WeWork Gets a Visit from Financial Reality • Hacker News Board

Re: WeWork Gets a Visit from Financial Reality

#71

Post by JumpCrisscross » Tue, Jan 08, 2019, 5:02 PM UTC

zrobotics wrote: post #47

projectramo wrote: post #19

Earlier quoted context omitted.

You're right on Tesla and WeWork, but not on Uber. Uber doesn't buy and own the car, which means it requires much less capital. This small change has many implications, and the tech helps solves many of the problems that come up. I am not saying it is properly valued (over or under or whatever). Just that given the choice between an Uber (or Lyft or yourlocalapp.com) or a cab company with the same fleet, customers, a…

What sort of moat does Uber have, though? Sure, it was a slight annoyance to sign up for lyft when they moved into the city my mom lives in, but that was ~5 minutes of annoyance and some phone data. I don't care at all about Uber, there's very little customer loyalty. How will they defend their valuation if the self driving project doesn't pan out?

> How will they defend their valuation if the self driving project doesn't pan out?

They’re already profitable in New York and San Francisco.

Re: WeWork Gets a Visit from Financial Reality

#72

Post by mcguire » Tue, Jan 08, 2019, 5:03 PM UTC

projectramo wrote: post #19

Traster wrote: post #4

>The Gulf investors backing the Vision Fund seem to have decided that WeWork is not a tech bet but simply an aggressive punt on real estate. This is the bogey man of a huge number of current 'tech startups' - What if it turns out Tesla really are a car company! Or if We Work are actually an office rental company! OR gasp Uber is a cab company! (1) We now have a glut of companies operating in traditional markets that…

You're right on Tesla and WeWork, but not on Uber. Uber doesn't buy and own the car, which means it requires much less capital. This small change has many implications, and the tech helps solves many of the problems that come up. I am not saying it is properly valued (over or under or whatever). Just that given the choice between an Uber (or Lyft or yourlocalapp.com) or a cab company with the same fleet, customers, a…

Is Uber still using capital to pay operating expenses?

[Edit] Doesn't Uber subsidize vehicle leases for drivers?

Re: WeWork Gets a Visit from Financial Reality

#73

Post by leoc » Tue, Jan 08, 2019, 5:03 PM UTC

bryanlarsen wrote: post #25

ironcan wrote: post #8

Earlier quoted context omitted.

On the flip side, if it wasn't Amazon mentioned but pets.com, they were entirely right.

I guess the right question is, was a basket containing Amazon.com, pets.com and all the rest overvalued? Amazon is up about 15X since its peak before the crash, the dow is at 3X over the same period. So as long as AMZN was >= 20% of your basket, then it was fairly valued. Sounds about right.

I don't have any citations, but I do seem to recall reading articles saying that if you had bought and held a conventional sort of basket of dot-com stocks through that whole era you would have come out quite well.

Re: WeWork Gets a Visit from Financial Reality

#74

Post by lsc » Tue, Jan 08, 2019, 5:05 PM UTC

projectramo wrote: post #19

Traster wrote: post #4

>The Gulf investors backing the Vision Fund seem to have decided that WeWork is not a tech bet but simply an aggressive punt on real estate. This is the bogey man of a huge number of current 'tech startups' - What if it turns out Tesla really are a car company! Or if We Work are actually an office rental company! OR gasp Uber is a cab company! (1) We now have a glut of companies operating in traditional markets that…

You're right on Tesla and WeWork, but not on Uber. Uber doesn't buy and own the car, which means it requires much less capital. This small change has many implications, and the tech helps solves many of the problems that come up. I am not saying it is properly valued (over or under or whatever). Just that given the choice between an Uber (or Lyft or yourlocalapp.com) or a cab company with the same fleet, customers, a…

>Uber doesn't buy and own the car, which means it requires much less capital. This small change has many implications, and the tech helps solves many of the problems that come up.

that can go both ways:

If I have to buy a fleet of cars big enough to cover my area and write an app and advertise to compete with uber, that sounds like an expensive proposition.

If all I have to do is come up with an app and the advertising, that sounds rather less daunting.

Re: WeWork Gets a Visit from Financial Reality

#75

Post by rickyc091 » Tue, Jan 08, 2019, 5:07 PM UTC

gizmo385 wrote: post #70

sky_rw wrote: post #39

Earlier quoted context omitted.

Or better yet, realizing spending $60k/year for three years on over-priced month to month office space is not always a better solution than signing an old-school lease.

Where do you see this 60k/year figure? Estimates that I'm don't even come /close/ to 60k/year for a WeWork space.

In New York, it's around $60k a year if you get an office for 7-10 people.

https://www.wework.com/buildings/154-grand-st--new-york-city...

Re: WeWork Gets a Visit from Financial Reality

#76

Post by mcguire » Tue, Jan 08, 2019, 5:07 PM UTC

projectramo wrote: post #38

busterarm wrote: post #32

Earlier quoted context omitted.

Uber has been financing driver car purchases for years. They might as well own the car.

No, I don't agree with that logic. Credit risk is not the same as the risk on owning the asset. Your bank might lend you money to buy a house based on your excellent credit and your large downpayment. That does not mean they want to rent out your home, speculate on home prices etc. They may end up doing some of this tangentially (they have to dispose of the house if you end up not paying) but that is not the same bus…

A home loan is a speculation on house prices. That was the lesson of 2008.

Re: WeWork Gets a Visit from Financial Reality

#77

Post by drewrv » Tue, Jan 08, 2019, 5:07 PM UTC

zrobotics wrote: post #50

acd wrote: post #44

One could say Uber a taxi car Company Airbnb a hotel Facebook selling private information Google advertisement company Tesla car company

True, but at least the companies you mentioned did something new in their respective industries. What, exactly, has WeWork done that is innovative, aside from putting a trendy face on office rental?

WeWorks innovation is coming up with an office rental "product" that has high demand not being met by the market. Most property owners want long term leases because vacancies cost them money. Most freelancers and small businesses want short term, month-to-month, fully furnished office spaces.

I think they're overvalued, and they'll be in trouble if a recession hits. But coworking spaces do fill a need in the real estate market, one that's likely to grow, and WeWork is the market leader.

Re: WeWork Gets a Visit from Financial Reality

#78

Post by busterarm » Tue, Jan 08, 2019, 5:07 PM UTC

projectramo wrote: post #38

busterarm wrote: post #32

Earlier quoted context omitted.

Uber has been financing driver car purchases for years. They might as well own the car.

No, I don't agree with that logic. Credit risk is not the same as the risk on owning the asset. Your bank might lend you money to buy a house based on your excellent credit and your large downpayment. That does not mean they want to rent out your home, speculate on home prices etc. They may end up doing some of this tangentially (they have to dispose of the house if you end up not paying) but that is not the same bus…

The bank financing your loan doesn't derive 100% of its income from their use of the home they loaned you.

Uber's risks are additive here. They're extremely leveraged.

Re: WeWork Gets a Visit from Financial Reality

#79

Post by parthdesai » Tue, Jan 08, 2019, 5:07 PM UTC

scandox wrote: post #5

Traster wrote: post #4

>The Gulf investors backing the Vision Fund seem to have decided that WeWork is not a tech bet but simply an aggressive punt on real estate. This is the bogey man of a huge number of current 'tech startups' - What if it turns out Tesla really are a car company! Or if We Work are actually an office rental company! OR gasp Uber is a cab company! (1) We now have a glut of companies operating in traditional markets that…

In 1999 there was an email going round about how ridiculous dotcom valuations were. Taking Amazon, I think, as an example it said it would have to earn more than Kodak, Boeing, Caterpillar etc to ever be worth it's valuation. There was a general sense of "it's just a bookstore". Now I know everything is more mature and the situation is different, but I also remember feeling very confident that Amazon was waaay overva…

Hey Steve Jobs, Bill Gates and Zuckerberg dropped out of college, so everyone should drop out and they will become billionaires.

Re: WeWork Gets a Visit from Financial Reality

#80

Post by 1024core » Tue, Jan 08, 2019, 5:11 PM UTC

simias wrote: post #56

scandox wrote: post #5

Earlier quoted context omitted.

In 1999 there was an email going round about how ridiculous dotcom valuations were. Taking Amazon, I think, as an example it said it would have to earn more than Kodak, Boeing, Caterpillar etc to ever be worth it's valuation. There was a general sense of "it's just a bookstore". Now I know everything is more mature and the situation is different, but I also remember feeling very confident that Amazon was waaay overva…

Hindsight is 20/20. Maybe people in 1999 were wrong about Amazon but they were right about Pets.com and many others, your comment is just an example of survivorship bias. I mean, I'm sure you're not trying to argue that dotcom valuations weren't generally ridiculous. Besides, Amazon, Kodak and Boeing were never exactly in the same market. The parent is comparing companies that ostensibly offer similar services. If I…

> but they were right about Pets.com

WebVan is another such example.