WeWork Isn’t a Tech Company • Hacker News Board

Re: WeWork Isn’t a Tech Company

#211

Post by rlucas » Thu, Aug 22, 2019, 1:32 PM UTC

rbg246 wrote: post #178

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…

Yes and No. Part of the No answer is that as an real estate investment company your building's worth is effectively present value of future rent, so sometimes it's better to preserve the valuation of your building rather than set a new market rent which will negatively affect your building valuation which in turn affects the cost of financing your building etc etc etc So you get an extra $1m in rent but it now costs…

Very true. In Calgary for example, following the drop in oil price there’s a rumor that over 50% of the downtown office space is empty, but landlords won’t drop rents for this very reason.

In such times you see all kinds of shenanigans such as landlords giving massive concessions and tenant improvements, effectively dropping the economic price of the rent drastically but preserving the “headline” rent number. Go figure.

Re: WeWork Isn’t a Tech Company

#212

Post by ohashi » Thu, Aug 22, 2019, 1:58 PM UTC

mrtksn wrote: post #173

ohashi wrote: post #125

Earlier quoted context omitted.

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.

But the thing that “never done” is not some technology. How this will change the status of WeWork as a tech company or not? Also I wouldn’t call it pivot, their users even don’t have to notice a thing. They can do it concurrently. Pretty much like McDonalds owning some of the restaurants and providing franchises to the rest.

It would be closer in alignment with what was defined as a tech company. The article is pretty explicit defining the features of a tech company. WeWork isn't. Saying they could do something that would fit some of those characteristics and it's easy doesn't magically make it true.

If McDonalds is so easy, how come everyone else isn't as globally prevalent? It's not easy. It's competitive as hell. It's a completely different model.

But you're not making arguments in good faith, you're just being intentionally dense.

Re: WeWork Isn’t a Tech Company

#213

Post by SilasX » Thu, Aug 22, 2019, 2:17 PM UTC

goatinaboat wrote: post #204

SilasX wrote: post #83

Earlier quoted context omitted.

It is a bad business generally, because it requires an unfailing entity to exist as a stopgap ("lender of last resort") who will take the hit to prop you up as the short term payment becomes due, for the inevitable times when the payments don't line up. WeWork doesn't (yet) have that.

True, but that is a general property of fractional reserve banking, not specifically of maturity transformation. There is a lot of ideology around homeownership both for and against, I am on the for side, so when asked about the social value of banking, that’s my go-to answer.

>True, but that is a general property of fractional reserve banking, not specifically of maturity transformation.

But maturity transformation requires FRB.

Re: WeWork Isn’t a Tech Company

#214

Post by Grustaf » Thu, Aug 22, 2019, 3:24 PM UTC

all_blue_chucks wrote: post #73

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…

If any of their special purpose vehicles default nobody is going to renew a lease with them ever again (at least not without a crushing risk premium).

I guess the problem is that the defaults will come in several years from now, but when they come they will be frequent.

Re: WeWork Isn’t a Tech Company

#215

Post by tim333 » Thu, Aug 22, 2019, 3:29 PM UTC

selfselfself wrote: post #190

stratelogical wrote: post #65

Earlier quoted context omitted.

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)

Multiples and the like are more quick rule of thumb estimating techniques and I hope the valuation is driven more by deeper analysis.

Re: WeWork Isn’t a Tech Company

#216

Post by ericd » Thu, Aug 22, 2019, 4:37 PM UTC

kolbe wrote: post #209

ericd wrote: post #104

Earlier quoted context omitted.

Softbank is currently making up the valuation, and by doing so, setting the value for their existing holdings. Take those valuations with a large grain of salt, it's not like a publicly traded security where you can be reasonably sure of getting around that market value if you decided to sell right now.

I suggest you look into the history of companies like TLRY and the current state of BYND.

Can you summarize what you’re trying to point out with those two? Is it just that the market is bubbly and willing to support insane valuations?

Re: WeWork Isn’t a Tech Company

#217

Post by Grustaf » Thu, Aug 22, 2019, 8:03 PM UTC

goatinaboat wrote: post #182

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.

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.

...using ingredients that are supposed to be illegal but there are loopholes

Re: WeWork Isn’t a Tech Company

#218

Post by Grustaf » Thu, Aug 22, 2019, 8:05 PM UTC

coding123 wrote: post #135

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.

If you're calling SpaceX a defense contractor, then nothing is tech. So what's your ACTUAL definition of "tech" like Apple? Or are you going to say - No, Apple is a fashion company? Even if AirBnB isn't "tech company" it definitely is NOT a hotel.

Apple would not be a tech company if that requires infinite scalability. Sure their gross margins are high, but nowhere near software levels.

Re: WeWork Isn’t a Tech Company

#219

Post by goatinaboat » Thu, Aug 22, 2019, 9:07 PM UTC

SilasX wrote: post #213

goatinaboat wrote: post #204

Earlier quoted context omitted.

True, but that is a general property of fractional reserve banking, not specifically of maturity transformation. There is a lot of ideology around homeownership both for and against, I am on the for side, so when asked about the social value of banking, that’s my go-to answer.

>True, but that is a general property of fractional reserve banking, not specifically of maturity transformation. But maturity transformation requires FRB.

Not if you start with enough capital. But it is drastically more efficient with FRB.

Re: WeWork Isn’t a Tech Company

#220

Post by benatkin » Thu, Aug 22, 2019, 9:44 PM UTC

acchow wrote: post #117

Anyone know what percentage of their employees are programmers?

The percent of open positions in Technology according to https://careers.wework.com is 25.8%. Glancing at Technology it appears to be mostly engineering or engineering management. Of course the number of open positions isn't the same because they're looking to staff up or staff down, but to me it seems about typical for a tech company with 20+ employees (a software-heavy 5 person startup might have 3 or 4 coders).