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WeWork and Counterfeit Capitalism

mattstoller.substack.com

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Re: WeWork and Counterfeit Capitalism

#141

Post by cfors »

johnfactorial wrote: post #120
jamiequint wrote: post #40

> 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 m…

> They control close to 50% of e-commerce which itself represents less than 12% of total retail sales. Both of these numbers are surprising to me, can you source them? Particularly the first one, which I assume is a global measure, and I'd be interested to know what % of North American e-commerce Amazon controls. I wager I could walk outside my home and ask 100 people on the sidewalk to name one e-commerce site and f…

Naming something popular != market share.

Re: WeWork and Counterfeit Capitalism

#142

Post by rossdavidh »

janee wrote: post #78
legitster wrote: post #35

> 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 coul…

> with the idea of profiting later on via the surviving monopoly I don't understand...if you undercut your competitors so you're the sole survivor, I don't see how profiting is a obvious end result. When you return prices to market value wouldn't competitors just appear again. Is predatory pricing really such a bad thing, I'd assume the market would just corrects itself later?

It depends on how hard it is to get going in that business. For example, in some markets (e.g. computer operating systems), it takes a big ecosystem of 3rd party companies making applications for your OS to be viable, so if you drive Blackberry out of business, you can own the smartphone market and crank up prices later. But, Google saw that coming and sponsored Android to prevent it, because they recognized that pattern from the PC market.

In the case of retail office space, it would depend on how much of the available office space you had locked up in long-term leases. If you have locked in most of the office space in long-term leases, but you are renting short-term, you can crank up your rates and in order to compete your would-be competitors would have to build an office builing, which is not impossible but is not quickly or easily done.

Not saying this was likely to work for We, just saying that's the theory.

Re: WeWork and Counterfeit Capitalism

#143

Post by hef19898 »

_23sd wrote: post #124
legitster wrote: post #35

> 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 coul…

>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. That's what the article says: >At first, with companies like Walmart and Amazon, predatory pricing can seem smart. The entire retail sector might be decimated and co…

Totally agree with the last pint, people completely tend to ignore the effort and attention to detail Amazon puts into executive and planning. That plus a very sound strategy. Also Amazon was profitable, even if just barely, for the most time while growing appr. 20% constantly. Not comparable to, say, WeWork from what I know. But it shows how powerful that narrative can be.

Re: WeWork and Counterfeit Capitalism

#144

Post by didip »

iamkroot wrote: post #80
40acres wrote: post #74

For me, this whole WeWork fiasco has shown just how valuable the SEC and the S-1 filing process is. Let's be clear -- Neumann was fired because any investor who read the S-1 was mortified and wouldn't touch the company with a 10 foot pole. If anything, this shows how lawless the private markets are and the lack of guardrails that are present to protect private investors -- perhaps this will lead to some reform in the…

Why do private investors need protection? Why can't they be held responsible for the foolishness of their actions?

People's pension can get dragged into this mess.

Re: WeWork and Counterfeit Capitalism

#145

Post by hef19898 »

Wowfunhappy wrote: post #138
janee wrote: post #78

Earlier quoted context omitted.

> with the idea of profiting later on via the surviving monopoly I don't understand...if you undercut your competitors so you're the sole survivor, I don't see how profiting is a obvious end result. When you return prices to market value wouldn't competitors just appear again. Is predatory pricing really such a bad thing, I'd assume the market would just corrects itself later?

> When you return prices to market value wouldn't competitors just appear again. No, because at this point the barrier to entry is substantial. And, if a competitor does come in, the incumbent with a huge warchest can just drop the price again temporarily to drive them out.

In the case of WeWork the warchest is streched by a price war. And the barrier to entry is basically office space in the interesting locations. Just what is an interesting location changes, and real estate is plenty. So the barriers aren't probably that high. Generally speaking the point can be valid so.

Re: WeWork and Counterfeit Capitalism

#146

Post by jerf »

kizer wrote: post #119
jerf wrote: post #20

Earlier quoted context omitted.

At that level of income, clothes are a choice. Simply insulting him about his clothes may not be very helpful, but thinking about the message Neumann is sending with that clothing choice is productive. I'm inferring from the text that that picture is from an investor presentation, though I don't quite know, but if it was, those clothes are rife with meaning. They are as deliberately crafted as any of the words in tha…

Or, it's just a t-shirt.

That is pretty much exactly the same thing as seeing a character wearing a T-Shirt in a movie and trying to argue it must have just been what the actor came on to the set wearing that day.

Re: WeWork and Counterfeit Capitalism

#147

Post by legitster »

_edo wrote: post #94
legitster wrote: post #71

Earlier quoted context omitted.

Yikes. There's an intelligent conversation to be had for sure about how large firms like SoftBank are intentionally playing the market and unsavvy investors. This isn't it.

Interesting. I'm not sure I understand why one type of charlatan is more important than the other. If you want WeWork/SoftBank to be regulated, which a lot of people do, it's kind of important that the people doing the regulating understand what they're doing. (edit: If you think a comment is off-topic then just say so. There's no need to be so insulting.)

The 'yikes' was more a response to his credentials. I agree, this argument seems scary coming from a policy adviser.

Re: WeWork and Counterfeit Capitalism

#148

Post by saalweachter »

erik_seaberg wrote: post #105
uxp100 wrote: post #55

Earlier quoted context omitted.

I think what they uniquely provide is actually tracking the cab to your door. I probably called 3 cabs total before I was aware of uber, and my experience each time was wait for around an hour, even if you had pre-arranged the pickup, and when calling the dispatcher, they would just say the cab was 10 minutes away, no matter what was actually going on.

I briefly drove airport shuttles and we'd sometimes rescue people who had been screwed over by taxi dispatchers. I don't think drivers faced any consequences for never showing up at all .

I personally don't blame the drivers, most of the time.

My impression is that taxi companies, wanting to be profitable, keep the largest number of drivers on call that can be maximally utilized -- not the smallest number needed to guarantee a certain SLO. So when you call dispatch and they tell you "30 minutes", that's a bald faced lie. It's not that the taxi driver got lost or stopped for a coffee break on the route, it's that they did not have any taxi drivers available for the next 80 minutes, and knew it.

The drivers don't get punished because they did nothing wrong; there may have never been a driver assigned to go pick you up.

It's like when you go to the grocery and there is one checkout open and ten people in line; it's not that the cashier is slow, it's that it is more profitable to make you wait than to have two cashiers sitting idle after you leave.

Re: WeWork and Counterfeit Capitalism

#149

Post by cs702 »

Despite a bit of exaggeration and unnecessarily salty language, I found the OP to be a though-provoking piece, well worth the read.

This passage, in particular, struck a chord with me -- it criticizes all the money-burning unicorns selling products and services below cost:

"What predatory pricing does is to enable competition purely based on access to capital. Someone like Neumann, and Son’s entire model with his Vision Fund, is to take inputs, combine them into products worth less than their cost, and plug up the deficit through the capital markets in hopes of acquiring market power later or of just self-dealing so the losses are placed onto someone else. This model has spread. Bird, the scooter company, is not making money. Uber and Lyft are similarly and systemically unprofitable. This model is catastrophic not just for individual companies, but for their competitors who have to MAKE money."

Highly recommended.

Re: WeWork and Counterfeit Capitalism

#150

Post by askafriend »

RodgerTheGreat wrote: post #132
legitster wrote: post #93

Earlier quoted context omitted.

I can't recommend the Stratechery piece enough (or Stratechery in general).

On the contrary, given the author's myopic and rosy perspective on surveillance capitalism as espoused in the article "Privacy Fundamentalism"[1] (and apparently amended in a follow-up which is paywalled), I find it hard to take anything on that blog seriously. [1] https://stratechery.com/2019/privacy-fundamentalism/

Ben is one of the greatest thinkers in technology writing today - period.

You're only depriving yourself of an important perspective in this case.

He's open to arguments and is extremely reasonable. If you're only looking for writing that agrees with what you already believe then you might be disappointed, but if you're looking for extremely thoughtful thinking on strategy and technology then you won't find anyone better than Ben.

It's not just a blog, it's a paid publication with a ton of research and effort behind it.

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