
Now Worth $10B, Is WeWork a 2000 Redux? - gwallens
http://www.wsj.com/articles/now-worth-10-billion-is-wework-a-2000-redux-1436910924
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wjnc
(big imho-post) Oh, I wish someone could explain to me how I can practically
short many of these bubbles that come around HN daily. China, the many tech-
unicorns, the housing market in Canada. Enough chances to short something
succesfully.

That whole 'private-IPO' thing makes the 'valued at' so much less worth, since
you can't short them, information is private, no efficient market hypothesis
in play (if any).

I only hope my pension funds isn't one of the suckers tunneling money into the
VC-firms doling out such valuations.

It really is the 2000's, but this time around it's even harder to spot the
suckers (in the 00's it was stock holders). Ok, Chinese small time investors
and Canadians buying a house at 10+ times income I can spot from a distance.
But who supplies the VC's with money?

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fredkbloggs
> But who supplies the VC's with money?

Ultimately, all "money" these days is supplied by central bankers.

There aren't a lot of good ways to short this stuff, at least if you aren't
someone like BlackRock. That's especially unfortunate because it means no one
is going to make money on the downside, offsetting others' losses. In every
transaction there is still a winner or a loser, it's just that in this case
the winner is going to be the people selling chunks of worthless companies for
big money today. Just like in 2008 the winners were people who sold overpriced
and overhyped real estate in 2006 and 2007. So if I were you, I'd go found a
worthless company, pay the "tech press" to hype the holy living fuck out of
it, raise a dozen rounds at obviously nonsense "valuations", and use the money
to pay yourself and your friends nice fat salaries and lots of silly perks for
the next 3 or 4 years while everything implodes around you. That's not how you
short the madness, but it's how you profit from it which is really what your
question is about.

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wjnc
Can you draw the link from central bankers operations to the inflow of cash to
VC's? Because most CB operations are either setting rates (where I understand
they at least have to stay in between some bandwidth the market will
appreciate, or else face a situation like Switzerland), or transactions buying
assets (mainly bonds).

Both do not directly accomplish the inflow of money into VC. VC's don't
leverage (no banking license). I guess VC-firms don't borrow money at 1%,
because no collateral?

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jeremyt
The government leaves the cheap money door open to banks like Goldman Sachs.
Goldman Sachs lends rich people a pile of money at 1%. Rich people invest that
borrowed money with the intention to arbitrage the difference.

Works great, until the party ends when interest rates start increasing or the
assets plunge and one has to cover their leverage, whichever happens first.

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moron4hire
Does WeWork pay to have these sorts of articles written? Because there are a
lot of these sorts of places and they never get mentioned in these articles
about WeWork. It makes it sound like WeWork is single-handedly reviving a
concept that died with the first dotCom crash, yet it's really just the
latest.

The only other places they mention are Regus--making it out to be a shambling
zombie form of its pre-dotCom bust self-- and Industrious in Chicago, which is
only 2 years old, making it sound like a me-too. Come on! Almost every major
city has at least 5 of these places. Even Philly has had IndyHall since 2007,
and that's just the one I know off the top of my head.

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eli
Did we read the same article? I _really_ doubt WeWork is happy about the WSJ
pointing out how much they look like a company about to take a spectacular
fall. That wasn't quite a hit piece, but it was not a favorable article.

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moron4hire
Sorry, I should know better, but I honestly only scanned it. I've read other
articles glowing about WeWork (making it onto the front page of HN) and
ignoring the other places and I was just looking to see if that was the case
here.

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GordonS
> With coffee bars, free beer and well-used communal spaces

Beer, while working? What a good idea... or maybe not.

Reminds me of 10-15 years ago when we'd have a pint or 2 at a local pub during
lunch on Fridays. Nobody every got anything done on a Friday afternoon after
that.

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ortuna
In case of the China Town WeWork in DC. They switched to cold brew coffee. I'm
guessing you can't just have an open tap in the kitchens in DC?

~~~
moron4hire
IIRC, the problem was that for WeWork to be able to serve beer, they would
have had to get a liquor license as a "private club". That aren't as onerous
as full liquor licenses, but they do require you keep a membership roster
(easy) with photos of each member (eh) and not admit non-members (no-go).

I might be thinking of something else entirely, though. Honestly, I prefer
Cove. Free coffee and soda/seltzer, plus a more professional crowd. It's clean
and open, but not trendy and overbaked. Plus, it's like half the price.

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shinymark
I recently toured a new WeWork space in San Francisco. While beautiful, the
price was absolutely bonkers. I say that in the context of a commercial real
estate market that is booming in general.

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ryanSrich
You're paying for no lease. You can get a 3-10 person office in a downtown SF
with no lease. No other place offers that.

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iolothebard
Daly City, SF without all the SF! Plus you can BART into the city and voilà,
you can pretend you're in SF the entire time!

WIN-WIN-WIN!

~~~
shalmanese
You've just been fired by the reddit board.

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tetron
My startup recently moved out of a WeWork location. The biggest problem I had
with WeWork is that they treated their tenants a lot like Facebook treats it
users: you are their product, not their customer. Some annoyances:

* A new "community manager" every 2 months. Either they move people around on purpose, or they had a lot of turnover, but either way it was confusing. Community managers ranged widely from "stickler for the rules" to "happy hour several times a week" to "invisible".

* Relentlessly flogging the mobile app, despite the fact that it the Android version crashed immediately on most phones.

* Daily spam of "top comments" from their wannabe social networking site, because I what I really want every day is to read about how the printer on the 3rd floor of the New York office is out of paper when I'm located in Boston.

* Hipster artwork that's funny the first time you see it and dull and juvenile the 50th time you walk pass it.

* Hipster furniture that's incredibly uncomfortable (because plush conference room chairs can't possible compete with a mismatched set of "retro" chairs apparently found in a junk shop.)

* Insufficient conference rooms, telephone booths and bathroom stalls

Of course, our location may be especially poorly planned/designed/operated,
but the general target market seems to be the 20-something male unattached
hipster entrepreneur with a "lifestyle startup"; if you're trying to get real
work done you don't need all the petty distractions, so I'm not sure how
durable the appeal of WeWork actually is.

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7Figures2Commas
One of my clients has a space in one of WeWork's San Francisco locations.
Every time I've visited, I have been struck by how many of the spaces seem
underutilized (i.e. companies have more space than they're using). For
example, I see companies that have private offices with _x_ desks but I only
see _x_ /2 being used at any given time.

Other private offices appear to be entirely unutilized (i.e. they're occupied
but I never see anybody in them). The latter seems to be more common with
large companies that have "real" offices elsewhere and don't really need space
at WeWork.

Obviously, this is entirely anecdotal.

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pavel_lishin
My wife's workplace currently has a WeWork office, as well as a manufacturing
facility outside of the city. They typically alternate days, switching between
being at the office (which has the 'prestigious' New York City address and
most of the paperwork), and the warehouse out on Long Island.

They used to have a bigger office, and my wife would typically be the only one
using 1 of the 3 desks - the others belonged to the engineer, who would be at
the warehouse more frequently, and the sales manager, who was out making
sales. It might be under-utilized, but both engineering and sales still needed
their own desk, file storage, etc. for the times that they were in the office.

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rwhitman
At the lowest tier for just floating desk space the cost of WeWork and these
other coworking spaces is kind of ludicrous if you consider the free
alternatives - working from home, a laptop-friendly coffee shop or even the
library.

So when they say they have "plenty of cushion in a downturn" that's probably
very true. When the tech market is bad the number of freelancers explodes.
Loss of larger anchor startups can probably be augmented pretty easily by
dropping the fees for freelancers a bit and doing business in volume.

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eli
Tying up lots of capital in long-term commercial leases seems very risky and
difficult to scale. It also seems like the barrier to entry is low. I'm not
sure there's anything fundamentally different between WeWork and the 3 or 4
other nearby co-working spaces. I share the WSJ's apparent skepticism about
this sort of business.

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moron4hire
In the case of the place I go, WeWork is different in that it's significantly
more expensive.

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smaili
> When the technology sector is booming, as it is now, growth is strong. The
> risk, real-estate executives say, is that if demand falls—because of, say, a
> tech bust—WeWork’s revenue would drop, while the rent it owes to landlords
> stays constant.

Though an obvious risk, I wouldn't say it's the only one. To me I would be
more concerned about the thousands of other spaces out there that are easily
more affordable.

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notahacker
In fairness, the advertised prices for the London ones are surprisingly
competitive, but then that just raises the _are they making enough to ensure
they keep the lights on if they 're not too busy?_ question...

The real problem for the valuation if not the business itself is that apart
from free beer, they're not really doing anything differently from most of the
other spaces, and their brand and scale really isn't much of a draw for their
audience. And they're notionally valued at over 5x the value a firm operating
essentially the same business on a much larger scale...

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helmett
marc andreeesen says no

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stephengillie
Please link to your sources.

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chrisdroukas
[http://fortune.com/2015/06/15/andreessen-horowitz-why-
were-n...](http://fortune.com/2015/06/15/andreessen-horowitz-why-were-not-in-
the-next-tech-bubble/)

