SoftBank to take control of WeWork: Sources • Hacker News Board

Re: SoftBank to take control of WeWork: Sources

#111

Post by teuobk » Tue, Oct 22, 2019, 1:54 AM UTC

malandrew wrote: post #72

Traster wrote: post #12

It's very difficult to see how SoftBank breaks even on this new deal. They're investing $5bn now, with the hope that it's worth more than that when they IPO, but several things have killed that idea. Firstly, their brand is tarnished. Secondly, the growth play will be gone by the time they IPO. Thirdly, the charismatic leader is gone, so the message of "Disrupting" and "We're a tech play' is gone. They've put $5bn in…

What if they are just trying to stem a contagion effect spreading to their other investments. Their other investments are a lot better but the retail market can be very irrational when there is bad news.

Yeah, seems like SoftBank isn't doing this just to save face. They're doing it to prevent the whole party from coming to an end, right quick.

Re: SoftBank to take control of WeWork: Sources

#112

Post by ceejayoz » Tue, Oct 22, 2019, 1:56 AM UTC

stickfigure wrote: post #44

hari_seldon_ wrote: post #37

Earlier quoted context omitted.

Can you explain why you think they are not going to be forced to remain in “wartime?”

Presumably the unit economics are positive and they will break even.

Why is it a given the unit economics are positive?

Re: SoftBank to take control of WeWork: Sources

#113

Post by perl4ever » Tue, Oct 22, 2019, 2:00 AM UTC

threeseed wrote: post #9

neural_thing wrote: post #3

This is your annual reminder that Masa Son once lost $70B

And is now worth $23B. So I would assume he knows a little about business.

Well, you can infer that, and people do often infer that from losing a lot of money and then coming back.

But it could be just one-in-a-billion luck.

https://xkcd.com/1827/

Re: SoftBank to take control of WeWork: Sources

#114

Post by OnlineGladiator » Tue, Oct 22, 2019, 2:01 AM UTC

PeterisP wrote: post #77

OnlineGladiator wrote: post #61

Earlier quoted context omitted.

Fair point, the way I said it exaggerated the issue. But I still think any company sold more than once has an issue. Boston Dynamics was first sold to Google, and then sold to Softbank - so they meet my criterion.

As far as I understand, the reason why Google sold Boston Dynamics was not because it wasn't able to make a profit, but because the obvious way how it would make a profit - military contracts - were not considered strategically acceptable.

Except the military rejected Boston Dynamics for being too loud - I'm not sure of the timing of that decision though so that very well may have been determined after Google sold Boston Dynamics.

Also this reason rings hollow with some of the other stuff Google has attempted with doing business in China.

Re: SoftBank to take control of WeWork: Sources

#115

Post by perl4ever » Tue, Oct 22, 2019, 2:03 AM UTC

rgbrenner wrote: post #104

threeseed wrote: post #9

Earlier quoted context omitted.

And is now worth $23B. So I would assume he knows a little about business.

His entire net worth can be accounted for with Softbank's investment of $20m in Alibaba in 1999. That's now worth ~$110B... and he has a 21% stake in softbank. Remove that.. and he's at 0 or even negative. Is that luck or skill?

Reminds me of Bill Ackman and General Growth Properties.

Re: SoftBank to take control of WeWork: Sources

#116

Post by ceejayoz » Tue, Oct 22, 2019, 2:05 AM UTC

hilbertseries wrote: post #70

nostrademons wrote: post #60

Earlier quoted context omitted.

> My limited understanding is they are avoiding an IPO because their financials are not up to snuff. My understanding is that they're avoiding an IPO because it would jeopardize SpaceX's mission of getting to Mars. When they're privately held, Musk can vet investors to be sure that they're aligned with SpaceX's mission, or ensure that they're powerless enough that they can't make problems if they're not (eg. no board…

I highly doubt going to Mars is the reason space x is still private. Given that astronauts have shown somewhat serious issues after being in space for six months, it’s unlikely the human body could survive three years in zero gravity without serious damage. Which means that a space flight to Mars would also require some form of artificial gravity and so for our lifetimes, is likely going to remain science fiction. No…

Where'd you get the idea that a Mars trip is going to involve three years of zero-G?

A Hohmann transfer orbit (minimum energy) will get you there in nine months. SpaceX is targeting a higher energy, shorter trip that'll probably wind up being about six months each way (with Mars gravity in the middle).

Re: SoftBank to take control of WeWork: Sources

#117

Post by ceejayoz » Tue, Oct 22, 2019, 2:06 AM UTC

hilbertseries wrote: post #107

nostrademons wrote: post #101

Earlier quoted context omitted.

Or physics - how to generate artificial gravity on an accelerating spaceship is literally an intro physics homework question.

We've currently never built a manned space ship for month long travels in outer space. We've never built a space ship that uses centrifugal force to simulate gravity and done longitudinal studies to verify that this doesn't have an adverse impact on Humans. SpaceX is has a market capitalization of 33.3 Billion. SpaceX which was founded 17 years ago has never had a manned flight. SpaceX has also never had a flight lea…

> SpaceX has also never had a flight leave the atmosphere so far.

Uh, what?

Re: SoftBank to take control of WeWork: Sources

#118

Post by nihonde » Tue, Oct 22, 2019, 2:07 AM UTC

ivalm wrote: post #47

nihonde wrote: post #38

Earlier quoted context omitted.

They basically bought control of the company for ~$15B. Any valuation north of $20B ought to put them in the black.

Big Edit: multiplying is hard, forgot to multiply by the PE ratio! Actually, potential valuation is 660B.. so 20% would mean 3% of US office real estate business. At a less generous pe of ~10 (perhaps more appropriate given they don't own the buildings), it would be about 10% of real estate market. ------ Sure, but $20B valuation seems hard to achieve. US commercial real estate market by revenue is ~$1.1T [0] Office…

I think it’s a given that Softbank’s involvement means the target market is global, with expansion in EMEA through acquisitions or mergers with other portfolio companies.

Re: SoftBank to take control of WeWork: Sources

#119

Post by CrazyStat » Tue, Oct 22, 2019, 2:13 AM UTC

philip1209 wrote: post #25

Traster wrote: post #12

It's very difficult to see how SoftBank breaks even on this new deal. They're investing $5bn now, with the hope that it's worth more than that when they IPO, but several things have killed that idea. Firstly, their brand is tarnished. Secondly, the growth play will be gone by the time they IPO. Thirdly, the charismatic leader is gone, so the message of "Disrupting" and "We're a tech play' is gone. They've put $5bn in…

I don't think their brand is "tarnished." The only people they are beholden to are their LPs, who I assume endorsed this deal. None of the actions they have taken as an investor should make others view their money "toxic." WeWork is just going to have to transition from wartime to peacetime. Ben Horowitz has a great article about what this looks like [1]. They're going to clean up the books, stop making risky acquisi…

The peacetime version of WeWork that you envision already exists, it's called IWG. It's roughly the same size as WeWork but it's only worth $4.5b. Paying $5b for 70% of it doesn't seem like a good idea.

Re: SoftBank to take control of WeWork: Sources

#120

Post by rurp » Tue, Oct 22, 2019, 2:26 AM UTC

ceejayoz wrote: post #112

stickfigure wrote: post #44

Earlier quoted context omitted.

Presumably the unit economics are positive and they will break even.

Why is it a given the unit economics are positive?

It's not, but WeWork heavily implied they are and that seems to be a key part of their new strategy. Obviously many people are skeptical (including myself), but I suppose we'll find out soon enough.