51–60 of 245 posts
Didn't investors, especially SoftBank, enable this behavior? They deserve as much blame for this mess as he does, if not more.
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This is true of many large companies today, though. Facebook comes to mind.
It's true of some large companies, yes. But it's still extraordinarily uncommon overall. Zuck's Facebook arrangement was essentially unique at the time of the IPO, and Facebook's success led to more founders on unicorn trajectory demanding and receiving similar terms, but it's still far from the norm.
WeWork is a useful product. Office real estate is broken for startups. Landlords make us take 5-10 year leases when startup planning horizons are almost never longer than 18 months. WeWork earning 30-40% margins by allowing us to take shorter terms that better fit our needs. Should be a good business.
Question, because I don’t know how this works. Who sets the valuation on a company? Does a CEO have anything to do with that, or is it wholly external?
If I later buy 1 share for $2 then your valuation has doubled. That is basically SoftBank’s business model.
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Probably. It would be funny if this blew up in SoftBank's face. I think it will make even Theranos sound more sensible. Sure, the product exists and it's good but the "business plan" and its assumptions and business structure don't make much sense. Though I don't know how long they will survive without any more cash injections in the short term due to all their rental liabilities.
Nah, this isn't like Theranos. In reality, it is a very good product with slim margins. The reason it is losing so much money is because it is expanding quickly to show that it is a "high growth" Unicorn company. It isn't that it's a scam, it just puts it is a non-tech/non-SaaS category. Every founder/CEO wants to tell a huge growth story. If private investors are buying that then it's just that they miscalculated, b…
WeWork is a useful product. Office real estate is broken for startups. Landlords make us take 5-10 year leases when startup planning horizons are almost never longer than 18 months. WeWork earning 30-40% margins by allowing us to take shorter terms that better fit our needs. Should be a good business.
The issue is if the global economy downturns fewer people want to rent short term, WeWork is still committed to paying the long term lease costs.
Leaving aside all of the headline-making entertainment of Adam Neumann being Adam, the real problem here is that WeWork really doesn't have much in the way of enduring network-effect advantages -- even though it tried so hard to convince investors otherwise. In many tech-fueled marketplaces, getting big in a hurry is a practically unbeatable advantage. I saw this 20 years ago when I was tracking eBay. No end of littl…
If the focus is getting a lot of people into an office for a long time, then it will eventually be cheaper for those people to rent their own.
If focus is on short term individuals, then they can just switch to whichever competitor comes along with a newer office and a more enticing introductory rate.
Maybe main advantage is that they're flexible. If you need 20 people sitting together in a random city, for 6 months, starting end of the month - well they can do this, but so can all manner of other managed office providers.
Other 'unicorns' such as Uber and Lyft can compete based upon which app you open first, how many drivers they can put near you - We has to compete by making great big office buildings appear.
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I think if you are including coffee shops, dry cleaners, and the rest of small businesses that are self-funded, I agree. If you look at VC backed high tech startups, I don't think that is the norm: https://www.capshare.com/blog/4-key-insights-from-5000-cap-t...
> high tech WeWork?