34 ms·

WeWTF

840 points by braythwayt 7y ago

dlgeek 7y ago
> Adam also owned the rights to the "We" trademark, which the firm decided they must own and paid the founder/CEO $5.9 million for the rights. The rights to a name nearly identical to the name of the firm where he’s the founder/CEO and largest shareholder. Really? How is this sort of shenanigan allowed?
- n-exploit 7y ago
  The Tragedy of the Commons 2.0™
  - Apocryphon 7y ago
    The Tragedy of the Creative Commons
- marcinzm 7y ago
  Adam controls the majority of voting right to the company and the board (made up of VCs) doesn't want a messy legal fight since they stand to lose money if We tanks. So a moderate amount of graft is tolerated since the alternative is less desirable.
  - dooglius 7y ago
    Breach of fiduciary duty can be a criminal matter in addition to a civil one.
    - amluto 7y ago
      I am not a securities lawyer (or any other type of lawyer), but: if this all blows up, I believe that self-dealing by the executives is an excellent way for creditors to pierce the corporate veil.
  - devcpp 7y ago
    >Adam controls the majority of voting right to the company This alone should be a massive turn-off for investors, nevermind this kind of personal eccentricity that makes this absolutely insane.
    - erikpukinskis 7y ago
      I don’t think majority ownership is necessarily a turn on or a turn off. There are cases when a bunch of minority shareholders would be chaotic and prevent the company from making long term bets. There are also cases where minority ownership would allow for stability while cycling through executive turnover and experimentation. Which situation you are in, and whether shareholders would be turned off by majority ownership, is context specific. For example, I think SpaceX would be a less attractive stock if there were only minority stockholders, and having Elon as the majority holder makes it more likely to succeed at going interplanetary, rather than just milking a traditional orbital business model. If your investment thesis depends on a bold bet like that, a single majority shareholder you trust would be a comfort.
      - codeisawesome 7y ago
        SpaceX isn’t a public stock though?
        erikpukinskis 7y ago
        It still has investors, and shares.
      - Breza 7y ago
        For the SpaceX example, I actually think they'd be better off focusing on the orbital launch market. The dream of affordable and reliable access to space dates back to the 50's and still hasn't been fully realized. In my opinion, that's a bigger deal than trying to get SpaceX to put a payload beyond orbit. I agree with your larger point though.
- JumpCrisscross 7y ago
  > How is this sort of shenanigan allowed? Investors gave Adam virtually unchecked power over their capital.
- navigatesol 7y ago
  This guy has become a multi-hundred-millionaire by renting out office space under a business model that appears to make no financial sense. Because "tech company". It's utterly bonkers.
  - marcinzm 7y ago
    It's basically a modern ponzi scheme as I see it. The VCs make money at the expense of people who buy post-IPO.
    - projektfu 7y ago
      If it goes where I think it should, then it’ll be the IPO subscribers holding the bag.
    - wpietri 7y ago
      Yeah, I think WeWork is at best the next Groupon: something that was made to seem just plausible enough at the time that the financiers made a bundle, but that rapidly turns into a minor-league business as the shiny wears off post-IPO. And that's at best. But I think a collapse is more likely. Uber may also be losing a ton of money, but they have enormous pricing power over their major raw materials, namely individual drivers and their cars. But WeWork is renting space from hard-bitten landlords run by professionals, and those companies have plenty of alternative tenants if they don't like WeWork's terms. At some point I think there's going to be a mismatch between their short-term income structure and their long-term obligations to the space owners, and then it's going to be a big old mess.
      - fragmede 7y ago
        If there's a recession that hits WeWork, those alternative tenants will also dry up, for the same reason. Companies won't want to justify a large capex investment into new office space, and cancel pending contracts for space that hasn't been built out yet. Comparatively, the money WeWork's customers spend on WeWorks would be considered opex, for those whos budgets are big enough for the distinction to be material. Is WeWorks hacking corporate America's budgeting practices, doing what AWS did for rack space?
- ggg3 7y ago
  lol. let alone trademark "we". guess I should trademark "you" and call google about youtube.
- juliusmusseau 7y ago
  This is a classic due-diligence item during early funding rounds - up there with "does the company actually own its domain name or do one of the founders own it"? I suspect either due-diligence caught it and decided to live with it after some negotiation, or they missed it - oops!
  - konschubert 7y ago
    No, they just decided later to re-name the company from WeWork to We - and then they needed the new brand name
    - juliusmusseau 7y ago
      The founder already personally owned the trademark to "We" well before they made that decision? That's lucky. In that case wouldn't he simply have to divulge that fact early on in the decision-making process? "Guys, maybe I should recuse myself on this decision since I'm in a bit of a conflict..."
      - 6nf 7y ago
        He has majority voting rights, he's the one making these decisions.
- DannyBee 7y ago
  It usually is not. But delaware
rolltiide 7y ago
Has anyone seen good coverage of WeWork as an investment? All my favorite finance meme accounts are tearing this to shreds too. The only people I’ve heard be excited are the WeWork employees, and you can practically never get the employees to have a counter view on this even if they don’t get stock. I dont mean in like “I dont want to rock the boat” way, but more in an common ignorance of personal finance let alone investing way. They also arent really the investing class, so far they dont really understand the memes aside from the comments like “is this company run by Congress?” Not WeWork specific they just arent investors or financial professionals. What do the “members” think? Is there any “yes I cant wait to align my interests with my favorite coworking space by investing in their future growth” sentiment? Im just not around those people so I dont know WSJ and Bloomberg have been ripping on this for over a year, and now with the S-1 out Hackernews and finmeme accounts are ripping it too Think they’ll retract the S-1 and stay private?
- 40acres 7y ago
  Check out the Odd Lots podcast episode: The Bullish Case for WeWork. Personally, I don't see it -- but capital is so cheap and WW brand so strong that they may be able to pull a rabbit out in a downturn.
  - addicted 7y ago
    It’s the only strong brand in a massive market, real estate.
    - dragonwriter 7y ago
      It may be the only strong brand in co-working spaces, but I find it harder to believe it's the only strong brand in real estate. It's obviously a more visible brand for people working in a particular area of the tech industry than most real estate brands, but that's a different issue than brand strength in real estate.
- projektfu 7y ago
  The problem they have is that you can’t save this business by clapping louder. Either it starts generating profits or it’ll go out of business. I am just personally surprised that Adam Neumann isn’t getting the kind of negativity Elizabeth Holmes got. Perhaps after it goes down, who knows, but his activity has been sufficiently shady that it should be drawing more fire.
TAForObvReasons 7y ago
For a contrasting view, consider this tweet from @patio11 https://twitter.com/patio11/status/1161796809741627392 https://twitter.com/patio11/status/1161796809741627392 > In 2025, every Fortune 500 company will have 10k+ remote workers, and every purchasing department will approve a reimbursement for WeWork with no questions asked. The actual bull case for WeWork is similar to Uber: there may be a massive trend, and WeWork is positioning itself to be the winner. With Uber it's the push to self-driving cars, and with WeWork it's the corporate move away from massive campuses and office buildings. In this new landscape, WeWork has extremely strong branding, experience, and a valuation that suggests it is the biggest player in the space.
- addicted 7y ago
  Real Estate is also a much bigger business than taxi cabs. The big bet on them I suspect is that any upcoming recession will probably lead to a lot of companies wanting to reduce their office costs. They may want to switch to WeWork managing their office spaces much like tech companies want to switch to Amazon Microsoft or IBM managing their IT infrastructure.
  - laurentl 7y ago
    Have you seen WeWork’s prices? It’s much more expensive to host a team in WeWork than just about anywhere else (including in your own corporate headquarters). I can understand companies wanting to variabilize office costs, but the first thing they’ll do is launch an RfQ... and WeWork’s fancy offices and free beer are not going to be much help there.
- MrBuddyCasino 7y ago
  I'm afraid he is correct, BigCorps are the main tenants as far as I can see. Which is sad, because WeWork is as fake and psychopathic as its CEO.
  - dragonwriter 7y ago
    But Big Corps can do math; whether they will be the main tenants if WeWork ever stops dumping to gain business is less clear. Big Corps have been working with the whole space of available real estate options to optimize costs longer than WeWork has existed; I don't see where WeWork had any stickiness.
mistrial9 7y ago
speculation on the origins of this ... in the San Francisco Bay Area, over the last twenty years, many ordinary downtown office+retail buildings became empty, due to some combination of suburban sprawl, loss of mom+pop retail, excessive rent-seeking and urban decay. Meanwhile, tons of twenty-somethings were arriving with a backpack and a laptop .. it was too fast and fluid for anyone to want an "address" .. so, the idea of flexible techie office "pop-up" shared spaces was obvious. Some tried it alone, and some tried to brand it with extras .. and FAILED FINANCIALLY.. practical people, who did try. If you have not failed this way, then you do not know how painful it can be, at the small business level. At any rate, from one point of view, this WeWork thing is just the oversize "winner" from New York City, in this dog race. Like commercial fishing, and some kinds of investments, lots of ordinary efforts fail for no good reasons, then some pig comes along and gets the momentum.
- deleted 7y ago
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- deleted 7y ago
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mola 7y ago
I don't understand why all analysis of the craziness that is The We Company is filled with opaque language and colorful mind bending terms. The company is a fraud, it should be explained with facts, and clear simple language. Everything else is just muddying the water.
- logicallee 7y ago
  >it should be explained with facts, and clear simple language. since it looks like you've spent some time on this, would you care to take a shot?
  - mola 7y ago
    What makes you think I understand this? my comment originated from the opaque language which read more like works of satire than actual analysis. All I can tell is that the whole way this company and its investors are acting is bat shit crazy. I'd like to get better analysis that is less "entertainment" and more factual and analytical.
    - ramraj07 7y ago
      It's actually just satire with numbers. Which seems better than satire by itself by a mile, and (personally) also better than rote numbers listed because it's amusing. Why complain?
    - logicallee 7y ago
      >What makes you think I understand this? The fact that you stated "The company is a fraud", before saying that this should be stated plainly. Since you didn't say something like "...from my point of view I certainly have the impression that..." or something like that. Since you spoke definitively, I assumed you have a definite opinion you formed somehow.
- simplecomplex 7y ago
  How is it fraud? Investors make idiotic investments. Nobody is being forced to buy shares of WeWork, and all the financials are there. It’s not like WeWork is lying about financials.
vmurthy 7y ago
The most interesting part of this article is the term "Community Adjusted EBITDA". It's not a term invented by the Prof but something used by WeWork. I remember Warren Buffett/Charlie Munger calling EBIDTA as bulls* earnings [1] but community adjusted EBITDA just smells like someone in Enron got hired by the We company recently. It almost feels like We IPO is the bellwether for an upcoming crash :-( [1] https://www.forbes.com/sites/brentbeshore/2014/11/13/ebitda-is-bs-earnings/#4f0539e56070 https://www.forbes.com/sites/brentbeshore/2014/11/13/ebitda-...
- dvtrn 7y ago
  Twice this week I’ve heard of EBITDA, the last conversation while taking an outdoor break with a coworker bemoaning some head scratching strategy choices from management where I work. Thanks for the explainer link.
  - csours 7y ago
    EBITDA itself is an interesting number that tells you something about the company in question. It's not the only number you should use, and it can definitely be misleading if it's the only thing you look at, but it does tell you something about the underlying business. However, 'We' has it's own EBITDA-sounding metric where they exclude so many expenses it is laughable.
- csours 7y ago
  > "More than its cash-burning ways, WeWork’s IPO will test investor tolerance for made-up accounting metrics. You might recall “Community Adjusted EBITDA,” the gauge WeWork devised to measure net income before not only interest, taxes, depreciation, and amortization, but also “building- and community-level operating expenses,” a category that includes rent and tenancy expenses, utilities, internet, the salaries of building staff, and the cost of building amenities (which WeWork has described as “our largest category of expenses”)." [0] Hahaha. I think its pretty fair to say that this is not a Generally Accepted Accounting Practice measurement. (non-GAAP) I've only visited a We Work location once, but it really felt like a VC funded startup - particularly the amenities. Without the amenities, it would have been just another depressing office. 0 - https://qz.com/1685919/wework-ipo-community-adjusted-ebitda-and-other-metrics-to-watch-for/ https://qz.com/1685919/wework-ipo-community-adjusted-ebitda-...
beeschlenker 7y ago
Truest WTF if there ever was one: Obama rapes & kills 2 boys 15Jan in Buffalo. DeBlasio 5, Buttgieg 5, Cuomo 4, Murray 3, Dorsey 3, Thiel 3. Trump $4 billion to cover. Pel!osi $3 billion, Harris $1 billion, Schumer $2 billion, to help bring the boys over the border. Trump: $138 million to bypass 5th amendment Previously unprocessed footage now available [Soros, obama child rapes 15Jan 4-6am], ,See pages 18-23, 8, 11, 12, 35, 45, 61, 62, and update list at end of doc |] Having trouble getting traction. Getting censored/banned. Billions in bribes paid to Trump, Pelosi, Schumer, Harris to enable a Soros funded child raping ring to operate in the USA. Please listen to the links below. Turn up the volume and put headphones on. You will hear these people, and many other high profile peo`ple, incriminate themselves in unbelievable fashion. Full 74 page document [update 10Aug] filled with red handed evidence like this at the bottom. \@Go to pages 18-=23 of this document and you will hear Dorsey and Thiel raping children. You will hear their screams. They both rape and kill three. Also at the "rape party" of note: Bill DeBlasio, Andrew Cuomo, Bill Murray, Peter Buttgieg, George Soros, Barack Obama. Please copy and paste this post and repost it. I keep getting censored by these people. Peter Thiel a1nd Jack Dorsey raping and killing three boys each. Turn the volume all the way up and put head phones on. https://s3.wasabisys.com/conv1/Overnight_14-17Jan/15JanCh3_100-200.avi https://drive.google.com/file/d/1mzZrjobxhNIEf38M3xk-IeA5SeF4aUtB/view?usp=sharing Obama admits to raping and killing boys he{re, with commentary from Peter Thiel, George Soros, Matt Porter: https://s3.wasabisys.com/out2/Out2/15JanCh3_0545.avi https://drive.google.com/file/d/1LCDoc1kT7cfSeKQ1vniP_sx32_bRsHau/view?usp=sharing Trump demands $4 billion to "take a blind eye" at 1015++ (link missing from report, unsure how). Here's pieces of dialogue: 1015 The President requests four billion and henry Porter agrees to it. Some dialogue below. 1017 Donald Trump: Why don't you think about it. 1017 Henry Porter: I don't need to think about it. I'm ready for you to find out what we're really about. 1017 Gigi Hadid: I don't think it's a good idea Henry. 1017 Henry Porter: ...no shit. Jelena just stop talking about it. 1018 Gigi Hadid: About what? 1018 Henry Porter: The child raping. 1018 Donald Trump: What the fuck are you talking about? 1018 Gigi Hadid: Mr. President we are child rapists. 1018 Donald Trump: You cannot be serious. 1018 Donald Trump: You're gonna need $4 billion for me to take a blind eye. 1019 ?: People are laughing because they think four billion is too much. I think it's not a problem when you have $35 billion. 1022 Donald Trump: You better have that $4 billion or you can kiss this shit goodbye. https://s3.wasabisys.com/conv2/3Jan/3JanCh3_900-1100.avi https://drive.google.com/file/d/1Grdr8xF2psKNsuYlEnl9dIRV-77YG0Vr/view?usp=sharing Trump wants $138 million to ensure smooth outcome for false judgment for a court case: https://s3.wasabisys.com/conv1/10JanCh3/10JanCh3_951-1033.avi https://drive.google.com/file/d/1iSeGHDToFRoRdIht50Wii0i30mlw9INp/view?usp=sharing Obama explains the Illuminati with Jack Dorsey: https://s3.wasabisys.com/conv1/Overnight_14-17Jan/15JanCh3_200-347.avi https://drive.google.com/file/d/1Ok1-9IvANULzKBOwADFgaiYCFi6yszfj/view?usp=sharing At 230 a conversation is occurring on the embedded Porter camera system with Jack Dorsey, Peter Thiel, Barack Obama, Bill Murray, and the Porter's. Jack Dorsey provides a statement defining who their group is: "The Illuminati is an underground organization of child rapists and homosexuals." Matthew Porter: "We have to thin the herd, so Barack is going to explain a few things." At 232 Barack Obama says the following: "You people have to realize we are child rapists. The Illuminati are child rapists. As soon as you figure that out, you can decide what to do. Everybody is freaking out about what just happened [child raping event still going on]. This is who we are." Full 74 page document [updated 10Aug]: https://s3.wasabisys.com/aviewmefirst/FBI_FinalDraft_26Jul2019_BSchlenker.pdf https://drive.google.com/file/d/1dXNjPQdQ8c-hFFLt9LT0GiSY5Vud0TzL/view?usp=sharing Please post this anywhere you can! Each google drive link is a backup to the wasabi link just in case one is "down". A word about the "f@\&&ot" usage: it was a necessary tool. It showed three things: they were not in control, if they were the usage would have be stopped. Everyone out there needed to see t%his. Two, it made it unpleasant for them to be in the headspace, which has obvious advantages. Three, it pointed out impersonators of BS because they would not call each other f@%%ot, thus helping to mitigate the spread of false information. Apologies for those unintentionally offended. Of special interest to the LGBT community, I give you Barack Obama in a foursome with Peter Thiel, Jack Dorsey, and Matthew Porter. It is on page 12 of the document where you can download the video containing audio footage of the "event". Link is just above under "Full 74 page document".
wallflower 7y ago
Can anyone knowledgeable talk about what happens in a severe business downturn with We? They have most likely setup separate LLCs for each building’s 10-15 yr lease. Do the LLCs isolate We enough so that LLCs can declare bankruptcy and the building owners or banks or creditors don’t go after the mothership We?
- JumpCrisscross 7y ago
  > Can anyone knowledgeable talk about what happens in a severe business downturn with We? No. This is a known unknown. On one hand, contracts get cancelled and WeWork defaults. On the other hand, WeWork’s aggregated buying power lets it renegotiate leases, passing the pain to landlords.
  - goatinaboat 7y ago
    True story: I once worked for a company that rented 3 of 4 floors in a building. The top floor was empty, and we were expanding, and we wanted it, and it should have been easy. It took years. The property company would rather that floor to be empty earning no rent, than to cut a deal on it. And they won, the company paid their price and signed the long lease they wanted. Property companies don’t blink. They will not cut WeWork any slack.
    - hnik 7y ago
      This is sometimes the case. Other times renting the last few units brings in significant cash flow as it increases the NOI disproportionately to leasing the initial units. For example you’re probably not hiring more custodial staff and you’re probably able to make draws from your debt as you’ve increased property value by being fully stabilized
  - paulsutter 7y ago
    My experience in downturns (2000, 2008) says that landlords consider leases a crucial part of their hedging strategy and they have zero willingness to renegotiate. In 2000 I knew someone who called all their major vendors for datacenter space, etc, and threatened that if the landlords didn't cut the cost, he would go bankrupt. The response from 100% was "go ahead". To do otherwise would be philanthropy on their part. > WeWork’s aggregated buying power lets it renegotiate leases, passing the pain to landlords.
paganel 7y ago
When bonds worth $14 trillion are in negative territory and when the 30-year US treasuries are at historical lows this is what happens, i.e. people are ready to throw money away at almost anything that flies and moves, as long as there's a chance of double-digit returns. In other words we live in crazy times, and as such crazy prospectuses like the one published by WeWork fit the current financial narrative perfectly.
eaenki 7y ago
Just short it.
- joelx 7y ago
  I thought this would be a good idea on that super hot hamburger chain a few years ago. I then learned that short interest changes based on short demand for that stock. I was putting 120% interest per year to short the stock. Be extremely careful with shorting, Warren Buffett himself says he won't touch it.
crawftv 7y ago
It all really comes back to Trump in the end.
- SyneRyder 7y ago
  I thought this was a weirdly off topic comment, until I read the full article. Towards the end it goes off on a wild tangent claiming Union Square Ventures are the reason progressives could lose the 2020 election to Trump. (?!) A shame, because the first half of the article is great.
- sergiotapia 7y ago
  They can't help themselves lol
- egdod 7y ago
  Seriously. He just couldn’t help himself from trying (and failing, frankly) to take a shot at Trump. In an article that has absolutely nothing to do with Trump. The TDS is strong with this one.
completelylegit 7y ago
I get that the author doesn’t like WeWork, which is fine. But the throw-away comment that there is some tertiary connection to Goop seems unnecessarily personal. Goop is a bunch of nonsense but I’m not sure why its relevant to why WeWork is nonsense.
- digianarchist 7y ago
  I took that as a poor attempt at humor. I don't think the author actually implied a connection.
methodover 7y ago
I think I might be the only person on HN optimistic about WeWork. Remote work is on the rise here in the US. Startups and entrepreneurship continue to grow. Finding traditional office space sucks and is a massive waste of money, and probably always will. Co-working spaces make sense, and it’s baffling to me that it wasn’t the default way to work in 2010, when I started programming, let alone 2019. I feel like if somehow fast food hadn’t been invented til now, and MacDonalds just got started, we’d be reading pessimistic threads about how it’s a real estate business masquerading as a food business and is destined for collapse. But like, it actually does work, as a business, to provide some necessary service (office space, food) at scale with a big central marketing apparatus. The fundamentals here seem sensible to me.
- schmrz 7y ago
  Only if by fundamentals you mean the fundamental idea behind coworking spaces. Sure, that makes sense. But the WeWork company fundamentals are out of whack. Nobody is arguing that coworking spaces are a bad idea. WeWork is a company that turns 2$ into 1$.
  - mguerville 7y ago
    Nearly $3 into $1 actually last quarter
- arbuge 7y ago
  WeWork != Coworking Coworking will grow and prosper. WeWork, I don't know. I don't know how long any company can survive the egregious investor-fleecing WeWork's founder seems to wantonly engage in. Perhaps if a clear stop is put to that, and if every other part of the business plan goes flawlessly, then it has a future. But coworking is about alot more than WeWork, and the industry will do fine whatever WeWork's shenanigans imply for the latter's future. There are currently around 20,000+ coworking spaces worldwide, of which less than 5% are WeWork's: http://www.deskmag.com/en/2019-state-of-coworking-spaces-2-million-members-growth-crisis-market-report-survey-study http://www.deskmag.com/en/2019-state-of-coworking-spaces-2-m... https://www.wework.com/locations https://www.wework.com/locations
carlsborg 7y ago
I skimmed at the S-1 filing .. they list 400k members for 2018, and revenues of $1.8B, so Average Revenue Per Member is $4500 USD. Now the gross margins look terrible, but the sell is probably this: how hard is it to monetize 500k users (Q1 2019 numbers) who land up and work out of your managed premises everyday?
mark_l_watson 7y ago
Well, I live in the mountains in Central Arizona, so no WeWork offices near me (Phoenix and Los Vegas are the nearest). I would be tempted, even though I am mostly retired, to use a shared office space. I have a great home office but I still like to go to the library, or to a coffee shop, to write or work. It just seems like WeWork should charge a little more to nail down profitability.
- insulanus 7y ago
  Oh, there's nothing wrong with shared office spaces. It just seems unreasonable to thing they are going to multiple investor money 100x. It seems like the valuation should be part commodity (the cost of the services provided), and part location (proportional to your local office real estate market). And maybe your size compared to your next largest competitor.
- panopticon 7y ago
  For what it's worth, there are non-WeWork coworking spaces all over. I'm not sure if you're near Flagstaff, but there are several in the area. I think this business model will continue to survive regardless of WeWork's success or failure here.
blunte 7y ago
The current system was ripe for a fantastical display of absurdity, and maybe this is it. It's startingly familiar given the current US political situation. All this reminds me of Blackadder 2, Ink and Incapability. https://en.wikipedia.org/wiki/Ink_and_Incapability https://en.wikipedia.org/wiki/Ink_and_Incapability Blackadder finds himself in a situation that quickly becomes increasingly unbelievable. Finally he recognizes he is in a dream, and he wakes up in disappointment. I'm still waiting to wake up.
- hyperdunc 7y ago
  Compared to the relative stability of the 1990s and early 2000s, the current political and economic situation does seem somewhat absurd. But history is littered with turbulent times, and compared to those times the present is a pleasant dream. Whether it turns nightmarish remains to be seen.
- csours 7y ago
  If you have Prime, here you go: https://www.amazon.com/gp/product/B07CJZLF3S?camp=1789&creativeASIN=B07CJZLF3S&ie=UTF8&linkCode=xm2&tag=justwatch09-20 https://www.amazon.com/gp/product/B07CJZLF3S?camp=1789&creat... It's also on Hulu
Tade0 7y ago
I have a couple of friends working for WeWork. Should they be worried about their jobs?
jasonmar 7y ago
The author of the article is a professor of marketing so I'd be interested to learn his opinion on WeWork's marketing instead of accounting, corporate structure and governance. Adam's unconventional moves appear extremely outlandish when spelled out in the S-1 disclosures, but because I have no position I just find it entertaining. I'm looking forward to the conference calls. I worked for WeWork for a short period of time during one of the SoftBank rounds, and one positive unconventional thing the company did was give employees with vested options the opportunity to cash out alongside Adam, rather than being forced to wait until post IPO lockup.
deleted 7y ago
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DoreenMichele 7y ago
I really enjoyed the acerbic and colorful style of this article, but wouldn't have enjoyed it nearly so much if it were all style and no substance. He's clearly knowledgeable, though I know the style of writing isn't the usual fare for HN. He's correct that really good businesses tend to start during recessions. Starting a business during a Roaring Twenties style economy when you could literally support yourself with a ridiculous idea like selling pet rocks will not test your business model and help you find its weaknesses. A la some African saying to the effect that "Calm seas don't produce skilled sailors." I learned a lot and I am a bit envious of his acerbic wit. I feel like that's more acceptable from a man, but sarcastic contempt was pretty much my default as a teen and I sometimes think I've become a bit too PC over the years.
- tfha 7y ago
  We've all become too PC and the stains of that culture are bursting out the sides in unexpected and colorful ways. It's oppressive to be PC and we haven't acknowledged that side of it well enough. (Oppressive to the person constantly censoring themselves in the name of PC)
  - arcticbull 7y ago
    FYI, the term non-PC is mental gymnastics for “being a dick” so I suppose you’re arguing we should be bigger dicks to each other. IMO, you should be yourself, unless you’re a dick in which case, don’t be yourself. It may feel oppressive to you, but frankly, I don’t ... care, and neither does the rest of society which is why your approach doesn’t get you far. Hopefully this framing is illustrative.
    - DoreenMichele 7y ago
      An ironic statement given that "dick" is not PC language. It's a gendered slur insulting men on an overwhelmingly male forum. I think it's a bit more complicated and nuanced than that, though I don't really think this is the time or place for me personally to try to get into it in a substantive way.
panabee 7y ago
bull hypothesis: the office space industry is very large but fragmented. wework becomes the central hub in a worldwide network of tenants and landlords. bear hypothesis: wework is an overhyped-regus with a frail capital structure, no scale or network effects, and dangerous liabilities. it will likely collapse during a recession. questions for investors: 1. how much flexibility/escapability does wework have regarding leases and liabilities? in particular, how much control do they have over cash flows to avoid disaster during a recession? 2. how much does it cost and how long does it take for enterprises like cisco and ibm to open new offices: (1) with wework; (2) with regus or another wework competitor; and (3) without any outside assistance? how about for companies with 100-1000 employees? 3. what is the current breakdown, lifetime value, and retention rate for wework members among solos, startups (2-99 employees), mid-sized companies (100-1000 employees), and enterprises (1000+ employees)? 4. cashing out $700mm seems like a red flag if you believe the company is worth much more. what percentage of equity does this represent for the founder? is cashing this much out normal for large IPOs? by comparison, how much did zuckerberg, hastings, and bezos cash out at IPO? question for others: what are the first questions you would research on wework?
- thadjo 7y ago
  A lot hinges on what would actually happen to WeWork during a recession. I think there's some possibility that when a recession hits, many companies may find WeWork (and coworking generally) more attractive as they downsize. I'm also curious about whether WeWork has leverage to renegotiate leases, since commercial real estate (which is already not doing well) will weaken in a recession.
- panabee 7y ago
  5. what are the unit economics for the average wework location, where revenue is projected at 10%/25%/50%/80% occupancy?
  - panabee 7y ago
    note: unit economics should be model as profit/sq. foot.
ErikAugust 7y ago
To me, it’s as simple as they lose $5200 a customer: https://beta.trimread.com/articles/78 https://beta.trimread.com/articles/78 We all can poke fun at the marketing BS and founder antics but it’s just another investment to avoid for me.
The_Hoff 7y ago
If you enjoy this, please checkout Scott's podcast Pivot [0]. He shares all kinds of analysis like this. [0] https://pod.link/1073226719 https://pod.link/1073226719
buboard 7y ago
OT but saying "hot take" on twitter is like saying "i m going to pee" in a toilet.
dvfjsdhgfv 7y ago
> ...it was a porn site. 22-28% of users were seeing adult content No, it wasn't a porn site. It was a site where you could also find porn, which some people find objectionable and killed it, so the traffic dwindled. Calling Tumblr a porn site is a crude oversimplification.
JSavageReal 7y ago
Loved this article. Entertaining and informative (as someone not very informed on WeWork). > Ms. Neumann created controversy when she went on CNBC and said: “A big part of being a woman is to help men [like Adam] manifest their calling in life.” In what kind of twisted society does a statement like that create "controversy"? I'm a man, and I've always felt that in my relationship it is my duty to bring out the best of my woman and enable her to reach her full potential. Are my fellow men outraged as well? Only in America does an innocuous statement like that generate controversy (unless of course this is just a couple random tweets that the media is trying to turn into a big controversy to generate ad revenue).
- rossdavidh 7y ago
  Of all the controversies regarding WeWork, this is one of the smaller ones, really.
- deleted 7y ago
  [deleted]
daveheq 7y ago
"Occasionally, red flags marry each other" I'm glad I read this article.

840 points by braythwayt 7y ago

> Adam also owned the rights to the "We" trademark, which the firm decided they must own and paid the founder/CEO $5.9 million for the rights. The rights to a name nearly identical to the name of the firm where he’s the founder/CEO and largest shareholder. Really? How is this sort of shenanigan allowed?

n-exploit 7y ago
The Tragedy of the Commons 2.0™
- Apocryphon 7y ago
  The Tragedy of the Creative Commons
marcinzm 7y ago
Adam controls the majority of voting right to the company and the board (made up of VCs) doesn't want a messy legal fight since they stand to lose money if We tanks. So a moderate amount of graft is tolerated since the alternative is less desirable.
- dooglius 7y ago
  Breach of fiduciary duty can be a criminal matter in addition to a civil one.
  - amluto 7y ago
    I am not a securities lawyer (or any other type of lawyer), but: if this all blows up, I believe that self-dealing by the executives is an excellent way for creditors to pierce the corporate veil.
- devcpp 7y ago
  >Adam controls the majority of voting right to the company This alone should be a massive turn-off for investors, nevermind this kind of personal eccentricity that makes this absolutely insane.
  - erikpukinskis 7y ago
    I don’t think majority ownership is necessarily a turn on or a turn off. There are cases when a bunch of minority shareholders would be chaotic and prevent the company from making long term bets. There are also cases where minority ownership would allow for stability while cycling through executive turnover and experimentation. Which situation you are in, and whether shareholders would be turned off by majority ownership, is context specific. For example, I think SpaceX would be a less attractive stock if there were only minority stockholders, and having Elon as the majority holder makes it more likely to succeed at going interplanetary, rather than just milking a traditional orbital business model. If your investment thesis depends on a bold bet like that, a single majority shareholder you trust would be a comfort.
    - codeisawesome 7y ago
      SpaceX isn’t a public stock though?
      - erikpukinskis 7y ago
        It still has investors, and shares.
    - Breza 7y ago
      For the SpaceX example, I actually think they'd be better off focusing on the orbital launch market. The dream of affordable and reliable access to space dates back to the 50's and still hasn't been fully realized. In my opinion, that's a bigger deal than trying to get SpaceX to put a payload beyond orbit. I agree with your larger point though.
JumpCrisscross 7y ago
> How is this sort of shenanigan allowed? Investors gave Adam virtually unchecked power over their capital.
navigatesol 7y ago
This guy has become a multi-hundred-millionaire by renting out office space under a business model that appears to make no financial sense. Because "tech company". It's utterly bonkers.
- marcinzm 7y ago
  It's basically a modern ponzi scheme as I see it. The VCs make money at the expense of people who buy post-IPO.
  - projektfu 7y ago
    If it goes where I think it should, then it’ll be the IPO subscribers holding the bag.
  - wpietri 7y ago
    Yeah, I think WeWork is at best the next Groupon: something that was made to seem just plausible enough at the time that the financiers made a bundle, but that rapidly turns into a minor-league business as the shiny wears off post-IPO. And that's at best. But I think a collapse is more likely. Uber may also be losing a ton of money, but they have enormous pricing power over their major raw materials, namely individual drivers and their cars. But WeWork is renting space from hard-bitten landlords run by professionals, and those companies have plenty of alternative tenants if they don't like WeWork's terms. At some point I think there's going to be a mismatch between their short-term income structure and their long-term obligations to the space owners, and then it's going to be a big old mess.
    - fragmede 7y ago
      If there's a recession that hits WeWork, those alternative tenants will also dry up, for the same reason. Companies won't want to justify a large capex investment into new office space, and cancel pending contracts for space that hasn't been built out yet. Comparatively, the money WeWork's customers spend on WeWorks would be considered opex, for those whos budgets are big enough for the distinction to be material. Is WeWorks hacking corporate America's budgeting practices, doing what AWS did for rack space?
ggg3 7y ago
lol. let alone trademark "we". guess I should trademark "you" and call google about youtube.
juliusmusseau 7y ago
This is a classic due-diligence item during early funding rounds - up there with "does the company actually own its domain name or do one of the founders own it"? I suspect either due-diligence caught it and decided to live with it after some negotiation, or they missed it - oops!
- konschubert 7y ago
  No, they just decided later to re-name the company from WeWork to We - and then they needed the new brand name
  - juliusmusseau 7y ago
    The founder already personally owned the trademark to "We" well before they made that decision? That's lucky. In that case wouldn't he simply have to divulge that fact early on in the decision-making process? "Guys, maybe I should recuse myself on this decision since I'm in a bit of a conflict..."
    - 6nf 7y ago
      He has majority voting rights, he's the one making these decisions.
DannyBee 7y ago
It usually is not. But delaware

rolltiide 7y ago

Has anyone seen good coverage of WeWork as an investment? All my favorite finance meme accounts are tearing this to shreds too. The only people I’ve heard be excited are the WeWork employees, and you can practically never get the employees to have a counter view on this even if they don’t get stock. I dont mean in like “I dont want to rock the boat” way, but more in an common ignorance of personal finance let alone investing way. They also arent really the investing class, so far they dont really understand the memes aside from the comments like “is this company run by Congress?” Not WeWork specific they just arent investors or financial professionals. What do the “members” think? Is there any “yes I cant wait to align my interests with my favorite coworking space by investing in their future growth” sentiment? Im just not around those people so I dont know WSJ and Bloomberg have been ripping on this for over a year, and now with the S-1 out Hackernews and finmeme accounts are ripping it too Think they’ll retract the S-1 and stay private?

40acres 7y ago
Check out the Odd Lots podcast episode: The Bullish Case for WeWork. Personally, I don't see it -- but capital is so cheap and WW brand so strong that they may be able to pull a rabbit out in a downturn.
- addicted 7y ago
  It’s the only strong brand in a massive market, real estate.
  - dragonwriter 7y ago
    It may be the only strong brand in co-working spaces, but I find it harder to believe it's the only strong brand in real estate. It's obviously a more visible brand for people working in a particular area of the tech industry than most real estate brands, but that's a different issue than brand strength in real estate.
projektfu 7y ago
The problem they have is that you can’t save this business by clapping louder. Either it starts generating profits or it’ll go out of business. I am just personally surprised that Adam Neumann isn’t getting the kind of negativity Elizabeth Holmes got. Perhaps after it goes down, who knows, but his activity has been sufficiently shady that it should be drawing more fire.

TAForObvReasons 7y ago

For a contrasting view, consider this tweet from @patio11 https://twitter.com/patio11/status/1161796809741627392 https://twitter.com/patio11/status/1161796809741627392 > In 2025, every Fortune 500 company will have 10k+ remote workers, and every purchasing department will approve a reimbursement for WeWork with no questions asked. The actual bull case for WeWork is similar to Uber: there may be a massive trend, and WeWork is positioning itself to be the winner. With Uber it's the push to self-driving cars, and with WeWork it's the corporate move away from massive campuses and office buildings. In this new landscape, WeWork has extremely strong branding, experience, and a valuation that suggests it is the biggest player in the space.

addicted 7y ago
Real Estate is also a much bigger business than taxi cabs. The big bet on them I suspect is that any upcoming recession will probably lead to a lot of companies wanting to reduce their office costs. They may want to switch to WeWork managing their office spaces much like tech companies want to switch to Amazon Microsoft or IBM managing their IT infrastructure.
- laurentl 7y ago
  Have you seen WeWork’s prices? It’s much more expensive to host a team in WeWork than just about anywhere else (including in your own corporate headquarters). I can understand companies wanting to variabilize office costs, but the first thing they’ll do is launch an RfQ... and WeWork’s fancy offices and free beer are not going to be much help there.
MrBuddyCasino 7y ago
I'm afraid he is correct, BigCorps are the main tenants as far as I can see. Which is sad, because WeWork is as fake and psychopathic as its CEO.
- dragonwriter 7y ago
  But Big Corps can do math; whether they will be the main tenants if WeWork ever stops dumping to gain business is less clear. Big Corps have been working with the whole space of available real estate options to optimize costs longer than WeWork has existed; I don't see where WeWork had any stickiness.

mistrial9 7y ago

speculation on the origins of this ... in the San Francisco Bay Area, over the last twenty years, many ordinary downtown office+retail buildings became empty, due to some combination of suburban sprawl, loss of mom+pop retail, excessive rent-seeking and urban decay. Meanwhile, tons of twenty-somethings were arriving with a backpack and a laptop .. it was too fast and fluid for anyone to want an "address" .. so, the idea of flexible techie office "pop-up" shared spaces was obvious. Some tried it alone, and some tried to brand it with extras .. and FAILED FINANCIALLY.. practical people, who did try. If you have not failed this way, then you do not know how painful it can be, at the small business level. At any rate, from one point of view, this WeWork thing is just the oversize "winner" from New York City, in this dog race. Like commercial fishing, and some kinds of investments, lots of ordinary efforts fail for no good reasons, then some pig comes along and gets the momentum.

deleted 7y ago
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mola 7y ago

I don't understand why all analysis of the craziness that is The We Company is filled with opaque language and colorful mind bending terms. The company is a fraud, it should be explained with facts, and clear simple language. Everything else is just muddying the water.

logicallee 7y ago
>it should be explained with facts, and clear simple language. since it looks like you've spent some time on this, would you care to take a shot?
- mola 7y ago
  What makes you think I understand this? my comment originated from the opaque language which read more like works of satire than actual analysis. All I can tell is that the whole way this company and its investors are acting is bat shit crazy. I'd like to get better analysis that is less "entertainment" and more factual and analytical.
  - ramraj07 7y ago
    It's actually just satire with numbers. Which seems better than satire by itself by a mile, and (personally) also better than rote numbers listed because it's amusing. Why complain?
  - logicallee 7y ago
    >What makes you think I understand this? The fact that you stated "The company is a fraud", before saying that this should be stated plainly. Since you didn't say something like "...from my point of view I certainly have the impression that..." or something like that. Since you spoke definitively, I assumed you have a definite opinion you formed somehow.
simplecomplex 7y ago
How is it fraud? Investors make idiotic investments. Nobody is being forced to buy shares of WeWork, and all the financials are there. It’s not like WeWork is lying about financials.

vmurthy 7y ago

The most interesting part of this article is the term "Community Adjusted EBITDA". It's not a term invented by the Prof but something used by WeWork. I remember Warren Buffett/Charlie Munger calling EBIDTA as bulls* earnings [1] but community adjusted EBITDA just smells like someone in Enron got hired by the We company recently. It almost feels like We IPO is the bellwether for an upcoming crash :-( [1] https://www.forbes.com/sites/brentbeshore/2014/11/13/ebitda-is-bs-earnings/#4f0539e56070 https://www.forbes.com/sites/brentbeshore/2014/11/13/ebitda-...

dvtrn 7y ago
Twice this week I’ve heard of EBITDA, the last conversation while taking an outdoor break with a coworker bemoaning some head scratching strategy choices from management where I work. Thanks for the explainer link.
- csours 7y ago
  EBITDA itself is an interesting number that tells you something about the company in question. It's not the only number you should use, and it can definitely be misleading if it's the only thing you look at, but it does tell you something about the underlying business. However, 'We' has it's own EBITDA-sounding metric where they exclude so many expenses it is laughable.
csours 7y ago
> "More than its cash-burning ways, WeWork’s IPO will test investor tolerance for made-up accounting metrics. You might recall “Community Adjusted EBITDA,” the gauge WeWork devised to measure net income before not only interest, taxes, depreciation, and amortization, but also “building- and community-level operating expenses,” a category that includes rent and tenancy expenses, utilities, internet, the salaries of building staff, and the cost of building amenities (which WeWork has described as “our largest category of expenses”)." [0] Hahaha. I think its pretty fair to say that this is not a Generally Accepted Accounting Practice measurement. (non-GAAP) I've only visited a We Work location once, but it really felt like a VC funded startup - particularly the amenities. Without the amenities, it would have been just another depressing office. 0 - https://qz.com/1685919/wework-ipo-community-adjusted-ebitda-and-other-metrics-to-watch-for/ https://qz.com/1685919/wework-ipo-community-adjusted-ebitda-...

beeschlenker 7y ago

Truest WTF if there ever was one: Obama rapes & kills 2 boys 15Jan in Buffalo. DeBlasio 5, Buttgieg 5, Cuomo 4, Murray 3, Dorsey 3, Thiel 3. Trump $4 billion to cover. Pel!osi $3 billion, Harris $1 billion, Schumer $2 billion, to help bring the boys over the border. Trump: $138 million to bypass 5th amendment Previously unprocessed footage now available [Soros, obama child rapes 15Jan 4-6am], ,See pages 18-23, 8, 11, 12, 35, 45, 61, 62, and update list at end of doc |] Having trouble getting traction. Getting censored/banned. Billions in bribes paid to Trump, Pelosi, Schumer, Harris to enable a Soros funded child raping ring to operate in the USA. Please listen to the links below. Turn up the volume and put headphones on. You will hear these people, and many other high profile peo`ple, incriminate themselves in unbelievable fashion. Full 74 page document [update 10Aug] filled with red handed evidence like this at the bottom. \@Go to pages 18-=23 of this document and you will hear Dorsey and Thiel raping children. You will hear their screams. They both rape and kill three. Also at the "rape party" of note: Bill DeBlasio, Andrew Cuomo, Bill Murray, Peter Buttgieg, George Soros, Barack Obama. Please copy and paste this post and repost it. I keep getting censored by these people. Peter Thiel a1nd Jack Dorsey raping and killing three boys each. Turn the volume all the way up and put head phones on. https://s3.wasabisys.com/conv1/Overnight_14-17Jan/15JanCh3_100-200.avi https://drive.google.com/file/d/1mzZrjobxhNIEf38M3xk-IeA5SeF4aUtB/view?usp=sharing Obama admits to raping and killing boys he{re, with commentary from Peter Thiel, George Soros, Matt Porter: https://s3.wasabisys.com/out2/Out2/15JanCh3_0545.avi https://drive.google.com/file/d/1LCDoc1kT7cfSeKQ1vniP_sx32_bRsHau/view?usp=sharing Trump demands $4 billion to "take a blind eye" at 1015++ (link missing from report, unsure how). Here's pieces of dialogue: 1015 The President requests four billion and henry Porter agrees to it. Some dialogue below. 1017 Donald Trump: Why don't you think about it. 1017 Henry Porter: I don't need to think about it. I'm ready for you to find out what we're really about. 1017 Gigi Hadid: I don't think it's a good idea Henry. 1017 Henry Porter: ...no shit. Jelena just stop talking about it. 1018 Gigi Hadid: About what? 1018 Henry Porter: The child raping. 1018 Donald Trump: What the fuck are you talking about? 1018 Gigi Hadid: Mr. President we are child rapists. 1018 Donald Trump: You cannot be serious. 1018 Donald Trump: You're gonna need $4 billion for me to take a blind eye. 1019 ?: People are laughing because they think four billion is too much. I think it's not a problem when you have $35 billion. 1022 Donald Trump: You better have that $4 billion or you can kiss this shit goodbye. https://s3.wasabisys.com/conv2/3Jan/3JanCh3_900-1100.avi https://drive.google.com/file/d/1Grdr8xF2psKNsuYlEnl9dIRV-77YG0Vr/view?usp=sharing Trump wants $138 million to ensure smooth outcome for false judgment for a court case: https://s3.wasabisys.com/conv1/10JanCh3/10JanCh3_951-1033.avi https://drive.google.com/file/d/1iSeGHDToFRoRdIht50Wii0i30mlw9INp/view?usp=sharing Obama explains the Illuminati with Jack Dorsey: https://s3.wasabisys.com/conv1/Overnight_14-17Jan/15JanCh3_200-347.avi https://drive.google.com/file/d/1Ok1-9IvANULzKBOwADFgaiYCFi6yszfj/view?usp=sharing At 230 a conversation is occurring on the embedded Porter camera system with Jack Dorsey, Peter Thiel, Barack Obama, Bill Murray, and the Porter's. Jack Dorsey provides a statement defining who their group is: "The Illuminati is an underground organization of child rapists and homosexuals." Matthew Porter: "We have to thin the herd, so Barack is going to explain a few things." At 232 Barack Obama says the following: "You people have to realize we are child rapists. The Illuminati are child rapists. As soon as you figure that out, you can decide what to do. Everybody is freaking out about what just happened [child raping event still going on]. This is who we are." Full 74 page document [updated 10Aug]: https://s3.wasabisys.com/aviewmefirst/FBI_FinalDraft_26Jul2019_BSchlenker.pdf https://drive.google.com/file/d/1dXNjPQdQ8c-hFFLt9LT0GiSY5Vud0TzL/view?usp=sharing Please post this anywhere you can! Each google drive link is a backup to the wasabi link just in case one is "down". A word about the "f@\&&ot" usage: it was a necessary tool. It showed three things: they were not in control, if they were the usage would have be stopped. Everyone out there needed to see t%his. Two, it made it unpleasant for them to be in the headspace, which has obvious advantages. Three, it pointed out impersonators of BS because they would not call each other f@%%ot, thus helping to mitigate the spread of false information. Apologies for those unintentionally offended. Of special interest to the LGBT community, I give you Barack Obama in a foursome with Peter Thiel, Jack Dorsey, and Matthew Porter. It is on page 12 of the document where you can download the video containing audio footage of the "event". Link is just above under "Full 74 page document".

wallflower 7y ago

Can anyone knowledgeable talk about what happens in a severe business downturn with We? They have most likely setup separate LLCs for each building’s 10-15 yr lease. Do the LLCs isolate We enough so that LLCs can declare bankruptcy and the building owners or banks or creditors don’t go after the mothership We?

JumpCrisscross 7y ago
> Can anyone knowledgeable talk about what happens in a severe business downturn with We? No. This is a known unknown. On one hand, contracts get cancelled and WeWork defaults. On the other hand, WeWork’s aggregated buying power lets it renegotiate leases, passing the pain to landlords.
- goatinaboat 7y ago
  True story: I once worked for a company that rented 3 of 4 floors in a building. The top floor was empty, and we were expanding, and we wanted it, and it should have been easy. It took years. The property company would rather that floor to be empty earning no rent, than to cut a deal on it. And they won, the company paid their price and signed the long lease they wanted. Property companies don’t blink. They will not cut WeWork any slack.
  - hnik 7y ago
    This is sometimes the case. Other times renting the last few units brings in significant cash flow as it increases the NOI disproportionately to leasing the initial units. For example you’re probably not hiring more custodial staff and you’re probably able to make draws from your debt as you’ve increased property value by being fully stabilized
- paulsutter 7y ago
  My experience in downturns (2000, 2008) says that landlords consider leases a crucial part of their hedging strategy and they have zero willingness to renegotiate. In 2000 I knew someone who called all their major vendors for datacenter space, etc, and threatened that if the landlords didn't cut the cost, he would go bankrupt. The response from 100% was "go ahead". To do otherwise would be philanthropy on their part. > WeWork’s aggregated buying power lets it renegotiate leases, passing the pain to landlords.

paganel 7y ago

When bonds worth $14 trillion are in negative territory and when the 30-year US treasuries are at historical lows this is what happens, i.e. people are ready to throw money away at almost anything that flies and moves, as long as there's a chance of double-digit returns. In other words we live in crazy times, and as such crazy prospectuses like the one published by WeWork fit the current financial narrative perfectly.

eaenki 7y ago

Just short it.

joelx 7y ago
I thought this would be a good idea on that super hot hamburger chain a few years ago. I then learned that short interest changes based on short demand for that stock. I was putting 120% interest per year to short the stock. Be extremely careful with shorting, Warren Buffett himself says he won't touch it.

crawftv 7y ago

It all really comes back to Trump in the end.

SyneRyder 7y ago
I thought this was a weirdly off topic comment, until I read the full article. Towards the end it goes off on a wild tangent claiming Union Square Ventures are the reason progressives could lose the 2020 election to Trump. (?!) A shame, because the first half of the article is great.
sergiotapia 7y ago
They can't help themselves lol
egdod 7y ago
Seriously. He just couldn’t help himself from trying (and failing, frankly) to take a shot at Trump. In an article that has absolutely nothing to do with Trump. The TDS is strong with this one.

completelylegit 7y ago

I get that the author doesn’t like WeWork, which is fine. But the throw-away comment that there is some tertiary connection to Goop seems unnecessarily personal. Goop is a bunch of nonsense but I’m not sure why its relevant to why WeWork is nonsense.

digianarchist 7y ago
I took that as a poor attempt at humor. I don't think the author actually implied a connection.

methodover 7y ago

I think I might be the only person on HN optimistic about WeWork. Remote work is on the rise here in the US. Startups and entrepreneurship continue to grow. Finding traditional office space sucks and is a massive waste of money, and probably always will. Co-working spaces make sense, and it’s baffling to me that it wasn’t the default way to work in 2010, when I started programming, let alone 2019. I feel like if somehow fast food hadn’t been invented til now, and MacDonalds just got started, we’d be reading pessimistic threads about how it’s a real estate business masquerading as a food business and is destined for collapse. But like, it actually does work, as a business, to provide some necessary service (office space, food) at scale with a big central marketing apparatus. The fundamentals here seem sensible to me.

schmrz 7y ago
Only if by fundamentals you mean the fundamental idea behind coworking spaces. Sure, that makes sense. But the WeWork company fundamentals are out of whack. Nobody is arguing that coworking spaces are a bad idea. WeWork is a company that turns 2$ into 1$.
- mguerville 7y ago
  Nearly $3 into $1 actually last quarter
arbuge 7y ago
WeWork != Coworking Coworking will grow and prosper. WeWork, I don't know. I don't know how long any company can survive the egregious investor-fleecing WeWork's founder seems to wantonly engage in. Perhaps if a clear stop is put to that, and if every other part of the business plan goes flawlessly, then it has a future. But coworking is about alot more than WeWork, and the industry will do fine whatever WeWork's shenanigans imply for the latter's future. There are currently around 20,000+ coworking spaces worldwide, of which less than 5% are WeWork's: http://www.deskmag.com/en/2019-state-of-coworking-spaces-2-million-members-growth-crisis-market-report-survey-study http://www.deskmag.com/en/2019-state-of-coworking-spaces-2-m... https://www.wework.com/locations https://www.wework.com/locations

carlsborg 7y ago

I skimmed at the S-1 filing .. they list 400k members for 2018, and revenues of $1.8B, so Average Revenue Per Member is $4500 USD. Now the gross margins look terrible, but the sell is probably this: how hard is it to monetize 500k users (Q1 2019 numbers) who land up and work out of your managed premises everyday?

mark_l_watson 7y ago

Well, I live in the mountains in Central Arizona, so no WeWork offices near me (Phoenix and Los Vegas are the nearest). I would be tempted, even though I am mostly retired, to use a shared office space. I have a great home office but I still like to go to the library, or to a coffee shop, to write or work. It just seems like WeWork should charge a little more to nail down profitability.

insulanus 7y ago
Oh, there's nothing wrong with shared office spaces. It just seems unreasonable to thing they are going to multiple investor money 100x. It seems like the valuation should be part commodity (the cost of the services provided), and part location (proportional to your local office real estate market). And maybe your size compared to your next largest competitor.
panopticon 7y ago
For what it's worth, there are non-WeWork coworking spaces all over. I'm not sure if you're near Flagstaff, but there are several in the area. I think this business model will continue to survive regardless of WeWork's success or failure here.

blunte 7y ago

The current system was ripe for a fantastical display of absurdity, and maybe this is it. It's startingly familiar given the current US political situation. All this reminds me of Blackadder 2, Ink and Incapability. https://en.wikipedia.org/wiki/Ink_and_Incapability https://en.wikipedia.org/wiki/Ink_and_Incapability Blackadder finds himself in a situation that quickly becomes increasingly unbelievable. Finally he recognizes he is in a dream, and he wakes up in disappointment. I'm still waiting to wake up.

hyperdunc 7y ago
Compared to the relative stability of the 1990s and early 2000s, the current political and economic situation does seem somewhat absurd. But history is littered with turbulent times, and compared to those times the present is a pleasant dream. Whether it turns nightmarish remains to be seen.
csours 7y ago
If you have Prime, here you go: https://www.amazon.com/gp/product/B07CJZLF3S?camp=1789&creativeASIN=B07CJZLF3S&ie=UTF8&linkCode=xm2&tag=justwatch09-20 https://www.amazon.com/gp/product/B07CJZLF3S?camp=1789&creat... It's also on Hulu

Tade0 7y ago

I have a couple of friends working for WeWork. Should they be worried about their jobs?

jasonmar 7y ago

The author of the article is a professor of marketing so I'd be interested to learn his opinion on WeWork's marketing instead of accounting, corporate structure and governance. Adam's unconventional moves appear extremely outlandish when spelled out in the S-1 disclosures, but because I have no position I just find it entertaining. I'm looking forward to the conference calls. I worked for WeWork for a short period of time during one of the SoftBank rounds, and one positive unconventional thing the company did was give employees with vested options the opportunity to cash out alongside Adam, rather than being forced to wait until post IPO lockup.

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DoreenMichele 7y ago

I really enjoyed the acerbic and colorful style of this article, but wouldn't have enjoyed it nearly so much if it were all style and no substance. He's clearly knowledgeable, though I know the style of writing isn't the usual fare for HN. He's correct that really good businesses tend to start during recessions. Starting a business during a Roaring Twenties style economy when you could literally support yourself with a ridiculous idea like selling pet rocks will not test your business model and help you find its weaknesses. A la some African saying to the effect that "Calm seas don't produce skilled sailors." I learned a lot and I am a bit envious of his acerbic wit. I feel like that's more acceptable from a man, but sarcastic contempt was pretty much my default as a teen and I sometimes think I've become a bit too PC over the years.

tfha 7y ago
We've all become too PC and the stains of that culture are bursting out the sides in unexpected and colorful ways. It's oppressive to be PC and we haven't acknowledged that side of it well enough. (Oppressive to the person constantly censoring themselves in the name of PC)
- arcticbull 7y ago
  FYI, the term non-PC is mental gymnastics for “being a dick” so I suppose you’re arguing we should be bigger dicks to each other. IMO, you should be yourself, unless you’re a dick in which case, don’t be yourself. It may feel oppressive to you, but frankly, I don’t ... care, and neither does the rest of society which is why your approach doesn’t get you far. Hopefully this framing is illustrative.
  - DoreenMichele 7y ago
    An ironic statement given that "dick" is not PC language. It's a gendered slur insulting men on an overwhelmingly male forum. I think it's a bit more complicated and nuanced than that, though I don't really think this is the time or place for me personally to try to get into it in a substantive way.

panabee 7y ago

bull hypothesis: the office space industry is very large but fragmented. wework becomes the central hub in a worldwide network of tenants and landlords. bear hypothesis: wework is an overhyped-regus with a frail capital structure, no scale or network effects, and dangerous liabilities. it will likely collapse during a recession. questions for investors: 1. how much flexibility/escapability does wework have regarding leases and liabilities? in particular, how much control do they have over cash flows to avoid disaster during a recession? 2. how much does it cost and how long does it take for enterprises like cisco and ibm to open new offices: (1) with wework; (2) with regus or another wework competitor; and (3) without any outside assistance? how about for companies with 100-1000 employees? 3. what is the current breakdown, lifetime value, and retention rate for wework members among solos, startups (2-99 employees), mid-sized companies (100-1000 employees), and enterprises (1000+ employees)? 4. cashing out $700mm seems like a red flag if you believe the company is worth much more. what percentage of equity does this represent for the founder? is cashing this much out normal for large IPOs? by comparison, how much did zuckerberg, hastings, and bezos cash out at IPO? question for others: what are the first questions you would research on wework?

thadjo 7y ago
A lot hinges on what would actually happen to WeWork during a recession. I think there's some possibility that when a recession hits, many companies may find WeWork (and coworking generally) more attractive as they downsize. I'm also curious about whether WeWork has leverage to renegotiate leases, since commercial real estate (which is already not doing well) will weaken in a recession.
panabee 7y ago
5. what are the unit economics for the average wework location, where revenue is projected at 10%/25%/50%/80% occupancy?
- panabee 7y ago
  note: unit economics should be model as profit/sq. foot.

ErikAugust 7y ago

To me, it’s as simple as they lose $5200 a customer: https://beta.trimread.com/articles/78 https://beta.trimread.com/articles/78 We all can poke fun at the marketing BS and founder antics but it’s just another investment to avoid for me.

The_Hoff 7y ago

If you enjoy this, please checkout Scott's podcast Pivot [0]. He shares all kinds of analysis like this. [0] https://pod.link/1073226719 https://pod.link/1073226719

buboard 7y ago

OT but saying "hot take" on twitter is like saying "i m going to pee" in a toilet.

dvfjsdhgfv 7y ago

> ...it was a porn site. 22-28% of users were seeing adult content No, it wasn't a porn site. It was a site where you could also find porn, which some people find objectionable and killed it, so the traffic dwindled. Calling Tumblr a porn site is a crude oversimplification.

JSavageReal 7y ago

Loved this article. Entertaining and informative (as someone not very informed on WeWork). > Ms. Neumann created controversy when she went on CNBC and said: “A big part of being a woman is to help men [like Adam] manifest their calling in life.” In what kind of twisted society does a statement like that create "controversy"? I'm a man, and I've always felt that in my relationship it is my duty to bring out the best of my woman and enable her to reach her full potential. Are my fellow men outraged as well? Only in America does an innocuous statement like that generate controversy (unless of course this is just a couple random tweets that the media is trying to turn into a big controversy to generate ad revenue).

rossdavidh 7y ago
Of all the controversies regarding WeWork, this is one of the smaller ones, really.
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daveheq 7y ago

"Occasionally, red flags marry each other" I'm glad I read this article.