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WeWork Isn’t a Tech Company

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Re: WeWork Isn’t a Tech Company

#191

Post by abalone »

I would like to understand this better because WeWork has a lot of open positions right now. Is it all a front? Much of this article seems to focus on it not having the margins and network effects of Apple, Facebook, etc.

Devil’s advocate: Amazon has dinky margins and was unprofitable for many of its early years. Physical servers have “wear and tear”. But they are a winner because they have developed competencies and efficiencies that let them rent out infrastructure that fast growing companies would rather not own and manage. Could WeWork be like AWS for office space?

Looking at their open positions they have teams around evaluating, visualizing and instrumenting spaces. In addition to the flexibility to scale up and down. There’s a lot that’s sketch about their company structure but if companies are going to outsource say payments to 3rd parties like Stripe, why wouldn’t they do it for office space which is a huge PITA?

Re: WeWork Isn’t a Tech Company

#192

Post by [deleted] »

abalone wrote: post #191

I would like to understand this better because WeWork has a lot of open positions right now. Is it all a front? Much of this article seems to focus on it not having the margins and network effects of Apple, Facebook, etc. Devil’s advocate: Amazon has dinky margins and was unprofitable for many of its early years. Physical servers have “wear and tear”. But they are a winner because they have developed competencies and…

[deleted]

Re: WeWork Isn’t a Tech Company

#193

Post by icelancer »

hn_throwaway_99 wrote: post #179
morpheuskafka wrote: post #133

Earlier quoted context omitted.

AWS is really a good comparison. It turned buying a server and getting an annual colo lease into "per-second" billing, and WeWork offers per-day pricing for office real estate instead of an annual lease.

Except AWS does a whole lot more than just let you rent generic EC2 instances by the hour. They have sooo, sooo, sooo many custom services that their lock-in is huge. It would be extremely painful for any sizable customer on AWS to switch (my previous comment on the subject: https://news.ycombinator.com/item?id=20339381 ). No such lock-in exists with WeWork. In fact the entire reason for WeWork's existence is it does…

>> No such lock-in exists with WeWork. In fact the entire reason for WeWork's existence is it doesn't have lock-in.

This isn't true for their expanding customer base: Businesses who are paying for blocks of co-working memberships to expand through services rather than finding new leases themselves. There is significant lock-in when this occurs, as people may move close to those WeWork locations, arrange their life around it, etc.

Re: WeWork Isn’t a Tech Company

#194

Post by sytelus »

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…

I'm not sure why all these negativity. WeWork's business model is no different than buying wholesale and selling retail. Or owning a mall and selling pieces to individual shops. It's an old idea and old business model. WeWork is able to sell 200 sq ft for $5000/month. Think about that for a bit. Their strength is diversification by multi-tenancy which means even if x% of customers fissals, you got others to pay for the cost. They are tech company in a sense they enable instant on-demand exchange of goods online just like on-demand renting of cars or scooters. They are fast movers and online-first company. We don't know if they are losing money just in growth markets or also in mature markets. If later is true then I would be worried about their cost structure and long term viability. Otherwise at their current ability to successfully convince customers to pay top dollars, they should be awesomely profitable once they stop bleeding in growth markets.

Re: WeWork Isn’t a Tech Company

#195

Post by robryan »

sytelus wrote: post #194
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…

I'm not sure why all these negativity. WeWork's business model is no different than buying wholesale and selling retail. Or owning a mall and selling pieces to individual shops. It's an old idea and old business model. WeWork is able to sell 200 sq ft for $5000/month. Think about that for a bit. Their strength is diversification by multi-tenancy which means even if x% of customers fissals, you got others to pay for t…

The negativity is around how they are asking to be valued. They want to be valued at tech company revenue multiples but are running a real estate business. As the article evaluates unlike a tech company there is really no opportunity for exponential growth without also adding a proportional amount to their costs.

Re: WeWork Isn’t a Tech Company

#196

Post by sytelus »

abalone wrote: post #191

I would like to understand this better because WeWork has a lot of open positions right now. Is it all a front? Much of this article seems to focus on it not having the margins and network effects of Apple, Facebook, etc. Devil’s advocate: Amazon has dinky margins and was unprofitable for many of its early years. Physical servers have “wear and tear”. But they are a winner because they have developed competencies and…

You don't want to look at margins by subtracting expenses from revenue. For a growing company, this can be zero or even negative. The key thing is this: Are customers paying top dollars for the space they sell then elsewhere? That answer seems to be yes which means they have better margin than competitors given their brand and amnesties. However, they might decide to reinvest all that money to build assets in other markets which will put their balancesheet in red.

Re: WeWork Isn’t a Tech Company

#198

Post by chx »

dasil003 wrote: post #150
corodra wrote: post #147

Earlier quoted context omitted.

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?

A fantastic vehicle for the rich to dismantle all protections organized labor made in the last century. Super cheap at a billion bucks a month if you consider the colossal amount of savings can be made on paying people if they are deemed contractors vs payroll.

Various businesspeople tried propaganda , buying politicians and so forth, this "gig economy" is the newest effort, it is going well. For them. Recommended reading: https://www.wwnorton.co.uk/books/9780393337662-invisible-han...

Re: WeWork Isn’t a Tech Company

#199

Post by goatinaboat »

braythwayt wrote: post #165
DebtDeflation wrote: post #148

Earlier quoted context omitted.

>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.

It’s also a moonshot bet that when autonomous vehicles become a reality, Uber will wind up on top. I don’t know about that at all. IBM owned everything in sight in computing, amd when PCs cam along, it improbably wound up owning them for a short while too... Then MS took over. They owned everything in sight, but stumbled when the Internet came around, and then again in mobile. They’ve roared back, but they don’t own…

There are bets stacked on top of bets. Let’s say that Tesla does deliver a viable self-driver, something presently only seen in sci-fi, like fusion power has been just around the corner for 50 years. Why would they cede the relationship to Uber when they already own the relationship with the end users? They already bypassed conventional dealer networks. Other car makers in this space do own their own dealers. Companies like Hertz own customer relationships and have experience managing fleets. Where does Uber fit into this world? They don’t.

Re: WeWork Isn’t a Tech Company

#200

Post by bakli »

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…

Aren't any kind of financial products, insurance tech then? You can theoretically sell them with a couple of clicks.
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