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WeWork Bonds Drop Below Par for First Time Since IPO Filing

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Re: WeWork Bonds Drop Below Par for First Time Since IPO Filing

#61

Post by goatinaboat »

chadash wrote: post #14
duxup wrote: post #4

It just seems like WeWork took an existing business model of renting office space, went all VC and gathered a bunch of money and sky high evaluation (toss in some creepy insider dealing) ... and ... that's it. I know there were some theories on cornering the market, or getting some sort of huge buy in / contracts with companies hiring remote workers but for the most part there's plenty of office space (at least in my…

> It just seems like WeWork took an existing business model of renting office space, went all VC and gathered a bunch of money and sky high evaluation (toss in some creepy insider dealing) ... and ... that's it. That is basically what they did, but they also marketed it really well and made the process seamless. Everyone points to Regus as an example of a company that already existed in WeWork's space, but as far as…

Before WeWork, most people weren't aware that coworking spaces were an option

I remember co-working spaces and “live-work units” in London in the 1990’s.

I’ll admit that WeWork has a certain cachet, Millenials can’t imagine anything cooler than getting an Uber from the AirBnB to the WeWork, but that’s just a fashion and they’ll move onto something else soon.

Re: WeWork Bonds Drop Below Par for First Time Since IPO Filing

#62

Post by kevin_b_er »

mlthoughts2018 wrote: post #45
JumpCrisscross wrote: post #36

Earlier quoted context omitted.

> It just seems like WeWork took an existing business model of renting office space, went all VC and gathered a bunch of money and sky high evaluation (toss in some creepy insider dealing) ... and ... that's it The nutty thing is WeWork could have worked as a well-executed business. The core thesis, that companies of all sizes appreciate the flexibility of spinning up and down remote workplaces as a variable (versus…

Don’t forget the weird cultish vibe of WeWork, like the forced summer camp, etc. This alone tells you something is very wrong.

Don't forget the "no eating meat" on WeWork business.

Re: WeWork Bonds Drop Below Par for First Time Since IPO Filing

#63

Post by mrweasel »

cs702 wrote: post #37

It's remarkably easy to make fun of WeWork, given the company's high-as-a-kite ambitions, its largely conjectural business model, its dependence on fresh capital for survival, its charismatic CEO’s new-age antics, and its disregard for conventional norms of ethical corporate behavior.[a] But if the IPO of a company as prominent as WeWork fails and the company is unable to raise the fresh capital it needs to stay aflo…

Shouldn’t “show me the profit” have been the basis for investing all the time? It’s the growth at all cost that’s dangerous.

Re: WeWork Bonds Drop Below Par for First Time Since IPO Filing

#64

Post by treis »

chadash wrote: post #31
whatshisface wrote: post #23

Earlier quoted context omitted.

There is actually an important detail here: that's €101, not $101. If you want to transact in dollars there would be no reason not to deal with the US Treasury which is even safer than the German government (Germany can't print Euros to fulfill its debt obligations).

Fine, so take Japan who also has negative yields on short term bonds and can print their own currency. And the US Treasury can print money, but it's got it's own issues with a congress who occasionally has members who grandstand and threaten to default on debts. Meanwhile, Germany runs a surplus budget. I'm not saying that US Bonds aren't extremely safe, but it's hard to know if German bonds are really less safe. The…

>hard to know if German bonds are really less safe

It's more of a currency based risk. You're probably right that Germany is as safe of a bet (if not more) to pay back their bonds than the US is. The question is how much 100 Euro is going to be worth in 10 year.

Re: WeWork Bonds Drop Below Par for First Time Since IPO Filing

#65

Post by graeme »

lonelappde wrote: post #49
cs702 wrote: post #37

It's remarkably easy to make fun of WeWork, given the company's high-as-a-kite ambitions, its largely conjectural business model, its dependence on fresh capital for survival, its charismatic CEO’s new-age antics, and its disregard for conventional norms of ethical corporate behavior.[a] But if the IPO of a company as prominent as WeWork fails and the company is unable to raise the fresh capital it needs to stay aflo…

It's only a warning if you are betting on the frauds. If you are betting on real businesses it's a relief.

Non-frauds can also have capital/cashflow troubles

Re: WeWork Bonds Drop Below Par for First Time Since IPO Filing

#66

Post by goatinaboat »

mason55 wrote: post #40
duxup wrote: post #5

Earlier quoted context omitted.

I wonder what they sold their initial investors on? I've heard a lot of theories (cornering the market, the future of remote work) but I don't quite get what WeWork was selling folks on when it came to investing and evaluations that were so high in the first place.

My guess is that initially they focused on a market that was underserved by tech (short-term real estate). That by itself is probably enough to get some initial funding. Then you show that you're actually executing, at least as far as being able to grow and manage a real business with real revenues, which can easily get you another round. From there they did two things. The first was to start to securitize the busine…

You pitch the business is a fully vertically-integrated lifestyle where people live, work and send their kids to school

I can see how this would seem compelling to a 22-year-old Google employee of the sort that gave us Google Glass and Google Plus, but was there any research done that this was a thing that normal people would want?

Re: WeWork Bonds Drop Below Par for First Time Since IPO Filing

#67

Post by bduerst »

cs702 wrote: post #37

It's remarkably easy to make fun of WeWork, given the company's high-as-a-kite ambitions, its largely conjectural business model, its dependence on fresh capital for survival, its charismatic CEO’s new-age antics, and its disregard for conventional norms of ethical corporate behavior.[a] But if the IPO of a company as prominent as WeWork fails and the company is unable to raise the fresh capital it needs to stay aflo…

That's survivor bias though, isn't it?

There are a ton of bad ideas and companies that sink all the time. WeWork isn't new or unique in this regard, for reasons you described.

Just because you see a boat sink doesn't mean the other floating boats are going to start sinking as well.

Re: WeWork Bonds Drop Below Par for First Time Since IPO Filing

#68

Post by aloknnikhil »

mrweasel wrote: post #63
cs702 wrote: post #37

It's remarkably easy to make fun of WeWork, given the company's high-as-a-kite ambitions, its largely conjectural business model, its dependence on fresh capital for survival, its charismatic CEO’s new-age antics, and its disregard for conventional norms of ethical corporate behavior.[a] But if the IPO of a company as prominent as WeWork fails and the company is unable to raise the fresh capital it needs to stay aflo…

Shouldn’t “show me the profit” have been the basis for investing all the time? It’s the growth at all cost that’s dangerous.

Agreed. Grow at all costs is what incubates the "fail fast" approach, which I, personally, disagree with. There's a reason why you need to spend most of your time designing and architecting and jump to implementation only when the viability of the solution has been justified. And part of this justification has to be a solid business model that has a clear road to profits. And a path to profit that's not decades away. As things stand, it looks like most startups want to exit through an acquisition and not ever have to talk profits.

Re: WeWork Bonds Drop Below Par for First Time Since IPO Filing

#69

Post by Mathnerd314 »

mrweasel wrote: post #63
cs702 wrote: post #37

It's remarkably easy to make fun of WeWork, given the company's high-as-a-kite ambitions, its largely conjectural business model, its dependence on fresh capital for survival, its charismatic CEO’s new-age antics, and its disregard for conventional norms of ethical corporate behavior.[a] But if the IPO of a company as prominent as WeWork fails and the company is unable to raise the fresh capital it needs to stay aflo…

Shouldn’t “show me the profit” have been the basis for investing all the time? It’s the growth at all cost that’s dangerous.

Some business models don't work unless they're a decent size, like marketplaces and social networks. Beyond that I generally agree. E.g. MoviePass, huge growth but no revenue. There are probably some good companies mixed in with the lemons but with the inverted yield curve etc. it's clear the tide is going to to go out sometime.

Re: WeWork Bonds Drop Below Par for First Time Since IPO Filing

#70

Post by Litmus2336 »

mrweasel wrote: post #63
cs702 wrote: post #37

It's remarkably easy to make fun of WeWork, given the company's high-as-a-kite ambitions, its largely conjectural business model, its dependence on fresh capital for survival, its charismatic CEO’s new-age antics, and its disregard for conventional norms of ethical corporate behavior.[a] But if the IPO of a company as prominent as WeWork fails and the company is unable to raise the fresh capital it needs to stay aflo…

Shouldn’t “show me the profit” have been the basis for investing all the time? It’s the growth at all cost that’s dangerous.

There are valid reasons to invest in a company that doesn't make profit now, but will in the future. Almost every business has this phase - it could be short (a lawnmower company that goes 5k in the hole for equipment) or big (a company with an idea to revolutionize the DVD to consumer marketplace, that starts operating at a loss until they build up the required customerbase).

Now, the big issue is that everyone thinks they're the company that's just operating at a loss right now, until they get the big break and start pulling in gigantic profit. That's simply not true for every startup, and right now I think we see VC is far too optimistic. But we don't want all the VC money to dry up, as then those companies that truly do have an amazing idea, that really will revolutionize their industry, will not not be able to get the necessary VC money to get past the unprofitable phase.

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