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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

#191

Post by GCA10 »

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…

As much as we'd like to draw a sharp line between "Real Businesses" and "Frauds," so much of it actually comes down to whether you can match your ambitions to the amount of money you're likely to raise.

Think about the construction of the Panama Canal. The first few attempts were total fails, because canal-building technology wasn't as advanced as people thought, and eventually the funders got tired of what they perceived as "throwing good money after bad."

Eventually the canal did get built. Technology improved and the winning venture had enough funding to make it happen.

As a thought experiment, if We/Neumann/Softbank had enough money to buy or lease all the great real estate in the world, and to educate all the population in We schools, so that they needed/wanted We offices when they grew up, it could have ruled the world. Putting it that bluntly makes it sound silly, which is probably the right way to view the Neumann era in retrospect.

But when We's future liquidity seemed almost endless, it was possible to dream big dreams. What got them undone is the reality that capital markets do not stay giddy forever. At the top of every cycle, there's always someone who ginned up an enormous flop -- losing their funding partway through for a dream that would not work without more capital.

Re: WeWork says will file to withdraw IPO

#192

Post by fullshark »

Hongwei wrote: post #38
harryh wrote: post #23

Earlier quoted context omitted.

In order for something to be fraud there has to be deception. This was never the case with WeWork.

I think the shenanigans they were pulling (crazy governance, conflicts of interest enriching the founder and wife, bad acquisitions) were obvious to the HN and analyst community, but possibly they hoped it would be over the heads of retail investors. Now obviously, in this case, it was too blatant and stunk bad enough that even retail investors shied away.

Well speaking for myself it was obvious to me, but it was NOT obvious it wouldn't work. A lot of companies had successful IPOs with those issues.

Re: WeWork says will file to withdraw IPO

#193

Post by wpietri »

dalbasal wrote: post #143
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…

Fred W just wrote about this, with a fairly moderate perspective. Reality check, rather than reality crashing down. I think wework just has too many things wrong with it. (1) Recent IPOs (eg uber), weren't great. (2) Financial performance from uber and other recent IPOs isn't great. (3) Theranos is old-ish news by now, but it's a good example of what public investors are looking out for: bubble excesses. Public marke…

Personally, I'm delighted to see the unicorn bubble popping. For a long time I've felt like the "Uber for X" wave of companies soaked up a lot of investment that should have gone to people building reasonable businesses. It seemed to me that investors were looking for the next Google, the next Facebook. Ignoring that when Google and Facebook started out, they were much more focused and modest than the high-drama unicorns hyping up how they were going to dominate the planet. (And also ignoring that both were profitable at IPO.)

Re: WeWork says will file to withdraw IPO

#194

Post by dcolkitt »

abvdasker wrote: post #189
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.

Oh man, what a fantastic film. It's a been a while since I saw Margin Call, but I still feel like it's one of the films that best captured the 2008 financial crisis. Jeremy Irons' portrayal of a Goldman CEO-like character — I think he's the one who delivers the line you quoted — remains probably the most convincing portrayal of that type of person I can remember. The wonderful board room scene: https://www.youtube.co…

I was working on a credit trading desk during the beginning of the crisis. At least in my experience, Margin Call is definitely the most accurate movie about high finance I've ever seen.

Re: WeWork says will file to withdraw IPO

#195

Post by vonmoltke »

5trokerac3 wrote: post #145
mypalmike wrote: post #74

Earlier quoted context omitted.

Twitter might be a bad example. The current P/E of Twitter is around 14 with the stock trading around 80% over the IPO price.

And when was the last time Twitter turned a profit?

Last quarter? https://finance.yahoo.com/quote/TWTR/financials?p=TWTR

Re: WeWork says will file to withdraw IPO

#196

Post by rightbyte »

streetcat1 wrote: post #76
mharroun wrote: post #4

Incoming layoffs... between wework and uber the market will be "flooded" with talent. I wonder if having wework on your resume is a good or bad thing.

The market is always flooded with "talent". The problem is finding good engineers which are around 1 in 100 resumes.

How do you know the other 99 are bad?

Re: WeWork says will file to withdraw IPO

#197

Post by paulddraper »

wpietri wrote: post #188
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…

I think there's a class of narcissist that doesn't really have knowledge and beliefs as much as they have desires and things to say that get them closer to their desires. So in some sense I think asking what Adam Neumann and Elizabeth Holmes really believe is a category error. Knowing the truth makes lying really hard. If you spend a lot of time figuring out what's true, that builds mental habits that make lying feel…

Exactly.

Everyone has their own peculiar mental model of reality, sometimes more optimistic, sometimes more pessimistic, almost always with strange boundaries on the thinkable universe.

I estimate this is how the majority of bad financial situations happen, whether untenable mortgages, huge credit card bills, excessive student debt, etc.

People are usually not fundamentally stupid or poor decision makers, but they do usually ignore uncomfortable thoughts.

It's easy for that to happen to one person; it's more surprising when it happens to dozens of people.

Re: WeWork says will file to withdraw IPO

#198

Post by user5994461 »

pram wrote: post #122
PMan74 wrote: post #103

Earlier quoted context omitted.

From an external viewpoint stuff like building your own internal chat application seems like a "too many engineers with too little to do" kid of decision. https://eng.uber.com/uchat/

The chat program they’re referring to in the beginning was HipChat, which really was a steaming pile of crap. Uber was our largest user and they constantly brought the entire service down. IDK if making their own was the right solution, but it was driven by necessity and not boredom I assure you.

The largest user of HipChat, really? Uber must have been something like 5k-15k employees at that time. I thought HipChat was used in F500, much larger than that.

Anyway, HipChat was bought and killed by Slack. They avoided a dying product by accident.

Re: WeWork says will file to withdraw IPO

#199

Post by nonconvergent »

SAI_Peregrinus wrote: post #175
djsumdog wrote: post #112

Earlier quoted context omitted.

> or cheat This is called "Being disruptive." 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.

This gets called "being disruptive" but it's possible to be disruptive without ignoring the law. For example see SpaceX: successful disruption of the launch industry, without breaking any laws. The issue is that not every industry is so inefficient as to be possible to legally disrupt profitably, so people try to do an end-run around the law.

The CEO of SpaceX did commit a couple crimes in the same podcast.

Uber's autonomous car fatally collided with a woman, raising questions of negligence and liability in automation.

Uber acquired some of Alphabet/Waymo's trade secrets when they aqui-hired one of their former engineers who apparently kept a bunch of Waymo's IP he worked on. That engineer himself is now facing a federal indictment, and Uber and Waymo have settled.

E-scooters are facilitating a number of city-specific crimes (it's usually illegal to operate a vehicle, bike, or skate on a city sidewalk and the e-scooters do not provide helmets but neither do the riders). To say nothing of the legally dubious use of public property to deploy them.

Move fast and break stuff indeed.

Re: WeWork says will file to withdraw IPO

#200

Post by danesparza »

wpietri wrote: post #188
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…

I think there's a class of narcissist that doesn't really have knowledge and beliefs as much as they have desires and things to say that get them closer to their desires. So in some sense I think asking what Adam Neumann and Elizabeth Holmes really believe is a category error. Knowing the truth makes lying really hard. If you spend a lot of time figuring out what's true, that builds mental habits that make lying feel…

I think the OP's question really involves the CFO or any accountants involved in this case. I would expect the CEO to be driven more by vision than by cold, hard facts.
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