41 ms·
The We Company S-1
- mmillin 7y agoMy favorite part of new tech company filings is looking at the risk section and finding something to the effect of: "We are not profitable, and may never be." > We have a history of losses and, especially if we continue to grow at an accelerated rate, we may be unable to achieve profitability at a company level (as determined in accordance with GAAP) for the foreseeable future. I understand the reasoning behind having these in the document, but I always get a kick out of seeing it said so plainly.
- fuzz4lyfe 7y agoI wonder how that compares to what they tell new hires who are likely taking a haircut for equity in the company
- heavenlyblue 7y ago"We have free lunch, a ping-pong table and a VR room with monthly fitness days"
- deleted 7y ago[deleted]
- xiphias2 7y agoActually they don't have free lunch, which is quite strange for Silicon Valley companies
- agotterer 7y agoThey are an NYC (does anyone still call it Silicon Alley?) company.
- saalweachter 7y agoMostly we're trying to get SF to rebrand as New New York.
- goatinaboat 7y agoThey (We) does have mandatory enforced veganism, however. https://www.bloomberg.com/news/articles/2018-07-13/wework-tells-employees-meat-is-permanently-off-the-company-menu https://www.bloomberg.com/news/articles/2018-07-13/wework-te...
- pharrington 7y agoThe Bloomberg article preview describes enforced vegetarianism, not veganism.
- quux 7y agoActually it's pescatarianism, for whatever reason seafood doesn't count as meat.
- keketi 7y agoMaybe it's because fish don't scream when you stab them, but idk.
- wickedsight 7y agoYeah, that's just horrible. We're emptying the oceans at an alarming rate. If they want to do it right, they shouldn't allow fish either.
- acchow 7y agoFish can't scream.
- deleted 7y ago[deleted]
- not2b 7y agoOld Silicon Valley (companies primarily engaged in the design and production of silicon) doesn't do free lunch.
- microtherion 7y agoNeither does Apple.
- ummonk 7y agoWe all know there is no such thing as a free lunch. (In seriousness, it is neither a Silicon Valley company nor a tech company. All it has in common is that it is using VC funding and SV-style brand marketing to grow to spectacular proportions relative to its underlying revenues)
- batmenace 7y agoProfitability and the value of the equity aren't necessarily related, though. Amazon was unprofitable for many years, but its stock still increased in value.
- phyalow 7y agoThats because Amazon was only unprofitable due to Capex and R&D. Their operating margin is fantastic, it was this promise that enticed investors! WeWork on the other hand is very ugly.
- hackerbabz 7y agoThis is what seems to not be understood by a lot of investors and people commenting on investments. Amazon could have turned a profit years earlier if they wanted to. Instead it made more sense to continue spending all of their money on expansion and R&D. It's the same with Tesla. They are selling a shit ton of cars at good markup. If they wanted a profit, they could have one. They just don't want one right now.
- notfromhere 7y agoYeah, no. There's a fundamental difference between Tesla and Amazon in terms of their profit potential. Super misleading to say that Tesla 'just doesn't want to profit rn'
- roenxi 7y agoNot understanding is one option; not trusting is another. It is presumably quite easy to shuffle operating expenses into the earnings report as capital expenses if a company really wants to, and the 'development' in R&D can hide a bunch of things. I'm happy to be wrong, but 'Oh, they can make money the minute they choose to, but at the moment they are choosing not to' is a concerning argument. Apple might have gone from "give the money back to shareholders" -> most profitable company in the world -> broke by the time Amazon turns a serious profit for its shareholders. It is yet to be disproven beyond all doubt that Amazon is competitive by virtue of having abysmal profit margins.
- michaelt 7y agoThey probably tell the new hires the same thing they tell themselves: * It's always a gamble, but if you'd received $x0,000 of options 3 years ago, they'd be worth $x00,000 now. * You'll own 0.00x% of the company, and if you owned that much of Facebook you'd be a multimillionaire. * Companies like Amazon don't make a profit, and the stock market is fine with it. They know Bezos could turn a profit if he wanted to, but he's putting all the money to work growing the business. * A company's IPO price isn't its all-time peak price; Google's stock increased 9x from their IPO price. You'll note that, if you look carefully, nowhere in those points did I promise WeWork options would ever be worth anything.
- skinnymuch 7y agoDoesn’t deter from your point at all. But Google’s stock has increased over 27x since IPO 15 years ago.
- dwighttk 7y ago“You know... like Amazon. We’re basically the next amazon. Want to miss out on that?”
- doppp 7y agoIt's not a tech company, it's a property company with the valuation of a tech company.
- lotsofpulp 7y agoIs it? I was under the impression it does not own land for the most part.
- CrazyStat 7y agoIt's a mix. Some locations they own, some they lease--including some that the CEO owns and they lease from him, which is an interesting arrangement.
- vorpalhex 7y agoA school I attended once had a similar arrangement with one of its board members. I also vaguely recall that board member defrauding the school of several million dollars and being federally charged...
- gamblor956 7y agoIt's different for a school though because there are regulations on related party transactions for nonprofits.
- ohashi 7y agoHow is that going to fly with a public company?
- bradstewart 7y agoAs long as the lease rates are inline with the market rates, shouldn't be an issue.
- elliekelly 7y agoPage 28 discusses it. They have an interesting approach to managing the conflict: > Pursuant to our related party transactions policy, all additional material related party transactions that we enter into require either (i) the unanimous consent of our audit committee or (ii) the approval of a majority of the members of our board of directors. I was pretty impressed when I read "unanimous consent of our audit committee" but then it all went out the window when I saw or the majority of the Board. The company CEO/landlord is the person with the major conflict of interest. He also has the majority voting power of the company stock and will control the board. WeWork's attempt to mitigate this conflict of interest is nothing but smoke and mirrors.
- jngreenlee 7y agoFor actually useful comparisons, look at Regus/IWG which is larger and more profitable: https://en.m.wikipedia.org/wiki/IWG_plc https://en.m.wikipedia.org/wiki/IWG_plc I have used Regus on and off in the US for a decade. I also have a free WeWork subscription through my AMEX platinum (boosting numbers pre-IPO?). Regus is actually better run and more comfortable...just doesn't have the millenial loft vibe. I think that vibe is costing them too much for a real estate play!
- servercobra 7y agoWoah, didn't realize Amex had that benefit. Looks like I'm signing up!
- xeroaura 7y agoLooks to be business Amex Plat only for 1 year of free WeWork.
- deleted 7y ago[deleted]
- AgloeDreams 7y agoSee I always thought WeWork's issues were location related, that the real estate costs were just so massive. Just look at their NYC locations, they have the entirety of the top floor of the Fulton st station, it's gorgeous but seemingly very expensive to rent, I'm sure the crazy busy small Shake Shack downstairs makes a month's worth of the (Upstairs) WeWork's payments every week. But you're right, the other more enclosed locations (like 85 broad) are more comfortable too.
- jngreenlee 7y agoI would also agree with you. They seem to have a focus on some top tier locations for their brand. IWG/Regus is not nearly so fancy...but they do have more locations, more suburban coverage, and usually in typical office parks. Which, FWIW, probably benefits a more money-ready segment of the population...middle class, middle aged, professional class.
- situational87 7y agoIt's almost as if the IPO market has become a ponzi scheme.
- dang 7y agoMaybe so, but please don't post unsubstantive comments to HN.
- empath75 7y agoPets.com of the current tech boom, imo.
- robodale 7y agoLet's hope for a commercial during the next Super Bowl.
- romanovcode 7y agoFirst time I hear about this company. Why is it related to HN?
- simonvc 7y agoProbably half the startups here are working from WeWork offices or have done at some stage..
- fingerlocks 7y agoAnd the other half of us are at the new discount off-brand WeWork, aka Industrious
- allengeorge 7y agoYou've never heard of WeWork? They also acquired Meetup and Conductor?
- gbrodman 7y agoIt's the parent company of WeWork et al.
- sek 7y agoIt also took me a while, this is WeWork. I think they overdid it with the branding. Snap from SnapChat was already pretty short, but it is at least a verb and not a pronoun.
- pmart123 7y agoBecause it's a "tech" company...
- blaser-waffle 7y agoWE owns WeWork / is WeWork (think Alphabet and Google). They run co-working and remote office locations. Perfect place to be if you're a remote worker needing on office or a small firm or start-up, hence the HN discussion and interest.
- ecmascript 7y agoCan someone give me a tldr of what this is/means and why it's almost at the top of HN?
- batmenace 7y agoAn S-1 is the prospectus a company has to file before going public. It includes historical financials, an overview of the business, go-to-market and a lot of additional information. It should generally tell you everything relevant about the company.
- blaser-waffle 7y agoThe company WeWork is going public, and, as part of becoming a publicly traded company, they have to file documents saying what they make, what they lose in expenses, etc. The S-1 document has that info, and it has been released. There are a lot of red flags, such as a $2 spend for each $1 made.
- dougmwne 7y agoIn addition to what others said, this belongs at the top of HN because one of HN's primary missions is to be the social media platform of the California VC community. The IPO is the final crowning achievement of everything that YCombinator stands for as a start-up accelerator, so the S-1 is the first very important pulling back of the curtain of exactly what the incubator-driven, VC-fueled startup ecosystem has wrought. And in this case, the emperor appears to have no clothes. Good luck everyone. See ya in the breadlines!
- webninja 7y ago> We have 3 classes of stock: Class A shares which have 1 vote, class B shares, which have 20 votes, and class C shares which have 20 votes. All classes vote alongside each other. I wouldn’t consider being an investor in this company unless class B or C shares are publicly traded. Just look at the underperformance of GOOGL, SNAP, and SQ for reasons why not to be an investor here.
- nindalf 7y ago> underperformance of GOOGL This stock went from $54 in Aug 2004 to $1196 today. Just for me to understand, is that "underperformance"? Is your claim that other stocks that have a traditional voting structure have outperformed GOOGL over the same time period or that GOOGL itself could have achieved much higher highs, say 30x instead of a mere 22x? Either way, those are tall claims and it's on you to prove it.
- skinnymuch 7y agoYour point is completely correct. A tiny bit for the full possible return being greater. Google IPOed at $85. And closed at $100. Either way, the initial price is between $42.50 and $50, accounting for the stock split. It’s between 24-28x based on yesterday’s price (before 2.5% drop today).
- webninja 7y agoThere was a time when GOOGL was $900 and AMZN was $900. Look at where their share prices are now. $1182 and $1791. One of them underperformed the other.
- webninja 7y agoTo elaborate further the justification for this discrepancy for anyone who likes reading: Stocks are ultimately worth a function of 4 things: 1) The value of their future dividends, 2) The value of their future stock buybacks, 3) The value of remaining book assets at company liquidation/bankruptcy, or 4) the value per share everyone will receive if the company is bought out. People can invest for non-monetary reasons: for example wanting to invest in Tesla because they just want electric cars to be a thing or investing in Google because they just love certain aspects of the company. However, at late-stage investing, investments are based on fiduciary incentives from these 4 returns of capital. Absent those 4 methods of returning capital, stock investing is a pyramid scheme. Amazon shareholders can eventually collude together to vote for more returns of capital if they ever stop believing in Jeff Bezos’s above average performance in returning increasingly higher amounts of free cash flow. This is about as likely as it is for Buffet’s BRK.A/BRK.B (highly unlikely due to his high profile but not impossible if everything were to go south). A buyout of Alphabet is unlikely at this point because only 3 companies have a higher market cap now. Tech companies don’t have much book value to liquidate. They can potentially choose to not to ever give a dividend and they can keep doing share buybacks in joke quantities —- and pension funds can’t potentially vote to change that. This is my theory for these stock performance discrepancies and I’d be happy to hear others thoughts on this.
- dynjo 7y agoYou would literally have to be out of your mind to buy into this, especially as the founder cashed out $700 million right before IPO. Best. Short. Ever.
- karpodiem 7y agoI don't disagree with you, but be careful of purposely orchestrated short squeezes.
- marcinzm 7y agoFounder cashed out, they're losing almost as much money as incoming revenue, multiple classes of shares with different voting rights, etc. Does anyone know what the positives are of the company?
- danieltillett 7y agoInvestor subsidised rent. Oh you mean for the investors? Well money is dirty so it is best if you have less of it.
- Bluecobra 7y agoThey are going to be screwed when there’s another recession, given that they don’t actually own the office space they rent out. This is a real gem: “Substantially all of our leases with our landlords are for terms that are significantly longer than the terms of our membership agreements with our members. The average length of the initial term of our U.S. leases is approximately 15 years, and our future undiscounted minimum lease cost payment obligations under signed operating and finance leases was $47.2 billion as of June 30, 2019.”
- danieltillett 7y agoI would say those landlords are going to be in for an even bigger shock.
- chisleu 7y ago
- sidyapa 7y agoThe financials - https://imgur.com/a/NZONeDo https://imgur.com/a/NZONeDo TLDR : Revenue - $1.535B | Costs - $2.904B | Loss - $1.369B
- tyingq 7y agoSo revenue and net loss are almost the same number. They lose^h^h^h^h spend $2 for every $1 that comes in. Ouch. Edit: Yes, spend is better verb here than lose...thanks
- bkinnard 7y agoNot quite - they spend $2 for every $1 that comes in, so they lose $1 per $1 of revenue
- buboard 7y agoWhats the expectation here? That real estate will get 50% cheaper or that users will pay 100% more to rent an office?
- sct202 7y agoThere's a contribution margin graph on page 72, that kind of tries to explain away their high costs as costs related to their expansion and that their existing locations have a sizable margin that is hidden by all their expansion costs. I don't really buy it, but that sounds like the story they're trying to sell.
- addicted 7y agoThat was the Amazon story. I didn't buy it to my loss until only recently.
- mdszy 7y agoThat wegrow bit seems really strange and cultish with all the mentioning of "connecting with the universe" and "cosmic education".
- kart23 7y agoWhat the actual heck. Why are startups trying to do schools now? There is no way I'm sending my kid to a company with shareholders. Oh, and it costs $30,000 for your 4 year old to attend preschool. Why must we 'disrupt' anything and everything? https://wegrow.com/ https://wegrow.com/ https://wegrowparents.squarespace.com/ https://wegrowparents.squarespace.com/
- homonculus1 7y ago>Rebekah has traveled the world apprenticing and studying under many Master Students, such as His Holiness the Dalai Lama and Mother Nature herself, and is committed to creating an educational community that fosters growth in humans' minds, bodies, and souls elevating the collective consciousness of the world. Sounds like a vanity project for the CEO's wife.
- hobofan 7y agoEdtech startups have been a thing for quite some time, but yeah, WeXYZ is something different. If it's a building and it has staff, the We compancy will probably try to turn it into a vertical.
- kgwgk 7y ago“When applying our average revenue per WeWork membership for the six months ended June 30, 2019 to our potential member population of 149 million people in our existing 111 cities, we estimate an addressable market opportunity of $945 billion. Among our total potential member population of approximately 255 million people across our 280 target cities globally, we estimate an addressable market opportunity of $1.6 trillion. “(...) By applying the average employee occupancy costs to our potential member population of 149 million people in our existing 111 cities, we estimate a total opportunity of $1.7 trillion. Among the approximately 255 million potential members across our 280 target cities globally, we estimate a total opportunity of $3.0 trillion.”
- CaptainZapp 7y agoSheesh! I think I found a company, label it tech and mention in the prospectus my potential customership of 8 billion people. Do investors actually buy into such bullshit?
- buboard 7y agoInvestors seeking to move their money out of unstable countries won’t mind
- goatinaboat 7y agoSaudi sovereign wealth fund —> SoftBank Vision Fund —> WeWork I do wonder why Silicon Valley workers tolerate this given the regime’s track record on... well... everything. Up in arms over Maven or Dragonfly but no one seems to care that this is part of the regime’s plan to sustain itself when the oil runs out.
- jddj 7y agoIs this how these things are usually calculated? Does a watch manufacturer say that there are approximately 255 million left arms which we can reach by post, and since our watches sell for $1000 that's a $255B opportunity?
- Havoc 7y agoHuge losses, no profitability in sight, pre-IPO founder cash-out ...yip to the moon!
- i_am_nomad 7y agoDoes the S-1 disclose the fact that the founder is also one of the company’s biggest business partners? He buys up properties and then leases them to WeWork. Seems like a red flag to me.
- sjtgraham 7y agoWhy don't you read it and find out?
- i_am_nomad 7y agoBecause I just got fifty other smarter and better educated people to do it for me.
- dillonmckay 7y agoThe majority of businesses I have worked for, the company leases the building from another company owned by the founders.
- rahkiin 7y agoThis is to protect the buildings from liability through issues with workers. You don't want to be sued by a worker for something and have the buildings on the table.
- ckdarby 7y agoWould note it financially secures the founders as well. Even if the company removes the founders they're going to be getting that lease payment forever.
- lotsofpulp 7y agoIt’s also due to being able to take advantage of lower taxes on capital gains, which you can have if you structure the real estate part of the business to have income from “passive activity” versus “business activity”. https://www.irs.gov/businesses/small-businesses-self-employed/passive-activity-losses-real-estate-tax-tips https://www.irs.gov/businesses/small-businesses-self-employe...
- arnvald 7y agoNext Uber? Impressive growth, but their expenses grow at the same pace (they consistently need to spend ~$2 to earn $1). WeWork's locations are wonderful, but if they want to start making money, they need to start charging more or lower the costs. Won't people just move to cheaper offices then?
- Barrin92 7y ago>WeWork's locations are wonderful really had the opposite experience. To me they feel like a neural net went rogue and scanned through a billion pictures of "generic millenial apartment" and then turned it into workplaces. Every weworks place I've seen seems completely exchangeable and lacking any sort of character.
- shawabawa3 7y ago> Every weworks place I've seen seems completely exchangeable That's kind of the point. You get a consistent office environment in any wework It might not be perfect, but in my experience it's way better than the average office (at least in London)
- skewart 7y ago> WeWork's locations are wonderful I strongly disagree. The ones I've been to are shoddily built and badly designed. Door handles break after a few months. There are gaps in walls between offices. And bathrooms have sinks that are borderline unusable because light fixtures are in the way. Sure, everything is new, so it feels kinda fresh and nice at a glance, but I can't imagine the spaces aging well. Or, they'll have to spend money overhauling the interiors every few years. And that doesn't even touch on their branding and design choices, which, to me at least, don't even begin make up for the cheapo low-quality interiors.
- ryanackley 7y agoAccording to the prospectus, they lose so much money because they are building out new locations. Their break even point takes about a year for an individual location. So theoretically, they have a path to profitability. I just wonder where they get the cash in the meantime. >$1B/year burn rate, ouch.
- skinnymuch 7y agoWouldn’t it be from the IPO? If they sell 10% of the company, it should raise billions.
- empath75 7y agoThat sounds like a ponzi scheme, not an investment.
- blaser-waffle 7y agoThe only difference between those two concepts is malice.
- gizmodo59 7y agoIsn’t that like a trend these days? Unless I’m missing something, can you please explain?
- zaroth 7y agoI would never invest in WeWork, but no, not at all. A Ponzi scheme takes new investor dollars to pay the earlier investors’ “returns”. Taking new dollars to grow the company to generate future profits is actually the definition of “investment”.
- mffnbs 7y agoA ponzi scheme requires fraud. If you've evidence of fraud going on here then perhaps you should report it to the SEC.
- nickles 7y ago
- dbuder 7y agoI've disliked WeWork from the beginning, it pretends to be a tech company but it's just an old school real estate play. I still wouldn't short it, especially early on.
- Fordec 7y agoYeah, with the yield curve news lately, I'm really considering a short but I'm well aware the market can stay irrational longer than I can stay solvent
- xiphias2 7y agoTo me WeWork just looks like the stock market with leverage and extra management fees.
- dbuder 7y agoWell at least their management does something, REITs look like cushy ticket clippers to me (from the outside).
- beager 7y agoI’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.
- anilshanbhag 7y agoI 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.
- beager 7y agoIt’s trivial to convey that information in plain text
- erikig 7y agoI 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.
- mruts 7y agoI mean, you just managed to do it with just words alone.
- tw1010 7y agoThere's still deception even if companies use dry language. Using deck-style language only makes it that obvious and easier to decipher.
- tw1010 7y agoHow do you read things like this? I'm overwhelmed but feel like there are nuggets all over in this document.
- mdszy 7y agoWith your eyes, mostly.
- vikramkr 7y agoHaving an accounting 101 level of background (I'm sure there are a lot of good online resources to pick up accounting - the basics of accounting are way easier than the basics of computer science IMO)gets you like 90% of the way there to be able to skip down to the financial statements and the footnotes and get a decent sense of what the company looks like. Obviously you can go further and further in depth, and there are a lot of things specific to the IPO process that are good to know, but IMO knowing how to look through the accounting statements and read a balance sheet/income statement/statement of cashflows is the 20% of effort needed to get 80% of the insight you would want.
- deleted 7y ago[deleted]
- richardwhiuk 7y ago> We are a community company committed to maximum global impact. Our mission is to elevate the world’s consciousness. ....
- gtfratteus 7y agoHey, they may have said nothing, but at least they didn't use a lot of words doing it. In that sense, it's a better mission statement than most politicians have.
- gregjw 7y agoOof.
- gizmodo59 7y agoThe executive compensation looks interesting. I wish they publish the ceo salary before 2018. Is that more for a public perception? And we see only CFO/Legal and no one else.
- phonon 7y ago"Employment Agreement The Company does not have an employment agreement in place with Adam and, accordingly, Adam does not earn any salary from the Company and would not be entitled to severance if he no longer served as Chief Executive Officer. Adam earned no salary in 2018 and only earned $1 in 2017. Moreover, Adam is not entitled to any perquisites from the Company and elects to reimburse the Company in full for any perquisites he may receive in connection with his service as our Chief Executive Officer." The value of the options he was granted, as well as related party transactions are quite significant though...
- nknealk 7y agoThe mechanics of deferred rent are fascinating here. They have 2.8 billion of deferred rent on their balance sheet. See note 11 and 17
- fjp 7y agoWhat exactly is deferred rent and what does it mean for We Company?
- nknealk 7y agoLet me try to explain with an example. GAAP requires straight line depreciation of a lease. So if I gave you a 2 year lease on a facility and required a single payment of $1M at the end of the term, you'd account for that as 500K expense in year one, 500K in year 2. In year 1, your cash balance didn't change though right? I only wanted payment in year 2. So you record a 500K deferred rent liability to indicate that the expense has yet to hit your cash balance. Basically over some set of future years they'll have to pay out 2.8B of cash. But they don't disclose the timing on when those payments come due.
- fjp 7y agoVery clear explanation, thank you. It seems somewhat curious they don't have to reveal when they would be contractually obligated to pay out?
- nknealk 7y agoThey are required to disclose it. See page f-59 at the top. You'll note that their lease payments are 1.3B this year but go up every year after. Edit: the rate of increase is startling. They are going to have an additional 500M in leases on top of their expense this year plus another 200M come 2021 on top of that
- glaive123 7y agoIs the $500M in leases on top of their expenses assuming 0 growth? Or is their growth plan baked in? Also, is the deferred rent liability fixed assuming 0 growth?
- carrozo 7y agoRed flag company spends $2 to sell each red flag for $1.
- deleted 7y ago[deleted]
- ringo123 7y agoLooks like they need to go public or else they will die. 2.8 billion deferred rent on the balance sheet = house of cards
- rbrtl 7y ago> Upon completion of this offering, Adam Neumann will own or control more than 50% of the total voting power of our capital stock Another Zuckerberg style IPO. Activist investors beware...
- Traster 7y agoIt's actually a good thing, they can't be included in a lot of indexes because of that clause which means only people truly intent on setting fire to their cash will ever buy the stock.
- tuyguntn 7y agoThis is dangerous in case of WeWork, since founder is leasing property to WeWork. Founder knows how much profit is company generating, he can increase rent prices and make WeWork zero profitable all the time, but his other company earns all profit, because he has >50% voting power, he might decide to stay with his own company even if he increases rent
- nova22033 7y agoFB opened at 38 and is now close to 200..so maybe not the best comparison. FB actually makes money.
- martin_bech 7y agoBut stille completely crazy, that you can buy up, most of the company, and Zuckerberg still controls it.
- vikramkr 7y agoYou know what you're buying. You're buying a share of the earnings/monetary value of the company, and are valuing it based on your belief in zuck as a leader. You are not buying any control in the company, and that's pruiced in. I'm sure shares would be worth more if zuck didn't control the company and you could gain control by buying shares.
- tontonius 7y agoIf you wanna put those financials in perspective... We Company financials chart: https://imgur.com/a/Xky1NNh https://imgur.com/a/Xky1NNh
- chadwittman 7y agoAt first I thought your graph was wrong... now I realize their business model is the thing that is wrong.
- dublidu 7y agoIt seems like they need to charge more or operate a leaner operation. Even after excluding marketing and sales expenses, they’re still not profitable. They also apparently have 12k employees, which is way too high.
- deleted 7y ago[deleted]
- wbl 7y ago"Our mission is to elevate the world consciousness". Let it never be said that tech startups were not very Californian.
- umeshunni 7y agoSince this is neither a tech startup, not a California company, not sure what your comment is meant to say.
- CodeSheikh 7y agoThis statement though "The We Company is committed to being meat, single-use plastics, and carbon emissions free."
- dymk 7y agoA laudable goal? Of all the statements to bemoan, why choose the one about environmental sustainability?
- manigandham 7y agoThese are buzzword marketing goals, and usually unachievable without ridiculous costs, assuming they're even attempted.
- dymk 7y agoGoing meatless would save money, if anything. Recycling or buying multi-use containers also eventually costs less than single use, especially at scale. Also, credit where it's due to We. Just because the common opinion of this company is negative, doesn't mean literally everything they do is bad. I don’t buy that it’s “unachievable” at all.
- Balgair 7y agoBuzzword Bingo? It's a strange statement that is maybe trying to attract investors that are looking to invest in those categories of companies and exclude others. Might as well just throw in a lot of jargon at that rate.
- peterwwillis 7y ago> carbon emissions free Are they not using concrete in all the buildings they're building around the world?
- neil1023 7y agoTLDR: We Company (parent company of WeWork) filed for an IPO
- led76 7y agoBased on the filing the company awarded 42M stock options to the CEO earlier this year. The filing mentions a share price of $110 per share, so that's over $4B. That can't be normal, right? That's 10% of the entire company. It's more than Elon Musk got for Tesla by a long shot, and that was already controversial.
- ec109685 7y agoOptions require the stock to go up to be worth anything. So if the stock price increases ten percent, that would be $420M (120-110) * 42M shares. Still seems like an awful lot.
- TimPC 7y ago4.2M not 420M. 10% of 42M in options.
- led76 7y agoIt's not $42M in options. It's 42M options, possibly valued at $110 each at the IPO. Hence $4B
- ex_ex_nihilo 7y agoThat's not how option valuation works. They're worth the difference of their strike price to the price of the underlying intrinsically. So if his strike is $110 (which it's not for reasons others have pointed out - he was issued options on common stock), he gets the appreciation of the stock after IPO once he exercises. If the stock plummets after IPO, his options will expire worthless. Though they are probably LEAPs, and it's weird to denominate options per-share like that. Normally contracts are for 100 shares and it always confuses me the way companies award options.
- led76 7y agoThat's actually not quite how it works: "The options awarded had a per-share exercise price equal to the fair market value of our Class B common stock on the applicable grant date" Common stock is usually way less expensive than preferred, so while currently the company may be 'valued' at $110 per share, the common stock is probably in the $30s or $40s. He's likely already up $2B on the stock options (pending vesting), assuming the company does IPO at $47B and all common stock converts at the $110 valuation. Personally I think this is unheard of -- anyone else know of examples of CEO compensation like this prior to an IPO?
- koiz 7y agoWeWork shouldn't exist.
- jakear 7y ago> We will be treated as an “emerging growth company” pursuant to the JOBS Act for certain purposes until the earlier of the date we complete this offering and December 31, 2019. An emerging growth company may take advantage of specified exemptions from various requirements that are otherwise applicable generally to public companies in the United States. These exemptions include: > - an exemption to include in an initial public offering registration statement less than five years of selected financial data > - reduced disclosure about executive compensation arrangements and no requirement to include a compensation discussion and analysis > - accounting standards transition period accommodation that allows for the deferral of compliance with new or revised financial accounting standards until a company that is not an issuer is required to comply with such standards. Number 2 seems surprising. Is that par for course in these dealings?
- gdgtfiend 7y agoWeWork has $33.9 Billion in Non-canceable lease commitments, and it's lease payments are increasing 100% YoY. I think that is the true ticking time bomb for this company. In a world where billion dollar losses (Uber) seems somewhat normal, those lease obligations are still outrageous, and those payments will come due eventually, whether they have the money or not. In 2019 they attributed over $800 Million to operating lease costs. Every year, based on static growth that will double, and my bet is that it may even more than double in some cases. This isn't so much a company as it is a race to light cash on fire and run away.
- short_sells_poo 7y agoSeems like they are pretty much levered to the hilt. What happens when the current bubble bursts (or even just deflates) and their occupancy rate declines? Their business model seems to be selling short term leases and buying long term leases. This is all fine and dandy as long as they can find enough buyers for the short term commitments, but the distribution of almost all such strategies tends to be heavily tailed. You basically collect a small but consistent margin and occasionally suffer heavy and unavoidable losses. That's a perfectly fine strategy if the company can stay solvent during the loss, but this seems far from certain in case of WeWork.
- sonofaplum 7y agoin a recession, is short term, flexible office space more or less desirable?
- mdorazio 7y agoIt's important to distinguish between the general form of leased small office space and the WeWork model. In a recession, I feel it's pretty likely companies would look at their expense numbers and decide that WeWork is way too expensive in comparison to options like Regis, work from home, or just eliminating workers outside the main office.
- Areading314 7y ago
- ChrisBland 7y agoAn interesting thing happened a bit ago related to public companies and how they must account for leases in the accounting standards update 2016-02, Leases (Topic 842). For lessees, any leases that are over 12 months in duration will need to be presented on the company’s balance sheet as a right-to-use asset and corresponding liability for the obligation to pay rent. So if you are a public company; you can rent space from WeCompany at an 11mo period and you can magically reduce your liabilities vs signing your own office space. While this may seem like a small change, this change could allow execs to improve their financials with accounting gimmicks.
- simplecomplex 7y agoAnother scam IPO for another scam tech company. The fucking hot dog stand at my neighborhood park is in better financial shape than these toxic scam businesses like Uber or We.
- fastbeef 7y agoPerhaps this is a stupid question, but is an S-1 the first chance for the general public to get any insight into a company’s financials?
- Wheaties466 7y agoYes. https://en.wikipedia.org/wiki/Form_S-1 https://en.wikipedia.org/wiki/Form_S-1
- fastbeef 7y agoThat’s so counterintuitive once you get used to all company returns (both privately and publicly held) being public information in Sweden. Here’s Spotify’s complete financial history from its inception for example: https://www.allabolag.se/5567037485/spotify-ab https://www.allabolag.se/5567037485/spotify-ab
- deleted 7y ago[deleted]
- xyzzy_plugh 7y ago> We will be treated as an “emerging growth company” pursuant to the JOBS Act for certain purposes until the earlier of the date we complete this offering and December 31, 2019. > These exemptions include ... reduced disclosure about executive compensation arrangements and no requirement to include a compensation discussion and analysis I hadn't noticed this in recent big tech IPOs so I looked it up (Rule 12b-2): > The term emerging growth company means an issuer that had total annual gross revenues of less than $1,070,000,000 during its most recently completed fiscal year. So they claim to have had under $1.07B of gross revenue in 2018, but they list $1.8B in revenue on page 21. > We ceased to be an emerging growth company as defined in the JOBS Act on December 31, 2018. However, because we ceased to be an emerging growth company after we confidentially submitted our registration statement related to this offering to the SEC, we will be treated as an emerging growth company for certain purposes until the earlier of the date on which we complete this offering and December 31, 2019. So they started the process before EOY 2018 where they knew they'd have $1B, so as to avoid disclosure until they are public. Sneaky! Slack did the same thing, and had $1.05B in revenue for the previous tax-year when they registered (and $2.2B for 2018). I guess this is a convenient goalpost. > Our membership base has grown by over 100% every year since 2014. It took us more than seven years to achieve $1 billion of run-rate revenue, but only one additional year to reach $2 billion of run-rate revenue and just six months to reach $3 billion of run-rate revenue. To claim run-rate revenue like this feels imaginary and misleading.
- chx 7y agoRevenue is one thing, net income is a whole another.
- nvarsj 7y agoIt seems there are a lot of red flags here. The entire thing feels like a ponzi scheme to make the founder insanely wealthy - aka no real business here. E.g. The founder took a near 0% interest loan for 30M in 2006, raised VC capital, than paid it back in 2009 with the inflated share values.
- segmondy 7y agoThe thing that's the most upsetting about this is that our 401k, pension funds, city funds will all end up buying this garbage.
- cs702 7y agoA Bloomberg columnist's reaction on Twitter: "I have only read the related party section in the WeWork IPO filing so far, and I am not kidding that it is THE MOST BANANAS THING I HAVE EVER READ." https://twitter.com/ShiraOvide/status/1161601877517246464 https://twitter.com/ShiraOvide/status/1161601877517246464
- dwhitney 7y agotl;dr This dude, through various financial shenanigans, is loaning himself hundreds of millions of dollars to buy real estate and lease it back to WeWork. He then pays the loans off by issuing shares of We Work stock. Nothing is illegal about this, but it stinks to high heaven. But hey, he doesn't draw a salary as CEO! From the Company Loans Section: In May 2013 and February 2014, we issued loans to WE Holdings LLC for $10.4 million (interest rate 0.2% per year; maturity May 30, 2016) and $15.0 million (interest rate 0.2% per year; maturity February 4, 2017), respectively. The loans were collateralized by shares of our capital stock held by We Holdings LLC, and each loan provided us with the option to purchase a number of these shares in full settlement of the applicable loan. We exercised these options in May 2016, purchasing and retiring an aggregate of 8,398,670 shares of our capital stock in full settlement of the loans. In June 2016, we issued a loan to Adam totaling $7.0 million (interest rate of 0.64% per year; maturity June 14, 2019). In November 2017, Adam repaid the loan in full, including $0.1 million in interest, in cash. Then from the Properties Leased to The We Company section: During the years ended December 31, 2016, 2017 and 2018, we made cash payments totaling $3.1 million, $5.6 million and $8.0 million to the [CEO] under these leases. Sounds like they are straight up loaning the CEO money so he can buy buildings and lease them back to the We Company. Bonkers. From the Personal Loans section: Adam currently has a line of credit of up to $500 million with UBS AG, Stamford Branch, JPMorgan Chase Bank, N.A. and Credit Suisse AG, New York Branch, of which approximately $380 million principal amount was outstanding as of July 31, 2019. The line of credit is secured by a pledge of approximately [BLANK] shares of our Class B common stock beneficially owned by Adam. From the WPI Fund and ARK section: We have entered into operating lease agreements with [the CEO] in which the WPI Fund (or, following the ARK/WPI combination, other real estate acquisition vehicles managed or sponsored by ARK) have an interest, on what we believe to be commercially reasonable terms no less favorable to us than could have been obtained from unaffiliated third parties. During the years ended December 31, 2016 and 2017, no rent expense or cash payments had been recognized by us relating to these agreements as we were not yet occupying any properties owned by these entities and had not paid any rent under these leases. During the year ended December 31, 2018 and the six months ended June 30, 2019, we made cash payments totaling $0.0 million and $0.6 million, respectively, and we recognized From Personal Real Estate Transactions section: With respect to the six properties not currently occupied by the Company, in connection with exercising its option to acquire a property in the first year of the management agreement, the ARK Manager and the Company may determine that a subsidiary of the Company should occupy any of such properties to the extent the ARK Manager and the Company agree on terms of any such occupancy agreement.
- _sword 7y agoWework disclosed in this S-1 that the vast majority of its members are small organizations or a handful of seats purchased by “enterprises.” In the event of an economic downturn I wouldn’t think WeWork could reasonably expect to collect on its membership fees no matter its contracts - their small clients will go out of business or otherwise just stop paying. WeWork is still on the hook for its contractual lease obligations, with lease terms averaging 15 years by its disclosures and between $2.3-$2.4bn of contractual obligations per year in upcoming years. I don’t see this going well.
- ummonk 7y agoTheir operating expenses + depreciation seems to consistently be equal to their revenue, before the pre-opening expenses, sales and marketing expenses, and new market development expenses. Investing in growth at a loss makes sense for such a rapidly growing company, but can they make the unit economics work to turn a profit (after covering general and administrative costs as well) when they need to? They do claim to be offering the ability to house employees at less than half the market rate for traditional leases + operations, so I guess they'd be able to raise prices to a more sustainable level when required, assuming those numbers are accurate. As put off as I am by this whole company's branding and vibe, they do seem to have built a major business and likely have a substantial lead in the space due to brand recognition and operational experience.
- u35517 7y agoStupid filter keeping me in the dark. Access Denied You don't have permission to access "http://www.sec.gov/Archives/edgar/data/1533523/000119312519220499/d781982ds1.htm" http://www.sec.gov/Archives/edgar/data/1533523/0001193125192... on this server. Reference #18.6fae0017.1565800624.11173d06
- grandridge 7y agothis guy one up'd madoff. took investor money, bought hard assets and now charging those investors rent. haha, dude should be in jail
- fierro 7y agoApparently Adam has pledged $1B in charitable donations over the next 10 years, otherwise he loses voting power. Is this normal? >To evidence their commitment to charitable causes and to ensure this commitment is meaningful, if Adam and Rebekah have not contributed at least $1 billion to charitable causes as of the ten-year anniversary of the closing date of this offering, holders of all of the Company's high-vote stock will only be entitled to ten votes per share instead of twenty votes per share.```
- anon1m0us 7y agoIt seems disingenuous to make themselves only 10x more powerful than other investors if they don't do what they say, rather than the accepted 20x. Is such an ratio normal?
- chipotle_coyote 7y agoIt's certainly normal for founders to give themselves more power than other investors.
- harikb 7y agoFrom Page 199: "A majority of Adam’s awards are also tied to the Company’s performance as a public company, particularly an increase in our market capitalization that is sustained over a period of at least 60 days". Seriously? just 60 days?
- 40acres 7y agoI have a very unsophisticated eye, but it's difficult to avoid the feeling that a portion of modern VC is a pump and dump scheme. Particularly when taking into account recent equity moves by WeWork and Beyond Meat.
- vikramkr 7y agoBeyond at least seems like it's a company with a strong path to profitability during a major shift in the food market towards meat alternatives. IDK what wework is doing...
- reneberlin 7y agoTranslation: WE slurp money - for granted.
- didip 7y agoThis is just my opinion, but I think it will be one of the most shorted stock this year and next year.
- lgats 7y ago4.5 MB of HMTL... not including the images.
- whatdoyouknow 7y ago> We provide our members with flexible access to beautiful spaces, a culture of inclusivity ... Honest question, Does that mean anyone may come in and work in, or otherwise use, the spaces?
- ummonk 7y agoI just realized that the last raise was at a $44 billion valuation. That seems unhinged. With the numbers in the S-1 filing, a valuation of closer to $20 billion seems more appropriate.
- epiphanitus 7y agoIs there anybody here who believes WeWork will eventually be profitable? I know most of the people here are skeptics but I'm interested in hearing the other side.
- DickieGreenleaf 7y agoTop 10 Biggest Risks in WeWork are Revealed https://www.swfinstitute.org/news/74504/top-10-biggest-risks-in-wework-are-revealed https://www.swfinstitute.org/news/74504/top-10-biggest-risks...
- DickieGreenleaf 7y agoInteresting analysis by SWFI guys, Top 10 Biggest Risks in WeWork are Revealed https://www.swfinstitute.org/news/74504/top-10-biggest-risks-in-wework-are-revealed https://www.swfinstitute.org/news/74504/top-10-biggest-risks...