WeWork and Counterfeit Capitalism • Hacker News Board

Re: WeWork and Counterfeit Capitalism

#151

Post by Wowfunhappy » Wed, Sep 25, 2019, 6:26 PM UTC

hef19898 wrote: post #145

Wowfunhappy wrote: post #138

Earlier quoted context omitted.

> 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.

I agree in the case of WeWork.

Re: WeWork and Counterfeit Capitalism

#152

Post by throwaway744678 » Wed, Sep 25, 2019, 6:28 PM UTC

polygotdomain wrote: post #72

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…

>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. It absolutely has a way; hold landlords hostage. They've got another WeWork 4 blocks away. WeWork can walk, and leave landlords with a lot of space to lease and an expensive buildout…

My understanding is that WeWork has long term commitment with the landlords, and cannot walk out of it, thus canceling their leverage.

Re: WeWork and Counterfeit Capitalism

#153

Post by TrackerFF » Wed, Sep 25, 2019, 6:31 PM UTC

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.

While it can sound personal, I think it's more aimed at the general lax and loose silicon valley "new age" way of doing things, opposed to the stuffy old ways of white-collar finance.

There's this mantra that you need to suspend your disbelief a bit, when it comes to (tech) startups.

Re: WeWork and Counterfeit Capitalism

#154

Post by femto113 » Wed, Sep 25, 2019, 6:33 PM UTC

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…

I’ll bet money he was “fired” for something much more banal, like using harder drugs than just the admitted marijuana. Still probably can credit the IPO process for bringing it to light, but I don’t think taking Neumann off the tiller of this company is going to make it any more attractive to investors.

Re: WeWork and Counterfeit Capitalism

#155

Post by golergka » Wed, Sep 25, 2019, 6:34 PM UTC

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?

For example, when you reach that scale, you may have enabled some economy of scale for you that is unavailable to your smaller-sized competitors (like Amazon). Or, may be, there's some friction for customer to switch when you stop selling a dollar for 90 cents, like with american internet operators (I don't live in US but I constantly hear horror stories about Comcast here on HN, and I assume it's similar).

Re: WeWork and Counterfeit Capitalism

#156

Post by smsm42 » Wed, Sep 25, 2019, 6:37 PM UTC

throwaway744678 wrote: post #117

helen___keller wrote: post #52

Earlier quoted context omitted.

> The subprime crisis is completely unrelated! And if anything it was proof that money-making assets should be scrutinized more. The subprime mortgage crisis is basically godwin's law for finance. Want to make something look awful? Compare it to CDOs or mortgage-backed securities.

I get your point, but Ponzi would be an even better candidate, though.

People usually know what Ponzi is about so comparing unrelated things to it is going to be obviously wrong. But most people have very murky idea beyond "something in capitalism went bad" when talking about the subprime crisis, so any time anybody wants to criticize anything going bad in capitalism, they are free to grab this example with low(er) risk of being called out.

Re: WeWork and Counterfeit Capitalism

#157

Post by BWStearns » Wed, Sep 25, 2019, 6:42 PM UTC

VHRanger wrote: post #115

BWStearns wrote: post #46

Earlier quoted context omitted.

> The subprime crisis is completely unrelated! And if anything it was proof that money-making assets should be scrutinized more. I think the connection here is that the assets themselves were money losing but they passed them off as safe assets despite knowing they weren't safe. If I make money by producing counterfeit bills and circulating them then it makes money. It's still counterfeiting. The underlying assumptio…

The CDO assets were money losing but in a much more obfuscated way. They acted like a bet where you make a dollar if you roll 1-19 on a d20, but lose $50 if you roll a 20. And because they had higher-than-sp500 returns, short sighted investors flocked to them. The one point where WeWork is similar to those CDOs is the stack of complexity used to obfuscate the fairly simple business financials

Absolutely true that a CDO is more obfuscated in terms of its actual structure. Pre-crash I don't pretend I would have spotted the risk (because my stats knowledge is meh on a good day).

I would say though that WeWork's insistence that it's a "tech company" is an obfuscation at the social/marketing level. This appears to be working somewhat, as evidenced by the various "Is WeWork a tech company?" articles [0]. Even though this time the trick seems to have been caught early it doesn't make it different in nature, just in how well it worked.

[0] https://stratechery.com/2019/what-is-a-tech-company/ https://hbr.org/2019/08/no-wework-isnt-a-tech-company-heres-... https://www.builtinnyc.com/2019/03/11/spotlight-working-at-w... (had to find someone with a vested interest to provide an affirmative answer)

Re: WeWork and Counterfeit Capitalism

#158

Post by empath75 » Wed, Sep 25, 2019, 6:43 PM UTC

cs702 wrote: post #149

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 Vis…

Everyone in this thread is nodding sagely along with this while not thinking about how this insanity drives up their own tech salaries to insane levels which will collapse soon after the vision fund collapses.

Re: WeWork and Counterfeit Capitalism

#159

Post by ryandrake » Wed, Sep 25, 2019, 6:47 PM UTC

askafriend wrote: post #150

RodgerTheGreat wrote: post #132

Earlier quoted context omitted.

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 be…

Which is why that article that OP points out is such an odd outlier. In contrast to the normally wonderful and insightful reading on that site, the one on privacy stood out as total defensiveness. I’m not going to condemn the author over just that one but it was weird!

Re: WeWork and Counterfeit Capitalism

#160

Post by RodgerTheGreat » Wed, Sep 25, 2019, 6:49 PM UTC

askafriend wrote: post #150

RodgerTheGreat wrote: post #132

Earlier quoted context omitted.

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 be…

The article I referenced boils down to dismissing fears of online privacy invasion as alarmism. Exploring his own site's dependencies, Ben concludes that the third parties phoned home to for every visitor are probably harmless. He recommends that discourse focus on striking a balance between technology being convenient and secure, and not worrying too much.

This essay reflects a profound failure of imagination with respect to the present and future of online tracking, and the risk it poses to consumers and citizens. This is an issue which is at the heart of the business models and strategy of the world's most powerful corporations, so in my opinion having this blind spot (or, perhaps, degree of ethical flexibility) seriously undermines the veracity and objectivity of his analysis in many areas.