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WeWork and Counterfeit Capitalism

mattstoller.substack.com

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Re: WeWork and Counterfeit Capitalism

#301

Post by adharmad »

_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…

WeWork is a cargo-cult startup

Re: WeWork and Counterfeit Capitalism

#303

Post by streetcat1 »

rossdavidh wrote: post #237
streetcat1 wrote: post #187

Earlier quoted context omitted.

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…

It's interesting that you bring up the importance of AWS to Amazon, nowadays, because...companies like Uber, Lyft, and WeWork spend a lot on AWS. In other words, like Yahoo getting a lot of their late-90's advertising from dot-com bubble companies that evaporated in 2001, AWS is massively exposed to the current bubble in "we have so much VC cash we don't know what to do with it" companies. When that goes away (i.e. t…

So I am not sure. I think that startups (with all due respect) generate buzz, inversely correlated with their technical depth. So AWS is mainly composed of non tech companies.

I also think that AWS did an excellent job locking its customers, so they cannot just "leave".

The real treat here is kubernetes. If I program to kubernetes , I can, in theory, move the workload from cloud to cloud, or move the workload from on prem to cloud.

This brings actual competition to the cloud space.

The problem is how to provide all the high-level services that AWS provide, and this will have to be taken by future startups which would extend kubernetes.

Re: WeWork and Counterfeit Capitalism

#304

Post by perl4ever »

bsder wrote: post #296
perl4ever wrote: post #281

Earlier quoted context omitted.

I don't understand this comment. Amazon didn't invent mail order. They never have had a monopoly on websites that sell stuff to be delivered by mail, either.

> Amazon didn't invent mail order. And were particularly bad at it for a long time. Selling books was the only thing keeping the company afloat during that span. > They never have had a monopoly on websites that sell stuff to be delivered by mail, either. Actually, they did on books. You seem like you may be young. In 1994-1996, credit cards were nowhere near as ubiquitous and certainly the online use of them was eve…

Not paying sales tax on mail order was the norm. The time period you're talking about, Amazon, and the internet in general, hadn't penetrated to the general public. 1995-96 was just when a small minority of people were waking up to the idea they needed to be on the internet and getting their first direct PPP dialup account. People still went to physical book stores because, for one thing, you couldn't preview a book online.

It wasn't at all obvious that Amazon would take over the world well into the 2000s. They looked like every other dotcom, particularly because they didn't consistently make GAAP profits and so people were just waiting for them to die. AWS, Kindle, Prime, Fresh, lots of stuff are recent developments.

Absolutely nothing about the original concept could have told you what it would become or was in any way exclusive.

Re: WeWork and Counterfeit Capitalism

#305

Post by baddox »

Wowfunhappy wrote: post #261
baddox wrote: post #256

Earlier quoted context omitted.

> Starbucks has caused a lot of coffee shops to close. Sure, but normal legitimate competition causes worse-performing competitors to close, so some distinction should be made between this supposed "predatory pricing until competitors shut down" strategy and the normal "cause competitors to shut down by simply being better than them" strategy.

...to my knowledge, Starbucks has never engaged in predatory pricing to begin with, so at this point I'm legitimately not sure what we're discussing here. If the question is, given a willingness to blatantly violate anti-trust law, and lose immense amounts of short-term for long-term gains, could Starbucks drive out all competition? And... I actually don't think they could, because (A) coffee shop patrons like variet…

Has Walmart ever been charged for predatory pricing? There have been plenty of accusations and lawsuits, but from what I've seen, they amount to accusations of having a few "loss leader" products. I can't find any evidence that either 1) loss leader pricing strategies are clearly illegal or 2) that Walmart actually prices things at a loss rather than simply cheaper than the cheapest price a competitor can offer.

Re: WeWork and Counterfeit Capitalism

#306

Post by jethro_tell »

buboard wrote: post #255
rossdavidh wrote: post #237

Earlier quoted context omitted.

It's interesting that you bring up the importance of AWS to Amazon, nowadays, because...companies like Uber, Lyft, and WeWork spend a lot on AWS. In other words, like Yahoo getting a lot of their late-90's advertising from dot-com bubble companies that evaporated in 2001, AWS is massively exposed to the current bubble in "we have so much VC cash we don't know what to do with it" companies. When that goes away (i.e. t…

Amazon must know that and i guess thats why they dont give up the commerce biz

Lol, or the bulk of the AWS income that is probably boring enterprise. Sure, less startups is less cpu cycles bought, but there are a shit tone of companies that aren't going to scale down in a massive way.

yahoo was at risk because the BULK of their ad business was ads for a budding industry that was hit hard. Normal boring enterprise was still selling buying ads elsewhere.

Re: WeWork and Counterfeit Capitalism

#307

Post by astronautjones »

crumpets wrote: post #226
Ididntdothis wrote: post #192

Earlier quoted context omitted.

Most people don’t make enough money to save that much money so they can retire.

The number of new cars, new iphones, large houses, and other luxury purchases suggests otherwise.

that's not great logic.

https://www.washingtonpost.com/graphics/2017/national/senior...

Re: WeWork and Counterfeit Capitalism

#308

Post by crushingcrash »

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.

You're wrong on this, and the parent poster is right.

Execs in his position have style consultants on retainer.

Re: WeWork and Counterfeit Capitalism

#309

Post by charwalker »

avinium wrote: post #298
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…

While you're right, I also wonder why anyone cares if a bunch of cash-rich, overconfident private equity funds get fleeced? They're more than capable of taking care of themselves. "Counterfeit capitalism" in the era of cheap money is probably a net benefit to the average Joe because it subsidies his co-working space/taxi trips/meal deliveries/etc.

Unfortunately the opportunity cost of those bad investments might sting many in the long run. I'm not going for any trickle down style economics just that smart investment may help a smart company blow up and solve a generalized problem. They can profit but over time that improvement might spread to another industry or company and slowly make many other groups better off sort of like how investing in NASA led to advancements in technology we all use today.

I do think there should be greater checks for private capital but then again it is their money to throw around. I just lament the lost opportunity because a 50:1 unicorn was picked over a 5:1 more generalized solution, failed, and now although billions was put back into the economy no progress was made.

Re: WeWork and Counterfeit Capitalism

#310

Post by skinnymuch »

Hongwei wrote: post #249
short_sells_poo wrote: post #234

Earlier quoted context omitted.

I think it also shows the stunning level of mass delusion in the SV VC space. To this day I don't know whether the people who throw around and parrot the valuations actually mean it. I mean, take the price of a small portion of an asset that is illiquid and in short supply, and assume the same price would apply for valuing the whole? This sort of crap wouldn't fly amongst kids in kindergarten, so I'm astounded that i…

Anecdotally, no one in SV ever believed in WeWork except Softbank. I couldn't find anyone to take the Bull case on WeWork, whereas at least some people could argue Uber had a real business model that depended on self driving cars. WeWork, and Theranos before it, are not really the norm in SV. But SV and the tech ecosystem in general has a culture of "money talks," so when Softbank and Kissinger start backing these ri…

Softbank didn’t start investing in WeWork until others had gotten it to a $16B valuation 3-4 years ago. A lot of the investors weren’t SV but some were in its history.
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