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WeWork Isn’t a Tech Company

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Re: WeWork Isn’t a Tech Company

#181

Post by rbg246 »

tehwebguy wrote: post #162
chiefalchemist wrote: post #110

Earlier quoted context omitted.

> The losers in the WeWork deal are the landlords, as they're bearing a lot of the risk, and get minimal upside. Couldn't this be interpreted differently? That is, landlords are having less and less choice. Something from WW is better than an empty building. Is WW a canary of sorts? It tells us about changes in the economy (less growing small to mid-size companies in major metro area?), as well as the health and stre…

Yeah like is it even really downside? Tenant defaults on their lease? OK, kick them out and get someone else in. What's the big deal?

Well, you have forgone rent you could have collected from a different tenant and reduced the quality of the tenant you have accepted.

So for an investor who looks at your rent roll, they will see that you have an increased rent arrears and they will value your asset at a reduced rate.

And as the sibling comment has mentioned, if you discount up front you haven't received any money.

Or worse still you provide a rent incentive in the case of a capex fitout and are now left with an office fit out a future tenant may or may not want but you have spent significant amounts of money on.

Re: WeWork Isn’t a Tech Company

#182

Post by goatinaboat »

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.

Uber is a tech company because their primary business is providing an app

Uber’s primary business is finding and exploiting legal loopholes, and ignoring regulators. They happen to have an app, that’s all.

An analogy would be a pizza company where you order a pizza with an app but it actually gets made in some random person’s house.

Re: WeWork Isn’t a Tech Company

#183

Post by jbay808 »

perl4ever wrote: post #139
jbay808 wrote: post #68

Earlier quoted context omitted.

A car company isn't a company that uses cars, it's a company that makes cars. Technology is "the application of science to commercial or industrial objectives" according to the dictionary. But a technology company is a company that makes technology. That inherently requires innovation.

It seems to me that excludes all software from "tech". The computers are tech, but how they are configured isn't "making" anything.

It doesn't seem that way to me at all. You can create software that does things that were previously not possible or not practical. That is the creation of technology. Software and information are products just as valid as cars and robots.

Re: WeWork Isn’t a Tech Company

#184

Post by goatinaboat »

megaremote wrote: post #119
strange_quark wrote: post #50

Earlier quoted context omitted.

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.…

Whose going to want to rent a plane? You are really pushing this point hard, when it does not fit.

Umm, everyone? https://en.wikipedia.org/wiki/Aircraft_lease#Dry_lease

Re: WeWork Isn’t a Tech Company

#185

Post by dumbfoundded »

mrtksn wrote: post #176
dumbfoundded wrote: post #174

Earlier quoted context omitted.

Honestly, I haven't done any research on Ticketmaster so I'll spell out my thinking more hypothetically. Ticketmaster has a $0 marginal additional customer cost. That's great. That's the model of a tech company. The real question is where the ceiling is for scaling event offerings. I don't know if Ticketmaster has enough dominance in negotiation to basically get listings for free and 100% penetration of events. I'm s…

So the tech in "Tech company" doesn't stand for technology but for "scalable"?

From my understanding, software tech companies were the first companies to have near $0 marginal cost customers. Generally, I don't think people refer to GE, Boeing, any energy company or any auto company as "tech" companies. These companies develop significant technology.

Tech seems to be branding for modernism, software, and rapid low-cost expansion. Lots of businesses are scalable in some sense. There are a lot of MacDonalds out there. I would say the primary difference is adding a new customer costs virtually nothing. This seems to be a relatively unique property of software companies.

Re: WeWork Isn’t a Tech Company

#186

Post by dodobirdlord »

rhacker wrote: post #146
CrazyStat wrote: post #124

Earlier quoted context omitted.

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.

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

That seems fair to say. If Uber transitions to self-driving taxis the whole business model will be radically different. They'll have to employ hordes of mechanics, and lease huge garages to store vehicles and run repair bays. They'll have massive capital expenses, a complex supply chain to manage, and a large distributed and probably unionized workforce to negotiate with. Their geographic distribution, legal exposure, exposure to economic shifts like tariffs, reliance on capital markets, number of employees, etc... will all be radically different. It seems fairly obvious to say that pre-self-driving and hypothetical post-self-driving Uber are totally different kinds of companies.

Re: WeWork Isn’t a Tech Company

#187

Post by maehwasu »

mrtksn wrote: post #176
dumbfoundded wrote: post #174

Earlier quoted context omitted.

Honestly, I haven't done any research on Ticketmaster so I'll spell out my thinking more hypothetically. Ticketmaster has a $0 marginal additional customer cost. That's great. That's the model of a tech company. The real question is where the ceiling is for scaling event offerings. I don't know if Ticketmaster has enough dominance in negotiation to basically get listings for free and 100% penetration of events. I'm s…

So the tech in "Tech company" doesn't stand for technology but for "scalable"?

Yup. It’s a metonym that’s getting at the idea of “bits, not atoms.”

Plenty of companies use extremely impressive tech to manipulate atoms, but, by convention, we call the ones that manipulate bits “tech companies.”

Re: WeWork Isn’t a Tech Company

#188

Post by dodobirdlord »

mrtksn wrote: post #176
dumbfoundded wrote: post #174

Earlier quoted context omitted.

Honestly, I haven't done any research on Ticketmaster so I'll spell out my thinking more hypothetically. Ticketmaster has a $0 marginal additional customer cost. That's great. That's the model of a tech company. The real question is where the ceiling is for scaling event offerings. I don't know if Ticketmaster has enough dominance in negotiation to basically get listings for free and 100% penetration of events. I'm s…

So the tech in "Tech company" doesn't stand for technology but for "scalable"?

It's short for "Information Technology", which is what these companies used to be called and illuminates the whole "scale" factor that has come to dominate discussions about what distinguishes them.

Re: WeWork Isn’t a Tech Company

#190

Post by selfselfself »

stratelogical wrote: post #65
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?

In an ideal world, we wouldn't care about which company is called a tech company and which isn't. This reminds me of that famous Bezos quote to the question of whether Amazon is an internet company or not. He said "It doesn't matter whether we are a pure internet play or not. Internet, Schminternet, it doesn't matter. What matters is obsessing over providing customer value." https://www.youtube.com/watch?v=RyrmPMJoG0…

It does matter because a company's valuation is driven by EBIDA and multiple, both of which depend on the type of business (e.g. SaaS, Cloud Services, Real Estate etc). In fact, Amazon's valuation jumped significantly starting 2015 primarily because of AWS, which is a pure tech play, not so much by its retail business. (In 2015 Amazon started reporting AWS revenue and margins)
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