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I’m really disgusted by how much recent tech IPOs inject pitch deck-style garbage into the S-1 filing, especially this one. I’ve always had a great amount of respect for the mediating nature of the S-1’s dry, candid, and ruthlessly honest assessment of business risks, and even though those things are still there, they’re blown out by marketing photos, full-page charts, and branding.

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


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

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

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

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

As a jury consultant who's worked on a lot of securities and M&A-gone-wrong litigation, I don't understand why you think it would be beneficial for pitch deck stuff to go into a disclosure. If I were a defendant accused of making misrepresentations, I'd most likely want the pitch deck kept out. "Pitch deck stuff" is aspirational, to put it charitably. A defendant would ideally want to take the opposite position-- that it made only bullshit-free, clear-eyed representations about upside prospects and downside risk.

Also, I totally disagree about the evidentiary issue and would venture to say you're wrong. First of all, the idea that you'd need to cram a pitch deck into a filing in order to get it into evidence is downright silly. A defendant could easily get it into evidence through a fact witness or PMQ. Second, and more importantly, you wouldn't want to do it in anticipation of litigation because you'd lose any control you might otherwise have had over its admissibility (a filing like that would be pretty much guaranteed to come into evidence). Third, and relatedly, you wouldn't want to do it because, pursuant to my second point, it's then going to come into evidence in all of your cases. As they say, the record is forever.

> As a jury consultant who's worked on a lot of securities and M&A-gone-wrong litigation

Plaintiff- or defense side?

> If I were a defendant accused of making misrepresentations, I'd most likely want the pitch deck kept out.

That's never gonna happen (keeping it out), so good defense counsel will grasp the nettle and get out in front of the issue.

Also (something I didn't mention before but should have): There's a jury-psychology benefit to being able to say, in effect, we submitted all this to the SEC, and they approved the registration. It's analogous to why patent applicants are well-advised to tell the USPTO about all the prior art that they know of — so that at trial, the patent owner's trial counsel can respond to the infringer's counsel with, yeah, we know about that prior art, because WE TOLD THE EXAMINER about it, and s/he issued the patent, so who ya gonna believe — this infringer's BS argument, or the government expert who was tasked by law with issuing only valid patents? That helps fend off infringers' invalidity challenges.

> "Pitch deck stuff" is aspirational, to put it charitably.

I perused the S-1; at first glance, that pitch-deck stuff is exactly what I imagine WeWork's litigation counsel might affirmatively want the judge, the judge's law clerk, and/or the jury to see — and, at trial, for an expert witness to be able to use as a visual aid in explaining the value proposition to the jury. (I've never done securities litigation, but I used to do IP litigation for complex technologies, where similar principles apply.)

> A defendant could easily get it into evidence through a fact witness or PMQ.

True, but again, it's always nice to be able to point out to the judge/law clerk/jury that this is what was disclosed to the SEC, and that the SEC approved the registration. Sure, legally that fact has very little weight; psychologically, though, it can't hurt and it costs essentially nothing. (You do have to make sure it's factually unchallengeable, but top-flight securities counsel will do their best to achieve that anyway.)

> Plaintiff- or defense side?

On the whole I do more defense work, but plenty of both. For securities, more often defense. For M&A gone wrong, more often plaintiff.

I take your point about getting out ahead of the issue, but I'm not convinced that it's as powerful an argument as you think it would be, and I think it introduces other risks. Since you're familiar with IP litigation, you're no doubt aware that patents get invalidated by juries all the time in trials where plaintiff counsel makes that argument.

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

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

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

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

Personally I prefer the dry version of SEC fillings. More to the point and with less marketing and PR crap. Also shows you that the finance department is filled with dry professionals, and as much as these finance people can be a pain less professional ones are real curse especially if form matters more than function. Like at my current gig which apparently won an award for their annual reports, the report mind you and not the reported figures. I tried reading it, if you ask me at least 75% are fluff and of the reminder a lot is just lacking substance.

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

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

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

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

translation: getting older may cause you die.

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

It's all about the incentives.

Should we just interpret these filings as CYA measures, or do they show the company preparing for an ugly legal battle with investors? Is it possible to tell the difference?

It can also serve as a major red flag, when a company adds in a bunch of unnecessary things while excluding things that aren’t required, but are critical, to valuations such as churn rates.

This was a big one in Uber’s filings where it looked like they were probably mixing in Uber Eats to hide flat or declining usage of the actual ride sharing service. Public companies changing how something has been historically reported also raises similar questions. Report the metrics that look amazing, exclude, merge, or mask the stuff that looks bad.

Or pull a Groupon and just completely redefine several accounting concepts, e.g. list marketing costs as capital expenditures.

I don't get that one. How are they justifying placing marketing as Capex instead of Opex? What is the advantage? Are they saying marketing is a depreciating asset?

IIRC, their argument is that marketing builds brand awareness, and brand awareness is a capital good.

> they’re blown out by marketing photos, full-page charts, and branding

Companies get a lot of latitude with the first few pages. Seasoned S-1 skimmers peruse that stuff, but save the digging in for the risk factors, financials and the accompanying notes.

Lmao, pages 157-160 are straight up magazine-esq full page adds for other companies (SalesForce, DropBox, etc)


Nit, peruse means to read carefully with an attention to detail.

"Peruse can mean 'to read something in a relaxed way, or skim' and can also mean 'to read something carefully or in detail.' Peruse is thus a contronym because it has multiple definitions that seem contradict each other."


Yes I realized this, but this makes the word unnecessarily ambiguous and this new definition is the purely the result of enough people using the word incorrectly long enough.

We don't mean "destroy 10%" when we use the word decimate anymore, I get it. Natural language, migration of meaning, subjective denotation etc.

So the normative comment should really be: avoid using "peruse" because it's ambiguous.

In a vacuum, perhaps, but to call it "unnecessarily ambiguous" when literally placed beside the word "skimmers" seems... intentionally dense

Tell me about it. I spend tons of karma absorbing downvotes in a losing battle correcting 'enormity' and 'epicenter'

Pick to your nit:


The casual reading meaning, although not the original one, has been in use since the 1500's.

I find this interesting. I've never heard anyone use this word with the meaning that Merriam Webster (and other dictionaries) give as its primary meaning (as in, the one which includes attention to detail).

It always means "just looking around" whenever I hear anyone use it.

Would be interested to hear other's thoughts. Maybe MW should consider changing the order of their definitions.

"When I use a word, it means just what I choose it to mean—neither more nor less." -- Lewis Carroll

There's still deception even if companies use dry language. Using deck-style language only makes it that obvious and easier to decipher.

This sounds very curmudgeonly of you - and I say that in the nicest way. I empathize with your point of view - but I think the graphics promote an important view into how the company perceives themselves. This is also important for investors to take into account.

You can skip the first dozen pages and get to the meat of the S1 further down.

I see this differently. This is a government document, but one that investors will read now and refer back to in the future. Why make it plain boring text when you can spin this document into a reason to invest?

This is an opportunity to tell the world who you are. Interested parties read these for a reason. It might as well look how you want it to look, as long as the same necessary content is listed.

> Why make it plain boring text when you can spin this document into a reason to invest?

That's exactly what the document was designed not to do. It's meant to convey facts, not "spin." Why do we use plain boring text on a prescription label? So the important disclosure information is readily available to consumers in a consistent and uniform format. The same logic applies to SEC filings.

You've answered your own question. Spin is manipulation: https://en.wikipedia.org/wiki/Spin_(propaganda)

The theory of well-regulated public markets is that all investors and all seekers of cash are put on an equal playing field. The goal is to maximize public confidence in the markets, which in turn maximizes the total useful investment. If hype becomes dominant, that will reduce overall returns and increase return variability. That in turn will reduce investor confidence, which reduces available capital, which reduces economic growth.

I understand that in the US we spend ~$500 billion a year on commercial manipulation, so it can seem normal. But it doesn't have to be, and maybe it shouldn't.

It looks like the management was involved in writing their own biographies. I can see why some people would want to spice up their IPO.

I'd agree except WeWork's emphasis on design is a huge reason they have become this big in the first place.

It's a public offering, WeWork didn't invent design. That's a terrible argument.

Not a terrible argument. Investors are people too. They can be swayed by nice looking things.

2nd page, yellow background - can't tell me that doesn't give you a sense they have their shit together.

All that being said - I won't be investing ha.

My argument is that they're using the same strategy, language and branding they used to sell their brand to the world to sell their public offering to the world.

I don't perceive that as detrimental, and don't see how designing a document is "disgusting". It's nontraditional.

But that isn't what an S-1 is supposed to be, from my understanding. It isn't a marketing document -- they are warping it.

Yeah, I see this as a pretty interesting illustration at how poor engineers are at figuring out how things actually function in the world for anything other than products.

Indeed, presumably they have paid a sizable team of designers quite well to create these diagrams, graphs, etc.

I was impressed by all the varied ways they have visualized their "data". The tipping scale, for instance, gives a clear before/after projection while being much more visually interesting than a plain graph.

Not to say that I believe all of it, but I do think visually appealing and/or dazzling graphics do have an effect on some types of people. Conscious or not.

While I would agree, I am a programmer, as are many other HN commenters, and even those who aren't are the sort of people who are ok with being on a forum filled with a bunch of programmers. That "garbage" might actually be more readable to a different slice of the public, that finds the "dry" parts so boring as to be unreadable. Just a hypothesis, I have no data to back that up, but maybe some people find the term paper more digestible with a little perfume?

I feel the opposite. The boilerplate S-1 stuff can be very mis-leading and unhelpful when trying to figure out how the business is and can work.

I for one think those photos / charts are important as otherwise you won't understand how big WeWork is. Couple of days ago I was casually checking Wework locations and was surprised that they have 24 locations in Beijing, 10 in Bangalore, 21 in Tokyo ! They are everywhere.

It’s trivial to convey that information in plain text

I don't think so - each of these locations are owned by joint venture subsidiaries (IndiaCo, JapanCo etc). Without a diagram like that on page 16, it would be near impossible for an investor to understand how their investment in the IPO relates to these subsidiaries.

I mean, you just managed to do it with just words alone.

I think it is interesting.

There are new paths to going public in the last several years, specifically because the government had made it too expensive to go public and be public primarily after Enron. One decade of companies coming to terms with staying private, one decade of companies coming to terms with the new ways of going public.

So they loosened that up and the industry reacts.

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