to be the main differenator I see when Wall Street talks about tech companies.

Re: WeWork Isn’t a Tech Company

#73

Post by all_blue_chucks »

99052882514569 wrote: post #25
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.c…

If any of their special purpose vehicles default nobody is going to renew a lease with them ever again (at least not without a crushing risk premium).

Re: WeWork Isn’t a Tech Company

#74

Post by mrtksn »

the_gastropod wrote: post #42
mrtksn wrote: post #32

I really don't understand the negativity on HN towards WeWork. In principle, how it is different than AirBnB or Uber in regard of being a tech company? It's not like Uber or AirBnB's core compentancies are tech, I'm sure WeWork can also build a dev team making frameworks and research that some day might be used in their core business. The article argues that the difference is that Uber, AirBnB, Yelp, Twitter is a tec…

> In principle, how it is different than AirBnB or Uber in regard of being a tech company? It's not like Uber or AirBnB's core compentancies are tech, I'm sure WeWork can also build a dev team making frameworks and research that some day might be used in their core business. Some day, maybe they could?! But their current business is selling short term office space leases. They have massive liabilities in their long-t…

Most technology IPO were of companies that were losing money, people bought what they might become one day. Nothing new here, maybe they will change the way they operate when they establish the brand and optimize the operations.

Re: WeWork Isn’t a Tech Company

#75

Post by sharadov »

munk-a wrote: post #44
nostromo wrote: post #24

Earlier quoted context omitted.

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.

I don't really buy that, WeWork is benefiting off of a demand that is constantly shifting hands - people who are using the workspace should be using it temporarily - maybe they're a contractor on sabbatical, maybe they're starting a company and don't have the momentum and size to consider a lease... but those needs will change. Airlines live an entirely different business, nobody but the super ridiculously rich will…

Your assessment of environs is right, they bought Meetup.com for that.

Re: WeWork Isn’t a Tech Company

#76

Post by human20190310 »

whoisnnamdi wrote: post #46
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…

I might be confused, but isn't it the opposite here? Borrowing long (long-term leases from suppliers) and lending short (month to month leases to customers)? You yourself said "long term promises to suppliers keep going", which sounds like borrowing to me? I could just be dense here, feel free to correct me

I think you are correct and the original poster has it backwards.

Re: WeWork Isn’t a Tech Company

#77

Post by baddox »

Finnucane wrote: post #67
baddox wrote: post #26

Earlier quoted context omitted.

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?

Not only is the term loosely defined, but it is not clear why it needs to be mutually exclusive with some other category. You can't be a tech company and some other thing at the same time, apparently.

Who uses the terms this way? I’ve never heard anyone imply that, for example, Apple is a tech company but not a smartphone company. Edit: see also "biotech," "fintech," "edtech," etc.

Re: WeWork Isn’t a Tech Company

#78

Post by baddox »

chrisseaton wrote: post #47
baddox wrote: post #26

Earlier quoted context omitted.

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?

So what's the point in the term at all? What are you using it to do if you know the person you're speaking to cannot infer anything at all from the word?

My claim is that the overwhelming majority of people have no problem understanding the label. The term is not precisely defined, and can be debated in slim gray areas, but the term does not in practice cause miscommunication in the vast majority of cases.

Re: WeWork Isn’t a Tech Company

#79

Post by paggle »

“Tech” is now a requirement of so many different businesses that the concept of a “tech” company needs to change. There is now a spectrum of “techness” where your companies like Spanx are on the left (still needing marketing automation, logistics, and a bunch of other tech), AMD is on the right, and Facebook etc are somewhere in the middle as a blend of tech and marketing. It hardly matters where you draw an imaginary vertical line and call everything to the right “tech” as the tech is now an input to the business the way that electricity is.

Re: WeWork Isn’t a Tech Company

#80

Post by goatinaboat »

whoisnnamdi wrote: post #46
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…

I might be confused, but isn't it the opposite here? Borrowing long (long-term leases from suppliers) and lending short (month to month leases to customers)? You yourself said "long term promises to suppliers keep going", which sounds like borrowing to me? I could just be dense here, feel free to correct me

Maturity transformation, to give it its proper name, isn’t inherently a bad business; it’s how your bank transforms your weekly or monthly pay packet into a 25-year mortgage. But - and here is the crucial point - it is not tech.
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