151–160 of 188 posts
Other news sources are reporting that Adam Neuman will be paid $200m to resign from the board of directors... just, wow.
after a few years in silicon valley I learned that's essentially the right way to make it here. Building successful companies is for suckers, you just make a big ball of excrements, package it real well and then hand it to someone else before it falls apart. The VC system rewards that more than any other skillset.
Wework is good business if they can become cash positive. They have a brand, more and more people are going remote, there is a bug market for pricey and google-like coworking spaces.
It doesn’t matter if they had a bad CEO, or if they can’t IPO anymore, there’s no reason this wouldn’t become massively profitable in the next 10 years.
So Softbank will have invested nearly $16Bn (10.5 already + 5 now) in something that even they think is only worth $8Bn? Am I reading this correctly because that makes no sense whatsoever. Except for Neumann who walks away with his $700Mn regardless!
Well, maybe you could think about it like this: If they don't intervene, they lose all their previous investment guaranteed. So just consider all of that previous investment gone (sunk cost). If they invest $5b they may make an $8b valuation. And they may still think there is upside beyond that. Not sure if that's what they really think, but a lot of posters here seem to accuse softbank of sunk cost fallacies without…
Maybe WeWork can turn cash flow positive, in which case Don can easily justify holding it. So long as he is not forced to mark down then we can continue doubling down. Son is not a guy with an exit plan, he doubles down until bust then waits for the next cycle.
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WeWork had so many excesses, like paying 100% commission to real estate agents. Softbank can cut out such nonsense, not just the tequila and private jets. Softbank also has full access to the company’s financials and will be in a position to restructure. It’s safe to say they are a lot better informed than we are.
> like paying 100% commission to real estate agents. Why did they do this?
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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.
https://finance.yahoo.com/quote/IWGFF?p=IWGFF&.tsrc=fin-srch This looks like the upper limit for WeWork. It doesn't matter how much nicer looking their offices are or if they have free beer bashes and parties, those expenses are all tiny when it comes to the bottom line of a multibillion dollar corporation. Plus, Regus has more desks and branches than WeWork, and is orders of magnitude less expensive.
Just as a thought experiment, imagine that Regus ended up just straight out getting all of WeWork's assets in some sort of liquidation, and half the tenants stayed. They would get bigger!
There is a possibility that WeWork can tap into more interesting markets.
Purely annecdotal, but the people I hear about who ending up in WeWork used to be in either dirt cheap local coworking spaces, or just getting their own offices. It does feel like a "pie got bigger" sort of thing, that wasn't before captured by such a large player.
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https://finance.yahoo.com/quote/IWGFF?p=IWGFF&.tsrc=fin-srch This looks like the upper limit for WeWork. It doesn't matter how much nicer looking their offices are or if they have free beer bashes and parties, those expenses are all tiny when it comes to the bottom line of a multibillion dollar corporation. Plus, Regus has more desks and branches than WeWork, and is orders of magnitude less expensive.
I am not a fan of the WeWork business and would bet on its failure, but I don't think that one can just say that "this company is $5 billion, so this is the cap of how big such a company in this market can become." Just as a thought experiment, imagine that Regus ended up just straight out getting all of WeWork's assets in some sort of liquidation, and half the tenants stayed. They would get bigger! There is a possib…
If WeWork get all Regus assets for free and half their business, sure, why not? That would be an immediate 3-4 billion dollar injection. As it currently stands, their coolness(tm) is not enough to compensate for their bloated fees and limited office space locations.
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Does WeWork ever need to IPO? If it turns WeWork profitable by cutting costs and implementing responsible leadership, it just keeps its share of all future profits. SoftBank wouldn't be doing this if it didn't think those profits were likely to be more than total investment so far. In other words, WeWork got acquired instead of IPO-ing.
Does WeWork ever need to IPO? Yes. The Vision Fund, like all VC funds, has a finite lifespan that all the investors agreed to when they funded it.
WeWork, though, needs a lot more than new capital.
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Does WeWork ever need to IPO? If it turns WeWork profitable by cutting costs and implementing responsible leadership, it just keeps its share of all future profits. SoftBank wouldn't be doing this if it didn't think those profits were likely to be more than total investment so far. In other words, WeWork got acquired instead of IPO-ing.
Does WeWork ever need to IPO? Yes. The Vision Fund, like all VC funds, has a finite lifespan that all the investors agreed to when they funded it.