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Keeping loss-making giants like WeWork flush with VC cash is killing competition

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Re: Keeping loss-making giants like WeWork flush with VC cash is killing competition

#11

Post by LastWeekendWas »

RansomStark wrote: post #3

warning: cynicism incoming, but... isn't this just the VC playbook: 1. enter market 2. undercut incumbents by burning VC cash 3. wait until the incumbents fail a. if you're getting close to burning all the available cash, sell to an incumbent and try a different market. 5. you are now a de facto monopoly a. if you fail to reach monopoly status plan an exit (SPAC) before it all comes crashing down 6. increase prices a…

Except harvesting your customers [personal] data isn't just scummy, it is no longer a legitimate business model in Europe.

There is no excuse for VCs not getting up to speed on the GDPR.

Re: Keeping loss-making giants like WeWork flush with VC cash is killing competition

#12

Post by toomuchtodo »

DuctTapeAI wrote: post #10

That's literally the entire point of VC funding. Folks love to talk about the network or advice VCs can give but the real value prop is the ability to operate at questionable/negative margins for longer than your competitors.

In international trade, this is usually referred to as “dumping.” VCs simply adopted it domestically in a low regulation environment.

Re: Keeping loss-making giants like WeWork flush with VC cash is killing competition

#13

Post by tonyedgecombe »

ckdarby wrote: post #7
SilverBirch wrote: post #5

It seems odd to me to take WeWork as the example - it's the worst example. The market worked fine with WeWork, they burned a load of money in a business model that had no moat with no real plan of how they'd make the business profitable. The business wasn't profitable and so it went bankrupt. The interesting thing about WeWork is that they essentially took a silicon valley playbook - which is normally applied to prod…

I believe WeWork could have worked well, but they raised money on valuations of being like a tech company. They have a moat, their locations and global convenience. Same feel, same badge, same almost everything regardless of location. I wasn't a Wework user until about 5 months ago where I decided to start working from there with a coworker twice a month. Has been a positive game changer! The sense I get in Toronto i…

>The sense I get in Toronto is that more & more employers would like to do a model or having employees sync up at co-working locations, but are stuck with their 10 year leases.

Regus has been around for a long time.

https://www.regus.com

Re: Keeping loss-making giants like WeWork flush with VC cash is killing competition

#14

Post by SilverBirch »

ckdarby wrote: post #7
SilverBirch wrote: post #5

It seems odd to me to take WeWork as the example - it's the worst example. The market worked fine with WeWork, they burned a load of money in a business model that had no moat with no real plan of how they'd make the business profitable. The business wasn't profitable and so it went bankrupt. The interesting thing about WeWork is that they essentially took a silicon valley playbook - which is normally applied to prod…

I believe WeWork could have worked well, but they raised money on valuations of being like a tech company. They have a moat, their locations and global convenience. Same feel, same badge, same almost everything regardless of location. I wasn't a Wework user until about 5 months ago where I decided to start working from there with a coworker twice a month. Has been a positive game changer! The sense I get in Toronto i…

I don't see how you can credibly claim their locations are a moat. Take any WeWork location in the world and there will be office space to rent within 5 minutes walk. So if they ever up their prices there's a juicy opportunity for a competitor just around the corner. The global convenience is a nice feature, but for 99.99% of workers it's probably a theoretical benefit rather than a practical benefit, and so it seems unlikely that that provides a competitive advantage.

The argument that companies would move to co-working spaces during the next downturn is something WeWork argued. But the truth is that during the downturn WeWork is stuck with high long term contracts and their customers either cancel (because it's a downturn) or can move to other cheaper coworking spaces that didn't lock in high costs during the boom times. It's a highly cyclical business and we know that because we can see how other established companies operate in the space.

Re: Keeping loss-making giants like WeWork flush with VC cash is killing competition

#15

Post by tticvs »

LastWeekendWas wrote: post #11
RansomStark wrote: post #3

warning: cynicism incoming, but... isn't this just the VC playbook: 1. enter market 2. undercut incumbents by burning VC cash 3. wait until the incumbents fail a. if you're getting close to burning all the available cash, sell to an incumbent and try a different market. 5. you are now a de facto monopoly a. if you fail to reach monopoly status plan an exit (SPAC) before it all comes crashing down 6. increase prices a…

Except harvesting your customers [personal] data isn't just scummy, it is no longer a legitimate business model in Europe. There is no excuse for VCs not getting up to speed on the GDPR.

American VCs don't care much about EU regulations despite what the Europeans wants you to believe.

Re: Keeping loss-making giants like WeWork flush with VC cash is killing competition

#16

Post by [deleted] »

tonyedgecombe wrote: post #13
ckdarby wrote: post #7

Earlier quoted context omitted.

I believe WeWork could have worked well, but they raised money on valuations of being like a tech company. They have a moat, their locations and global convenience. Same feel, same badge, same almost everything regardless of location. I wasn't a Wework user until about 5 months ago where I decided to start working from there with a coworker twice a month. Has been a positive game changer! The sense I get in Toronto i…

>The sense I get in Toronto is that more & more employers would like to do a model or having employees sync up at co-working locations, but are stuck with their 10 year leases. Regus has been around for a long time. https://www.regus.com

[deleted]

Re: Keeping loss-making giants like WeWork flush with VC cash is killing competition

#17

Post by rchaud »

RansomStark wrote: post #3

warning: cynicism incoming, but... isn't this just the VC playbook: 1. enter market 2. undercut incumbents by burning VC cash 3. wait until the incumbents fail a. if you're getting close to burning all the available cash, sell to an incumbent and try a different market. 5. you are now a de facto monopoly a. if you fail to reach monopoly status plan an exit (SPAC) before it all comes crashing down 6. increase prices a…

Previously they didn't have the money or risk appetite to actually follow through on that plan. ZIRP gave them that last push. The sums that have been sunk into the WeWorks and Ubers of the world are staggering, on par with what giant infrastructure projects (with all the pork) cost.

Re: Keeping loss-making giants like WeWork flush with VC cash is killing competition

#18

Post by LastWeekendWas »

tticvs wrote: post #15
LastWeekendWas wrote: post #11

Earlier quoted context omitted.

Except harvesting your customers [personal] data isn't just scummy, it is no longer a legitimate business model in Europe. There is no excuse for VCs not getting up to speed on the GDPR.

American VCs don't care much about EU regulations despite what the Europeans wants you to believe.

They can say goodbye to the European market then.

(And the privacy conscious segment of the US market.)

Re: Keeping loss-making giants like WeWork flush with VC cash is killing competition

#19

Post by tticvs »

LastWeekendWas wrote: post #18
tticvs wrote: post #15

Earlier quoted context omitted.

American VCs don't care much about EU regulations despite what the Europeans wants you to believe.

They can say goodbye to the European market then. (And the privacy conscious segment of the US market.)

Not a very good threat since the EU market is just a distraction for all but the largest American companies, and only becoming more so every year.

Privacy conscious segment of the US market is a rounding error, despite what HN would have you believe.

Re: Keeping loss-making giants like WeWork flush with VC cash is killing competition

#20

Post by LastWeekendWas »

tticvs wrote: post #19
LastWeekendWas wrote: post #18

Earlier quoted context omitted.

They can say goodbye to the European market then. (And the privacy conscious segment of the US market.)

Not a very good threat since the EU market is just a distraction for all but the largest American companies, and only becoming more so every year. Privacy conscious segment of the US market is a rounding error, despite what HN would have you believe.

And in keeping out the parasites, nothing of value was lost :-)
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