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My favorite part of new tech company filings is looking at the risk section and finding something to the effect of: "We are not profitable, and may never be."
by mmillin 7y ago
My favorite part of new tech company filings is looking at the risk section and finding something to the effect of: "We are not profitable, and may never be."
> We have a history of losses and, especially if we continue to grow at an accelerated rate, we may be unable to achieve profitability at a company level (as determined in accordance with GAAP) for the foreseeable future.
I understand the reasoning behind having these in the document, but I always get a kick out of seeing it said so plainly.
- 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.