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The We Company S-1

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Re: The We Company S-1

#221

Post by xyzzy_plugh »

> We will be treated as an “emerging growth company” pursuant to the JOBS Act for certain purposes until the earlier of the date we complete this offering and December 31, 2019.

> These exemptions include ... reduced disclosure about executive compensation arrangements and no requirement to include a compensation discussion and analysis

I hadn't noticed this in recent big tech IPOs so I looked it up (Rule 12b-2):

> The term emerging growth company means an issuer that had total annual gross revenues of less than $1,070,000,000 during its most recently completed fiscal year.

So they claim to have had under $1.07B of gross revenue in 2018, but they list $1.8B in revenue on page 21.

> We ceased to be an emerging growth company as defined in the JOBS Act on December 31, 2018. However, because we ceased to be an emerging growth company after we confidentially submitted our registration statement related to this offering to the SEC, we will be treated as an emerging growth company for certain purposes until the earlier of the date on which we complete this offering and December 31, 2019.

So they started the process before EOY 2018 where they knew they'd have $1B, so as to avoid disclosure until they are public. Sneaky!

Slack did the same thing, and had $1.05B in revenue for the previous tax-year when they registered (and $2.2B for 2018). I guess this is a convenient goalpost.

> Our membership base has grown by over 100% every year since 2014. It took us more than seven years to achieve $1 billion of run-rate revenue, but only one additional year to reach $2 billion of run-rate revenue and just six months to reach $3 billion of run-rate revenue.

To claim run-rate revenue like this feels imaginary and misleading.

Re: The We Company S-1

#222

Post by jddj »

addicted wrote: post #168
jddj wrote: post #121

Earlier quoted context omitted.

Thanks. But isn't making a claim that it's plausible that every square inch of office space in every modern city will be managed by WeWork actually doing the opposite of identifying some of the obvious limits to scaling? I suppose some of this is addressed elsewhere under other sections, and the fact that it's called the Total Addressable Market explains a lot, but it does seem remarkably arbitrary and to be of very…

They aren't making that claim though. They are just doing simple back of the envelope math using their current metrics, but in word form. No one is suggesting that those numbers will actually be achieved.

You're right, the mistake I was making was not realising that the calculation was for leased office space as an entire industry, rather than as their plausible potential customer base.

Since their actual market is more niche (in practice it seems to be satellite offices, startups and remote workers) than general commercial office space, I'd still propose that it's significantly overstated, but thanks for the correction regardless.

Re: The We Company S-1

#223

Post by theflyinghorse »

DebtDeflation wrote: post #166
nabnob wrote: post #129

Earlier quoted context omitted.

I'll see if I can dig up the article, but I think they're planning on tracking everything that workers do in their buildings and giving that data to employers. Edit - found this - https://www.inc.com/betsy-mikel/wework-is-trying-a-creepy-ne... >WeWork's latest acquisition is a small software company with 24 employees. Euclid is a spatial analytics platform...Euclid's website says the company is "focused on redefining…

There are a couple of issues with this. It's a well-known effect in management theory that workers behave differently when they know they're being observed. Also, presumably most of their tenants employ knowledge workers not factory floor workers, and so data about how often they go to the bathroom or how many steps they take in an hour is probably a lot less relevant than tracking what they're doing on their compute…

I can just imagine a bunch of managers attempting to "optimize" their employees once given the power to do so!

"Jane, I noticed you don't stay late after work, why is that?" "Mike, I see you sometimes go off company's wifi, why is that?"

Re: The We Company S-1

#224

Post by trimbo »

led76 wrote: post #216
ec109685 wrote: post #203

Earlier quoted context omitted.

Options require the stock to go up to be worth anything. So if the stock price increases ten percent, that would be $420M (120-110) * 42M shares. Still seems like an awful lot.

That's actually not quite how it works: "The options awarded had a per-share exercise price equal to the fair market value of our Class B common stock on the applicable grant date" Common stock is usually way less expensive than preferred, so while currently the company may be 'valued' at $110 per share, the common stock is probably in the $30s or $40s. He's likely already up $2B on the stock options (pending vesting…

> anyone else know of examples of CEO compensation like this prior to an IPO?

Snapchat

https://fortune.com/2018/02/23/snapchat-evan-spiegel-ipo/

Re: The We Company S-1

#225

Post by ryacko »

srehnborg wrote: post #113
beager wrote: post #50

I’m really disgusted by how much recent tech IPOs inject pitch deck-style garbage into the S-1 filing, especially this one. I’ve always had a great amount of respect for the mediating nature of the S-1’s dry, candid, and ruthlessly honest assessment of business risks, and even though those things are still there, they’re blown out by marketing photos, full-page charts, and branding. This is basically like putting per…

I see this differently. This is a government document, but one that investors will read now and refer back to in the future. Why make it plain boring text when you can spin this document into a reason to invest? This is an opportunity to tell the world who you are. Interested parties read these for a reason. It might as well look how you want it to look, as long as the same necessary content is listed.

It looks like the management was involved in writing their own biographies. I can see why some people would want to spice up their IPO.

Re: The We Company S-1

#226

Post by chx »

xyzzy_plugh wrote: post #221

> We will be treated as an “emerging growth company” pursuant to the JOBS Act for certain purposes until the earlier of the date we complete this offering and December 31, 2019. > These exemptions include ... reduced disclosure about executive compensation arrangements and no requirement to include a compensation discussion and analysis I hadn't noticed this in recent big tech IPOs so I looked it up (Rule 12b-2): > T…

Revenue is one thing, net income is a whole another.

Re: The We Company S-1

#227

Post by joshgachnang »

jngreenlee wrote: post #210
mmillin wrote: post #2

My favorite part of new tech company filings is looking at the risk section and finding something to the effect of: "We are not profitable, and may never be." > We have a history of losses and, especially if we continue to grow at an accelerated rate, we may be unable to achieve profitability at a company level (as determined in accordance with GAAP) for the foreseeable future. I understand the reasoning behind havin…

For actually useful comparisons, look at Regus/IWG which is larger and more profitable: https://en.m.wikipedia.org/wiki/IWG_plc I have used Regus on and off in the US for a decade. I also have a free WeWork subscription through my AMEX platinum (boosting numbers pre-IPO?). Regus is actually better run and more comfortable...just doesn't have the millenial loft vibe. I think that vibe is costing them too much for a re…

Woah, didn't realize Amex had that benefit. Looks like I'm signing up!

Re: The We Company S-1

#228

Post by dymk »

manigandham wrote: post #215
dymk wrote: post #196

Earlier quoted context omitted.

A laudable goal? Of all the statements to bemoan, why choose the one about environmental sustainability?

These are buzzword marketing goals, and usually unachievable without ridiculous costs, assuming they're even attempted.

Going meatless would save money, if anything. Recycling or buying multi-use containers also eventually costs less than single use, especially at scale.

Also, credit where it's due to We. Just because the common opinion of this company is negative, doesn't mean literally everything they do is bad.

I don’t buy that it’s “unachievable” at all.

Re: The We Company S-1

#229

Post by nvarsj »

It seems there are a lot of red flags here. The entire thing feels like a ponzi scheme to make the founder insanely wealthy - aka no real business here.

E.g. The founder took a near 0% interest loan for 30M in 2006, raised VC capital, than paid it back in 2009 with the inflated share values.

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