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WeWork and Counterfeit Capitalism

mattstoller.substack.com

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Re: WeWork and Counterfeit Capitalism

#371

Post by imtringued »

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…

Operating a kubernetes cluster on-prem is much harder than you think. Kubernetes is an overcomplicated mess if you want to build a cluster yourself and it's a mess every time you want to upgrade to a newer version.

Re: WeWork and Counterfeit Capitalism

#372

Post by imtringued »

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?

The monopoly benefits from economies of scale. The future competitor has to make every investment that the monopoly made.

Re: WeWork and Counterfeit Capitalism

#373

Post by imtringued »

petra wrote: post #288
DebtDeflation wrote: post #134

Earlier quoted context omitted.

The issue is fixed vs variable costs. The scale argument requires very high fixed costs and very low variable costs. Then, once the initial hurdle is cleared, marginal costs per incremental unit of revenue are very low while barriers to entry against competition are very high. WeWork is the exact opposite of this as their leasing costs (variable) are like 90% of rental revenue.

But leasing becomes ownership - and than it's a "high fixed costs, low marginal costs" situation.

If WeWork had ownership claims to the properties it rents out then it wouldn't be in trouble. It's value would be equal to how much real estate it owns.

Re: WeWork and Counterfeit Capitalism

#374

Post by moduspol »

Wowfunhappy wrote: post #171
saalweachter wrote: post #148

Earlier quoted context omitted.

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…

...and I guess Uber's main innovation there was, make the drivers independent contractors, so you don't have to pay them for the time they're idle. :\

And (perhaps more importantly) actually give the end user a reasonable estimation of what's going on and how long it'll take for the driver to reach you.

Re: WeWork and Counterfeit Capitalism

#375

Post by imtringued »

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…

They can't hold landlords hostage. The best they can do is to cancel the lease and convert WeWork into an Airbnb style platform that lets the landlord rent out their office space as a workspace. This shifts most of the risk to the landlords and WeWork can simply take a transaction fee as a middle man.

Re: WeWork and Counterfeit Capitalism

#376

Post by matwood »

munk-a wrote: post #224
WalterBright wrote: post #204

Earlier quoted context omitted.

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…

Bookstores provide a lot of service value, a decent bookstore will allow you to find similar material, allow you to browse as you please (instead of the skimpy sample pages), usually contain an expert that can offer advice and allow you to walk out with your purchase. Additionally it's common to see a heavy effort at investing in the atmosphere. Amazon has succeeded at beating bookstores in none of these categories -…

> Bookstores provide a lot of service value, a decent bookstore will allow you to find similar material, allow you to browse as you please (instead of the skimpy sample pages), usually contain an expert that can offer advice and allow you to walk out with your purchase. Additionally it's common to see a heavy effort at investing in the atmosphere.

Maybe post-Amazon retro bookstores provide this, but prior to Amazon bookstores were mostly garbage. You could only browse what they had, which was far from everything. Prices were also very high. I remember as a kid bringing in pencil and paper to copy down algorithms from books that were simply too expensive to purchase. There were also few if any 'experts' at the book store.

For me, the internet + Amazon (and now 1/same day delivery) is better than a book store in every way.

The only place that I know of now that provides something close to what your are romanticizing about is libraries. People who work there for the most part still care about books and understand their catalog. But, anything even remotely popular will likely be checked out which means I'll end up back at Amazon.

Re: WeWork and Counterfeit Capitalism

#377

Post by davidajackson »

JumpCrisscross wrote: post #188
iamkroot wrote: post #80

Earlier quoted context omitted.

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

> Why can't they be held responsible for the foolishness of their actions? Because it's politically difficult. Sometimes, infeasible. The public often pays for defrauded grandmas' mistakes. There are also positive externalities to stable business environments. Diligence costs money. Putting some of that cost on the issuer, once, is more efficient than each investor incurring it. Consistent rules around fraud and disc…

But she can buy lottery tickets without understanding that her odds of a profit are worse than jumping on an ICO? Seems hypocritical to me.

I'm no expert about legal matters. I'd appreciate if someone else can chime in here. But I found this with a brief search:

"To be an accredited investor, a person must have an annual income exceeding $200,000, or $300,000 for joint income, for the last two years with expectation of earning the same or higher income in the current year."

Let's say you're smart but poor. So, even after doing your research, you have to be richer to get richer? Again, seems hypocritical and feels like it does less to protect people.

Now, let's say the SEC develops a test for an accredited investor status. How is the SEC supposed to test that you can assess good business ideas/risk efficiently? Some of the smartest people took bets that seems insanely risky and were considered stupid. I don't think there's a test able to judge this.

As an aside: It would be cool if hacker news could let you attach a flair to your profile for an area of expertise, and then you could request input from people with a specific flair who are also commenting on a thread.

Re: WeWork and Counterfeit Capitalism

#378

Post by bigYahnz »

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…

Predatory return policy?

>let me use this video card for two years and then get a 100% refund by shipping it back to Amazon.

Why would I shop anywhere else?

Re: WeWork and Counterfeit Capitalism

#379

Post by bluGill »

smogcutter wrote: post #346
bsder wrote: post #336

Earlier quoted context omitted.

> Not paying sales tax on mail order was the norm. You're forgetting that mail order wasn't the norm--even if you ordered from a catalog you picked it up in person at the store. So, not collecting tax on mail order wasn't a big deal until Amazon flattened bookstores with it.

Huh? That’s not how I remember it at all. You ordered from the catalog and then waited three weeks. If you were going to pick up in the store, why not just go to the store instead of calling an 800 number and reading off your credit card info? There was a whole Seinfeld episode about how the only mail anyone got anymore was catalogs. Per FRED[1], monthly mail order sales doubled from 1992 to the end of 96. Obviously…

You picked up in store because there was free shipping to the sears store in town. You didn't go to the sears store in town because it didn't have very much inventory.

Note that we are talking about small rural towns in the middle of nowhere. When sears started most of the population was either a farmer, or lived in a small town in farm country. If you lived in a large city you could go to a department store downtown and it would have everything. If you lived in a small town the department store had only the very popular items and you were expected to order from them.

By the 1980s the population had shifted to bigger cities, and UPS offered affordable shipping to your door, so those small town stores had little reason to exist and started closing.

Re: WeWork and Counterfeit Capitalism

#380

Post by ragazzina »

byeadam wrote: post #323

> If you can counterfeit something for cheap, the counterfeit will eventually take over the entire market and drive out the real commodity. This is definitely true in the case of parmigiano reggiano cheese which is a $1.2 billion dollar a year business from the real cheese. The fake cheese, called parmesan, makes $100 billion. 99% of Parm cheese sold each year is fake.

99% in revenue, so probably more than that in volume.
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