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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

#81

Post by jboydyhacker »

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…

So if we don't support the insider self dealing of management and complete lack of discipline or board governance then legitimate cos will all shut down?

Seems like a strange and skewed view.

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

#82

Post by alasdair_ »

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…

From [c] - “Here is my central argument. There are only two priorities for a start-up: Winning the market and not running out of cash. ”

This quote misses an important third option - don’t get so big that even if you win one hundred percent of the market, you still can’t generate a return.

Dumping a billion dollars into a company in a niche market is also a failure mode.

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

#83

Post by rolltiide »

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…

We Work has no place in anyone’s portfolio and Softbank was the greater fool.

It is a great story for founders and for closely held corporations. The investor disclosures came out and there is no oxygen here for investors.

WeWork best deleverage and just continue its rental business.

This can function in a vacuum.

Their grow with all revenue and no profits scheme has nothing wrong with it, its the governance structure and convoluted corporate structure that all but ensures investors are guaranteed nothing.

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

#84

Post by foobiekr »

goatinaboat wrote: post #66
mason55 wrote: post #40

Earlier quoted context omitted.

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?

It kind of describes the Google extended-university-experience thing though. Google employees live in a social ecosystem; you don’t just do Yoga, you do Google Yoga. And so on.

Some subset of people find this gross and creepy but it’s something a lot of young people demonstrably go for.

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

#85

Post by chipotle_coyote »

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…

...as far as I can tell, most people have only heard of Regus because WeWork is so often compared to them.

This may well be true, but I'm not sure that's precisely a negative. Most people don't need to hear of Regus unless they're looking for ready-to-go space for a small company, or if they work for a company renting such space. (I'd heard of Regus, as I worked at a company renting space at Regus. And it was a really nice environment. This was back in 2010, by the way.) And I think anyone who was actually doing that search would have pretty easily come across Regus.

WeWork's "innovation" in some ways was marketing directly to developers, pitching themselves as "we're a tech startup ourselves, catering to tech startups just like you!", so people putting together startups would already know their name before they did a search for space.

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

#86

Post by tomatocracy »

sephamorr wrote: post #16
whatshisface wrote: post #12

Earlier quoted context omitted.

There isn't an institution in the world that could sell an IOU $100 for $100, not even the US Treasury. For example, if you bought a 1-year dated IOU for $100 from the US Treasury today, it would cost only $98.30. Edit: this comment was written in response to the parent before it was edited to remove any trace of what was being replied to.

Plenty of sovereign debt interest rates are below zero, so you'd pay $101 for $100 in a year's time. Whether or not this is sane economic policy is a question though.

Many large corporates can issue at or below zero in Euros in the current market too, or alternatively issue in very long tenors (30-50+ years) at 1% or less. It’s insane.

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

#87

Post by arielm »

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…

I think that’s some truth to your statement about growth, but also would like to point out that most IPOs we see where growth at all costs are tech or primarily tech companies and WeWork isn’t. At all.

Outside tech, growth has rarely been the kind of Play you make at a great loss, and most ventures need some sort of grounding in reality.

Show me a tech IPO that seeks revenue and then we can debate a change in the markets.

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

#89

Post by fragmede »

CPLX wrote: post #71
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…

> The last time we had such a shift, in 2000 Nah. This happened again in 2008.

Parent comment is a bit terse so let me explain a tiny bit more. While the 2008 financial crisis itself was precipitated by real estate mortgage shenanigans, as the dust was settling and thereafter, it became very difficult to secure funding, at least compared to before. Banks, under renewed scrutiny by regulators, became so risk adverse that the fed's lowered interest rates, which made money "cheaper", were nigh unwilling to lend money to all but the strongest borrowers. But then the strongest borrowers needed cash the least.

It's that wave of cheap money that we're riding, with banks having satisfied regulators and new regulations enacted in the wake of 2008, that has led us to where we are today. Companies with invented valuation and unconvincing financials going public, or trying to, in WeWork's case.

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

#90

Post by Ididntdothis »

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.

As long as the investor can make money by selling to the greater fool it's all good. I think that's the current strategy with the companies that keep losing money. Pump up validation and then dump it on the public markets.
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