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WeWork and Counterfeit Capitalism

mattstoller.substack.com

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Re: WeWork and Counterfeit Capitalism

#31

Post by draw_down »

I find the amount of vitriol for this one person, now, suspicious. He ran the company this way (like a goofball) for years, none of this is a surprise.

I think if things had gone slightly differently and they held everything together long enough for the IPO to happen, he'd be considered a visionary instead of a crank.

I also take issue with the notion that the nature of capitalism has changed or degraded. The point has always been to make as much money as you can, and honestly, this guy played the game to the hilt. Some parties are clearly upset that it didn't work out for them as they expected, but if it had, they wouldn't be taking issue with the t-shirts or any of the other goofy stuff.

Re: WeWork and Counterfeit Capitalism

#32

Post by pat2man »

cestith wrote: post #28

I think there's a space for a one-stop business services company. Office space with utilities, with the definition of utilities expanded to include Internet access, catering, software licenses, shared IT staff, and such does make sense. I also think, though, it's a new tweak on the office real estate business and not a groundbreaking tech business that needs to be valued the way a tech company would be.

WeWork is really just a middle ground between a co-working space and a full blown office. Seems like a no brainer for someone to fill the space. If WeWork collapses I'm sure a dozen other companies will fill the space.

Re: WeWork and Counterfeit Capitalism

#33

Post by mc32 »

chrisseaton wrote: post #3

Some of these criticisms are just irrelevant personal abuse - like saying he doesn't think Neumann's t-shirt is fitted well.

He has some criticisms but he strays from seriousness with jabs like the one you point out. It sounds like me in high school being sarcastic in a juvenile way —it’s momentarily funny but totally detracts from the main story. In this case issues in self-dealing. In a small biz self dealing may be necessary and may be common practice. After all it’s all your money or your debt. But here it’s in conflict with fiduciary duty of a CEO.

Re: WeWork and Counterfeit Capitalism

#34

Post by ocdtrekkie »

mcormier wrote: post #2

I like the way this Matt Stoller writes words. RSS feed subscribed.

Matt Stoller's bio for people who don't know who he is: https://openmarketsinstitute.org/staff/matt-stoller/

His Twitter is a pretty good follow too: https://twitter.com/matthewstoller

Re: WeWork and Counterfeit Capitalism

#35

Post by legitster »

> WeWork then used this cash to underprice competitors in the co-working space market, hoping to be able to profit later once it had a strong market position in real estate subletting or ancillary businesses.

> This is of course Amazon’s model, which underpriced competitors in retail and eventually came to control the whole market.

This is wrong, wrong, wrong. The difference is Amazon saw what the marginal costs could be, and had a specific roadmap to drive investment into bringing them down. WeWork fundamentally has no way to drive down the margin on real estate in any meaningful way. Especially as a lessee.

> The goal of Son, and increasingly most large financiers in private equity and venture capital, is to find big markets and then dump capital into one player in such a market who can underprice until he becomes the dominant remaining actor. In this manner, financiers can help kill all competition, with the idea of profiting later on via the surviving monopoly.

A bold assumption with no citations. There are just as many counterfactuals to this strategy as there are examples. The scooter market is an especially bad - there is so much capital from so many companies - if you were trying to establish monopolies that would be a bad bet.

> Endless money-losing is a variant of counterfeiting, and counterfeiting has dangerous economic consequences. The subprime fiasco was one example.

The subprime crisis is completely unrelated! And if anything it was proof that money-making assets should be scrutinized more.

WeWork is a garbage, charlatan company. But don't misunderstand what is happening here.

Re: WeWork and Counterfeit Capitalism

#36

Post by socialist_coder »

bbddg wrote: post #27
anilshanbhag wrote: post #18

"The company is losing an enormous amount of money and 'has no path to profitability at scale'." - well if there is no path to profitability, how is it still worth 10-15 billion ? "If you know Dimon’s actual reputation, him getting suckered isn’t surprising. From what I heard back in 2009, Dimon is a mediocrity who essentially got lucky his bank was too slow to get in on the subprime scam in 2006; he then used his ba…

> And then whole blurb on Counterfeit Capitalism - which in essence described capitalism This is my favorite thing. Whenever someone describes something like "Counterfeit Capitalism" or "Crony Capitalism", it's always just describing capitalism.

I feel like this is similar to how Greta Thunberg recently described capitalism as "fairytales of eternal economic growth". That too is just describing capitalism.

The way she is attacked by the Right, and what they say in their attacks, really makes it obvious that they know it's not an environmental issue. It has absolutely nothing to do with the environment or climate change. It's neoliberalism and capitalism and imperalism and "fairytales of eternal economic growth". They know that, and that's why they pretend like they cannot engage her because "she's a child".

All climate change activists should switch their message and focus on capitalism, not reducing emissions or climate change. Because the amount of CO2 emission reductions we need are clearly impossible with the current system. And if you leave capitalism out of the argument, it lets neoliberal leaders off the hook.

Re: WeWork and Counterfeit Capitalism

#37

Post by onli »

anilshanbhag wrote: post #18

"The company is losing an enormous amount of money and 'has no path to profitability at scale'." - well if there is no path to profitability, how is it still worth 10-15 billion ? "If you know Dimon’s actual reputation, him getting suckered isn’t surprising. From what I heard back in 2009, Dimon is a mediocrity who essentially got lucky his bank was too slow to get in on the subprime scam in 2006; he then used his ba…

> The author is just another one with a big mouth writing clickbait articles !

This is not clickbait. This is not promising one thing and delivering another or being overly inflamatory. It's a highly intelligent analysis of systematic issues in the current (US) capitalist system.

> well if there is no path to profitability, how is it still worth 10-15 billion ?

It is not worth anything. If they really have no way of becoming profitable and they have more debt than capital (in terms of money and property) WeWork is worth less than $0. That's why the IPO failed.

> "WeWork ostensibly became more valuable because Son said it was more valuable, and bought shares for higher prices. " - well isn't this how market pricing works.

There was no market. That goes together with the point above. In a real market: Sure, it's worth what people would pay for it. But here people wouldn't pay that much, the valuation only arrived at the point because it was decidedly not a market situation.

> Dimon is the most respected banker and he led JPM to become the largest bank in the western world. Well somehow that is mediocre.

Evidently the author disagrees with you. Without judging myself I'd kindly suggest that "most respected" anything does not have to be a sign of merit.

Re: WeWork and Counterfeit Capitalism

#38

Post by jknoepfler »

edit: I think the article is deeply confused about whether it wants to talk about how shitty WeWork and it's associated investors are, versus why pumping loss-leading companies full of cash is a bad idea. The former is just yellow journalism and not very interesting (also well-aired already), the latter is important (imo).

The point is a simple one, I think. It's well understood that capitalism breaks if an actor is able to consistently create and defend a monopoly. Pumping a loss-leading company full of capital under the expectation that it will loss-lead until it dominates the market is one such strategy. WeWork is a classic example of this strategy in action, albeit an ill-begotten one. We've made this illegal in the past, we should consistently enforce such laws as exist, and improve them to bring them into 2019.

Let's not get pinheaded about this thought. I'm personally bootstrapping a company from $0. That means I'm using my "deep pockets" to "loss lead" a company. Nothing about what I'm doing is "anticompetetive" in the relevant sense because of scale. Furthermore, my growth is pegged to my ability to make money (I won't hire unless I can pay a salary out of revenue). I do think capping naked investment in loss-leading companies is probably a good idea. I personally think VC culture results in bloated, unsustainable companies that over-hire overpriced engineers, and that it's long term a very inefficient strategy that is bad for the health of the economy.

Obviously this is a weird forum to air that view on, but here we are. At least I'm putting my money where my mouth is.

Re: WeWork and Counterfeit Capitalism

#40

Post by jamiequint »

> This is of course Amazon’s model, which underpriced competitors in retail and eventually came to control the whole market.

This is false.

First, Amazon is far from controlling the whole market. They control close to 50% of e-commerce which itself represents less than 12% of total retail sales.

Second, Amazon didn't predatory price, or if it did, it didn't for long, certainly not long enough to achieve its current market share. The author is mistaking Amazon's lack of profit for its propensity to reinvest all of its profit into other businesses (e.g. AWS), or its willingness to take short-term losses in order to reach economies of scale where profits exist (which, as Amazon's retail business has shown, they do).

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