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WeWork says will file to withdraw IPO

reuters.com

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Re: WeWork says will file to withdraw IPO

#161

Post by munk-a »

pbreit wrote: post #82
JohnJamesRambo wrote: post #43

Earlier quoted context omitted.

“There are three ways to make a living in this business: be first, be smarter, or cheat.“ -Margin Call SV ran out of the first two because they are much harder. We are left with the dying gasps of companies trying the third way.

How is this comment relevant to WeWork? How has it "cheated"? It definitely is early/first and very smart.

Honestly, it wasn't even smart. And the thing it was first at was social focused co-working spaces, there have been more bare bones offerings for co-working spaces for a long time, WeWork just tried to appeal to that SV niche of people that'd like the folks they're subletting with to be the kind they'd like to share a beer with.

Re: WeWork says will file to withdraw IPO

#162

Post by john_moscow »

akulkarni wrote: post #128
john_moscow wrote: post #120

Earlier quoted context omitted.

>This is a classic "bottoms-up" model that is quite viable (eg Dropbox, Slack, Zoom, Elastic, MongoDB). None of which are profitable. >In fact, I would be wary of software companies without a base of free users, as that means the company needs to keep spending a lot of its revenue on sales and marketing. I am much more wary of companies that keep or burning cash for years and years with the only excuse that "Amazon d…

> I am much more wary of companies that keep or burning cash for years and years with the only excuse that "Amazon did that as well". I think about this a little differently. Spending money on free users is actually a much more efficient "marketing expense" than classic outbound strategies (e.g., online advertising).

Yes, but if your marketing expenses systematically exceed the revenue from the paid customers, your business isn't viable.

Re: WeWork says will file to withdraw IPO

#163

Post by JumpCrisscross »

pbreit wrote: post #154
JumpCrisscross wrote: post #87

Earlier quoted context omitted.

> How is this comment relevant to WeWork? How has it "cheated"? They borrowed short, lent long and then pretended it was as sustainable business. To their credit, they abundantly disclosed their shenanigans. (I haven't seen any evidence suggesting investors can reasonably claim fraud.) But they were playing fast and loose with basic economics. At its core, sure, WeWork could have been a business. Its thesis, that off…

So not really any "cheating", right?

> So not really any "cheating", right?

No evidence of fraud, no. But cheating is not necessarily fraud because not all rules are codified as law. There is cleverly devious cheating, like a lot of what Gates and Jobs did in the 80s. That's cheating, but it's clever and it's cute so we think of it positively.

Then there's cheating as in pretending to defy the laws of economics, which is what WeWork did. They were trying to scale out of a business that loses money on the marginal dollar. Nothing illegal about that. But together with Masa Son's spigot of Saudi cash and Neumann's rampant self dealing, I'd go ahead and qualify it as cheating.

Re: WeWork says will file to withdraw IPO

#164

Post by munk-a »

pbreit wrote: post #155
gtirloni wrote: post #84

Earlier quoted context omitted.

Early/first in what exactly?

Massive paradigm shift in office leasing.

Please elaborate in what was innovative here, their technical infrastructure seems to be nothing to write home about and well appointed office leasing has been around for quite some time.

The social focus is indeed different but I wouldn't call that alone a massive paradigm shift.

Re: WeWork says will file to withdraw IPO

#165

Post by TheRealDunkirk »

S_A_P wrote: post #19

What I don't understand is how do things get this far down the road before a good old fashioned sanity check happens? I have got to think that Soft Bank knew/knows the valuation was off. The fact that they pushed on means they either intended to try and get away with it/take the money and run as I cant believe incompetence is the reason here. How did this get so far along??? As for Adam N, I have to think some part o…

> but it seems that the last couple of really huge unicorn companies have all been based on BS(We Work), Fraud(Theranos), and untenable business models (Uber).

What I don't understand, and this is an honest question for this crowd: aren't these viable businesses, in and of themselves? Maybe this is a stupid question. This is probably what allowed them to run so far on what they actually were, but here's the question anyway.

For instance, WeWork seems to be an AWS-for-office-space. Is that not a useful business? If I own a contract for space that can be slotted into anywhere in the world I might want to sit, is that not a useful thing to pay for? One might argue that, if I had the resources to truly care about a world-wide smorgasbord of office spaces to choose from at any given time, I'd have enough resources to lease my own building(s). But it still seems like something the market needs. Did it have to be a one-hundred-billionaire-minting business to rent space into that kind of market?

Theranos seems like a useful thing, and there seems to be an opening in the market for it. Are the cost mechanics of the available technology and the opportunity not aligned? Is there no way to run an economically-viable company providing a blood tester unit with a more-limited set of tests? Did it have to be a unicorn, end-all-be-all, existing-testing-company-destroyer to make any money?

You see where I'm going now. Does Uber need to suck all the money into their pockets to fund their self-driving car efforts (or wherever all this money is going) in order for any of it to work? Surely there's a model of ride sharing through an app that doesn't have to suck, pay their drivers well, and is a sustainable business, right? Does it really have to be the "Uber-of-cars," so to speak, in order to exist at all?

Is the only game left in the Valley, now, unicorns? All others need not apply?

Re: WeWork says will file to withdraw IPO

#166

Post by Jagat »

munk-a wrote: post #158
mschuster91 wrote: post #125

Earlier quoted context omitted.

> Basically, just ignore the law, but make sure you get enough workers and customers that love you so that they turn against politics when you break the law. Unfortunately, this seems to be the only way that's not outright massive violence such as Hongkong or France to get politicians to do their goddamn job. Taxi services have had a really massive lobby power in the US.

Is Uber in it for the social change? If not then this is just a silly point. Some of the regulations were unreasonable and the result of corruption - but Uber also skirted insurance and background check related laws at various times.

Neither is the taxi lobby out there for the social change.

It's better to have two parties competing for user's money than just one party fixing the price and service quality.

Re: WeWork says will file to withdraw IPO

#167

Post by richardwhiuk »

TheRealDunkirk wrote: post #165
S_A_P wrote: post #19

What I don't understand is how do things get this far down the road before a good old fashioned sanity check happens? I have got to think that Soft Bank knew/knows the valuation was off. The fact that they pushed on means they either intended to try and get away with it/take the money and run as I cant believe incompetence is the reason here. How did this get so far along??? As for Adam N, I have to think some part o…

> but it seems that the last couple of really huge unicorn companies have all been based on BS(We Work), Fraud(Theranos), and untenable business models (Uber). What I don't understand, and this is an honest question for this crowd: aren't these viable businesses, in and of themselves? Maybe this is a stupid question. This is probably what allowed them to run so far on what they actually were, but here's the question…

The problem with WeWork is that it's business is fundamentally rubbish.

It has long leases for buildings, and short leases for customer, so it's basically failure scenario number 1 for an economic downturn.

And yes, if you act as a startup, and hire engineers assuming you are startup, you better be a unicorn.

Re: WeWork says will file to withdraw IPO

#168

Post by john_moscow »

skinnymuch wrote: post #129
john_moscow wrote: post #71

Earlier quoted context omitted.

Cloudflare still relies on the "massive amount of free users creating buzz vs. a tiny fraction of paid users". Although not an obvious scam, they may very well go the Groupon way.

What relevance does Groupon have? The two companies aren’t related in any major way. Def not with freemium model or revenue model.

Groupon is a perfect example of a company that became irrelevant before reaching profitability. Most tech valuations are based on the assumption that the company's product will stay hot forever, giving enough time to cut expenses and turn black. While in reality, the crowd of early adopters that gave you the hockey stick growth, quickly moves on to something else once they get bored and then it turns out your market is orders of magnitude smaller than your investors expected.

Re: WeWork says will file to withdraw IPO

#169

Post by rauchp »

ethbro wrote: post #141
konschubert wrote: post #130

Earlier quoted context omitted.

Same for Uber.

I was going to include Uber, but there's an argument that creating a realtime, massively-scaled fare-setting infrastructure is a moat. Uber's product isn't rides. Uber's product is being the market-maker between riders and drivers.

Right, but Lyft has the same product. Given enough time, we might see other ride-share companies succeed with the same (yet inferior) tech servicing specific cities.

Austin has a non-profit rideshare business that matches riders and drivers.

http://www.rideaustin.com

Re: WeWork says will file to withdraw IPO

#170

Post by metalliqaz »

TheRealDunkirk wrote: post #165
S_A_P wrote: post #19

What I don't understand is how do things get this far down the road before a good old fashioned sanity check happens? I have got to think that Soft Bank knew/knows the valuation was off. The fact that they pushed on means they either intended to try and get away with it/take the money and run as I cant believe incompetence is the reason here. How did this get so far along??? As for Adam N, I have to think some part o…

> but it seems that the last couple of really huge unicorn companies have all been based on BS(We Work), Fraud(Theranos), and untenable business models (Uber). What I don't understand, and this is an honest question for this crowd: aren't these viable businesses, in and of themselves? Maybe this is a stupid question. This is probably what allowed them to run so far on what they actually were, but here's the question…

> For instance, WeWork seems to be an AWS-for-office-space. Is that not a useful business? If I own a contract for space that can be slotted into anywhere in the world I might want to sit, is that not a useful thing to pay for? One might argue that, if I had the resources to truly care about a world-wide smorgasbord of office spaces to choose from at any given time, I'd have enough resources to lease my own building(s). But it still seems like something the market needs. Did it have to be a one-hundred-billionaire-minting business to rent space into that kind of market?

I think about it from the other direction. WeWork leases office space and parcels it out to temporary tenants. But, what's to stop the management companies that already own the office space to do the same thing? Why pay a middle man? WeWork would take the risk and prove the model effective in a particular area, then their own suppliers could undercut them.

Theranos was trying to sell technology that doesn't exist.

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