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WeWork Gets a Visit from Financial Reality (bloomberg.com)
362 points by rhayabusa on Jan 8, 2019 | hide | past | favorite | 368 comments



https://www.bloomberg.com/opinion/articles/2019-01-08/wework...

"In addition to the corporate finance weirdness: “Going forward, the company will no longer be called WeWork but rather The We Company.” (“The switch is not a legal name change,” okay.) And: “Rather than just renting desks, the company aims to encompass all aspects of people’s lives, in both physical and digital worlds,” which is—and I have spent years writing about the financial and tech industries and do not say this lightly—the very worst corporate slogan I have ever heard.

Me: What does your company do?

We: We encompass all aspects of your life, in both physical and digital worlds.

Me: Wait that’s terrifying.

We: We’re like Facebook, only you also live here.

Me: Who did you say you are again?

We: We are We.

The new company will be divided into several main business units: WeWork, WeLive, WeGrow, WeHarvest and WeFeast, wait no only the first three of those are real, but I am looking forward to when they start a line of industrial-chic funeral homes, WeDie. (Free beer at the wake!) Seriously WeGrow (real!) is “a still evolving business that currently includes an elementary school and a coding academy.” And WeWhatever’s founders once (in 2009!) “mapped out plans for everything from WeSleep to WeSail to WeBank.” I can’t keep up with this."


The dystopian novel "We" tells the story of a society which encompass all aspects of your life, in both physical and mental worlds.

>"We is set in the future. D-503, a spacecraft engineer, lives in the One State, an urban nation constructed almost entirely of glass, which assists mass surveillance. The structure of the state is Panopticon-like, and life is scientifically managed F. W. Taylor-style." https://en.wikipedia.org/wiki/We_(novel)

I'm not sure why they would invite the comparison in both mission and name,


Everything in We was made of glass, even the buildings, so everyone could see everyone else at all times. It was sort of like one giant coworking space.


I went looking for a good quote from "We" to capture that, but I didn't manage to find a chunk of text that was self-contained enough.

"If you want a picture of the future imagine a human trapped in a glass co-working space -forever" - George Orwell ...probably


Wow, I thought you were making that up to fit the mood... until the Wikipedia article. This is bananas.


It is rare to find something too good to be true that is, indeed, true. I don't know why this amuses me so much.


I mean, "Soylent"?


The dystopia we inhabit is different than the one that produced Soylent Green, to the point that the comparison is humorous and edgy.

The same cannot be said for We.


Seems similar to Soylent, minus the mission statement.


"The We Company": somebody didn't check what that sounds like when spoken in British English. Wait, what? A company that manufactures and or sells wee?!?? (Pee, to our American friends.) It's not as extreme as powergenitalia or expertsexchange but still something of a facepalm.


> Pee, to our American friends

"Wee" also means "pee" in the US, as well as meaning "small".


Only in the context of being a Britishism that Americans occasionally use.


> Only

Nope. Never in my life heard of it being a britishism.

Edit: A downvote for proving an absolute statement wrong?

"Bloody" is used as a britishism. "Wee" is not, at least in many areas.


Not in the urine sense, but as in "a wee problem" it's got strong British (mostly Scots, really) overtones for me.


Yes, I've seen that use.


When people use it, they probably won’t add “that was a britishism I just used”. You interpret that through... eh, cultural analysis.


Have lived all over the US, "wee" is most definitely used.


As a Britishism? I didn't say it wasn't used at all.


I guess, if you squint just right -- but only in the same sense that it's true of most American English.

Those uses of "wee" (particularly the "urine" meaning) have been common in the US for far longer than I've been alive. Nobody thinks of them as "britishisms".


Nintendo got away with it...


I don't get it...


Nintendo Wii


Nintendo Wii


I have looked at "expertsexchange" for years and never saw the humor there. Thanks for pointing out!


And don't forget ViaGrafix.com


Sounds like it's now a Weak Company.


It happens all the time. Apple's Siri means Ass in Japanese.


I brought this up with my Japanese friend. He told me there are so many homophones in the language people are desensitised to stuff like this. For example: シ (shi) can mean both 四 (four) and 死 (death).


You’re not wrong, but your choice of examples isn’t great. Four is actually associated with death because it sounds like death, four is unlucky[4]. There is also an alternative pronunciation for “four”, よん。

[4] https://en.m.wikipedia.org/wiki/Tetraphobia


Or you can recall the snickering when the iPad was introduced. Didn't seem to have negatively affected it.


They presumably did think about what it sounded like. And they presumably also noticed that it worked for Nintendo.


It’s not commonly used that way, but does have the same meaning in American English as well.


Mitsubishi Pajero is even worse


The joke being that the name fits the drivers.

(By way of explanation, 'pajero' roughly means 'wanker' in Spanish)


Americans use "wee" too



And, another novel about living under oppressive conditions from a Russian-born author:

https://en.wikipedia.org/wiki/We_the_Living


Just FYI this is an Ayn Rand book, so if you've already explored that I'll save you the click.


In case anyone is wondering: not worth the read unless you're just interested in the history of dystopic fiction. The characters are boring and everything drags on far too long.


I’ll agree it can get boring at times, but it was incredibly creative and a lot of the descriptions of the world in the book are unlike any other I’ve read about and were quite poetic, while at the same time mathematic and scientific. Still, it’s a pretty short read and should be of much interest to those into scifi and dystopias.


Perhaps our interpretations of those descriptions where our disagreement lies then. I found the protaganist's obsession with romanticizing everything in terms of math to be incredibly repetitive and even cringeworthy at times (the imaginary number thing especially). It's not that I think loving math in a poetic way is not possible, but the protagonist's manner of thinking about it just made no sense, and it was sprinkled through everything in a way that added little value and distracted from the meat of the story. I suppose that may be what the author intended, but it was not enjoyable to read or poetic in my view.

I also judge it harshly for the way the author wrote the only female character as an obvious object of wish-fulfillment rather than a coherent individual with reasonable motivations.

I do indeed give it credit for being an early scifi dystopia, but every other dystopia I've read was far better, and I can't help but feel that "Brave New World" surpassed "We" in every possible way. Still not recommending this book to anyone who doesn't just want to learn about dystopic novels.


I agree, incredibly creative. Definitely worth the read for anyone who enjoyed 1984, Brave New World, etc. I don’t recall it being boring in the least, perhaps the translation is partly to blame.


It wasn't the translation, I just hated all of the characters - especially the protaganist and his faux-philosophical rants about his hatred the square root of negative one. The world that that the author built was actually interesting, and if that's the only thing a reader cares about, then I can see the appeal. But the storytelling as a whole just sank the whole thing for me.

And this coming is from someone who loved 1984 and Brave New World and was eagerly looking forward to reading "We" at one point.


I found it quite the page turner. I'm not saying sixstringtheory is wrong, reading excitement is certainly a matter of opinion, but I would invite people to give it a try. They might be surprised by how much they enjoy it.


Well the wikipedia synopsis is pretty kind in that regard.


We(are the)Borg

Lower your firewall and surrender your data. We will add your biological and technological distinctiveness to our own. Your culture will adapt to service us.

Resistance is futile


We: Also, We won't let We eat meat. (https://www.bloomberg.com/news/articles/2018-07-13/wework-te...)

Me: But I like meat!

We: Not if you want to be We, you don't. Are you sure you're We material?


That's actually a good policy though, because meat is bad


Seriously, the day my employer bans meat is the day I walk out, right after ordering a side of beef delivered to the CEOs office.


Aka, the company wants to take a moral stand for once and I am going to retailate with an immoral posturing and kill some innocent animals and shove my immoral views in their face, before i leave.


This is not a moral stand, it is an ideological stand. A moral stand is “We won’t serve meat that is not processed in a humane manner”. We’s stand is the same thing as saying ”Only Christian idolatry may be practiced in our offices”.


"Meat processed in a humane way" - there is no such thing. "Humane meat" is an oxymorone. 1) What is the definition of humane 2) Whatever that definition is, i really doubt it includes killing a sentient being that does not want to die.

Also moral stand is - an injustice is happening and you refuse to support it- in this case innocent animals are killed, the environment is trashed for future generations. etc. Ideological stand - I personally belief in A and B. An Ideological stand or belief is by definition subjective. A moral stand - there is a victim involved.


Sorry, I simply don’t agree with you. I love a big, juicy steak while at the same time having respect for the animal who provided it. I hope they lived a good life and were humanely slaughtered. I prefer it medium rare.


That is an oxymoron. You can not have respect for the animal and fully support killing it and all this without a hint of remorse or empathy. I can not comprehend how that would work.

For the sake of argument lets imagine there is such thing as "humanely" slaughtered cow. For example this one here, enjoying the sun: https://i.redd.it/9v0shahwsh921.jpg

First of all, cows live around 20-25 years and are slaughtered between 18 months and 3-4 years when it comes to dairy cows (which live a live full of misery and are disposed of, once they stopped producing enough milk to be economically viable). Best case scenario, you steak was a child/teenager in cow years.

Second, even the the most "humanely" slaughtered cow has to bleed to death for you steak - we don't want our precious meat to be soaking in blood don't we.

Third, your steak almost certainly didn't have a good live. If you want to see what humanity looks like at its worst, look no further then any industry involving humans and animals that can be economically exploited. Dairy, meat, eggs, fur, wool - it is all horrors beyond your wildest dreams.

Forth, last time I checked - if you eat a lot of meat, cholesterol still blocks your arteries. Heme iron still causes a lot of oxidative stress, aka you age faster. And animals are filled to the brim with antibiotics and hormones and all that good stuff accumulates in the meat, so you get a good juicy concentrated dose.

Fifth, that steak also hurts humans. Nobody in their right mind wants to work in a slaughterhouse, only the most desperate an financially vulnerable choose this field of work and are scared for life afterwords.

All this misery for 15 minute of sensory pleasure. In a time where we have the impossible burger, beyond meat and a plethora of other options, if we want meat without all the suffering and misery.


Yea it sounds like the kind of corporate slogan you come up with when you have to prove you're not just a real estate company and that your company has exponential growth potential rather than a slogan expressing something anyone wants.


"We rent out office spaces and amenities like big successful startups to anyone."

Says what they do and hints at why people want it. And it will never, ever be their mission for the reasons you said.


I heard they're changing their name to WorryFree.

https://en.wikipedia.org/wiki/Sorry_to_Bother_You


Eventually it may be, "we broke."


Never fear, WePivot.


WeWorked


a still evolving business that currently includes an elementary school and a coding academy.

Education is like catnip to these people. It's like some kind of attractor industry. They're all convinced they have the magic formula.


That's because everyone has an opinion, and everyone's[1] gone to at least elementary school.

If I were made king of the world, I'd have a lot of ideas about how to reform education (after I'd take some time to throw sand in Billy's face, as payback for three years of playground bullying.)

[1] Just about everyone, at least.


To be fair, education in the US is very broken.


Yet if you look at places where education seems less broken, it has nothing to do with tech or startups. Quite the opposite.


It remains unlooted so far. It needs a layer of opaque billing, routinely bankrupting its customers, and profit extraction to match the healthcare industry.


It remains unlooted so far.

On the contrary, public employee unions (including teachers) have done a masterful job of enriching themselves at public expense. E.g. Oregon:

Member accounts saw appreciable and consistent growth during this time, but underlying pension assets did not grow to cover the increased benefit guarantee. Career public employees who worked from 1970 to 2000 often were entitled to retirement income replacement rates over 130% of their pre-retirement earnings.[1]

Show me private sector pensions (if you can still find any) that come close to that.

[1] https://en.wikipedia.org/wiki/Oregon_Public_Employees_Retire...


I find it hard to describe even 130% of average pay of $90k as "looting", on a website where most software developers wouldn't get out of bed for that kind of money.

I also find it very interesting that the 130% number on that wikipedia page comes from the only reference which is a youtube video by one "John Tapogna", who appears to be from a thinktank.

A different view: https://www.oregonafscme.org/?zone=/unionactive/view_article...

"the average PERS benefit to a retiree is $29,720 per year, or about $2,476 per month, which is a modest income, but it is being seeing as the problem. In the mean time, Comcast owes $170 million of unpaid taxes, Intel's off-shore profits were $26.9 billion, and "non-profit" hospitals made $1 billion in profits in 2015 - yes, you read it right, non-profits made a profit. " (I wonder why this more plausible number is so different to the Tapogna one?)


You can't compare software developer salaries to typical wages in this country. Even software developer salaries are skewed by the Bay Area bubble. In many parts of the country $90K would be a fine salary for a software guy.

Your "different view" is from the public employee union, so of course they will have a different spin. I guess it's all down to what "average" is.

The local newspaper puts it this way:[1]

The average monthly benefit for public employees who retired in 2015 was $2,692, or about $32,300 annually. That includes all retires that year, whether they worked five years or 35. For career employees, with 30 years of service, the average monthly benefit was $3,771, or $45,252 annually.

Not too many private sector people get a pension of $3,771 per month for 30 years of service. But that number includes everyone. I don't see any data just on "education", which is the category that initially started this subtopic.

It's unfair to start pulling in off-the-wall stuff like Intel's "off-shore profits". That's old-school union thought. Thoroughly discredited. I remember very clearly when in NYC the World Journal Tribune[2] newspaper asked the unions for concessions so they could keep operating. To me the money quote was a union guy on TV who resisted this and said: "this is one of the richest firms in the world". There was a 140 day strike. Shortly thereafter the newspaper folded and everyone was out of a job.

[1] https://www.oregonlive.com/politics/index.ssf/2018/04/nation... [2] https://en.wikipedia.org/wiki/World_Journal_Tribune


This is facially false. No one eligible for a public sector pension is well off. 130% of nothing is still nothing.

Like honestly, think of all the people you know in unions. What are their houses and cars like? Do they live in the rich neighborhoods with the doctors, lawyers, and professional athletes? Do their kids go to expensive private schools? Just outrageously wrong.

The issue here is that most (all?) state and local governments are very resource constrained by reactionary Republican low tax regimes, so the amount of money required for pensions (or health care or education) is a big pie slice. But if these governments adopted reasonable, progressive tax regimes with confiscatory upper limits, the pie would look very different.

In other words, look at the ruthless income inequality in this country before blaming budget shortfalls on government employees, social programs, and unions.


This is facially false. No one eligible for a public sector pension is well off. 130% of nothing is still nothing.

As I mentioned in a nearby post, the average public sector pension was $3,771 per month for 30 years of service. Maybe to you that's "nothing", but to many people that's a very decent supplement to IRAs, savings, and Social Security.

I can't believe the straw man you're creating. No, the average Joe isn't entitled to live in "rich neighborhoods" alongside "professional athletes". And most "doctors" did 8+ years of additional education and training after college. You resent that they are getting paid for that?


> the average public sector pension was $3,771 per month for 30 years of service.

It would be better to quote the rest of the context [1]:

    As organized labor groups were quick to point out on
    social media this weekend, normal benefits are much
    lower. Out of some 136,000 retirees receiving PERS
    benefits, only 2,000 or so collect more than
    $100,000 a year.

    The average monthly benefit for public employees who
    retired in 2015 was $2,692, or about $32,300 annually.
    That includes all retires that year, whether they
    worked five years or 35. For career employees, with
    30 years of service, the average monthly benefit was
    $3,771, or $45,252 annually. The Oregonian/OregonLive
    maintains an online database of public employee
    pensions.
In fairness, OP does have a point here, so I apologize:

    Along with the guaranteed rate of return for older
    members' pension accounts, and the decision by a
    PERS Board packed with public employees to credit
    most of the system's bull-market earnings to
    employee accounts for two decades ending in 1999,
    the money match formula inflated pensions for a
    large cohort of public employees.
You could also take a look at the reason for some of PERS' issues, and you'd discover that it's the "money match" formula [2], which wasn't always beneficial for pensioners. You'd also discover that the pension was set up in the 40s, and has since undergone a lot of changes to accommodate different market conditions (as recently as 2003), and it's likely that it will continue to.

But I wouldn't say that Oregon teachers are "enriching" themselves. We're talking about pensions that ended up paying 100% of salary. That's not bananas; most advice is save for 75% taking inflation into account. But I also think pensions are weirdly complicated for probably political reasons. It seems to me a benefits cap at 50% makes complete sense (considering Social Security and other retirement income vehicles)?

(OP quotes 130%, and the source is a YouTube video via Wikipedia posted by the president of ECONorthwest. The video is clear and feels unbiased--in fact ECONorthwest is an economics consulting firm so it's in their interest to be analytical--but the 130% number is assuming Social Security accounts for 30% of salary [5]).

I'm not at all saying everyone's entitled to be rich. OP made the claim Oregon teachers enriched themselves via public sector pensions, and as I interpret the word "enrich" to mean "become rich", I presumed their argument was Oregon teachers can live like rich people on public sector pensions. This is, as we've both pointed out, not true, even though it seems there have been some shenanigans in how the pension is managed.

There are a lot of "social safety net" politics swirling around pension policy debates, and I guess my points are generally:

- A lot of public sector employees don't even get pensions

- Average pension payments are low

- There are sometimes outrageous abuses

- There should probably be a cap on benefits

- Beneficiaries shouldn't be allowed to manage the fund

- Pensions in general are a good idea

- But it would be better if we just expanded Social Security and removed the taxable earnings cap

[1]: https://www.oregonlive.com/politics/index.ssf/2018/04/nation...

[2]: https://www.oregonlive.com/politics/index.ssf/2012/11/oregon...

[3]: https://www.heritage.org/social-security/report/the-real-cos...

[4]: https://www.brookings.edu/blog/brown-center-chalkboard/2016/...

[5]: https://youtu.be/8viDMetIUHA?t=153


> No one eligible for a public sector pension is well off.

https://www.mcall.com/news/nationworld/pennsylvania/mc-nws-p... states that "Rodney Erickson is netting $477,590 a year -- from a state pension". I believe that is "well off".


OK I was dabbling in ghoulish overkill. But if you read that article, it contains this:

"More than 127,000 former Pennsylvania state employees or their beneficiaries collect public pension checks each month, and most are comparatively paltry. The average paid out last year was $27,722."

I'm a little tired of people using rare abuses to justify shutting down programs that people depend on. "ODB got food stamps", "this Penn State president makes $500k a year from his pension". The programs are still worth it, and even that level of abuse is beneath the cost of what it would take to combat it. It's also important to note that this guy is an example of "privileged white guy bilking the public sector", as we remember that the vast majority of fraud in social safety net programs is actually by providers of services (medical, food, etc.), not receivers. Guess which demographic most of those are?


It's not obviously true that high pensions mean unfairly high remuneration. Another hypothesis that fits the facts you've mentioned could be that private sector salaries that could be earned by teachers are higher, and the public sector is competing by offering more attractive pensions for teachers than the private sector does.

There's another possible contributing factor: government can offer higher future pensions without increasing current expenditure (because government is not forced to fund the higher pensions until they need to be paid, many years in the future). Maybe that's why so many US states have dramatically underfunded pension plans (meaning teachers and other pensioners might not actually get their promised pensions when they retire).


Maybe that's why so many US states have dramatically underfunded pension plans (meaning teachers and other pensioners might not actually get their promised pensions when they retire).

This is a very complex topic. I think it's widely agreed that the US Congress can change Social Security benefits at any time. But the pension issue varies in the states. E.g. the Illinois Supreme Court ruled that pensions were sacrosanct:

Justices cited a provision in the Illinois Constitution stating that pension benefits, once granted, “shall not be diminished or impaired.”

https://www.chicagotribune.com/news/local/politics/ct-met-il...


I don't know a single country where it isn't. Modern education paradigm is broken.


It's like some kind of attractor industry

Sweet, sweet tax dollars in your pocket.


Lots of money, not much oversight, “won’t somebody think of the children”.


This is funny:

"The valuation of the round was still being agreed between the two sides, with one person saying that it would be split with $1bn at the existing $20bn level and the remaining cash at the $42bn valuation from the previously announced fundraising."

So, $2bn at a $31bn valuation is what is being done.


I think they used to call this "a church".


Ah, the Nintendo strategy.

Why anyone at Nintendo thought that the Wii U was a good name for a completely new console is beyond me.


There's some systematic issue with naming that has existed at Nintendo since the 90s.

Thinking:

Nintendo entertainment system and super Nintendo entertainment system. Not necessarily bad, but also kinda "meh." Probably the best 90s explanation for what a "console" is, before everyone already knows what a console is. I bring it up because here begins Nintendo's critical error: failing to understand the customer in America isn't children, it is their parents and grandparents, who have no fucking clue what the difference is between "the Nintendo" and "the super Nintendo." I remember peripherals were a nightmare already. Also: consider the competition. Sega Genesis. Badass.

Gameboy: what the fuck does this even mean. And thus: Gameboy color. Advance. Sp (what?????). Mini?

DS is even worse. Dual screen, maybe. And then, DS but smaller. DSi, also some games for this aren't compatible with DS regular. 3ds. 3ds xl (not too bad). "New 3ds," good luck grabbing the right one at GameStop.

Wii vs Wii U is just a crime. What does the "u" even mean??? How do you communicate across parental units the intended Christmas purchase? "Sally wants what? We? We want to what? We you? Honey what are you saying? She wants the Nintendo we with you? With enhanced we motes?"

The switch, I argue, is the only time Nintendo has applied a sensible name.


re: NES

That was a console released following the video game industry crash of 1983 — a crash associated with total pessimism of games everywhere (at least in the US, but that was the most important console market)

It’s likely they were very deliberately trying avoid direct association with the game industry. Afaik, they’ve always intended their consoles be percieved as more toy-like, but the nes was a particilarly hard stance on that (even bundling it with a toy — R.O.B.)

>Nintendo's critical error: failing to understand the customer in America isn't children, it is their parents and grandparents, who have no fucking clue what the difference is between "the Nintendo" and "the super Nintendo."

You say this.. but outside of the wii u and n64, hasnt nintendo outsold its competition in every console generation so far? Although, I suppose it could also be said thats better attributed to the bigger shitshow of microsoft/sony/sega/atari, than nintendo’s own doing


They're not the "serious" console. But you can't cash serious at the bank. Being everybody's second or third choice has made Nintendo hand over fist the past couple years.


Yep, as a reasonably heavy gamer for the past three generations my consoles have been a Playstation or an XBox, and always a Nintendo console (and a PC) as well.

Although I don't see why, in an alternate universe we couldn't have one company making the "serious, powerful" console and two companies competing on the "fun, less expensive, great first party titles (although not so much less expensive now with the switch)" end with the "serious, powerful" one winning out just like Nintendo is in the current environment.


I find that its difficult to justify an xbox/ps purchase, especially when the biggest titles get shared between them, while its usually trivial to justify nintendo.

I also find it humorous that xbox/ps have gone down the road of building an “entertainment system” (which is part of the justification issue; the price is always higher for it, for things I don’t need/care, especially since I have a pc for that stuff), while nintendo stuck much closer to games specifically, despite the NES name.


Exactly.

For most of my gaming type friends, it's always a battle of MS vs Sony every single console cycle. However, after a few months of playing the main console, they almost always buy a Nintendo console as their secondary.

I don't think Nintendo minds being "third" place as long as the first and second place customers still buy their system. I know I would be happy in Nintendo's shoes.


Nintendo admits DS meant Developers System. If not for that it would sound like a stupid corporate incompetence rumor of "Whoops accidentally gave the placeholder brand recognition!". DS as Dual Screens made a good fit for laymen and does describe it well though.

The Switch in English also manages some naughty dual meanings while also being totally innocuous.


I don’t think it affects your main point, which I think is about the SNES and forward, but the naming of the NES and its “sober” redesign of the Japanese FamiCom for the US was very deliberate, and Part of Nintendo’s winning move after the video game crash. This video goes into great detail: https://youtu.be/B9kyey_qxNM


There's also the 2DS, and the 2DS XL. Oh, and the New Nintendo 3DS XL.

They all play the same games though, so yeah, good luck explaining which is which to a casual buyer. The very 2DS name sounds like it should be a weaker system than the 3DS, despite coming out later and being mostly the same bar the stereostopic 3D visuals.

Names certainly haven't been their strong suit.


Some games actually only run on the New 3ds and New 2DS XL, most notably Xenoblade Chronicles 3D.


DS was a dumb name. 3DS was clever. 2DS was bad but I don't know what they should've called the "3DS that isn't 3D" otherwise (3D-isn't?). After that they should've just stopped, I cannot fathom why they did the New whateverDS stuff when the naming was already getting out of hand.


As someone who didn't own a TV, thus any consoles: the Switch was out before I learned the Wii U wasn't just an accessory for the Wii.


Like Wii We would have been better


Wait but what about WeChat?


Maybe they are setting themselves up for the eventual company buyout from WeChat?


WeWeChat

It's basically a Weception at this point


Makes me want to say:

"We have met the enemy and he is We."


Living-as-a-service may actually be a valuable proposition in a root-less world. If this proves successful , and it spurs competition, soon we 'll end up with competing private cities.


Taking it to an even further extreme, what about competing private countries? Or even economic alliances like the EU, ... for-profit world government even?


no, they have to be distributed , so you can easily switch to an alternative


WeHarvest what is their product? Soylent green?


The mint flavor is to cover the aftertaste.


At least they finally fixed the pH.


I've heard there are companies that you can pay to visit your parents in the Retirement homes.

The moment we stopped working at the fields was the moment we had to stop the profit business. We should instead put in efforts into projects like CERN or anything that actually helps us improve the lives for as many as possible.


We is an SV generated dream workspace built... to change a human being into this.


Wish I could triple upvote this comment, you’re hillarious and it made my morning! :-)


Did Google not do something similar?


When you have Google’s track record you can get away with things We can’t.


> WeDie

I wonder when craft-dying becomes popular.


WeWee - toilet services.


One opinion about the unrealistically high valuations of companies like WeWork, Uber, etc is that Saudis like to feel that they are buying control over Americans' lives. Pure vanity, not much long-term planning, IMO. The whole "We Company" stunt looks like a desperate attempt to highlight this property in the face of a disappointed would-be buyer.


People interested in commercial real estate are starting to warm up their checkbooks.


>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 have valuations that would indicate they'll be as big or bigger than their biggest competitors. IWG is a comparable company to WeWork, has £2.35n revenue and £1.95Bn market cap. Wework has slightly lower revenue but is being lined up for a £20Bn valuation. Not only this, but WeWork are going to learn about the cyclical nature of office rental revenue.

The key for these companies is to show concrete indicators that their business is actually different from the companies they're disrupting and We Work has done an absolutely rubbish job of that so far.

(1) I want to be clear I don't think all those examples have nothing to differentiate them, but it's closer than some people might like to think.


Somewhere along the way I think we got it flipped around. No one was calling Sears a tech company in 1969 just because they bought an IBM 370 to computerize their accounting and inventory. By probably 1975, if you were Fortune 500 and still doing your books by hand you were probably just a dinosaur rather than your computerized competitors being so advanced.

Uber, Tesla, okay, maybe there is an argument to be made for them to be "tech companies". Like the referenced investors, I fail to see how WeWork is anything but a real estate play, and consequentially having to work from that rulebook. Oh, you have computer systems involved? Welcome to the 21st! Where everyone else does, too.

In summary, I don't think simply using a phone app to do some form of collaboration or logistical deployment using assets owned or contracted by the company qualifies one as a "tech company" anymore. I think they're still a traditional company doing what everyone else ought to (and eventually will) be doing to begin with.


That's because "tech" isn't a vertical but an operating model. As I've said before: https://twitter.com/mbesto/status/1017116663676919811

"IMHO the idea that companies are either "tech" or "not tech" has been peddled by VC's to convince buyers that all companies considered "tech" either have or will potentially have high gross margins regardless of current state and thus high valuations."

"When working with my clients (investors/acquirers) we generally consider businesses in three distinctions, IT Supported, Heavily Tech Enabled and Software Businesses. There are then varying degrees in between those distinctions."


I work in tech, I think how people work is a key advantage. But the concepts underpinning agility and leanness can be traced back as far as you please. We didn't invent them and we don't own them.


> I think how people work is a key advantage.

Yup, which is precisely what an Operating Model is: https://en.wikipedia.org/wiki/Operating_model


A book that really made me understand this early on was "Fortune's Formula" in that it illustrated how technology transformed the speed of information arbitrage, but the real human problem was getting information as quickly as possible from point A to B.

Having a website in 1997 to sell goods was a better means to reach customers unable to visit a store location than a mail catalog due to better inventory management, personalization, etc.

One blog I've enjoyed reading is Chick-fil-a's technical blog as it really demonstrates how a company in the restaurant business is leveraging technology to make its customer experience or operations more efficient, much in the same way, Mcdonald's used milkshake machines to be more efficient. But, Chick-fil-a is willing to admit it is a restaurant!


Similar I have issues with Compass Real Estate getting 440M in funding to basically buy traditional real estate companies with some sort of mythical special tech to make home buying “better”

https://techcrunch.com/2018/09/27/safe-as-houses-compass-400...


Apparently, they spent the 440M on signing bonuses for top realtors, who brought listings with them. I can't speak to the economics, but as an active buyer right now, I'm seeing Compass listings all over Streeteasy, where the other firms barely acknowledge that SE has upended the search process, and still try to peddle "buyer agent" services, like I can't just find listings online. Compass.com at least has "coming soon" listings.


Indeed. What value does Compass bring to the market that Redfin (standardized deal flow) and Zillow ("coming soon") haven't already?


Agreed. Valuation is based on sum of future profits - so essentially how profitable the business can be AND how big it can be. If

1) Ratio of fixed to marginal costs is high you have economies of scale, and will get much more profitable as you grow (software vs consulting)

2) You can capture revenue quickly because it's operationally simple to add customers (e.g don't need to hire with each dollar of revenue) you are more likely to reach that profitable scale faster.

If your company uses tech to achieve (1) and (2) then they should have high valuations. If you happen to use cool tech but don't have economies of scale or easy operational growth than how you brand the company shouldn't really matter.


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 overvalued.


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 can trust Wikipedia by 1999 Amazon "also sold video games, consumer electronics, home-improvement items, software, games and toys in addition to other items." That meant that it was already an online retail store, not a mere bookstore.


> but they were right about Pets.com

WebVan is another such example.


> but they were right about Pets.com > WebVan is another such example.

Timing was wrong, too early. Chewey sold for 3 billion in late 2017 to petsmart, a less online savvy box store https://www.recode.net/2017/12/6/16681040/ryan-cohen-chewy-r...


And let's not forget boo.com ... https://en.wikipedia.org/wiki/Boo.com


On the other, other hand, Amazon sends currently very overvalued as a retail company. (I haven't looked at the comparative sizes of its various components.)

How long before Amazon sounds of its retail business?


Amazon hasn't been just a retail company in a very long time. It is probably THE Tech company at this point. They are a consumer electronics company having cornered the market on the cheap android tablet, and the smart speaker. They are a dominant enterprise cloud player. They own the biggest player in e-sports currently with twitch. They are in the music and video streaming business. They do government contracting at this point. The valuation is more than justified.


I think the point is that Amazon as retail on the web isn't the success story of Amazon. It's all of the other things you mentioned.


And twitch is becoming much more than esports. With YouTube shooting itself in the foot with their copyright nonsense, there are lots of big YouTubers carefully transitioning their content and user base to twitch.


It will come to nothing once Twitch becomes a big enough target. Then they’ll start to resemble YouTube more and more until the in turn are “disrupted.”


I mean, haven't they pretty much already done so?

Would not surprise me if a majority of both inventory and sales are actually marketplace sellers by now, that pay Amazon for fulfillment.


So, Amazon is a major tech company attached to a warehousing and logistics operation.


I think that's fair. Their retail operations don't qualify them as a "tech" company -- that just makes them a tech-savvy retail company.

However, their cloud (and other IT) services do qualify them as a "tech" company.


That's pretty revisionist as to the actual reality. The vast majority where incredibly overvalued internet plays on traditional markets, exactly what the gp warns. You just picked one of the few that survived and thrived. Don't overestimate how inevitable it was that we ended up with the Amazon we see today.

The biggest difference I see this time is these unicorns have actual revenue. Heavily subsidized but revenue still. Last time we had monster companies that didn't even show that given 2 dollars they could make 1, so progress?


It's not revisionist. The problem is identifying which ones will survive ex ante. Given 100 assets to invest in, if you knew that one of them would become amazon in 20 years, but the other 99 would die, how do you value them? Well, you value all 100 at 1/100th the expected value of Amazon. Now, maybe you look at each individual company and try to pick a winner to put all your arrows behind, but assuming you can't reliably do that (which is a reasonable assumption), you would want to value all 100 at quite a bit more than they currently appear to be worth.


IMO Amazon and most other dotcom companies were waaay overvalued at the tail end of the dotcom boom and many companies with hefty valuations from those days do not exist today.

What made Amazon survive (and achieve valuations way in excess of those in 1999) was not the fact that it had something super valuable then, but that it relentlessly innovated, stayed flexible (an online bookstore offering a computing cloud services, what a weird idea) and executed well enough. And had enough money and controlled costs well enough to reach profitability. For every Amazon there are hundreds of Enrons and WorldComs.


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.


> was a basket containing Amazon.com, pets.com and all the rest overvalued?

Yes. This has been extensively studied. Almost every investor who deployed new capital in the late 90s lost money on those investments.

> as long as AMZN was >= 20% of your basket

You’d have to torture causality to come up with a portfolio that would have made sense in the 90s and would have been 20%+ Amazon. It wasn’t even in the top 10 most valuable public companies by market cap [1].

[1] https://en.m.wikipedia.org/wiki/List_of_public_corporations_...


But it obviously would have been a major component of any "Internet" basket at any date after its IPO in 1997. But 20% major? Perhaps not.


Keep in mind, too, that $1 in January 1999 would buy what $1.53 does today [1]. Saying you’d be 20% Amazon in 1999 is the same as saying you’d have bought the stock then. Yes, of course—with that prescience you’d overperform.

[1] https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=1&year1=199901...


5X is worse case, it's 15X in dollar terms, but an equivalent investment in Dow would be almost 3X so thus the discount.

It's also worse case because it assumes you buy at the $107 peak. It didn't spend much time above $100...


Buying Amazon in the 90s is analogous to buying Berkshire in the 70s. It would have taken a prescient and outsized allocation decision which, ex ante, would have been difficult to justify.


A very large number of people were buying Amazon and the other internet stocks in the 90s. If not, there wouldn't have been a bubble. The part requiring the magic genie would be not selling it for the next 20 years... :)


>So as long as AMZN was >= 20% of your basket...

and there's the rub, knowing, a priori, what the proper balance should be.


Amazon also aggressively and effectively expanded from being "just" a bookstore to a cheap store that sells everything, and diversified even further by effectively creating the multi-billion dollar cloud computing market, which in turn created the hyperscaling startup boom. Amazon deserves that valuation for that (not so much for its extorsion of its employees though; you'd expect one of the highest valued companies of the world to pay its employees accordingly)


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.


How many "over valued" "Amazons" died? Compared to the Unicorns like... well... Amazon?

It's like saying "All houses built in 1900 are built SOLID because look at all the 100 year old houses that still exist" and then completely ignoring all the 100 year old houses that don't exist...

Hell, look at the companies that were undervalued. GIANTS! Companies that will never fall... like, say, Blackberry and Palm?


Well, back then the capital markets were all about value investing. And if someone in 1999 told you that a publicly traded company could run losses for 15 years straight and be 'successful', you'd have looked at him as though he were a fool.

'Valuation' these days seems to be less about determining the free cash flow of a company's operations. It's the promise of great innovation that's just around the corner. Or, more likely, it's the promise that a bigger company will acquire this company at a markup above whatever you paid.


So we should be contrarian, and move back to value investing again?

I wonder how these profitless companies will fare when the next recession arrives.


Who says that feeling was wrong? At that time, Amazon was a moonshot gamble. Lots of very important things needed to line up for it to be successful, primary of which was investor confidence in a company that didn't turn a profit for most of it's existence. I still think Amazon is overvalued and the market will correct it at some point.


Amazon was also overvalued in 1999. It took almost a decade to get back to its dotcom valuation. Amazon of 1999 and 2009 were two very different companies.


That's a good analogy, because over a 10-20 year time horizon it turned out to be a bargain, but over 1-2 year time horizon it was WAY overvalued.


If you'd invested in Amazon in 1999, you'd have lost 80% over the next year. It stayed flat until about 2008.

It's difficult to decompose a stock price, but I think Amazon gets most of its from AWS.


Pets.com was also overvalued, right? It's easy to see the winners in hindsight.


Pets went out of business trying to ship heavy dog food for free. But today the logistics for that actually exists. Often it doesn't pay to be too early. If you are too early you need more cash to stick around until you are proven right. Webvan was another example, today food shipping businesses are everywhere (whether they make money or not one can argue) but back then they were too early and tried too hard before the logistics worked.


> Often it doesn't pay to be too early

As the old adage goes -- the pioneers get all the arrows.


The second mouse gets the cheese.


It went out of business in 2000 so I guess any valuation over zero turned out to be too high?


Chewsie sold for $3.35 billion recently...


Well amazon didn't achieve what is did staying a bookstore.


Sometimes it's different, sometimes it's not. Tech allowed a company like Amazon to scale. Tech allows a company like Uber to allocate rides vastly more efficiently, tech allows a company like AirBnB to enable property owners to extract more value from their property. But tech doesn't allow Tesla to sell 10x more cars than Toyota (for example).


> Tech allows a company like Uber to allocate rides vastly more efficiently

It's more accurate to say that venture capital allows Uber to subsidize rides more aggressively. I see no evidence that Uber is substantially more efficient (when you include the driver's costs) than traditional taxi companies.

Edit: Uber has also managed to skirt a bunch of labor laws by claiming their employees are contractors. I guess that's a kind of "efficiency".


I think it's unquestionable that tech like Uber's can/does allocate cars and rides more efficiently. The taxi model relies on drivers circling looking for a fare and phone dispatch with, at best, a dispatcher seeing GPS cab location on a screen and trying to eyeball-match it to the caller's location. (or, at worst, caller-reported location, and radioing a bunch of cabs asking them "hey, where you at?")

At its most efficient, an Uber model can automatically and predictively allocate rides based on realtime rider and driver current and predicted locations with realtime traffic/travel data. There's simply no comparison.

The extent to which rides are cheaper due to skirting of regulations, extracting money from VCs, pushing costs onto drivers, is effectively a separate issue.

That is to say, Uber can break many laws, screw over drivers, flood the market with way too many cars, all while losing money, but none of that means that the dispatch model isn't inherently more efficient.


The dispatch model is also relatively easily copyable, though. I don't want to downplay the amount of tech work that went it, but it's not an insurmountable obstacle -- taxi companies could sign up with a service like Curb or Easy, or even create their own like Yellow Cab Houston's Hail a Cab.


> At its most efficient, an Uber model can automatically and predictively allocate rides based on realtime rider and driver current and predicted locations with realtime traffic/travel data. [emphasis mine]

This seems like a bizarre claim. Precisely when a specific rider will call for an Uber is inherently unpredictable (at least without a lot of surveillance). Meanwhile Uber drivers are not paid to drive from place to place without a rider - so Uber has limited capability to make them do something like head to a high-volume area in anticipation of demand. This is especially true since almost all drivers I talk to now drive for Uber, Lyft, and whoever else at the same time.

The micro-optimizations of dispatching drivers based on what side of the street I'm on or how many left vs. right turns are on the route are nice but only have a meaningful impact on wait time when there are already numerous drivers in the area to choose from (i.e. when the wait time is already short).

Edit: On second glance I realized you may mean that the dispatch is predictive in terms of anticipating traffic conditions and factoring this into the matchmaking between riders and drivers. While this is valuable, the key innovation here is the same kind of predictive routing algorithms that both Google and Apple already provide. Building this yourself may be hard, but is far from novel.


Yes, perhaps the best example I can think of was actually a failure -- my Uber that was supposed to arrive in "5 minutes" was actually driving away from me at the time, turning into FB HQ a minute later, and then spending easily 10+ minutes getting lost driving from building to building on the campus. But their algorithm can predict (usually!) which car will be nearest me the soonest; not which car is currently closest to me (regardless of occupancy) or which car is empty and nearby.


Uber wins through three things.

one, the convenience of the app model.

two, subsidizing rides to flood the market with drivers.

three, offloading risks like employment law and fleet management onto drivers.

None of the stuff you said about traffic routing is currently true nor is it likely to be relevant. Taxi and Uber drivers do the same thing -- show up where and when there are predictable flows of people. They do this using human intelligence. It is unlikely that all the crazy big data analytics is going to do significantly better than this.

Occasionally they work off hours and pick up a few people that need rides.

That's it.


1 and 3 are undefensible territory. 2 is selling dollar notes for 90 cents; eventually you're going to have to convert to something more cash-flow positive.

Their only realistic "exit as a world champion" play was to get to self-driving and own a fleet themselves (being able to create economies of scale on vehicle purchase and maintenance that would beat local taxis). That dream ended when they ran over a woman in Tempe.

Their best hope now is to be one of several large commodity players-- modest margins, some limited ability to spread fixed costs like software engineering over large volume.


This brilliantly advanced dispatching still makes cars drive around New York City blocks at rush hour instead of letting me walk 20 metres to the car that is not far ahead of me on the avenue.


Uber has also managed to skirt a bunch of labor laws by claiming their employees are contractors. I guess that's a kind of "efficiency".

In the US, taxi drivers were always considered contractors, Uber just followed the existing model. In fact, they used to pay to work[1], starting each day in the hole. Only after Uber et all appeared have drivers started unionizing nationally and suing taxi companies to change that.

[1] https://www.nytimes.com/1995/04/09/nyregion/driving-a-taxi-d...


Include me in the same boat, but that was many years before I learned value investing and fundamentally analysis of equities. One of which is gross margin analysis.

Amazon, despite losing money, had very competitive gross margins from day one. I think pets.com was literally losing money on every product they sold (but don’t quote me), which is not sustainable.


They were losing money on each sale but they planned to make it up in volume.


Yes, but then Palm had a higher market cap than the rest of 3Com, which owned 80% of it. https://en.wikipedia.org/wiki/3Com#1997%E2%80%932000


What about pets.com and webvan? I feel like we are back in the webvan days again. Except the companies figured out they could trick regular folk into doing deliveries instead of driver who is an actual employee with some kind of benefits.


During the dotcom bubble thousands of companies were way over valued, where are they now? Mostly gone. Amazon survived and evolved. They actually were the exception. That doesn't mean every company that you can imagine being in a similar boat to amazon is going to end up in the same boat as amazon or even close to it.

Not to mention when the dotcom bubble popped Amazon's stock price took a beating and didn't really surpass its dotcom bubble peak until fall 2009, 9 years later...


> In 1999 there was an email going round about how ridiculous dotcom valuations were.

Which, while some of the examples sometimes quoted survived, was generally validated by the 2000 crash.


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


Amzn (adjusted for splits/etc) had a peak value of $107 in 2000 and a low of $7 in 2001.


It still is!

It's a heavily leveraged company with high capital requirements. AWS makes all of the money.


I got a similar email about pets.com

It’s all relative


Also; it might be different in the US ( I do not know ) but in the countries (UK (the wooden floors in Aldwych) , NL, DE, HK ( the one in Wan Chai I cannot even hear myself talk often)) I work where partners or clients have invited me to WeWork offices, the employees complained openly about the noise (it is more like a college kantine than an office space) to me and the next time they were not there anymore. Somehow that cannot be good for the bottomline although maybe in the US this is different.


WeWork is exactly the same everywhere, just as you described in the US. It is far too noisy to get any meaningful work done.


This is because they are the trendiest of trendy open office work spaces. Many many other tech companies are following this trend to be sure their new offices are featured in business mags and they can take pretty pictures of the office for promos.

Oh, and for greater 'collaboration'.


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, and revenue, I would consider the Uber version more valuable.


> which means it requires much less capital

They burned through billions of dollars of capital. That's quite a lot for a business that requires very little capital. What would they burn if they needed lots of capital? Trillions of dollars?


I mean half a million drivers each with a car that say costs $20k over its lifetime is about 10 billion. So like maybe?


$20K is a very low estimate for cost of owning a car. Edmunds estimates the 5-year "True Cost to Own" of a Toyota Camry for home-use is $35K. This is based on a 15K miles a year, Uber drivers can easily put on 50,000+ miles a year.


500,000 drivers * $20,000/car => $10,000,000,000 or $10 bil, not $10 trillion.

Thus far, Uber has raised $24.2 bil in financing so they could have bought cars for every driver easily. No idea what they did with all that money.


Subsidized fares.


Is there a single company in the world that pays for its machinery with cash, upfront? I don't think so.


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?


Even with self driving, there's effectively no difference to the consumer in experience/product whether the car drives it self or someone else does.


I strongly disagree. I have had many Uber rides where I wished it took longer to get to my destination. The driver engaged in fantastic conversation. I learned from them, I got insight into the area and recommendations. Self driving seems sterile.


Although, they probably wanted it to end so they could make more money on another fare.


Understandable, I was just referring to the enjoyable experience of the ride and nice conversation. It sure as hell beats a cab any day.


> 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.


Profitability doesn't mean defensible though. What separates them from their competitors? That is the point I'm making, not that they are unprofitable.


> What separates them from their competitors?

Scale. One can reliably get an Uber almost anywhere. That makes it attractive to travelling businesspeople and jet setters, two price insensitive customer segments that Uber almost singularly dominates.

Network effects. Ubers are almost always among the fastest transportation options in most cities.

Breadth. I never use Uber Eats, but apparently it’s doing quite well.

(I don’t know if the above gets me to $70bn. It does, however, point to a gargantuan business.)


> Scale. One can reliably get an Uber almost anywhere. That makes it attractive to travelling businesspeople and jet setters, two price insensitive customer segments that Uber almost singularly dominates.

Indeed. I was shocked to not be able to get one in China a couple of months ago

When I land in Sydney, or Seoul, or Paris, or New York, I don't want to have to work out what app to get, download it, set it up, set up payments, and then hope it works.

On the other hand Uber really let me down in Nairobi last year. with an airport pickup, so I don't rely on it there now, and will pre-book a legacy transfer to/from the airport now. They need to keep the quality up across all those cities otherwise they risk someone else winning.


I was pretty shocked to be able to use them in Tanzania, and at like 1/10 the price of our hotels' car service.


Ironically, where I live getting a Lyft or an actual taxi is easy. Getting an Uber is far more difficult.


Agreed. I use actual taxis because (in my area) they're faster and easier than Uber or Lyft.

(Also, Uber is a terrible company that doesn't deserve my money.)


The latter is how I discovered the former.


Uber does plan to own the cars though, since they're doing their own self-driving car work and have a deal in place with Volvo for up to 24,000 self-driving SUVs. https://www.washingtonpost.com/business/economy/uber-signs-d...


That doesn't really rebut the argument, since they'll only end up with an inventory of thousands of cars if they get self-driving cars to work productively, which would immediately propel them out of any "conventional" category they could have been assigned to.

I don't think they will get there with self-driving, but by the same token they're not going to end up owning a zillion cars either.


>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.


Exactly. The service currently provided by Uber is very much a commodity, both for drivers and riders.


> Uber doesn't buy and own the car, which means it requires much less capital.

That sounds the same as all cab companies I know of that have operated in the UK for years.


Same in my part of the US -- I believe that with every cab company in my city, the drivers actually own the cabs and are contractors. It's been that way for at least 20 years.


>Uber doesn't buy and own the car, which means it requires much less capital.

I don't think this is true with one of the major things they have been selling investors for years: self-driving cars. That certainly requires a lot of capital to pull off, and I think they plan is they would own those cars.


If Uber pulls off self-driving cars, I would argue:

1. It is not the same business model it currently has

2. It has an even stronger claim to not being a traditional cab company, and for being a "true" technology company

In that case they would have capital costs (perhaps even higher), but would eliminate labor costs.


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 business.


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


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.


Is Uber still using capital to pay operating expenses?

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


Doesn't Uber subsidize vehicle leases for drivers?

I don't remember if Uber does, but Lyft does.


Has Uber started actually turning a profit yet?


I agree that Tesla is probably just a car company but no american cab company operates in 72 countries outside of america though.


I tend to agree that Uber and Lyft are qualitatively different from traditional cab companies although, as many others have said, I'm not sure they have much of a moat or economies of scale. For the overwhelming majority of Uber users, it's irrelevant that they're in 72 countries or even multiple countries. In fact, I'm sure many users would switch to a better service that just operated in their own city.


Uber and Lyft have worse economics than traditional cab companies. Traditional cab companies have the advantage of fleet maintenance and higher utilization rates. Without VCs and financially illiterate drivers subsidizing fares, Uber and Lyft would be the high cost providers.


Outside of US the Uber brand is not so strong. In EU they are very regulated and they compete with local players that understand the market. Asia is also dominated by local players. So Uber exists in these markets, but almost nobody uses it there.


Almost nobody is a wild exaggeration. Most EU business travellers I know use it very often.


> no american cab company operates in 72 countries outside of america though

... while complaining about the big evil taxi cartels


>Not only this, but WeWork are going to learn about the cyclical nature of office rental revenue.

I don't know anything about office rental so I'm curious, what makes it cyclical? You also seem to imply that we're high on the cycle (otherwise it wouldn't be a problem for WeWork in the future), why do you think that?


Office rental costs are basically highly correlated with the business cycle, when we're late in the business cycle there's lots of companies doing well, so they're hiring people so they're expanding so they need more office space. We can see that's true due to the low unemployment rate. This drives prices up. Because WeWork's business model is primarily to offer short-term flexible agreements their business is doing great now.

The problem is that WeWork is agreeing long-term agreements (5-10 years) with their suppliers. So when a recession happens unemployment will spike, businesses will close offices, consolidate to the low cost offices they own (which they can do really easily with their flexible agreements with WeWork) and WeWork is going to be left with lots of expensive offices that no one wants to use. That's one of the reasons their debt is so expensive.


In brief: if the economy is booming, loads of companies want office space. If the economy tanks, loads of companies need to cancel their leases.

WeWork's lifetime has been on the upward slope out of the 2008 crisis. There is a question as to whether they can survive a downturn that at all hits them where it hurts.


Don't forget that Snap is a camera company.


I don't agree with the "rubbish part".

WeWork single handedly changed the way we work. It is way easier to build a tech startup with the help of a co-working space company than before.

I suspect that WeWork's business model ain't the problem but it's competitors, for example in London, UK. Competition drives prices for new real estate, crashed margins.


This makes very little sense to me. They haven't "changed the way we work", they've just stuck an attractive brand on shared office space. Every city in the UK has at least one Regus building where you can rent managed office space on short term leases, they just don't also throw in copious amounts of free drink and an atmosphere more like a college party than a workspace.


I tried using a Regus space the other week. It didn't seem that much better than any other co-working space in regards to noise and bad manners?


Have you been in a WeWork office, though? IME all shared offices are incredibly noisy, I don't understand why anyone would want to rent there.


but that's pretty true of all tech offices I've been to in the last few years. Even FAANG companies where they're paying their engineers a lot.

Over time, it seems like I'm getting less and less noise dampening... my last office, they had these little fabric cardboard deals they clipped to the edge of the desk... before that, I worked at smaller places, where there were a few people per office, and before that, I worked at a large place that gave us full cubes.

But at this office? nothing. nothing in between me and the person in the desk across from me. I had facilities put in a whiteboard between us, 'cause while I can wear hearing protection for noise; accidental eye contact is just not okay.

These aren't junior people, these aren't low-paid people; I don't think it's about saving money; or, cramming us in might be about saving money, but leaving out the partitions isn't. They give us really nice, expensive sit/stand desks that would demolish the cost of partitions.

(That said, most of the places I've worked at the very least had fabric coverings on the floor, and often those noise dampening ceiling hanging things... but I personally think that partitions are important, and those have gone the way of the dodo)


What I'm going to say is a very personal opinion and I understand well that it's not everybody's:

You'd have to pay me a lot of money to have me work in a place with separate offices or with people that think that "accidental eye contact is just not okay". A lot of people (not arguing that it's the majority, I have no idea) are actually more productive and happy in an open space than in a box cut out from the rest of the workers.


>You'd have to pay me a lot of money to have me work in a place with separate offices or with people that think that "accidental eye contact is just not okay".

I guarantee that you work with someone who doesn't want to accidentally make eye contact through their monitors while trying to work. You don't even need to be particularly introverted, i think, to find faces distracting when trying to code, and introverts, historically, have been attracted to the industry.


> nothing in between me and the person in the desk across from me.

You literally couldn't pay me enough to work in an open office space. Those things are nightmares.


IME all shared offices are incredibly noisy

I did a lot of co-working from 2009-2012 in several cities. The atmosphere was always very quiet and professional. People were very cautious about creating noise, and few people every spoke aloud unless they were on the same team.

I'm not sure what changed. Was it the bro-ification of the tech industry? Did coworking get a lot cheaper, and brought in a lower class of people? Was it Starbucks making its stores less attractive to campers? It doesn't sound like I'd go back to coworking again.


Cheapness is the answer, I expect. Based on my albeit limited experience, people who are actually making money are getting on with it and being productive as possible.

The problem people can't be making much unless there is a way of monetizing noisy phone calls that I am unaware of?


The Workspace offices I've been in have been a lot quieter than the WeWork one I was in -but- a lot of that would come down to lower density, inter-office walls made of concrete instead of glass, etc. (although the shared areas seemed generally quieter too but I didn't spend much time there.)


No, but I've worked in a few co-working spaces and the experience has always been the same. I expected Regus to be a little more grown-up but it appears not?

From what I've read about wework, I certainly won't be a customer any time soon.


Regus is valued at about 10k per desk. Wework is valued at about 160k / desk (August 2017 numbers, see Aug 25 2017 WSJ).

What does Wework do that Regus doesn't, that accounts for 16x the value?


Free beer?


> WeWork single handedly changed the way we work.

Why? Coworking is not a new concept. There are plenty of local coworking spaces in every city that has WeWork. How are they better than their local competitors?


Not the OP, but I can shed some of my thoughts as I've been at WeWork, local co-working spaces, and leased our own office space.

Most co-working spaces are cheaper, but they won't offer as many amenities as WeWork. 24-hour building access, conference rooms (for clients and internal meetings), phone booths, free coffee, a kitchen to utilize for lunch, highspeed internet (1,000Mbps if you use the ethernet jack) and roughly around 200Mbps on their free Wifi, free printing up to a certain volume every month. Did I forget the best perk? With your WeWork membership you can actually access any other WeWork location in the world and work out of there.

There were a number of times when I was traveling, I would just book a desk at another city or country for a single conference room credit.

Just a few positives off the top of my head compared to other coworking spaces. While you can find some with the same benefits, WeWork also wins with their decor and natural lighting in some offices. They also make it easy for startups to expand if they need more desk space. You rent on a monthly basis, whereas most places do yearly contracts.

Now let's talk about leasing your own space and all the headache that goes with it. At least in NYC, most places don't have a kitchen. So if you want a place to make coffee and wash your hands that's not the bathroom, you'll need to pay someone to have it installed.

You'll also need to set up the internet and electricity. And since you're on a lease, there's a good chance the landlord will raise the prices sky high the moment the contract is up. You'll actually end up paying relatively close to WeWork's price per month with a lot more things to manage on your own.

Think of it as self-hosting versus managed hosting. Small scale startups don't want to deal with all the headache so they just opt for WeWork. It's a reputable brand and they know what they are getting at any WeWork. It's similar to walking into a Hilton or Marriot. You know what to expect from it.

Hope that helps!


I don't think the debate is whether WeWork provides a better office space experience than Regus, which it does, having used both.

The question is though is it worth 10x more than it's competitor on a per customer basis?

Since they are fundamentally selling the same thing, office space, and there are ton of new startups doing the same thing with a similar vibe to WeWork in NYC, their original market, it has shown that the model is easy enough to replicate and most tenants won't benefit from a WeWork satelite network of offices since they remain local, and the customers will primarly choose on price when the same benefits are offered.

So a 10x multiple increase over their closest competitor at scale would imply that they have a foreseeable future where they are doing 10x more revenue, which would be approaching $8-10B.

Also in a market that is heavily dependent upon the general health of the fiscal market that would imply 100% growth for each of the next 3 years and the global economy not hitting a recession which would certainly impact their revenue. That's before we even get into the fact they are losing over a $1B a year as well.

They are well capitalized so that is less of an issue, but people are basically implying that either WeWork owns the entire coworking office space market, or these other initiatives take off.

There is a possibility for that to work. After all half of Amazon's current market cap is actually AWS and that is far removed from their original ship books to customers business model when they first launched.

So it is possible that WeLive can become a large contributor over time, but I would prefer to see more numbers on that and how that is progressing and if it's really a working model, then the rehash of the coworking office space analysis.


There's no doubt that it's great for you as a consumer of VC-subsidized services but given that their largest investors are basically echoing what the OP wrote, I would have to agree with "rubbish" differentiation.


They were founded in 2010. I'm reasonably certain I remember co-working spaces being a thing a good while before then...


For a tiny subset of "we." And, in any case, there are lots of local alternatives.


This. I have never used WeWork.


> WeWork single handedly changed the way we work

It has?? Not so much that I've actually noticed it...


How?

I've worked out of a WeWork and it's just an expensive shared-office space the same as any other.


I feel like WeWork would be one of the first companies to go under in case a recession hits the US market. Everyone who works there is probably going to decide en masse that they can do the same things from home or a Starbucks


We (2 of us, expected to grow to 4 quickly) toured WeWork, Spaces (Regus) and a few other one-off spots here in Orange County. Everyone was pretty pricey, like 2500/mo for 100 square feet. WeWork was definitely the worst and was the most overcrowded... but hey they have beer on tap! (sarcasm)

Ultimately we grabbed a lease on Pacific Coast Highway with a sweeping view of the ocean for less with about 3x the room in a freshly renovated building.

These coworking spaces are terrible.


I recently became remote and when hunting for a coworking space initially figured I'd just go to one of the WeWork's here (Denver).

I was blown away at the cost of a "hot desk" membership [1]. The least expensive offering was $360/mo. For a desk that's not "yours" and you can't leave anything at.

I wound up going with Novel [2] for $99/mo. Sure printing costs me $0.10/page but other than that it's pretty much a desk.

For fun I checked out the pricing for WeWork SF [3]...

[1] https://www.wework.com/l/denver--CO

[2] https://novelcoworking.com/locations/colorado/denver/16th-st...

[3] https://www.wework.com/l/san-francisco--sf-bay-area--CA


I might end up at a desk near you! I'm currently looking for a co-working space in Denver.


Https://www.Proximity.space

Interesting startup. :)


Which WeWork in OC did you tour? Mine is definitely not overcrowded - lots of empty offices.


> These coworking spaces are terrible.

They're like Monkey Joe's for tech bro's.


It's not really tech bro's ... I don't encounter those people very often. I think that fraternity style vibe has kinda gone by the wayside. It's everyone else who aren't really technologists but want to get in on the gold rush. The social media marketing companies, the wordpress/magento factories, the crypto people, the uber-for-xyz... there is a lot of noise both literally and figuratively with these groups.


I'm currently "officing" in a WeWork dedicated desk. Out of all the desks immediately around me, I'm the only person working for a "tech" company. There's a building contractor, a couple designers, electrical engineers, and a Realtor, and a marketer for some distillery/alcohol co.


That sounds like a pretty cool snapshot of a diverse set of folks.


Just curious, what kind of company do the EEs work for if not tech?


Just guessing, but probably traditional electrical engineers. Like designing the power system for a restaurant buildout or whatever.


Exactly this. The fellow in the desk right next to me is doing the power/lighting work for a new restaurant going in in my apartment building - which is how I found out that’s what he does, when I ran into him outside my building entrance.


Don't forget the bootcamps. A company I departed about two years ago was in a Regus spot. We watched 4 bootcamps in 3 years pop up for 6-8 weeks at a time, graduate a "class", pack up and leave.


That amusingly describes we work as well - they are clearly marketers above all else - you can tell because they speak in pure buzzword instead of technical aspects at all - even by the standards of overhyped technologies.


Do you mostly rely on brokers to look for commercial lease space?


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...


That doesn't sound too bad if your employee payroll is going to be >= $1M/yr.

To put it another way, I'd rather have a dedicated space for 10 employees than have 10.5 or 11 employees all working from their bedrooms and starbucks.


You gotta compare it to the cost of a traditional commercial real estate lease, that’s what makes it a good or bad deal.

(I don’t actually know what a comparative traditional lease would cost).


At least in NYC, it's comparable, but there are a lot of other factors like location and time that goes into it as well.

As a founder, do you want to spend your time negotiating contracts, handling the admin stuff like setting up the internet, electricity, build out if necessary?

To compare the original WeWork location I posted, a 1,000- 1,5000 square feet place would be around $15,000/mo in an older building. But that space would be a lot larger than what WeWork is offering, without any ammenities. At the same time, you can move it to a less convenient location and cut some costs.

It really depends on what the company's needs are at the time and how much they want/need to invest in their own office at the moment. WeWork has month to month contracts for smaller desk spaces so you can adjust as needed. They also offer to build you out offices to customize to your needs.

Many larger companies typically have remote offices at WeWork. For example, at a WeWork we were working at, there was a Blizzard and GitHub office.


You also have to consider that signing an office lease is a long term commitment and can be a lot of hassle. WeWork is probably worth the price for young companies that just want to focus on getting more important things done than renovating and decorating an office that may end up being too small (or too big) after a few months.

I'm working out of the Factory in Berlin for about 100 euro a month. Very nice space facilities, nice people, etc. and it matches my "I might drop in a couple of times a week" type usage. There are loads of co-working spaces here.

I've been in one of the local WeWorks as well (apparently they have 9 offices now in Berlin) and in my experience the space is alright but a bit less so than the Factory. But it did suit the project I was on at the time perfectly and we were there for a few months before we outgrew the space. I'd say it's perfect for seed funded companies or well funded corporate projects. It makes less sense for indivduals looking for a desk as they tend to be comparatively expensive to competitors or coffeeshops. I suspect their corporate revenue is a bit more lucrative.


Sounds about right. Spent a couple years at a WeWork in Los Angeles. It's a luxury, a glorified co-working community. People enjoy the beer. One shake of the economy and everybody will cut WeWork and go back home or somewhere considerably more affordable.


One shake of the economy and everybody will cut WeWork and go back home or somewhere considerably more affordable

Or even free.

When I was in the Seattle tech scene about ten years ago, the State of Washington had free co-working space at the convention center as a way to stimulate local entrepreneurship. The desks were a little strange, but they were free!


Do not forget your local community college and city libraries!


Remote coder here, this is my jam. I can get a whole conference room all day and kick back in my local library, which I can lock behind me if I want to jump out to use the bathroom or eat. Granted, this is in Fairbanks, not LA or SF :)

But even living in Boston I never saw the libraries super packed, usually plenty of room in the top-floor old-school reading room at the central branch on Boylston. Maybe not on holidays, but those sucked for cafes too in the city–better to just stay home or not work those days.

Internet can be a crapshoot, but I can do most of my work tethered to cell anyways. I always have that one cafe with awesome WiFi I can go to for downloading OS/IDE updates.


This made me curious so I checked our local library that has study and meeting rooms. But looking at their online calendar, they're all reserved for most of the day.

At least it's nice to know people are using our library.


Libraries are amazing and I'll sing their praises all day, but I have two complaints and they both revolve around pooping, which genuinely distresses me when considering where to work for the day.

1. At a library, when it's poop time, you gotta bag everything and bring it with you. Mildly annoying if you're using a mouse and notebooks etc.

2. If you're in a major metro library, no matter how hard they try to keep it clean, the bathrooms are full of people using the sink as a shower, and the toilets are foul beyond measure.


Just put the poop in the bag. For your health!


That's a great point!


>>somewhere considerably more affordable.

Your local library. It has desks, internet, restrooms. And there are more than one so you can pick the one that best fits your needs.


I get these financial criticisms, I doubt they'll last long when the recession hits. We were in one recently and I remember seeing a bulletin board thing I think showing stuff from their Instagram, but it said they're opening 40+ buildings a month. And there's probably 10 in walking distance of the City now. It's pretty insane.

That said, we moved from a WeWork to a Spaces (the Regus clone-ish) and it's incredible the basic things that feel standard that Spaces screw up. It took weeks to get us all building passes. The office was boiling when we moved in, we asked them to cool it and they made it freezing (no thermostat...), then ignored further requests to adjust. No microwaves (they sell food instead...). No free coffee (you can buy instant pods). To print you have to email reception then wait for someone to be available to do it - and you have to pay for that. Booking meeting rooms for a future day costs money. You can't ask them to get your parcel from the postroom, they just leave it wide open so anybody can take whatever, and there's no organisation. WeWork wasn't anything special (and had the noise issues everyone else mentioned), but they did have down the very basics that make an office usable.


I don't think Spaces is the only one that can't get their act together. We moved to WeWork location last October. Took a week to sort out building passes. Took another one to deal with parking passes. Occasionally (yesterday), the gate won't open - trapping you in the garage. Thankfully, it's staffed by a human being now who will open it manually.

Finally and unbelievably, there is a bathroom on our floor that has no toilet cover dispenser. Bathrooms on other floors have it, but not this one. I mentioned it to the staff and they were told by their superiors that one won't be installed.

There is a lot to like about the location, but these problems are just simply comical and won't get fixed for whatever reason.


Surprised at how many locations they have, if this is the correct company:

https://www.spacesworks.com/locations/


That's the one - I wonder if they just rebranded some existing Regus places? Or maybe they're building as fast as WeWork, I'm not sure.

Funny thing about that list though - their app doesn't remember your office location, so if you want to book a meeting room you have to drill down from every Spaces location worldwide down to your country, then city, then office to find the one in your building. :)


It will be interesting how this all plays out.

WeWork’s model wasn’t new (Regis has been doing real estate subdivision arbitrage for years) they just made that model cooler and added some free beer and a few other perks but it’s still the same business. Someone from WeWork recently told me they are a digital experiences company and not a real estate company. Increasingly the market seems to be calling BS on that.

There’s very much a demand for WeWork type services and it meets a real need but it’s a low margin low multiple real estate arbitrage play not a high multiple tech play. WeWork has way too many people and far too much overhead relative to the business they are actually in despite pretending to be something else.

WeWork also seems to be getting very unfocused buying up lots of other businesses and getting way beyond their core real estate play. Given that, shifting market views and their extreme leverage with long term leases I wish them well but this could get real ugly real quick.


Someone from WeWork recently told me they are a digital experiences company and not a real estate company.

Did you ask them what this meant, or did the conversation effectively die there? I'd be curious to hear straight from the horse's mouth what the horse thinks 'digital experiences company' means.


I was trying to be polite and didn’t push it too much, but it was similar to descriptions coming out in the press. They want to run schools, housing and all aspects of your life but as a digital experience.

The gist though was that these were all just existing needed but boring businesses with low valuations. WeWork’s strategy seems to be “but we can run an elementary school and it should command a wild valuation because it’s not a school it’s a WeSchool.” It wasn’t a convincing argument.


Completely fair. I was just curious because looking at so many of these types of companies that on the face look just like another real estate/cab/hotel (WeWork/Uber,Lift/AirBnb respectively) company but are convinced "no we're %synonym laden description of what a cab company does%", I start to wonder how thoroughly convinced of these descriptions your non-C-level employee is.


> they are a digital experiences company

The problem also is that the experience also sucks. I've been working out of WeWork and other coworking/office rental spaces in Berlin and WeWork is by far the worst of it while also costing 2-3 times as much.

Excerpt from the things I experienced at one WeWork location over the last year:

- Broken AC in the whole building during a very hot summer

- Water dripping from the ceiling in the hallway for about two weeks (which also left ugly stains, which I think are still there to this day)

- Regular recurring construction noise during working hours, to this day (one year after opening!)


Crazy valuations for startups like WeWork remind me of the Dot Com bubble, when companies put up a shiny new "high tech" facade in front of entirely traditional business models, then expected to be valued at a large multiple of a normal company with that well trodden value proposition.

We all know how well that ended.

Companies that want the sky-high valuations of innovative high tech should be, you know, actually innovative and high tech. Just because your company has web 2.0 trappings (or ends in .com) doesn't automatically entitle you to "high tech" and "innovative" valuations.

Developing a new non-obvious technology would be a good start.


Anything pitched as 'tech' that doesn't look or smell like 'tech' is basically the founders' way of saying 'we need a lot of money because we lose millions each year and are nowhere close to making a profit.'


Well, maybe they should add Blockchain to the company name.


Well, most of the Dot Com bubble companies had literally no revenue. So I think we might see a scale down in these type of valuation, but in terms of revenue generation and Technology penetration we are no where near the absurd Dot Com bubble era.


People have been valuing them using the wrong metrics so far: "WeWork isn’t really a real estate company. It’s a state of consciousness, he argues, a generation of interconnected emotionally intelligent entrepreneurs." https://www.bloomberg.com/opinion/articles/2018-04-27/wework...

Can't wait till SEC adds "state of consciousness" and "emotionally interconnect-ness" to quarterly reports.


Quoting Matt Levine from that link:

> That first innovation seems a little questionable. Like, there is an established competitive business of office rental in which real-estate companies own office buildings and rent them to companies; I am not sure why there would be a ton of room to compete with that business by interposing yourself as an expensive middleman. Why would a tenant want to pay a profit margin both to WeWork and to its underlying landlord, when it could just rent from the underlying landlord and pay only one profit margin? There is some room for a value-added middleman — and WeWork can add value not only by providing beer but also by splitting office rental into smaller space and time chunks than a big commercial landlord — but, still, it does not seem easy.

> But the second innovation is great. For one thing, it is great for the obvious reason: If you can get into a traditional mature highly competitive business, call yourself a tech startup, and get a multibillion-dollar valuation based on potential rather than cash flow, then you have achieved a profound arbitrage and really ought to be rewarded for it. But it also helps solve the first problem: WeWork’s tenants don’t have to pay two profit margins, because WeWork’s investors give it tons of money which it can then spend on giving tenants free rent. In a loose sense, WeWork’s business model is getting SoftBank to buy beer for software workers. Which is fine!


> " Given WeWork’s opaque financials and its self-made metrics such as “community-adjusted Ebitda,” you can see why investors might be rethinking a company that has relied a lot on confidence, optimism and faith."

I understand why companies occasionally report results as GAAP and non-GAAP, but "community adjusted EBITDA" is absurd, even for a private company.


They seem to try to use this metric to claim healthy financials on individual locations (because they rent out desks in aggregate for more than the office lease costs) but it ignores where a large part of their costs are (central overhead) and thus it’s an unrealistic picture of how they actually run the business.

If they ran themselves like a real estate company then their central function would probably be a few attorneys to process deals and some people handling paperwork. Instead they have huge central costs which they want people to ignore via these metrics.

Simple non-GAAP is one thing but most of these invented metrics scream “our financials are terrible so we made up this metric where if you ignore our real costs we look less terrible”


I really wanted WeWork to work for me. But it did not.

During my time there, it became apparent that their entire focus was on growth. WeWork was never interested in catering to their core market: people who want to work. They failed to create a productive work environment. They alienated people like me, who were willing to pay top dollar for a decent place to work. Instead they created distraction-filled, tacky places that fostered little except beer drinking.

I'm looking forward to seeing it crumble, or at least for reality to catch up.

PS. If anyone knows a co-working space in NY that actually provides a nice, quiet place to work, please let me know. I will pay good money for such a place. I am thinking like https://misantrope.com/?lang=en


What's really strange to me is that WeWork has the ability to offer wildly different work environments to different types of people, but they don't do it. Instead, they try to offer the same space to everyone, pureeing everything together.

How about a location that's dark and brooding and enforces "library" noise rules? How about a location that fosters the hot-house environment of sales teams? How about a location that's free of alcohol? It doesn't matter what each one is, but make them different, and give people the option of choosing one that fits their mood that day.

That being said, maybe I just don't like the centralization of WeWork. Let a hundred different people make their own spaces with their own characters and the market will work it out.


Aren't "co-working" and "nice, quiet place to work" sort of mutually exclusive? It's like nice quiet open office plan. I suppose it's possible in theory but doesn't seem to be the norm. Certainly there are lots of places that rent private offices.


WeWork is a new low. It's not even necessarily the demographics or the chatty beer/coffee scene; their standard fitout couldn't echo more, or block less noise, if they tried.

Source: spent over a year in a WeWork, with a desk, using meeting rooms etc. I've spent 14 years working in various open offices and WeWork was the worst.


> Aren't "co-working" and "nice, quiet place to work" sort of mutually exclusive?

I don't think this has to be true. Why can't people co-work together, quietly? This used to be the case in libraries, before libraries became places where governments administer social services.

It's nice to work around other people, just as long as they are not on phone calls or taking meetings. These people belong in call centers or meeting rooms, so that people who aren’t talking can continue thinking and working.

> Certainly there are lots of places that rent private offices.

After giving up on the open office hot desk, I switched to a private office in WeWork. You could hear the music from the hallway. Furthermore, this particular WeWork was situated on top of a beer garden. Every weekend my "private office" most literally started shaking and vibrating as the beer garden turned into a club. I am not exaggerating. It was a joke.


In my experience, most of the spaces in libraries where I work are still pretty quiet. But there's a pretty strong cultural expectation that you don't talk on the phone or have more than short low volume exchanges with others--even aside from any specific rules.

I agree music seems more than a bit much but a workplace is somewhere many people have conversations and have to make and take calls. I don't think I'd be very inclined to spend money on a space where I had to try to find a room every time I was on a phone call or wanted to talk with someone.

I'm willing to restrict talking if I'm hanging out for free in a library. Not so much if I'm paying for a desk. One should of course have consideration for others but, for many, a big part of their job is talking on the phone.


> I don't think I'd be very inclined to spend money on a space where I had to try to find a room every time I was on a phone call or wanted to talk with someone.

But what makes more sense: you stepping out or getting a private office, or making the open office non-viable for everyone else who has to focus? What a conceit that everyone else should adapt to you when you could simply adapt to everyone else.


It's a matter of expectations. For most people, an office isn't a library reading room. It's a place they work which often means talking. Someone's welcome to do a silent co-working space startup but I don't think they'll have much success.


> It's a matter of expectations. For most people, an office isn't a library reading room. It's a place they work which often means talking.

Can't argue that. Only issue is WeWork doesn't sell it that way. They sell the open office space as a quiet place, and then play good cop/bad cop and everything in between.


Just go to a library and bring headphones?

Coworking spaces for the most part don't seem interested in catering to you. It's easier to find people who don't mind an active noisy environment than it is to please people who demand a quiet workplace.


Brooklyn Creative League


Thanks for the recommendation. Not seeing anything on there suggesting they provide quiet places to work.


> The tech bubble’s financial backer of last resort, the $100 billion SoftBank Vision Fund

That is the most amazing and accurate description of SoftBank I've ever read.


"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."

If you have earlier invested in WeWork as a tech startup then one should be questioning your investment strategies and research methods.


Probably not a bad idea for SoftBank... even this headline is funny, Sotbank has decided against a _ludicrously large_ investment in favor of a _still very large_ one


SoftBank did not decide against it. SoftBank's Vision Fund investors decided against it so SoftBank itself invested instead of the Vision Fund.


Considering how much these mega-funds put in, I would wager that 'Investment strategies and research methods' are about selling the vision of WeWork more than anything else. They need the valuation to stay up if they want to divest at a profit.


I really wonder why and how companies are willing to rent at these places. It's full of arrogant pricks and the failure rate of startups is insane. I founded a company few years ago. Was offered space at we work for about 3k for just 100square feet. Few days of searching through local real estate companies brought me a 300square feet office for 1.5k at a similar location. Only no freebeers and fancy entrance.


Just looked at a WeWork space today. The use case is an attractive place for a remote employee to work for us in a job that attracts (and is best done) by a highly social person. I can't get the right person leaving them at home, and I can't relocate them to me.


While I agree with this use case (and is why I hate co-working spaces for what I do), that's a pretty narrow slice of the market given their current valuation.


What are people's thoughts about a franchise model co-working space where the core company develops all of the technology, infrastructure, etc and then they are all independently owned and operated paying a franchise fee? I see a lot of people that want to start a co-working space and spin their wheels trying to figure out how to do it right. If there was a blueprint and turnkey solution to manage users, website presence and you could open one in a strip mall, would people use it? One problem I see is that people compete to make it THE place to work as opposed to A place to work.

Imagine if your town had almost as many co-working hubs as mattress firm stores. I know that's a lot but a guy can dream, right?

Edit: Not to mention, you could have a membership that could be regional, national, international and interplanetary.


Are you thinking a traditional franchise (like a gym) or a platform that independent landlords can list their co-working spacaces on (i.e. Airbnb for coworking spaces)?

They both seem like less risky and more traditional tech plays than WeWork's current business model.


Years ago (before airbnb) I was working on that independent landlord idea and got cold feet when people I was interviewing seemed mostly concerned with insurance liability of having strangers in their space. LiquidSpace came along and did the same thing but they were funded so better equipped to navigate the liability issues.

That's when I started thinking about smaller co-working spots in strip malls and similar locations. Focus more on the details around managing co-working (member management, access management, etc) and franchise it out.

I have never gotten deep into the details so there are likely many reasons why it wouldn't work but as a work from home guy, it's something I'd love to have near me.


I've enjoyed being a customer of WeWork (and benefitting from this economically untenable situation) much more than having my start-up acquired by them. It actually is a pretty well executed product (not economically viable but well designed/run spaces) but not the type of company I wanted anything to do with as an employee. I definitely wasn't buying their pitch about being a tech company.

I left immediately after we were acquired to start another new company and have been very happy with that decision. The whole thing was very... bizarre... to say the least. Just glad I can enjoy this spectacle from afar with relatively little skin in the game.


> "While there’s no doubt a sober message here for Silicon Valley optimists, there’s also one for markets at large. This might be a turning point not too dissimilar to past real-estate bubbles."

The question is have now is: where are those investors / investment monies going to go next? If the hipness of being involved in startups is over (for the trendy types if you will), where are these rich cool kids going to go next? That is, unless they have a place to go, are they going to leave?


This Bloomberg article got it wrong. The stock market has been going down and they jumped on a potentially negative story. Bottom line is SoftBank didn't make as much money in the IPO of its Japanese telco unit and the Vision fund can't invest due to Saudi interest.

From Dan Primack's column at Axios:

>"The state of play: There's lots of buzz about how this deal is much smaller than what was originally contemplated, including one 2018 report whereby SoftBank could acquire a majority stake in the co-working space giant.

>The big picture: We told you in October that the control deal was no longer on the table, but that investment negotiations were ongoing.

>Fast Company this morning reports, based on an interview with CEO Adam Neumann, that the two sides neared a much-larger deal that could have bought out all of WeWork's existing shareholders, but that SoftBank bailed after a disappointing IPO for its Japanese mobile unit. In short, SoftBank's corporate balance sheet was smaller and less flexible than had been originally anticipated. SoftBank theoretically has enough dry powder in its Vision Fund, but we hear that the Saudi connections made that prospect less appealing to both sides due to perceived regulatory risk (read: CFIUS, particularly in light of the Khashoggi murder). The bottom line: Don't read this deal as a macro commentary on unicorn troubles. SoftBank is still investing $2 billion into WeWork, in which it already holds a sizable position though both its balance sheet and Vision Fund, and doing so at a high valuation.

>Not even the most profligate investor spends that kind of coin if it believes the market is crumbling. There also is a NYT report that SoftBank may have had trouble getting enough WeWork shareholders to sell into the larger proposal."

[0] https://www.axios.com/authors/danprimack


Anytime I've been to a WeWork, I have never seen much work being done.

Common themes I've seen are, some hipster Instagram'ing their overpriced avo and toast, a bunch of cute dogs running around mad distracting everyone, people browsing social media and someone messing around with the Sonos music player, setting the song to Rihanna's "Work" on repeat.

The WeWork camps look fun, if not a bit cultish.

caveat: these observations are from what I've seen in the shared spaces, I realise there are private offices and spaces where people will be working hard.


Some anecdotal trends from first hand observations in a few co-working spaces: 1] Startups that do well tend to outgrow the co-working space and leave for their own offices. 2] Higher salaries/interesting job openings in larger companies due to economic growth and low unemployment at the macro level means fewer people co-working at startups that don't do well. 3] Remote workers want to arbitrage living costs so they leave big cities and go to low cost areas.


I hope they make it through. I have a WeWork right in walking distance and would love to work there regularly if I ever get a remote job.


I tried one out for a month and didn't like it. It's very expensive for what it is.


What is attractive to you about it? Serious question, I’ve worked in their spaces before but we leased an entire floor and I wasn’t wowed or pissed at it. What makes you excited?


I co-work in one. The people who also co-work there are friendly, and they do have good amenities. Honestly, they upped the game of co-working spaces in my city. I don't work consistently in the office to warrant renting my own office space but I wanted a place where I could socialize instead of getting cabin fever at home. Starbucks / Cafes aren't really conducive to talking to random people either.


This is basically my story. After we closed our office due to everyone except me moving away, I worked from home for a few months. It's nice being around people.


The space looks really nice.


WeeWork largely catered to the digital portion of the gig economy(freelancers etc), which was largely over estimated. https://www.wsj.com/articles/how-estimates-of-the-gig-econom...


Has anyone seen startups like this:

https://www.proximity.space

Seems like maybe a more realistic approach that provides a way for traditional real estate to become coworking spaces.


Even the 2B might be just to preserve the value of their earlier invested money ?


A private office costs between 1,000 to 22,000 a month in ny city. Why not rent a house or apartment the privacy would be better and beer for all.


Mostly because (a) insurers will typically void your homeowner's/renter's insurance and (b) the amount of business you can do from home in NYC is limited. It works fine for a techie working solo. But you won't be able to work with anyone.


Perhaps I'm missing something, but in what sense, even in the most liberal interpretation, is WeWork a technology company?


tl;dr: Softbank/VisonFund investors told Softbank that they want to concentrate investments on "technology bets". Since WeWork is a real estate company and not a technology company Softbank will invest less in their next financing round (though not so little that it will be a down round)


Dang most comments are reddit tier. Could you please clean up. Thanks.


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.


you could say that but you'd be wrong




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