
The We Company S-1 - dawhizkid
https://www.sec.gov/Archives/edgar/data/1533523/000119312519220499/d781982ds1.htm
======
cs702
A Bloomberg columnist's reaction on Twitter:

"I have only read the related party section in the WeWork IPO filing so far,
and I am not kidding that it is THE MOST BANANAS THING I HAVE EVER READ."

[https://twitter.com/ShiraOvide/status/1161601877517246464](https://twitter.com/ShiraOvide/status/1161601877517246464)

------
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.

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

------
richardwhiuk
> We are a community company committed to maximum global impact. Our mission
> is to elevate the world’s consciousness.

....

------
tontonius
If you wanna put those financials in perspective...

We Company financials chart:
[https://imgur.com/a/Xky1NNh](https://imgur.com/a/Xky1NNh)

~~~
dublidu
It seems like they need to charge more or operate a leaner operation. Even
after excluding marketing and sales expenses, they’re still not profitable.
They also apparently have 12k employees, which is way too high.

------
ChrisBland
An interesting thing happened a bit ago related to public companies and how
they must account for leases in the accounting standards update 2016-02,
Leases (Topic 842). For lessees, any leases that are over 12 months in
duration will need to be presented on the company’s balance sheet as a right-
to-use asset and corresponding liability for the obligation to pay rent.

So if you are a public company; you can rent space from WeCompany at an 11mo
period and you can magically reduce your liabilities vs signing your own
office space. While this may seem like a small change, this change could allow
execs to improve their financials with accounting gimmicks.

------
ummonk
Their operating expenses + depreciation seems to consistently be equal to
their revenue, before the pre-opening expenses, sales and marketing expenses,
and new market development expenses.

Investing in growth at a loss makes sense for such a rapidly growing company,
but can they make the unit economics work to turn a profit (after covering
general and administrative costs as well) when they need to? They do claim to
be offering the ability to house employees at less than half the market rate
for traditional leases + operations, so I guess they'd be able to raise prices
to a more sustainable level when required, assuming those numbers are
accurate.

As put off as I am by this whole company's branding and vibe, they do seem to
have built a major business and likely have a substantial lead in the space
due to brand recognition and operational experience.

------
_sword
Wework disclosed in this S-1 that the vast majority of its members are small
organizations or a handful of seats purchased by “enterprises.” In the event
of an economic downturn I wouldn’t think WeWork could reasonably expect to
collect on its membership fees no matter its contracts - their small clients
will go out of business or otherwise just stop paying. WeWork is still on the
hook for its contractual lease obligations, with lease terms averaging 15
years by its disclosures and between $2.3-$2.4bn of contractual obligations
per year in upcoming years.

I don’t see this going well.

------
mdszy
That wegrow bit seems really strange and cultish with all the mentioning of
"connecting with the universe" and "cosmic education".

~~~
kart23
What the actual heck. Why are startups trying to do schools now? There is no
way I'm sending my kid to a company with shareholders. Oh, and it costs
$30,000 for your 4 year old to attend preschool. Why must we 'disrupt'
anything and everything?

[https://wegrow.com/](https://wegrow.com/)
[https://wegrowparents.squarespace.com/](https://wegrowparents.squarespace.com/)

~~~
homonculus1
>Rebekah has traveled the world apprenticing and studying under many Master
Students, such as His Holiness the Dalai Lama and Mother Nature herself, and
is committed to creating an educational community that fosters growth in
humans' minds, bodies, and souls elevating the collective consciousness of the
world.

Sounds like a vanity project for the CEO's wife.

------
led76
Based on the filing the company awarded 42M stock options to the CEO earlier
this year. The filing mentions a share price of $110 per share, so that's over
$4B.

That can't be normal, right? That's 10% of the entire company. It's more than
Elon Musk got for Tesla by a long shot, and that was already controversial.

~~~
ec109685
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.

~~~
led76
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), assuming
the company does IPO at $47B and all common stock converts at the $110
valuation.

Personally I think this is unheard of -- anyone else know of examples of CEO
compensation like this prior to an IPO?

~~~
trimbo
> 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/](https://fortune.com/2018/02/23/snapchat-evan-spiegel-ipo/)

------
ringo123
Looks like they need to go public or else they will die. 2.8 billion deferred
rent on the balance sheet = house of cards

------
fierro
Apparently Adam has pledged $1B in charitable donations over the next 10
years, otherwise he loses voting power. Is this normal?

>To evidence their commitment to charitable causes and to ensure this
commitment is meaningful, if Adam and Rebekah have not contributed at least $1
billion to charitable causes as of the ten-year anniversary of the closing
date of this offering, holders of all of the Company's high-vote stock will
only be entitled to ten votes per share instead of twenty votes per share.```

~~~
anon1m0us
It seems disingenuous to make themselves only 10x more powerful than other
investors if they don't do what they say, rather than the accepted 20x.

Is such an ratio normal?

~~~
chipotle_coyote
It's certainly normal for founders to give themselves more power than other
investors.

------
rbrtl
> Upon completion of this offering, Adam Neumann will own or control more than
> 50% of the total voting power of our capital stock

Another Zuckerberg style IPO. Activist investors beware...

~~~
Traster
It's actually a good thing, they can't be included in a lot of indexes because
of that clause which means only people truly intent on setting fire to their
cash will ever buy the stock.

~~~
tuyguntn
This is dangerous in case of WeWork, since founder is leasing property to
WeWork. Founder knows how much profit is company generating, he can increase
rent prices and make WeWork zero profitable all the time, but his other
company earns all profit, because he has >50% voting power, he might decide to
stay with his own company even if he increases rent

------
40acres
I have a very unsophisticated eye, but it's difficult to avoid the feeling
that a portion of modern VC is a pump and dump scheme. Particularly when
taking into account recent equity moves by WeWork and Beyond Meat.

~~~
vikramkr
Beyond at least seems like it's a company with a strong path to profitability
during a major shift in the food market towards meat alternatives. IDK what
wework is doing...

------
harikb
From Page 199: "A majority of Adam’s awards are also tied to the Company’s
performance as a public company, particularly an increase in our market
capitalization that is sustained over a period of at least 60 days".

Seriously? just 60 days?

------
ummonk
I just realized that the last raise was at a $44 billion valuation. That seems
unhinged. With the numbers in the S-1 filing, a valuation of closer to $20
billion seems more appropriate.

------
empath75
Pets.com of the current tech boom, imo.

~~~
robodale
Let's hope for a commercial during the next Super Bowl.

------
wbl
"Our mission is to elevate the world consciousness". Let it never be said that
tech startups were not very Californian.

~~~
umeshunni
Since this is neither a tech startup, not a California company, not sure what
your comment is meant to say.

------
gizmodo59
The executive compensation looks interesting.

I wish they publish the ceo salary before 2018. Is that more for a public
perception?

And we see only CFO/Legal and no one else.

~~~
phonon
"Employment Agreement

The Company does not have an employment agreement in place with Adam and,
accordingly, Adam does not earn any salary from the Company and would not be
entitled to severance if he no longer served as Chief Executive Officer. Adam
earned no salary in 2018 and only earned $1 in 2017. Moreover, Adam is not
entitled to any perquisites from the Company and elects to reimburse the
Company in full for any perquisites he may receive in connection with his
service as our Chief Executive Officer."

The value of the options he was granted, as well as related party transactions
are quite significant though...

------
jakear
> 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. An emerging growth company may take advantage of
> specified exemptions from various requirements that are otherwise applicable
> generally to public companies in the United States. These exemptions
> include:

> \- an exemption to include in an initial public offering registration
> statement less than five years of selected financial data

> \- reduced disclosure about executive compensation arrangements and no
> requirement to include a compensation discussion and analysis

> \- accounting standards transition period accommodation that allows for the
> deferral of compliance with new or revised financial accounting standards
> until a company that is not an issuer is required to comply with such
> standards.

Number 2 seems surprising. Is that par for course in these dealings?

------
Havoc
Huge losses, no profitability in sight, pre-IPO founder cash-out

...yip to the moon!

------
kgwgk
“When applying our average revenue per WeWork membership for the six months
ended June 30, 2019 to our potential member population of 149 million people
in our existing 111 cities, we estimate an addressable market opportunity of
$945 billion. Among our total potential member population of approximately 255
million people across our 280 target cities globally, we estimate an
addressable market opportunity of $1.6 trillion.

“(...) By applying the average employee occupancy costs to our potential
member population of 149 million people in our existing 111 cities, we
estimate a total opportunity of $1.7 trillion. Among the approximately 255
million potential members across our 280 target cities globally, we estimate a
total opportunity of $3.0 trillion.”

~~~
jddj
Is this how these things are usually calculated?

Does a watch manufacturer say that there are approximately 255 million left
arms which we can reach by post, and since our watches sell for $1000 that's a
$255B opportunity?

~~~
JumpCrisscross
> _Is this how these things are usually calculated?_

Yes, it’s a run-of-the-mill back-of-the-envelope TAM [1] estimate. The point
of this number isn’t to value the company. It’s to identify obvious limits to
scaling.

[1]
[https://en.m.wikipedia.org/wiki/Total_addressable_market](https://en.m.wikipedia.org/wiki/Total_addressable_market)

~~~
ghaff
> It’s to identify obvious limits to scaling.

In my experience, it's more likely in order to show an enormous number as a
way of telling investors, the executives you need to approve your
product/project, etc. that your thing has just incredible potential.

It has some value. If the TAM isn't very big and you'd have to achieve 50% of
it to ever turn a profit, that may be a red flag. But TAMs that lead to
business projections like: "We only need to put our watch on 10% of the left
arms in the world to make a huge pile of cash!" are pretty bogus.

~~~
jerf
Even a nobody likes me knows to take TAM estimates with a grain of salt, so I
imagine experienced investors know too.

I suspect if you added up all the TAM estimates for all the industries on
Earth you'd get a number somewhere north of 10x the actual total value of the
markets on Earth. I feel I'm being conservative; I really wanted to say 50x,
but chickened out at the last minute before posting.

------
didip
This is just my opinion, but I think it will be one of the most shorted stock
this year and next year.

------
epiphanitus
Is there anybody here who believes WeWork will eventually be profitable? I
know most of the people here are skeptics but I'm interested in hearing the
other side.

------
simplecomplex
Another scam IPO for another scam tech company.

The fucking hot dog stand at my neighborhood park is in better financial shape
than these toxic scam businesses like Uber or We.

------
DickieGreenleaf
Interesting analysis by SWFI guys, Top 10 Biggest Risks in WeWork are Revealed
[https://www.swfinstitute.org/news/74504/top-10-biggest-
risks...](https://www.swfinstitute.org/news/74504/top-10-biggest-risks-in-
wework-are-revealed)

------
grandridge
this guy one up'd madoff. took investor money, bought hard assets and now
charging those investors rent. haha, dude should be in jail

------
tw1010
How do you read things like this? I'm overwhelmed but feel like there are
nuggets all over in this document.

~~~
vikramkr
Having an accounting 101 level of background (I'm sure there are a lot of good
online resources to pick up accounting - the basics of accounting are way
easier than the basics of computer science IMO)gets you like 90% of the way
there to be able to skip down to the financial statements and the footnotes
and get a decent sense of what the company looks like. Obviously you can go
further and further in depth, and there are a lot of things specific to the
IPO process that are good to know, but IMO knowing how to look through the
accounting statements and read a balance sheet/income statement/statement of
cashflows is the 20% of effort needed to get 80% of the insight you would
want.

------
DickieGreenleaf
Top 10 Biggest Risks in WeWork are Revealed
[https://www.swfinstitute.org/news/74504/top-10-biggest-
risks...](https://www.swfinstitute.org/news/74504/top-10-biggest-risks-in-
wework-are-revealed)

------
ryanackley
According to the prospectus, they lose so much money because they are building
out new locations. Their break even point takes about a year for an individual
location.

So theoretically, they have a path to profitability. I just wonder where they
get the cash in the meantime. >$1B/year burn rate, ouch.

~~~
skinnymuch
Wouldn’t it be from the IPO? If they sell 10% of the company, it should raise
billions.

~~~
empath75
That sounds like a ponzi scheme, not an investment.

~~~
zaroth
I would never invest in WeWork, but no, not at all. A Ponzi scheme takes new
investor dollars to pay the earlier investors’ “returns”.

Taking new dollars to grow the company to generate future profits is actually
the definition of “investment”.

------
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.

------
CodeSheikh
This statement though "The We Company is committed to being meat, single-use
plastics, and carbon emissions free."

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

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

~~~
dymk
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.

------
nknealk
The mechanics of deferred rent are fascinating here. They have 2.8 billion of
deferred rent on their balance sheet. See note 11 and 17

~~~
fjp
What exactly is deferred rent and what does it mean for We Company?

~~~
nknealk
Let me try to explain with an example. GAAP requires straight line
depreciation of a lease. So if I gave you a 2 year lease on a facility and
required a single payment of $1M at the end of the term, you'd account for
that as 500K expense in year one, 500K in year 2. In year 1, your cash balance
didn't change though right? I only wanted payment in year 2. So you record a
500K deferred rent liability to indicate that the expense has yet to hit your
cash balance.

Basically over some set of future years they'll have to pay out 2.8B of cash.
But they don't disclose the timing on when those payments come due.

~~~
fjp
Very clear explanation, thank you.

It seems somewhat curious they don't have to reveal when they would be
contractually obligated to pay out?

~~~
nknealk
They are required to disclose it. See page f-59 at the top. You'll note that
their lease payments are 1.3B this year but go up every year after.

Edit: the rate of increase is startling. They are going to have an additional
500M in leases on top of their expense this year plus another 200M come 2021
on top of that

~~~
glaive123
Is the $500M in leases on top of their expenses assuming 0 growth? Or is their
growth plan baked in?

Also, is the deferred rent liability fixed assuming 0 growth?

------
lgats
4.5 MB of HMTL... not including the images.

------
reneberlin
Translation: WE slurp money - for granted.

------
u35517
Stupid filter keeping me in the dark.

Access Denied You don't have permission to access
"[http://www.sec.gov/Archives/edgar/data/1533523/0001193125192...](http://www.sec.gov/Archives/edgar/data/1533523/000119312519220499/d781982ds1.htm")
on this server.

Reference #18.6fae0017.1565800624.11173d06

------
segmondy
The thing that's the most upsetting about this is that our 401k, pension
funds, city funds will all end up buying this garbage.

------
gregjw
Oof.

------
dwhitney
tl;dr This dude, through various financial shenanigans, is loaning himself
hundreds of millions of dollars to buy real estate and lease it back to
WeWork. He then pays the loans off by issuing shares of We Work stock. Nothing
is illegal about this, but it stinks to high heaven. But hey, he doesn't draw
a salary as CEO!

From the Company Loans Section:

 _In May 2013 and February 2014, we issued loans to WE Holdings LLC for $10.4
million (interest rate 0.2% per year; maturity May 30, 2016) and $15.0 million
(interest rate 0.2% per year; maturity February 4, 2017), respectively. The
loans were collateralized by shares of our capital stock held by We Holdings
LLC, and each loan provided us with the option to purchase a number of these
shares in full settlement of the applicable loan. We exercised these options
in May 2016, purchasing and retiring an aggregate of 8,398,670 shares of our
capital stock in full settlement of the loans._

 _In June 2016, we issued a loan to Adam totaling $7.0 million (interest rate
of 0.64% per year; maturity June 14, 2019). In November 2017, Adam repaid the
loan in full, including $0.1 million in interest, in cash._

Then from the Properties Leased to The We Company section:

 _During the years ended December 31, 2016, 2017 and 2018, we made cash
payments totaling $3.1 million, $5.6 million and $8.0 million to the [CEO]
under these leases._

Sounds like they are straight up loaning the CEO money so he can buy buildings
and lease them back to the We Company. Bonkers.

From the Personal Loans section:

 _Adam currently has a line of credit of up to $500 million with UBS AG,
Stamford Branch, JPMorgan Chase Bank, N.A. and Credit Suisse AG, New York
Branch, of which approximately $380 million principal amount was outstanding
as of July 31, 2019. The line of credit is secured by a pledge of
approximately [BLANK] shares of our Class B common stock beneficially owned by
Adam._

From the WPI Fund and ARK section:

 _We have entered into operating lease agreements with [the CEO] in which the
WPI Fund (or, following the ARK /WPI combination, other real estate
acquisition vehicles managed or sponsored by ARK) have an interest, on what we
believe to be commercially reasonable terms no less favorable to us than could
have been obtained from unaffiliated third parties. During the years ended
December 31, 2016 and 2017, no rent expense or cash payments had been
recognized by us relating to these agreements as we were not yet occupying any
properties owned by these entities and had not paid any rent under these
leases. During the year ended December 31, 2018 and the six months ended June
30, 2019, we made cash payments totaling $0.0 million and $0.6 million,
respectively, and we recognized _

From Personal Real Estate Transactions section:

 _With respect to the six properties not currently occupied by the Company, in
connection with exercising its option to acquire a property in the first year
of the management agreement, the ARK Manager and the Company may determine
that a subsidiary of the Company should occupy any of such properties to the
extent the ARK Manager and the Company agree on terms of any such occupancy
agreement._

------
arnvald
Next Uber? Impressive growth, but their expenses grow at the same pace (they
consistently need to spend ~$2 to earn $1).

WeWork's locations are wonderful, but if they want to start making money, they
need to start charging more or lower the costs. Won't people just move to
cheaper offices then?

~~~
Barrin92
>WeWork's locations are wonderful

really had the opposite experience. To me they feel like a neural net went
rogue and scanned through a billion pictures of "generic millenial apartment"
and then turned it into workplaces. Every weworks place I've seen seems
completely exchangeable and lacking any sort of character.

~~~
shawabawa3
> Every weworks place I've seen seems completely exchangeable

That's kind of the point. You get a consistent office environment in any
wework

It might not be perfect, but in my experience it's way better than the average
office (at least in London)

------
gdgtfiend
WeWork has $33.9 Billion in Non-canceable lease commitments, and it's lease
payments are increasing 100% YoY. I think that is the true ticking time bomb
for this company. In a world where billion dollar losses (Uber) seems somewhat
normal, those lease obligations are still outrageous, and those payments will
come due eventually, whether they have the money or not. In 2019 they
attributed over $800 Million to operating lease costs. Every year, based on
static growth that will double, and my bet is that it may even more than
double in some cases. This isn't so much a company as it is a race to light
cash on fire and run away.

~~~
short_sells_poo
Seems like they are pretty much levered to the hilt. What happens when the
current bubble bursts (or even just deflates) and their occupancy rate
declines?

Their business model seems to be selling short term leases and buying long
term leases. This is all fine and dandy as long as they can find enough buyers
for the short term commitments, but the distribution of almost all such
strategies tends to be heavily tailed. You basically collect a small but
consistent margin and occasionally suffer heavy and unavoidable losses.

That's a perfectly fine strategy if the company can stay solvent during the
loss, but this seems far from certain in case of WeWork.

~~~
sonofaplum
in a recession, is short term, flexible office space more or less desirable?

~~~
WhompingWindows
Wouldn't anyone spending money on that just cheap out and go with a library or
cafe or home-office to save money? Sure, not working at home is great for
productivity for some people, but when push comes to shove, their customers
can largely move elsewhere, right?

~~~
edanm
Maybe if you work alone. But there are plenty of corporate customers of WeWork
who will never, ever tell their employees to "work out of a cafe".

The problem of course is that not all customers are big corporates - some are
small firms that _will_ scale back spending, or even close, if a recession
hits.

------
fastbeef
Perhaps this is a stupid question, but is an S-1 the first chance for the
general public to get any insight into a company’s financials?

~~~
Wheaties466
Yes.

[https://en.wikipedia.org/wiki/Form_S-1](https://en.wikipedia.org/wiki/Form_S-1)

~~~
fastbeef
That’s so counterintuitive once you get used to all company returns (both
privately and publicly held) being public information in Sweden.

Here’s Spotify’s complete financial history from its inception for example:

[https://www.allabolag.se/5567037485/spotify-
ab](https://www.allabolag.se/5567037485/spotify-ab)

------
neil1023
TLDR: We Company (parent company of WeWork) filed for an IPO

------
koiz
WeWork shouldn't exist.

------
carrozo
Red flag company spends $2 to sell each red flag for $1.

------
sidyapa
The financials - [https://imgur.com/a/NZONeDo](https://imgur.com/a/NZONeDo)

TLDR : Revenue - $1.535B | Costs - $2.904B | Loss - $1.369B

~~~
tyingq
So revenue and net loss are almost the same number. They lose^h^h^h^h spend $2
for every $1 that comes in. Ouch.

Edit: Yes, spend is better verb here than lose...thanks

~~~
bkinnard
Not quite - they spend $2 for every $1 that comes in, so they lose $1 per $1
of revenue

------
dbuder
I've disliked WeWork from the beginning, it pretends to be a tech company but
it's just an old school real estate play. I still wouldn't short it,
especially early on.

~~~
xiphias2
To me WeWork just looks like the stock market with leverage and extra
management fees.

~~~
dbuder
Well at least their management does something, REITs look like cushy ticket
clippers to me (from the outside).

------
i_am_nomad
Does the S-1 disclose the fact that the founder is also one of the company’s
biggest business partners? He buys up properties and then leases them to
WeWork. Seems like a red flag to me.

~~~
jsty
Yes, under "related party transactions":
[https://www.sec.gov/Archives/edgar/data/1533523/000119312519...](https://www.sec.gov/Archives/edgar/data/1533523/000119312519220499/d781982ds1.htm#toc781982_105)

"We are party to lease agreements for four commercial properties with landlord
entities in which Adam has an ownership interest..."

~~~
human20190310
> Adam is a unique leader who has proven he can simultaneously wear the hats
> of visionary, operator and innovator...

Is this a normal sort of thing to see in such a filing? He's being referred to
by his first name and heaped with praise.

~~~
burtonator
Adam is extraordinarily humble. Everyone, including Adam, would never
exaggerate.

Adam is a part of everything. He is in the sky and sea. He is in the dreams of
children at night. He is all that there is, forever.

~~~
smacktoward
Adam is the Alpha and the Omega, the Beginning and the End. Those who invest
will inherit all this, and Adam will be their God and they will be his
children. But the cowardly, the unbelieving, the shorts -- they will be
consigned to the fiery lake of burning sulphur. This is the second death.

~~~
untangle
Adam's rise signals the start of the Apocalypse. Even his name is an affront,
and a sardonic reference to the Alpha (Book of Genesis) and Omega (We).

------
mmillin
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 having these in the document, but I always
get a kick out of seeing it said so plainly.

~~~
doppp
It's not a tech company, it's a property company with the valuation of a tech
company.

~~~
nabnob
It's a property company that's planning tracking everything people do in their
buildings.

>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 the workplace experience of the future." Translation:
optimizing every aspect of the physical workplace so workers are their most
productive. Euclid does this by tracking how people move around physical
spaces. Its technology can track how many people showed up to a meeting or to
that after-work happy hour. The company can see where employees tend to
congregate and for how long. It's all done over Wi-Fi.

Edit - forgot to link the article - [https://www.inc.com/betsy-mikel/wework-
is-trying-a-creepy-ne...](https://www.inc.com/betsy-mikel/wework-is-trying-a-
creepy-new-strategy-it-just-might-signal-end-of-workplace-as-we-know-it.html)

~~~
wpietri
Yeah, I don't see that providing the outsized gains they're hoping for. I've
talked to a number of entrepreneurs who business plan is basically

    
    
        1. Collect data
        2. ???
        3. Profit
    

And every time I quiz them on point 2, they get squirrely. They can never
explain exactly how it works; at best I get hazy references to Google making
lots from data, which is at best a partial truth.

In this case, I doubt having that data will do much; humans are already
natural optimizers. Really, the things workplaces should be optimized for are
unlikely to be easily measurable, so at best these systems will optimize for
the wrong thing.

And really, the reason workplaces aren't particularly optimal now is that most
decisions are made not for maximizing business value, but for maximizing the
power and comfort of those high up. As an example, when businesses relocate
their headquarters, it is generally to move closer to the CEO's home. Or we
can look at all the decisions made to optimize a visible metric, like cost, to
the harm of invisible ones. E.g., the open office plan, which is cheap and
lets managers supervise by looking out their office window, but significantly
harms productivity and employee happiness.

~~~
wickedsight
> And every time I quiz them on point 2, they get squirrely.

Well, sure, but all they're being told is that data is the new gold. [0] And
gold is valuable, so data must also be valuable. They tend to forget that not
all data is gold, because 'some data is gold' isn't what they were told and
also isn't fun.

0: [https://www2.deloitte.com/nl/nl/pages/data-
analytics/article...](https://www2.deloitte.com/nl/nl/pages/data-
analytics/articles/the-new-gold.html)

------
ecmascript
Can someone give me a tldr of what this is/means and why it's almost at the
top of HN?

~~~
batmenace
An S-1 is the prospectus a company has to file before going public. It
includes historical financials, an overview of the business, go-to-market and
a lot of additional information. It should generally tell you everything
relevant about the company.

------
beager
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 perfume on a term paper. Regulators could do
well to clamp down on this sort of activity, especially with the S-1’s
reputation as a means to truly inform investors.

~~~
dctoedt
WeWork's _litigation counsel_ might have wanted the pitch-deck stuff to go
into the S-1 to make the information more understandable to non-business
people. That way, the pitch deck would be an official part of the record; in
turn, this would mean a couple of things:

1\. If disgruntled investors were to sue WeWork, the pitch-deck material could
be referred to by WeWork's counsel in tactical maneuvering such as a motion
for judgment on the pleadings, without having to jump through all the hoops
that might otherwise be required;

2\. Worst case, if a lawsuit ended up going all the way to a jury trial, the
pitch-deck material presumably would be sent back into the jury room as a
"real" exhibit, allowing the jury to review the pitch-deck material during
deliberations. (The jurors might even be given individual notebooks with
copies.) In contrast, if the pitch deck were left out of the S-1, the judge
might or might not allow it to go back into the jury room, especially if it
were a so-called demonstrative exhibit prepared for the litigation.

(I teach my contract-drafting students to draft agreements with an eye toward
being readable by judges and jurors, with tables, footnotes, non-legalese
language etc. — and if the contract language is understandable to a juror,
then the parties' business people will be able to get to signature more
quickly and are less likely to get into disputes afterwards.)

~~~
notyourday
Yeah, except that's not how this works outside the theoretical realm.

In practice, those that actually took companies public know that the more
terrible crap you throw into the S-1 ( pitch deck included ) as long as you
state that risk-wise you are probably a terrible investment for the public,
the better protected you are from the lawsuits in the future when the public's
investment does not pan out: you say 'we are doing X and this is our rosy pie
in the sky pitch deck, but we must tell you the risk is that none of this is
helping us to make money. Buyer beware'

Should one look at the S-1s of the tech companies that went public in last 4-5
years one would see that pattern

Source: Attorneys engaged by the investment banks to help companies to IPO.

~~~
dctoedt
This is also true. Back when I was drafting my then-company's Form 10-K annual
reports, for just that reason I loaded up the risk section with a list of all
the things that could go wrong, based on studying similar lists from the big
software companies. It's sometimes known as vaccination or inoculation — "hey,
we _told_ you all these things that could make our stock price go south!"

(The danger with this approach, of course, is that if you inadvertently leave
something out, the plaintiffs' lawyers will spotlight the omission and argue,
"they LIED!")

~~~
rdslw
Your actions are reason, why this (yours incl) sections are useless from
investor perspective.

Take for example a risk from We Work company S1: > the sustainability of our
rapid growth and our ability to manage our growth effectively;

translation: getting older may cause you die.

in other words: dont put your cat to microwave, and beware as your tea might
be hot in your cup.

~~~
dctoedt
It's all about the incentives.

------
romanovcode
First time I hear about this company. Why is it related to HN?

~~~
simonvc
Probably half the startups here are working from WeWork offices or have done
at some stage..

~~~
fingerlocks
And the other half of us are at the new discount off-brand WeWork, aka
Industrious

------
webninja
> We have 3 classes of stock: Class A shares which have 1 vote, class B
> shares, which have 20 votes, and class C shares which have 20 votes. All
> classes vote alongside each other.

I wouldn’t consider being an investor in this company unless class B or C
shares are publicly traded. Just look at the underperformance of GOOGL, SNAP,
and SQ for reasons why not to be an investor here.

~~~
jermaustin1
Unfavorable opinion alert!

Lets say they were publicly traded, and not held for institutions, VCs, and
fonders.

Would you as a person, buying Class B shares ever buy enough that the 20 votes
per share matter? Why does the number of votes to you matter, unless you sank
a few hundred million into the company (at which point, you would be an
institution or vc), your votes wouldn't matter with any of the classes.

~~~
dragandj
The reverse of that argument is "if my vote doesn't matter, why do they want
to additionally shrink it by 20x"?

------
dynjo
You would literally have to be out of your mind to buy into this, especially
as the founder cashed out $700 million right before IPO.

Best. Short. Ever.

~~~
Bluecobra
They are going to be screwed when there’s another recession, given that they
don’t actually own the office space they rent out. This is a real gem:

“Substantially all of our leases with our landlords are for terms that are
significantly longer than the terms of our membership agreements with our
members. The average length of the initial term of our U.S. leases is
approximately 15 years, and our future undiscounted minimum lease cost payment
obligations under signed operating and finance leases was $47.2 billion as of
June 30, 2019.”

~~~
danieltillett
I would say those landlords are going to be in for an even bigger shock.

~~~
lordnacho
If WeWork goes broke it's mildly annoying to have to find other tenants, it's
true. But it's not like they can't plan for that.

For instance if WeWork goes down, there are still tenants that might want to
stay in the building. That's a sensible place to start.

~~~
Traster
The tenants who want to stay in the building aren't going to be paying the
same private equity subsidized prices that WeWork were. I'd imagine in some
markets wework is such a big customer now that their collapse would cause
massive repercussions.

~~~
tomatocracy
In a default scenario, the temptation for the building owners and ultimate
tenants to cut bilateral deals and screw over the middle man (WeWork) would be
huge. For the owner it's win-win - they keep cashflow coming in and if the
deal remains short term then they can replace the tenant with someone who will
sign a longer-term lease once markets recover fairly easily.

