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WeWork and Counterfeit Capitalism

mattstoller.substack.com

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Re: WeWork and Counterfeit Capitalism

#201

Post by luckydata »

kizer wrote: post #126
toomuchtodo wrote: post #7

Earlier quoted context omitted.

Defending those of poor character and moral fiber (not my judgement, facts reported) from a jab about their clothes is low priority. The other issues presented are far more pressing.

We're not under any time pressure in this discussion; there's no need to prioritize. Pointing out "low blows" which and writer should strive to be above is pressing, in my opinion.

That's not at all a low blow. It's pointing out one of the many signaling methods this conman used to swindle investors "look at me, I make no sense because I'm so unconventional..."

It's crazy to me that a forum full of the self proclaimed intellectual elites can't get the meaning of that sentence without a full blown explanation.

Re: WeWork and Counterfeit Capitalism

#203

Post by toiletfuneral »

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…

I was a paid subscriber for years until he started saying shit like “actually, the US giving employers control over access to healthcare is good because they can force people to work harder” and “it’s bad for China to jail ethnic populations but ok for the US because they’re good guys”.

I realized that for how insanely smart he is in analyzing business plans he ultimately worships the rich and despises collective power.

I now HN loves that kind of rhetoric but yeah, I’m not really a fan anymore.

Re: WeWork and Counterfeit Capitalism

#204

Post by WalterBright »

hef19898 wrote: post #143
_23sd wrote: post #124

Earlier quoted context omitted.

>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.

I'm pretty sure Amazon was profitable all along - it's just that the profit was all spent on expanding the business. Hence, there was no taxable profit.

Amazon was also able to make money selling products at little or no markup by taking advantage of the float. They'd collect money from the purchaser immediately, and would pay the vendor after 90 days. Then, Amazon would make interest on that money for the 90 days.

I do the same thing on a (very) small scale. I buy with a credit card, and don't have to cough up the money until the credit card bill is due. That gives me free use of the money for 30 days.

Pretty much all businesses do this, it's just that Amazon did it on a massive scale.

Re: WeWork and Counterfeit Capitalism

#205

Post by WalterBright »

streetcat1 wrote: post #187
hef19898 wrote: post #143

Earlier quoted context omitted.

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.

The only difference between wework and amazon is the way they finance their money-losing ventures. Wework does that via the private market, hence the game is up when it needs access to the public markets. Amazon does that via AWS. AWS is the money that fuels the eCommerce side. The game will be up when: 1) Kubernetes will move AWS customers back to on-prem, or at least turn clouds into a commodity. Amazon knows that…

AWS did not become a product until Amazon had been around for several years.

Re: WeWork and Counterfeit Capitalism

#206

Post by ameister14 »

landivar2 wrote: post #75

> Part of what’s going on with WeWork is that monopolies and private equity have eliminated profitable opportunities for investment, which is why the Federal Reserve is increasingly powerless. No, you are confusing "monopolies and private equity" with the natural result of Sarbanes-Oxley. If you make going public too costly... companies are less likely to go public.

That would make sense only in the context of actively fraudulent companies.

A big reason to IPO used to be to gain the liquidity necessary to scale the business. This is no longer as necessary, since private financing allows companies to get billions in funding without trading control and being beholden to what most perceive as the short term thinking of public shareholders.

Re: WeWork and Counterfeit Capitalism

#207

Post by WalterBright »

munificent wrote: post #130
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 they won't be able to raise enough capital to cover startup costs when investors know that the dominant player can just price dump long enough to starve any new company out. Relatively unregulated capitalism works OK when the product area naturally approaches a perfect market: - Simple easily compared products - Consumers hav…

> No, because they won't be able to raise enough capital to cover startup costs when investors know that the dominant player can just price dump long enough to starve any new company out.

For the larger company to do that, their losses would be correspondingly larger. This is why it's pretty hard to find a case history of this strategy being successful.

Re: WeWork and Counterfeit Capitalism

#208

Post by CitizenKane »

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…

I hope this doesn't get entirely buried at this point, but I think you bring up something interesting with driving marginal costs down.

Ostensibly both Uber and Lyft are doing the same thing, but with the item that will bring the marginal cost down being self-driving cars. They've both bet big in order to capture the market, because it's likely that whoever owns the market before that transition will own it afterwards as well.

It does seem like there was probably more optimism that the technology would materialize sooner than it really has, but assuming it materializes some time in the near future it's likely that whatever company manages to hold onto the market until then will reap massive rewards.

It's clearly a risky bet, but at least from my view doesn't seem like a pump and dump type of scheme.

Re: WeWork and Counterfeit Capitalism

#209

Post by ameister14 »

commandlinefan wrote: post #106

> This kind of counterfeit capitalism is terrible for society as a whole. Well, so says the author, but he doesn’t make a very compelling case. He hammers WeWork, but WeWork is failing spectacularly and miserably, as Adam Smith’s invisible hand suggest it must. A lot of people have a problem with Walmart and Amazon, but I have yet to see any evidence that either of them has harmed society _as a whole_. He suggests th…

The author seemed to be more pointing out opportunity costs and the inability to build a long-term employment structure as consequences.

Lower workforce participation, 'underemployed' workers, the rise of the gig economy (essentially just independent contractors with no insurance) and a concentration of wealth without community investment are others.

Some of that is countered by going for illegal labor practices specifically, but mostly it's countered by restructuring the incentives companies work with and constraining their freedom to act generally.

Re: WeWork and Counterfeit Capitalism

#210

Post by nouveaux »

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?

Our economy and financial systems are built on trust. Fraud makes it hard to have productive transactions. Fraud also has a massive detriment to society. It's not that private investors needs protection. It's that people who commit fraud needs to be punished.

It is the SEC's job to build trust and prevent fraud, which it looks like it's doing a great job.

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