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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

#111

Post by ethbro »

JumpCrisscross wrote: post #87
pbreit wrote: post #82

Earlier quoted context omitted.

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

> 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…

Furthermore, and this to me is the most damning indictment: where's the moat?

SoftBank and Masayoshi Son's hypothesis is:

1. Find a market which can be captured by a business with access to massive capital

2. Provide massive capital

3. Extract profits once a monopoly has been established

WeWork is a terrible example of this, because in no way does scale give them unique advantages. And furthermore, "scale" in this context means "scale in the office property market" -- that's a pretty big pool to expect to overflow.

Re: WeWork says will file to withdraw IPO

#112

Post by djsumdog »

JohnJamesRambo wrote: post #43
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…

“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.

> 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.

Re: WeWork says will file to withdraw IPO

#113

Post by prostoalex »

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 have got to think that Soft Bank knew/knows the valuation was off.

For private rounds valuation is part of the equation, but liquidation preferences and ratchets are likely more important. As the famous finance saying goes "You set the price - I set the terms, you set the terms - I set the price".

SoftBank has negotiated downside protection. Everything from there is just gravy on top.

The press never seems to discriminate between preferred and simple shares, so why not reach for the moon, e.g. https://www.latimes.com/business/la-fi-hy-uber-ipo-20181016-...

Re: WeWork says will file to withdraw IPO

#114

Post by sukilot »

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…

Humans are often irrational

wikipedia.org/wiki/Escalation_of_commitment

wikipedia.org/wiki/Dollar_auction

Re: WeWork says will file to withdraw IPO

#115

Post by ethbro »

benj111 wrote: post #98
axiak wrote: post #39

Earlier quoted context omitted.

I think the pure tech plays in 2019 are doing just fine. Zoom, Cloudflare, and Datadog all look like good companies. They're just not over-hyped and overinflated.

This sounds slightly like a no true Scotsman arguement to me. I'm sure you could find some none pure tech plays that are successful. Plus companies like Uber don't exactly own assets, its more tech company than not. For all the promise of the Web, people live in the real world, that's where the money is to be made, mega tech companies are necessarily going to live at the interface.

The irony is that essentially all of SoftBank's playbook is ripped from Buffett.

Except Buffett did it with non-tech, capital-heavy companies. Where it arguably works a lot more reliably.

Re: WeWork says will file to withdraw IPO

#116

Post by CydeWeys »

bjtonline wrote: post #13
dcchambers wrote: post #6

Earlier quoted context omitted.

How many engineers does WeWork actually employ though? From everything I've read on here they're not really a tech company. I can't imagine that, even if it all goes up in flames, there will be many SWEs looking for new jobs from this. Uber is another story. They've got a sizeable engineering force.

WeWork has done a significant amount of hiring in New York City for SWEs with very generous compensation, and honestly hasn't really had much for them to do.

Any idea how much the actual salary for these positions was vs the stock component which may well be worth nothing?

Re: WeWork says will file to withdraw IPO

#117

Post by samstave »

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.

We should start a google sheet of startup ideas where ppl from this and all pools can say “I have talent that would work for that” and others can say “I’d fund that”

Actually, we just need this in general...

Re: WeWork says will file to withdraw IPO

#118

Post by butterfi »

Its been interesting reading the various takes on WeWork. I have my own casual rating -- I walk past a very fancy WeWork space in Levi Plaza and I rarely see people in it. I often wonder how they manage to survive given the high rent.

Re: WeWork says will file to withdraw IPO

#119

Post by ghaff »

sk5t wrote: post #66
cj wrote: post #9

Earlier quoted context omitted.

> Hopefully it doesn't paint other great IPOs in a bad light. Are you thinking of any in particular? Attention toward IPOs (especially on HN) go almost exclusively to bad IPOs. Fair offerings seem to get ignored. Edit: Peloton is one that comes to mind. Nearly $1 billion in sales, up 40% YoY. Although even they are posting a net loss of a quarter billion.

> Peloton is one that comes to mind Is it not possible that both investors and the public will find the shine off the apple of pairing two independently somewhat unattractive things--a stationary bicycle and a hefty monthly fee--as used models start to hit the secondary market? Have you ever tried to sell a used stationary bicycle? It ain't easy! The evidence of the gulf between good intentions and regular use is rig…

It's certainly not hard to imagine Peloton is something of a fad. There is no shortage of those in the fitness space--in addition to the, as you say, general omnipresence of New Year's resolutions vs. ongoing use.

Re: WeWork says will file to withdraw IPO

#120

Post by john_moscow »

akulkarni wrote: post #77
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.

This is a classic "bottoms-up" model that is quite viable (eg Dropbox, Slack, Zoom, Elastic, MongoDB). Not sure why anyone would call it a scam. 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.

>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 did that as well".

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