WeWork Isn’t a Tech Company • Hacker News Board

Re: WeWork Isn’t a Tech Company

#121

Post by tdaltonc » Wed, Aug 21, 2019, 11:28 PM UTC

megaremote wrote: post #116

rlucas wrote: post #20

It's a 1920s (pre-FDIC) bank, or a 2008-style risky financial instrument, like an Auction-Rate Preferred. WeWork's business model is "borrow short, lend long." That is, they accept very short term promises to pay (month to month leases from customers), and aggregate them to make very long term promises to pay (mutli year leases from suppliers). Keep the spread. This works as long as there are lots of customers who wi…

> That is, they accept very short term promises to pay (month to month leases from customers) No, that is the market. Just like airbnb compared to normal renting.

Except AirBnB does not have any long term obligations wrt the properties. If the market for short term residential renting takes a dive, AirBnB has to fire some people. If the market for short term office space takes a dive, WeWork is stuck holding a bunch of property and lease agreements that they have to fulfill.

Re: WeWork Isn’t a Tech Company

#122

Post by megaremote » Wed, Aug 21, 2019, 11:32 PM UTC

thorwasdfasdf wrote: post #63

baddox wrote: post #26

Earlier quoted context omitted.

Is it really that important to define the term precisely? It doesn't seem like the term is used precisely, so what's the point in defining it precisely?

It makes a big difference in the aggregated analysis of the IPO market. Tech is one of the few IPO areas that actually come close to matching the S&P500 returns (tech did better than any other IPO category). So, most companies going public want to be considered and valued as "tech".

Cool, so it doesn't really matter.

Re: WeWork Isn’t a Tech Company

#123

Post by TrackerFF » Wed, Aug 21, 2019, 11:32 PM UTC

paxys wrote: post #10

I like that WeWork is finally forcing us to have the conversation about WTF a "tech company" even is. A company that sells software? Or one that employs a lot of engineers? Or companies that use a lot of tech in their operations? Companies with a presence in San Francisco and Kombucha on tap? Are big banks tech companies? Insurance providers? Hospitals, auto manufacturers, oil and gas... What isn't a tech company?

A lot of these companies are nothing more than traditional companies but with a tech interface.

Re: WeWork Isn’t a Tech Company

#124

Post by CrazyStat » Wed, Aug 21, 2019, 11:34 PM UTC

maratd wrote: post #108

chiefalchemist wrote: post #106

Earlier quoted context omitted.

They all need technolgy and came about because of the powerful handheld mobile device. The first three are at least software companies. Business and social changes aside, WeWork could have happened 20 years ago.

> They all need technolgy and came about because of the powerful handheld mobile device. I'm not sure why Uber is a tech company because you can order a taxi using your phone, but WeWork is not ... because you can reserve a room or space using your phone? Not all members pay for an office. Some of us are nomads and stay at whichever WeWork is convenient. We make reservations for space using our phone.

Uber is a tech company because their primary business is providing an app. If they owned or leased a million cars to provide their service then they would not be a tech company.

If WeWork was AirBnB for work spaces then I'd call them a tech company. But they're not.

Re: WeWork Isn’t a Tech Company

#125

Post by ohashi » Wed, Aug 21, 2019, 11:35 PM UTC

mrtksn wrote: post #93

the_gastropod wrote: post #89

Earlier quoted context omitted.

It seems like you're just not listening. They're not a tech company because they, while they may use software for some things, it's not their differentiator. Tech companies are valued at higher multiples because software doesn't deal with scarcity. It costs Microsoft virtually nothing to sell an extra copy of Windows. So each extra sale is pure profit. WeWork sells OFFICE SPACE—something with real world scarcity, and…

i’m not convinced that this is true because they can embrace the Uber or AirBnB business models to do just that. If They can be Tech companies, WeWork can too. I suspect that the value is in the brand, just like with the Uber or AirBnB. Making a booking software or mobile app is not such a big deal but they are called tech companies for some reason.

Your argument is the company can pivot post-IPO to something it's never done and it's magically a successful tech company?

I feel like you didn't read the article or being purposefully dense.

Re: WeWork Isn’t a Tech Company

#126

Post by rwallace » Wed, Aug 21, 2019, 11:37 PM UTC

dsl wrote: post #105

goatinaboat wrote: post #80

Earlier quoted context omitted.

Maturity transformation, to give it its proper name, isn’t inherently a bad business; it’s how your bank transforms your weekly or monthly pay packet into a 25-year mortgage. But - and here is the crucial point - it is not tech .

Uber isn't tech, it is a taxi company. Stripe isn't tech, it is a payment processor. Airbnb isn't tech, it is a hotel. SpaceX isn't tech, it is a defense contractor.

> SpaceX isn't tech, it is a defense contractor.

When you get to the point of saying space rockets are not technology, it's time to acknowledge that somewhere in the construction of your ontology, something has gone wrong.

Re: WeWork Isn’t a Tech Company

#127

Post by Thrymr » Wed, Aug 21, 2019, 11:41 PM UTC

rwallace wrote: post #126

dsl wrote: post #105

Earlier quoted context omitted.

Uber isn't tech, it is a taxi company. Stripe isn't tech, it is a payment processor. Airbnb isn't tech, it is a hotel. SpaceX isn't tech, it is a defense contractor.

> SpaceX isn't tech, it is a defense contractor. When you get to the point of saying space rockets are not technology, it's time to acknowledge that somewhere in the construction of your ontology, something has gone wrong.

In this context I take "tech" to mean software, as in arbitrarily scalable with an exponential growth curve. (Not that that can last forever in software, either, but it is growth potential that drives valuations.)

Re: WeWork Isn’t a Tech Company

#128

Post by filleduchaos » Wed, Aug 21, 2019, 11:43 PM UTC

megaremote wrote: post #120

paxys wrote: post #10

I like that WeWork is finally forcing us to have the conversation about WTF a "tech company" even is. A company that sells software? Or one that employs a lot of engineers? Or companies that use a lot of tech in their operations? Companies with a presence in San Francisco and Kombucha on tap? Are big banks tech companies? Insurance providers? Hospitals, auto manufacturers, oil and gas... What isn't a tech company?

Why? Who cares whether something is a tech company or not? How does that change the conversation? Is it no longer a startup? There are enough things wrong with wework that this is just muddying the issue.

If you read the article, it should be pretty clear why it matters; "tech companies" are valued differently (because of their potential for giant profit margins and exponential growth), so a business can inflate its valuation/grab buckets of investor money by positioning itself as a tech company even though it doesn't meet any of the criteria that actually make tech companies good investments. Which is arguably somewhat unethical.

Re: WeWork Isn’t a Tech Company

#129

Post by TrackerFF » Wed, Aug 21, 2019, 11:46 PM UTC

avocado4 wrote: post #6

Why would anybody claim it's a tech company? What kind of tech do they leverage to differentiate?

With tech companies, there's this assumption of quick and cheap scaling, compared to traditional companies.

That is true - a company selling software can acquire new customers, and spend MUCH less doing so, compared to traditional companies like McDonald's.

The problem arises when a "tech" company is actually much closer to McD, than actual tech companies. The assumption of exponential rise and cheap scaling falls away, and analysts start coming up with much more conservative valuations.

Re: WeWork Isn’t a Tech Company

#130

Post by xyzzyz » Wed, Aug 21, 2019, 11:48 PM UTC

strange_quark wrote: post #50

nostromo wrote: post #24

Earlier quoted context omitted.

This isn't that dissimilar from lots of industries. Every airline that takes a loan to buy a plane is banking on future demand for air travel, for example. Or take Amazon Web Services, which is building data centers to lease out on a short term basis. Yes, there are tremendous risks involved, depending on the lease terms. But it's not at all unusual.

It is dissimilar though. In the examples you gave, the airline or Amazon are taking on debt to purchase a plane or a bunch of servers themselves, so if the demand decreases in the future, they can sell off those assets. They would probably incur a loss, but at least they could recoup some of their investment. WeWork on the other hand is not a landlord and does not own anything other than the furniture in the offices.…

If (when) the market turns down, they're going to have a really hard time unloading those liabilities because who's going to want to pick up their lease?

I don't see why it would be any harder than selling off a plane in case of market downturn. Both are hard, and in both cases the owners of the asset (whether it's a lease or a plane) will likely incur a loss, so I don't really see any difference here at all.