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WeWork Isn’t a Tech Company

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Re: WeWork Isn’t a Tech Company

#141

Post by perl4ever »

TrackerFF wrote: post #129
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 aw…

Isn't franchising the essence of cheap scaling?

I don't see the distinction you're making.

Re: WeWork Isn’t a Tech Company

#142

Post by carusooneliner »

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.

It's what you make and how you make money. If you make hardware or software and that's your primary source of revenue, you're tech.

Re: WeWork Isn’t a Tech Company

#143

Post by tompetry »

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…

It's a very interesting thing they are doing though, one must admit. It really highlights to me the fact that pricing long-term leases is really hard. Companies (the tenants) are living, breathing things that change and evolve. Their staffing and office needs are constantly changing. Not to mention changes in remote working, be it 100% remote companies, or satellites within larger companies. This makes matching supply and demand difficult, and it's a problem for owners of commercial real estate that isn't going away. Lost revenue due to vacancy is uncomfortable for them to stomach - they will pay a premium for known cash flows.

You are right in that there is risk to what WeWork is doing, but if it's a hard enough problem, the premium paid by owners may be big enough to provide an acceptable margin of error. Secondly, perhaps there is a valid hedging mechanism? Third, does their large network and brand give them a competitive advantage at top of the funnel such that they can charge a higher risk-premium (spread) to owners?

We shall see.

Re: WeWork Isn’t a Tech Company

#144

Post by flukus »

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".

For them wouldn't a tech company and a software company be synonymous? It seems like software is by far the easiest way to create the growth they're after.

Re: WeWork Isn’t a Tech Company

#145

Post by quickthrower2 »

konschubert wrote: post #101
whoisnnamdi wrote: post #46

Earlier quoted context omitted.

I might be confused, but isn't it the opposite here? Borrowing long (long-term leases from suppliers) and lending short (month to month leases to customers)? You yourself said "long term promises to suppliers keep going", which sounds like borrowing to me? I could just be dense here, feel free to correct me

When people say “borrow” in this context; they mean the money, not the space. We-work gets short-term monetary commitments from renters and turns them into long-term monetary commitments towards landlords

> long-term monetary commitments towards landlords

borrow-long then?

Re: WeWork Isn’t a Tech Company

#146

Post by rhacker »

CrazyStat wrote: post #124
maratd wrote: post #108

Earlier quoted context omitted.

> 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.

So you're saying Uber is a tech company for being what it is. But it wouldn't be a tech company if it is exactly what it is today but also owns the cars the driver's use?

So by that logic if Uber ever does migrate completely to a self-driving taxi system, it is no longer a tech company.

Re: WeWork Isn’t a Tech Company

#147

Post by corodra »

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?

I can't remember where I heard this or who said it, but I do like it and use it as my own definition.

A tech company is a company whose product is "easily" scalable with a few taps of the keyboard and clicks of the mouse. A game development company is a tech company. Selling one, two or a few thousand units is not that big of a deal. Now, we can argue that scalability in terms of cloud services is an issue. Think Steam for video games. But generally, there's little difference "work" wise between selling 10 copies and 10,000.

A not tech company that uses a lot of technology, but again, is not a tech firm, let's say Haas. They build high-end CNC machines. Manufacturing one or two machines is not negligible. Well, kind of. Compared to them. They build like a few hundred a month. But lets say they want to build a few thousand. That's a big deal. That's more manpower. More equipment. More materials. More warehouse space. More planning. More everything.

But Autodesk selling Fusion 360 (modeling program for CNC milling) is a tech company. Because it's generally meaningless if they have 1,000 licenses a month or 100,000 licenses a month. Production wise. All the upfront work was done for the product and now it's a matter of people giving up their credit card numbers.

Re: WeWork Isn’t a Tech Company

#148

Post by DebtDeflation »

arcticbull wrote: post #114
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.

Stripe is absolutely a tech company. They're a B2B SAAS company. They provide software that connects e-commerce platforms with actual payment processors. Uber isn't at taxi company, since it doesn't own or operate taxis. Conceptually it's a platform for connecting independent taxi operators with customers, like Expedia or Craigslist or eBay. Airbnb isn't a hotel company, since it doesn't own or operate hotels. Concep…

>Uber isn't at taxi company, since it doesn't own or operate taxis. Conceptually it's a platform for connecting independent taxi operators with customers

Uber is a moonshot bet on re-imagining transportation when autonomous vehicles become a reality. If that reality never materializes, Uber either raises prices and sees its growth rate and valuation crash back down to earth or it goes out of business.

Re: WeWork Isn’t a Tech Company

#149

Post by rossdavidh »

polygotdomain wrote: post #66
99052882514569 wrote: post #25

Earlier quoted context omitted.

Their business is structured in such a way that the leases they signed on their locations aren't really enforceable against WeWork itself, but rather against "special purpose vehicles", I'm guessing one per lease?[1] It costs a bit in insurance but substantially limits their liability. So, in a downturn, even if "short termers are done", they can shed properties too, basically with impunity. [1] https://stratechery.c…

Each WeWork office has an SPE that's just for that lease. Every landload wants WeWork on the lease, but won't get it, as WeWork tends to have significant leverage with either the space that they're going after or the desire to have WeWork on the rent roll. When things are booming, WeWork is advantageous for landlords, and appraisers/the market/potential buyers will underwrite that space positively. However, there's m…

I believe you, but in markets like Austin, TX (where I live) it seems odd that a landlord would not just hold out for a more orthodox lease, since there is some shortage of retail space and rental rates are high. What am I missing as to why they would lease to such an SPE?

Re: WeWork Isn’t a Tech Company

#150

Post by dasil003 »

corodra wrote: post #147
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?

I can't remember where I heard this or who said it, but I do like it and use it as my own definition. A tech company is a company whose product is "easily" scalable with a few taps of the keyboard and clicks of the mouse. A game development company is a tech company. Selling one, two or a few thousand units is not that big of a deal. Now, we can argue that scalability in terms of cloud services is an issue. Think Ste…

What’s Uber?
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