WeWork withdrawl letter https://sec.report/Document/0001193125-19-258913/
WeWork says will file to withdraw IPO
321–330 of 404 posts
Re: WeWork says will file to withdraw IPO
#322I see lots of cheering which, to some degree, I understand given the public persona of Adam Neumann. I'm more interested in the ramifications, and I don't just mean the obvious ones like "potential tech recession" (maybe, who knows) or "more due diligence" (unlikely, or if so likely to swing completely the other direction). Given that "private markets are the new public markets" I wonder if this will just encourage m…
Staying private longer in the face of capital markets skeptical of money losing businesses isn't much of an option. Eventually, in order for the private investors to make money, they either need to get profitable or go public. AirBnB is a poor example of staying private longer in these circumstances because they are profitable. [0]
[0] https://www.cnbc.com/2019/01/15/airbnb-sustains-profit-as-it...
Re: WeWork says will file to withdraw IPO
#323This 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 . . .
Alternatively, never be too quick to attribute to stupidity when there’s a strong incentive for malice to take advantage of that attribution to hide itself.
Yeah,
Hanlon's Razor needs a strong caveat that it should never be uncritically applied when strong financial motives are at play.
I think Hanlon's Razor became popular in earlier days of the Internet, when dumb technical decision might happen ... people are dumb. Today, with money riding on everything, the situation can be much muddier, with dumb technical decisions happening because people are greedy ... and dumb.
Re: WeWork says will file to withdraw IPO
#324Earlier quoted context omitted.
Yes. It seemed like every single one of their drivers was getting messages from one of their chat rooms in HipChat. It was like 25k people in a single room iirc. They seemed to be using it for notifications or something? At any rate HipChat was already dead prior to the sale. Atlassian made a new program from scratch called Stride which was its own little awful can of worms.
Literally nothing in the first paragraph is true. For driver interaction, if it wasn't a push notification in the app then it would have been some sort of driver operations community tool like zendesk or similar. > It was like 25k people in a single room iirc. This never happened. I literally could not have happened. Uber ditched Hipchat when it was around 10k employees. The largest rooms I ever saw were outages or e…
Theres really no point litigating this 4 years later (who cares) but it did happen. Uber had bots of some type, thousands of them in a single room. They were the largest user of our v1 API, which was an ancient shitty PHP base, and whatever they were doing put an enormous load on our backend during peak traffic periods and crippled the entire service.
Seeing this behavior was as easy as doing a join in mysql for user ids and rooms. I mean it's likely you wouldn't have seen it, or the room, or had knowledge of it unless you weren't directly involved with whatever it was?
Re: WeWork says will file to withdraw IPO
#325Wow what a huge rise and fall in the past few weeks! What I don't understand is how the S-1 filing ever saw the light of day? How could nobody reviewing that see any of the red flags that were obvious? I think this just shows how hard it is to be objective when there are so many cultural/financial/etc influences affecting your judgement. Obviously their team bought the hype (and as a sad Browns fan I can totally symp…
It's all about them Benjamins.
Re: WeWork says will file to withdraw IPO
#326During late 1990s it was common for IPOs without much revenue and no profit.
After the crash, Google and Facebook didnt go IPO until there were profits.
This year there many IPOs with big revenues but no profits. The market isnt buying that.
Re: WeWork says will file to withdraw IPO
#327Incoming 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.
On a side note, I was quite surprised/shocked to see Waymo's recent valuation. $105Bn!! That is after Morgan Stanley cut it by 40%. So it was 165 Billion dollars prior to that. 165!! Now, Uber has it own share of quite extensive R&D on self driving tech. How can it be a $50 Bn market cap company today? With all the markets it is present in? For me, it looks like an opposite case of that of WeWork. Conspiracy against…
Uber's tech and business model is relatively easy to replicate. So much so, that in many of their markets they already have at least one close competitor, or near-perfect competitor if you count Lyft (who have a similarly good app to Uber in my estimation; many of the other substitutes seem to have a pretty acceptable app that is missing some of the polish of Uber).
This makes their business vulnerable to price competition and raises doubts about their ability to make large profits over any long period of time. At the moment, they are losing money, but their (still high, imo) valuation is based on the fact that they are the biggest player and this means they have 'mind share' / brand awareness. If they try to start making a profit e.g. by pricing above their costs and not giving so many subsidies / bonuses, then they are vulnerable to any of their numerous competitors stealing market share by undercutting / offering their own bonuses or subsidies. They are already in fierce competition in many markets so it doesn't seem that their brand is necessarily enough to give them a huge and defensible advantage.
By contrast, all reports I have read (e.g. https://www.ft.com/content/7c8e1d02-2ff2-11e9-8744-e7016697f... ) indicate that Waymo's self-driving tech is the best in the market by some margin, with Cruise a distant second (and everyone else, including Uber, way behind that). And Waymo's technology is fundamentally more complicated and difficult to copy than a taxi hailing app. You couldn't have multiple local competitors to Waymo popping up in each city around the world, in the same way you have with Uber. So their competitive advantage seems a lot more defensible, meaning that their potential to earn defensible profits from their technology seem stronger in the long run. Continuing on this idea of defensibility: whereas people are happy to try any new cab-hailing app that launches with a promotion, the decision on which self-driving tech to use is going to be a lot more strict, in that unless it really works, it's not viable. So having the best tech makes a BIG difference, unlike for ride sharing.
The car industry is worth $1tn+ per year. The market for ride sharing is probably one or two orders of magnitude smaller than that ($12bn by 2025 according to this: https://www.prnewswire.com/news-releases/ride-sharing-market... , although Uber's revenues are already $11bn so I question the accuracy of this). Uber is a loss-making and non-unique ride sharing company with so-far unfilled aspirations to develop market-ready self-driving tech. Waymo is a self-driving tech company with apparently real potential to disrupt the trillion-dollar car industry with their unique technology.
Finally, Waymo's valuation is only on paper, whereas Uber's is in a public market. As WeWork (and Uber) have recently demonstrated, private valuations may not hold in private markets. However, given the reasons above, I actually think that the Waymo valuation might be more reasonable than the Uber one.
Re: WeWork says will file to withdraw IPO
#328I'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.
In the long view, all tech companies are small bubbles. They don’t stick around and have no long term value.
Re: WeWork says will file to withdraw IPO
#329Why 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?
> Why is WeWork considered a tech company?
They are considered a tech company (by the people who consider them a tech company) because they say they're a tech company. And they say that because tech companies get higher valuations.
> And what exactly is wrong with their business model? [...] It says they take long-term leases and sell short-term leases.
Right. So in the good times, you can make a fair bit of money doing this, but in bad times you'll lose a lot of money, as all the short term leases drop off.
Traditionally companies in this space work around this by buying their own buildings, by having fat margins in the good times, by not making very much money, and by occasionally going bankrupt. :) It's a perfectly valid business model, but it's not super attractive to investors; it's capital intensive and not very profitable. IWC (formerly known as Regus) has about 5 times the locations WeWork does, and is worth about $3B. $3B is a lot of money, so there's nothing wrong with the business model, but it's also a lot less than the $47B people were talking about for WeWork until very recently.
WeWork is trying to find a way to do something different or cooler, in the hopes of finding a reason they should be values completely differently than IWC, but so far that's translated into renting buildings, thin margins, no profits, and no story for why what they're doing is fundamentally better or more valuable than what IWC is doing. Yes, they have a live DJ in one of their London buildings and IWC does not, but IWC is making money and WeWork is not, and I mean...you can hire a DJ if that turns out to be the critical feature missing from other office space.
> That seems straightforward and potentially lucrative if they're adding value
Right. Especially now that Adam Neumann has stepped down, there's no reason WeWork can't find their niche as another IWC. The problem is, as another IWC, there's no real reason they'll be worth even $10B (again, IWC is much larger and only worth $3B), and Softbank backed them at much higher valuations. Just because WeWork has a profitable niche doesn't mean their investors will be okay. For Softbank the difference between a $5B valuation and a $0B valuation is minimal, when they were expecting something more like $60B.