
WeWork parent pulls IPO following pushback: sources - jwegan
https://www.reuters.com/article/us-wework-ipo/wework-parent-expected-to-delay-ipo-wsj-idUSKBN1W12T6
======
tempsy
As someone living in SF, I don’t think anyone in SF or SV would ever consider
WeWork to be a “Silicon Valley” company in the same way that Uber or Twitter
or Slack is.

The company has 0 tech brand among employees (how many ex-FB or ex-Google
engineers work there?) and outside of Benchmark’s early round none of the VCs
are SV-based.

Point is the media is making this out to be an indictment on some SV tech
bubble but people in SV are looking at this from the outside like everyone
else.

~~~
nkoren
It's not "Silicon Valley", it's _Silicon Valley_. As in the show.

My wife just started a contract at a new WeWork office in London. The lobby
features a giant but non-functional as skateboard ramp, and two DJ booths,
both manned (at 9am on a Monday). The bathrooms feature the very latest in
digital toilets, but they aren't flushing, and nobody can figure out how to
reboot them.

At an aesthetic level, this couldn't be more _Silicon Valley_ if Mike Judge
were in charge of the service design.

In this context, the media pile-on may be annoying -- but it's inevitable, and
basically deserved.

~~~
puranjay
My WeWork in Gurgaon, India has a biweekly bhangra dance class at 4pm on a
weekday

After the third such class, I decided to get the hell out of my lease.

It's like their entire corporate culture is built around finding creative ways
to not work. It's awful environment to build a startup in.

~~~
nkoren
Snort!

I am imagining a bunch of microdosing firangi sitting in their gravity pods,
asking each other what Indians do to be, like, all cool and stuff. "Build a
successful business" is, like, way too square an answer, daddy-o. Anybody can
be a dull old business man. Our customers want to be cooool. So what's cool
and Indian?

Yoga?

Sure, man, but _everyone_ does yoga. They probably do Yoga in Kansas these
days, so how's that gonna build our brand? Yoga goes without saying. We need
something way cooler than that. What is it?

(Long awkward silence.)

Ah, I've got it! Bollywood dancing! Yeah, they eat that shit up over there.
Let's do that.

~~~
muddi900
This might be 90% accurate.

------
ginkgotree
We Co isn't a tech company. Its a landlord subleasing commercial realestate as
short term month to month leases with snazzy furniture. They happen to have a
mobile app. Its functionality is so poor they removed the pay snack bar in my
SF WeWork because no one could pay through the app.

CloudFlare... Now there's a proper tech company.

~~~
benj111
Ah, but it has/had a tech company valuation.

Why do you think valuations varied so wildly? You get the same thing with
Tesla, it's valued more as a tech company than as car company.

~~~
xiphias2
The biggest difference between car companies and tech companies is return on
invested capital.

According to that Tesla is somewhere inbetween a tech company and car company.
Also it's the only car company that used software to substantially improve the
performance of the car using software after selling it.

~~~
benj111
ROIC?

Have you got figures because I just googled for Telsa, Ford and Facebook at
that doesn't seem to be the case, albeit with older figures.

Anyway at this stage Tesla are selling luxury cars to the converted, its
unclear to me that they can keep doing that. Eventually they'll have to start
selling to Joe Bloggs.

[https://www.gurufocus.com/term/ROC/NAS:FB/ROC-/Facebook](https://www.gurufocus.com/term/ROC/NAS:FB/ROC-/Facebook)

[https://www.gurufocus.com/term/ROC/F/ROC-/Ford-Motor-
Co](https://www.gurufocus.com/term/ROC/F/ROC-/Ford-Motor-Co)

[https://www.gurufocus.com/term/ROC/TSLA/ROC-
Percentage/Tesla...](https://www.gurufocus.com/term/ROC/TSLA/ROC-
Percentage/Tesla%20Inc)

------
loeg
The Matt Levine saga on this for the past week or so has been fantastic. If
you're vaguely interested in corporate / bank finance, I'd encourage
subscribing to his newsletter. It's free.

~~~
nabla9
> WeWork Co., is a clever financial engineering company that has managed to
> tell an appealing fast-growing-tech-company story to equity investors while
> also telling an appealing stable-real-estate-company story to lenders, but I
> must say that I am stumped by this:

[https://www.bloomberg.com/opinion/articles/2019-09-06/people...](https://www.bloomberg.com/opinion/articles/2019-09-06/people-
are-worried-about-we)

------
quaquaqua1
Semi related but Blue Apron will forever be my favorite IPO.

5 stock splits and 3 CEOs later, day one investors will receive roughly 2
pennies back for every dollar invested just 2 years ago.

Only people who won were those who dumped free shares on the market
(insiders), and maybe consumers for getting subsidized food of questionable
quality.

Once valued at 2 billion USD, a paltry 150 million will get the job done now.

~~~
dangxiaopin
Pinterest is next

[https://trends.google.com/trends/explore?date=today%205-y&ge...](https://trends.google.com/trends/explore?date=today%205-y&geo=US&q=%2Fm%2F0h3tm0f)

~~~
foldingmoney
Google trends is probably not a good way to assess Pinterest.

Want to browse Pinterest? Open the app. Want to get Pinterest? Go to the App
Store. Heard someone say 'pinterest' but don't know what it means? Search
google.

Your link is only showing that last one.

~~~
manigandham
Google Trends takes advantage of the Google knowledge graph for deeper
understanding of entities and companies. This is showing "Pinterest the social
network" not just "Pinterest the search term". You can toggle with the menu at
the top.

~~~
foldingmoney
>This is showing "Pinterest the social network" not just "Pinterest the search
term"

I believe this is just a broader result set that includes searches for
anything that Google deems to be related to 'Pinterest the social network'.

Google doesn't have access to internal Pinterest metrics.

~~~
zrobotics
Google also knows how many Android users search/download the app. I don't use
pinterest, but if they use Google analytics or ads then Google also has a fair
amount of data on usage.

Google is very much a panopticon, I doubt any other single entity has as much
knowledge of the internet as a whole. Now whether this reflects in Google
analytics I don't know, as I've never really used their analytics for anything
serious.

------
miguelmota
WeWork is a real estate company and not a software company. They don't have
any worthy propriety tech and their business model is collecting rent. How
they were once valued at 47 billion just straight up doesn't make any sense.

~~~
Traster
I don't think big investors are that stupid. They don't think an office rental
business is a tech business, that's just a really convenient story to tell.
Because if it's NOT a tech company, you have to look at why it's worth so much
and come to the conclusion that all the fundamentals point to. It's worth a
huge premium because it's getting a monopoly. My suspicion is that WeWork
thinks that they can use their scale to drive their landlords prices down the
way Uber does to their drivers, and jack up the rent.

"We're going to really fuck anyone willing to do business with us" is not a
compelling story for a company trying to grow, but it's great for investors.
Also, I'm not just talking about the landlords and customers, you better
believe the plan is for the lenders to get pennies back on the dollar too.

~~~
CPLX
> It's worth a huge premium because it's getting a monopoly.

A monopoly on _real estate_?

Yeah no.

~~~
DebtDeflation
The commercial real estate market in just the US is valued at $16 TRILLION.
It's absurd to even be discussing a monopoly.

------
situational87
What a wild ride. Maybe there is hope for the bullshit industrial complex
around tech to finally start unwinding a little bit.

------
weworksmb
> This target is tied to a $6 billion credit line We Company secured from
> banks last month, that calls for an IPO to take place by the end of the year
> and raise at least $3 billion, one of the sources said.

> Were the New York-based company to fail to meet this target by the end of
> the year, it would need to secure alternative funding.

Does this mean, its now a ticking time bomb?

~~~
mytailorisrich
It definitely is.

When you read this and that Softbank has committed to buy 1/3 of the shares
sold at IPO it does sound like it's going to pop sooner than later (that may
include the vision fund if WeWork crashes)

~~~
DebtDeflation
I would not be surprised if Softbank's commitment ultimately changes to "we'll
buy however many shares we need to buy to ensure the IPO raises at least $3B
and the debt covenant is preserved".

------
jhcl
WeWork is a huge success...for its founders. Neumann reportedly sold over 700
million worth of shares ahead of the IPO.

For some reason every startup nowadays is the next Amazon or Facebook. Poised
to become the market leader in their field of expertise. Most of the IPOs are
losing big money yearly but the market is happy to support them with billions
of dollars. Actions that would make Warren Buffet cringe but could make money
if you're lucky.

This invites startups to take advantage of the situation. To me this is one of
the dark sides of our society because the ones at the bottom of the pyramid
losing their money are you and me saving for our pensions.

~~~
dagw
_WeWork is a huge success_

Indeed. For all the platitudes otherwise, the vast majority of startup
founders do this primarily because they want to become rich. Judging a startup
by any other metric is at the end of the day at least somewhat disingenuous.

If all you know about two startups is that in startup 1 the founder exited the
company with $10 million in his bank account and in startup 2 the founder
exited with $750 million in his bank account, which would judge the bigger
success?

------
yalogin
Recruiters from WeWork reach out to people with a pitch that they are unicorn
tech company. They lose me with that line.

~~~
lampdoorpost
Not sure if I'm just young, but my friend's over 200k total comp would have
made me think twice about an offer. It's not the highest, but seems fairly
competitive in sf

~~~
lotsofpulp
How much was the cash comp? I would value any equity at 0. Plus they would
have to offer extra cash as a premium for volatility and a negative brand
image.

------
victor106
> The WeWork brand is strongly tied to Neumann, a freewheeling 40-year-old
> Israeli-born entrepreneur who has said that We Company’s mission is “to
> elevate the world’s consciousness”.

"Elevate the world's consciousness" \--> Dont mean to be negative but what the
hell does that even mean? Imagine your landlord told you that.

Been following this story closely and Adam Neumann is such a crook, from the
outset he just wanted to take advantage of public shareholders. His intentions
were to screw them. Don't forget that lot of the shareholders for big IPO's
are pension and mutual funds and hard working middle class families indirectly
or directly own a bulk of these. This is how they get screwed.

I am so glad the market called his bluff.

~~~
semi-extrinsic
No-one knows what it means, but it's provocative. It gets the people going!

~~~
Zeebrommer
Nah, it's gross.

~~~
selimthegrim
He’s quoting Will Ferrell from a film.

~~~
Zeebrommer
Me too (well, John Heder)

------
dochtman
Looks like the title changed? TFA now says:

WeWork parent says IPO still on despite setbacks

------
volkadav
Any wagers on the price of fancy, used office chairs in 6-12 months? :)

#dotbombveteran

~~~
tibbydudeza
Do they still make Aeron chairs ???.

~~~
kunday
Or wait for the conscious elevating "WeSit" tech unicorn that changes the way
you sit

------
urs2102
It's been incredible watching each part of this unfold exactly as Matt Levine
called it each week prior.

~~~
urs2102
Additionally, I think this is great to think about as far as the entire story
of IPOing a big tech company in 2019.

You start with the story the bankers sell you. They all want to tell you
you're going to be bigger than you ever thought possible, because, well...
those fees are awfully nice.

"We're going to IPO you at 20% of $PREVIOUS_VALUATION"

The counter-argument was, well, "We don't think you're worth that much, you're
probably worth only $20B."

The problem is here... well there's not really a financial position you can
take here especially as the short price skyrockets. Maybe you get some smug
satisfaction, but overall, everyone in the early stage of trying to win the
IPO for their bank is going to tell you what you want to hear.

Now... things suddenly change, you need to shop it around. Well, maybe you
don't get the number you want. Maybe you do? You edge it a little down. Yet,
all the benefits you have as a private company (insert your It's Always Sunny
in Philadelphia Pepe Silvia meme of Mack trying to connect the dots) you can't
really keep entirely as you try to collect that public check.

Matt was spot on here, of course, they're going to try and take apart some of
those political rights that usually people grumble about (see Snapchat IPO)
and then somewhat get over as time goes on.

Yet even that didn't do the trick! So you slash the economic upside, and once
again that's not enough.

Maybe you even set the price low enough that you can hype it and it will go
up, but at some point, the market will give its verdict and in this case:
WeWork didn't cut it.

In many ways, it's an interesting litmus test of the health of the tech
industry. Yes, there's been a bull market for this last decade, but bubble...
maybe not. Maybe, this is great example of Wall Street being serious about how
much large private companies are worth? Either way, what a crazy saga
nonetheless. I wonder if they'll be able to (somewhat paraphrasing Matt) turn
the dial from growth to revenue and approach the market later? Time will tell
I guess.

Maybe we'll get an Alex Gibney documentary out of it!

~~~
rabeener
We is not a tech company.

~~~
tinytim69
I agree but are you saying that if it was a tech company, it would be worth
the 48 billion? Also, is it THAT much different from AirBnB that is considered
a tech company? What 'tech' does AirBnB offer that qualify it is a tech
company?

~~~
x0x0
AirBnB is asset free. We is long $47B of leases.

------
doppp
The headline has been changed to "WeWork parent says IPO still on despite
setbacks".

~~~
paxys
It's crazy how quickly we have come from newspapers having to print revisions
and retractions to fix minor mistakes to an organization like Reuters changing
an article to say the complete opposite thing in minutes.

------
DebtDeflation
IPO is back on. Not surprising when you look at their burn rate vs cash on
hand. Or the fact that they entered into a $6B line of credit last month that
is contingent on them raising at least $3B in an IPO by end of year. Beyond
Adam and Softbank wanting to cash out eventually, the company needs this
funding to continue to operate.

~~~
marcinzm
Hasn't Adam already cashed out $700 million during a previous round?

------
ChrisArchitect
sorry, all the talk about comedic _Silicon Valley_ (whether WeWork is 'tech'
or not or whatever) and then I see this:

 _" My friend’s entire company is locked out of their WeWork office because an
umbrella fell, jamming the door. No one can figure it out. It’s been like this
for 2 days."_
\--[https://twitter.com/NeerajKA/status/1173997679363407872](https://twitter.com/NeerajKA/status/1173997679363407872)

Too good.

------
hendzen
RIP Softbank Vision Fund 2.0

~~~
nabla9
Delaying IPO buys some time for Sofbank. IPO with low valuation forces huge
write-down for SoftBank. Now they can still pretend.

I suspect that SoftBank & Saudi money will be the biggest casualty of current
tech boom. They just throw money around.

~~~
pishpash
In a world awash with negative interest rate investments, even loss-making
enterprises are worthwhile. This may be the natural glide path at the end of
growth: redistribution.

------
ganeshkrishnan
Calling dibs on the bankruptcy/restructuring.

------
navigatesol
I hope it's now painfully obvious why Silicon Valley is getting behind the
Long-Term Stock Exchange: they need to be able to pass these duds onto the
uneducated public.

------
nugget
Is it true that WeWork is now the largest single lessee of commercial real
estate in the US? Seems like a bad bankruptcy could have some broad ripple
effects.

~~~
pvarangot
Well people are actually using the offices so prices will go down if they
backrupt but they'll catch up. It would feel like an adjustment and not a
bubble bursting.

~~~
nugget
It's anecdotal but I've been in half a dozen WeWork properties in the last 2
months and I've yet to see one more than 50% occupied. There were a couple
buildings in Seattle that seemed almost empty.

~~~
hobofan
Despite all their shortcomings (and I have ranted about them on here a lot in
the past), the seem to have close to a 100% occupancy in Berlin. It does often
look like they are less occupied though (partial empty offices) because the
claim of "you can easily move to a bigger office" isn't true and companies
rent offices that are bigger than they need them to be.

------
JMTQp8lwXL
We should now question the valuation of the other companies that have recently
gone public. I understand WeWork was unusually tumultuous, but many of these
talking points equally apply to recent IPOs.

A couple quarterly filings have already begun to bring some of these companies
closer to reality.

~~~
elpakal
like which ones?

~~~
hendzen
uber, lyft, to a lesser extent slack

~~~
isoskeles
Can you all be more specific about which "talking points" are similar? These
companies had to submit financial statements ahead of their IPOs and as far as
I know, WE has been a complete trainwreck in comparison to the others. Talking
about "talking points" doesn't seem to address any knowledge of what exists in
financial statements, it sounds way more abstract like we're trying to say
that Uber, Slack, etc. all talk big about themselves but are actually not that
great. Like that matters? In comparison to _a CEO who has used his position to
allow for absurdly corrupt looking deals and nepotism_ , which _was not the
case for Uber, Slack, etc._

Just saying, maybe you and the other person could be more specific about how
WeWork is similar to Uber, Slack, etc. beyond "talking points" because
financial statements are more substantial than how similar companies puff
themselves up through PR and branding.

------
KoftaBob
It's a shame WeWork is run by such scummy characters, the concept itself has
the potential to make people's commutes much more flexible and shorter.

When on-boarding a new employee, companies would be able to automatically
provision them a desk/office at the closest WeWork to them. This allows
companies to have access to a much bigger pool of talent, and allows employees
to have access to a bigger pool of companies.

On top of that, the flexibility means commutes are much shorter, as co-working
spaces can be efficiently distributed across a city and its suburbs. Even when
an employee moves to a new company, they could theoretically stay at the same
WeWork site, rather than have to deal with a new commute.

~~~
wayoutthere
Why even provide office space to folks? Just let them work from home and you
save a lot!

I always felt this was the fatal flaw in WeWork’s model. Once telecommuter
culture has been established, companies realize they can just make their
employees pay for their office space and deduct it.

For most things where you benefit from “going in to the office”, the benefit
is reliant on having a set of people in the same place. If everyone is all
over the country, what is the point of office space in the first place?

------
myth_buster
Scott Galloway victory lap incoming 3... 2...

------
farseer
This reminds me of the startups selling dog food that IPO'd during the first
dot com bubble. At least collective sense seems to have prevailed this time
around.

------
thedudeabides5
Does anyone know what happens to the liqPref (and hence the subordinated
equity shares of early employees) if they IPO below their $12bn liquidation
pref?

~~~
code4tee
Depends entirely on contractual details likely not broadly known. Those
details have not been broadly reported or discussed. In general in a generic
sense it’s quite common for investors (those writing actual cheques into the
business) to be made whole again and then some before options holders or
others get to come to the table. First dibs on the rewards goes to those that
took the most risk.

Reports out now are saying the likely market cap of the company is less than
the cash raised by the company. Speaking generally that’s typically a beyond
ugly situation for non-investors hoping their stake/options is going to make
them some $. Think about it... it wouldn’t be right for some employee
equity/options holder to get money while investors lose money.

Haven’t seen much written about the details specific to We/WeWork, but given
all the crazy governance issues identified to date with its corporate
structure it wouldn’t be surprising if such clauses are very complex.

~~~
thedudeabides5
Makes sense that at this point the cap table would be a bit of a mess.

Would be interesting to see something simple, like the total value of all the
employee equity, according to different IPO prices/valuations, and then
compare that to the changes in the CEO's wealth on the same axis.

------
selimthegrim
Financial Twitter on fleek (h/t Financial Times front page)

[https://www.twitter.com/nickatfp/status/1171613239580516352](https://www.twitter.com/nickatfp/status/1171613239580516352)

------
trippytyping
If We does IPO, I'm going to buy some IWG shares. The only way We can justify
their sky high valuation is buying out the bigger competitor who is way
undervalued by the markets.

------
mathieuh
I started at Arm last week on an R&D project around eUICC HSMs

I don’t know enough about how SoftBank manages it’s children to know if I
should be worried...

------
gandutraveler
Not necessarily related, but curious to know what hn community thinks about
Airbnb and how it will do in a IPO

~~~
erikpukinskis
I’m not any kind of expert, but Airbnb has strong network effects, a clear
business model, and is easily understood as a tech mediated disruption to
hotels.

So, sounds like an easy sell. But it depends on the price.

------
outside1234
And next, the bankruptcy episode...

------
buboard
What will i do with all that popcorn now?

------
ruchirule
Do I need citizenship in the USA if I want to trade on this stock?

~~~
dagw
No, but if you want to invest prior to the IPO you have to get what's called
Accredited Investor Status by the SEC.

Once the stock has gone IPO anybody can trade.

------
techslave
proof we’re not in a bubble?

~~~
Wowfunhappy
To the extent that "I didn't literally jump off a bridge" is proof that I'm
intelligent, sure.

~~~
whateveracct
It's a start!

------
hourislate
Wepocalypse.....

