WeWork says will file to withdraw IPO • Hacker News Board

Re: WeWork says will file to withdraw IPO

#271

Post by rebuilder » Mon, Sep 30, 2019, 8:48 PM UTC

skrebbel wrote: post #81

aresant wrote: post #49

This is almost too perfect but SoftBank is, at the moment, trying to hire a valuations director: https://www.indeed.com/viewjob?jk=cf0378114e63aeb4&from=tp-s... Sort of a "Never attribute to malice that which is adequately explained by stupidity" kind of thing . . .

In their defense, Masayoshi Son made much of his fortune by applying the greater fool theory (and lost much of it that way as well). There's a chance they really just took a calculated risk here, and with many of their other investments too. The risk being not so much the success of the company like normal VC investments, but explicitly a "maybe we can profitably push this through an IPO, let's see if the sheeple fal…

Thats quite the defense.

Re: WeWork says will file to withdraw IPO

#272

Post by myth_buster » Mon, Sep 30, 2019, 8:49 PM UTC

austenallred wrote: post #233

myth_buster wrote: post #15

I'm just impressed by how well the fallout has been predicted by Scott Galloway[0] and Matt Levine. Has been an incredible learning experience for me on the unicorn class in general. Looking forward to unicorn report for 2019 [1]. [0] https://www.profgalloway.com/wewtf-part-deux [1] https://corpgov.law.harvard.edu/2019/03/20/the-unicorn-ipo-r...

Galloway always predicts that every tech company is a bubble. Every now and then he's right.

He is bullish on AirBnB[0] and Shopify[1].

[0] https://www.vox.com/2018/10/26/18029008/pivot-kara-swisher-s...

[1] https://www.youtube.com/watch?v=m58YkxEjzT4

____

Edit

Linked to a better resource.

Re: WeWork says will file to withdraw IPO

#273

Post by maehwasu » Mon, Sep 30, 2019, 8:49 PM UTC

gist wrote: post #179

myth_buster wrote: post #15

I'm just impressed by how well the fallout has been predicted by Scott Galloway[0] and Matt Levine. Has been an incredible learning experience for me on the unicorn class in general. Looking forward to unicorn report for 2019 [1]. [0] https://www.profgalloway.com/wewtf-part-deux [1] https://corpgov.law.harvard.edu/2019/03/20/the-unicorn-ipo-r...

I wouldn't give that much worship to Galloway it's not like he is always right or my guess even close to that (and nobody is). For example this post circa 2017 about the bubble. I can't tell you how many people have not called the bubble since the last bubble correctly. Galloway is one of them: https://www.profgalloway.com/every-seven-years Market was at 21,600 (very roughly) on the approx. date of that post and now…

Yeah, if you’re bragging about Nobel prizes in economics, you’re doing it wrong. They make the Peace Prize seem rigorous.

Re: WeWork says will file to withdraw IPO

#274

Post by prostoalex » Mon, Sep 30, 2019, 8:49 PM UTC

greenyoda wrote: post #223

prostoalex wrote: post #148

Earlier quoted context omitted.

https://www.cnbc.com/2019/09/24/softbank-has-a-multi-million...

That article says: > The [ratchet] provision could grant existing shareholders $200 million to $500 million worth of additional shares, most of which would go to SoftBank, Kennedy said. For example, if WeWork’s market cap came in at less than $14.5 billion post-IPO, the total value of additional shares issued to SoftBank under the provision would be more than $400 million. $400 million doesn't seem to be much of a co…

Yeah, it doesn't de-risk the investment as far as bankruptcy, but SoftBank's exposure is $10.5 bln, according to https://www.nytimes.com/2019/01/07/business/softbank-wework.... so any valuation above $10 bln would be a break-even for them.

Re: WeWork says will file to withdraw IPO

#275

Post by notyourday » Mon, Sep 30, 2019, 8:52 PM UTC

goatinaboat wrote: post #260

notyourday wrote: post #251

Earlier quoted context omitted.

Err... that's not an accurate comparison. If Softbank gives WeWork $10B for 100% of the company then its book value will skyrocket as its liabilities won't increase even by a penny but it will get 10B on its balance sheet. There's not a single company in the WW lines business that has this kind of a prospect. Regus simply can't raise this kind of money -- if they could, they would have.

Well sure but why would they pay 10x as much as it’s worth? Remember they have already invested $10.5Bn. So they would be paying a grand total of $20.5Bn and what would be their exit strategy from that?

Lets presume that for some reason Softbank wants to play in this space. What are the plays that are at its disposal?

1. It can buy Regus. Regus does not need money to survive, has poisoned pill and does not have a brand recognition. With 3B yearly revenue. Anything below 8x the revenue probably won't get a board's automatic stamp of approval and anything below 10x won't get a board's enthusiastic "Yes, please!". So that's 35B. Regus with Softbank money would definitely crush everyone. It will take a long time just to get the 35B back.

Pro: Definitely a solid play Con: Really expensive.

2. They can create their own competitor - it will take 3-5 years or longer to assemble the entity comparable to WeWork with the same level of name recognition. It will also cost more than WeWork already burned. During that time Regus may restructure and become a real competitor ( they are in a different market now ) and whoever picks up a corpse of WeWork could become a competitor in the juciest markets.

Pro: cheapest Con: longest, and most unclear -- Regus may pick up WeWork corpse making it the undisputed leader.

3. Basically do a hostile takeover of WeWork. If that was the play, it seems to have worked very well. It was as if a biker was taking candy from a baby: neither VCs nor C-suite, not ibankers seemed to have caught on.

Pro: No WeWork corpse for Regus to pick up cheap, no other competitors show up from it. Cheaper than buying Regus. Con: ~10B spent already + 10B to buy the rest.

> what would be their exit strategy from that?

They may not be looking for an exit at all. At those sizes cash equivalents without good investment prospects aren't a good asset.

Re: WeWork says will file to withdraw IPO

#276

Post by Solar19 » Mon, Sep 30, 2019, 8:52 PM UTC

Why is WeWork considered a tech company?

And what exactly is wrong with their business model? That's not clear to me from the article. It says they take long-term leases and sell short-term leases. That seems straightforward and potentially lucrative if they're adding value, making it easier to find suitable short-term office space, etc. Is it just that they're not making money doing this? Why not?

Re: WeWork says will file to withdraw IPO

#277

Post by gbronner » Mon, Sep 30, 2019, 8:53 PM UTC

metalliqaz wrote: post #170

TheRealDunkirk wrote: post #165

Earlier quoted context omitted.

> 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(…

Office brokerage is super-inefficient. If you are looking for up to a few thousand square feet, the current search process is terrible and slow. WeWork commoditizes this aspect, and has a reputation for being an expensive, if fair landlord.

Re: WeWork says will file to withdraw IPO

#278

Post by aeternum » Mon, Sep 30, 2019, 8:54 PM UTC

austenallred wrote: post #233

myth_buster wrote: post #15

I'm just impressed by how well the fallout has been predicted by Scott Galloway[0] and Matt Levine. Has been an incredible learning experience for me on the unicorn class in general. Looking forward to unicorn report for 2019 [1]. [0] https://www.profgalloway.com/wewtf-part-deux [1] https://corpgov.law.harvard.edu/2019/03/20/the-unicorn-ipo-r...

Galloway always predicts that every tech company is a bubble. Every now and then he's right.

Right, maybe not every tech company but he is wrong more often than he is right.

For example, he predicted both Amazon and Google would be 'losers' back in 2015.. oops:

https://www.forbes.com/sites/stevedenning/2015/04/09/the-fut...

Re: WeWork says will file to withdraw IPO

#279

Post by foobiekr » Mon, Sep 30, 2019, 8:56 PM UTC

JumpCrisscross wrote: post #68

ixtli wrote: post #12

I feel bad for the stary-eyed kids one year out of college that are going to get mass fired. They're all really young and naive :/

> They're all really young and naive And now they'll be a little less of each. The lessons they can learn from this experience could put them ahead of the pack. We have an entire generation that knows nothing but post-crisis bull markets. When the next downturn comes, those tempered by bad experiences have the opportunity to position defensively and react nimbly. (Or at least more defensively and nimbler than their p…

It is honestly better to be on the leading edge of the curve than on the trailing edge.

People who got culled early in the dotcom did ok since the cross company hiring freeze wasn’t yet in effect. They took a hit but found more secure jobs earlier. The people a bit later went a year unable to find jobs.

Re: WeWork says will file to withdraw IPO

#280

Post by foobiekr » Mon, Sep 30, 2019, 8:58 PM UTC

wil421 wrote: post #241

JumpCrisscross wrote: post #152

Earlier quoted context omitted.

> Could you define: "Position yourself defensively and react nimbly" means to an IC? Depends on specifics. Broadly speaking, having been an IC, the lessons I learned the hard way were: (1) Pay your taxes early and often. Keep your credit and channels open fixed-cost obligations low. (Nimble and defensive.) (2) Save aggressively. Rule-of-thumb liquidity advice doesn't apply to you; I learned to keep 2 years of cash in…

How does an Individual Contributor (IC) have to worry about paying taxes? I’ve never worked at a company and had to worry about the timing of my taxes. Save enough for 2 years? Only a very small percent could actually save 2 years worth of salary. For a family I’m not sure if anyone able to do this. The standard advice is 6 months.

People with windfalls are often surprised how much they owe.

As an example, below 1M, I am told, Uber only withheld 25% from vested (taxable) RSU grants.

It was worse in 1999. I knew a few people who blew everything they took out at 1Y with the expectation there was more to come. They ended up with significant tax debt due to under withholding once the market crashed and there wasn’t more to come.