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Matt Levine as usual called how this would play out. He said we work would start dropping the weird voting/control privileges ("corporate governance concessions

Matt Levine as usual called how this would play out. He said we work would start dropping the weird voting/control privileges ("corporate governance concessions") that founders have enjoyed on recent "tech" IPOs. He also said investors wouldn't care much and this latest news confirms that. His conclusion: "But now WeWork seems to be facing the traditional tradeoff: Stay private, keep control, but lose access to billions of dollars of funding, or go public, raise unlimited money, and have to act normal. If it does either of those things, that will mark a sort of end of an era. At the height of the unicorn boom, big tech companies could stay private without giving up the benefits of being public, or they could go public without taking on the burdens of being public. Now they might have to make hard choices again."

duxup 7y ago
I wonder how much of this is about timing and perception of potential public investors? Early enough and maybe you don't get as much money, but the public money might be more willing to take a chance on who knows what might happen. Too late and enough people have pointed out that the emperor has no clothes and people start to belive / realize it.
rajacombinator 7y ago
Any studies out there of returns on companies that have made “governance concessions” as you describe them? I’d wager they outperform substantially. WeWork not being a good example, since it was obv a well crafted scam from the beginning.
- fragmede 7y ago
  Any company that offers preferred stock and non-voting stock is participating in some form of "governance concessions", a number of which are hugely successful (eg Google's stock-split in 2012). WeWork went a step or two further than most with their LLC and holding company shenanigans before this announcement.
acchow 7y ago
"that will mark a sort of end of an era. At the height of the unicorn boom, big tech companies could" Except WeWork isn't a tech company.
- pearjuice 7y ago
  They have successfully marketed themselves as one and apart from a relatively small group, the common denominator perceives them as such.
  - ianferrel 7y ago
    Their troubles with an IPO suggests that they have not successfully marketed themselves to the broader investor class.
  - acchow 7y ago
    According to wikipedia "WeWork investors as of 2014 included J.P. Morgan Chase & Co, T. Rowe Price Associates, Wellington Management, Goldman Sachs Group, the Harvard Corp., Benchmark, and Mortimer Zuckerman, former CEO of Boston Properties" They basically convinced a bunch of non-tech investors that they're a tech company.
    - ackbar03 7y ago
      I'm pretty sure the banks invested just to get a shot at collecting fees for ipo work
  - MR4D 7y ago
    Actually, they haven’t. They hold themselves out as Real Estate Agents & Managers. You can see their SIC & NAICS codes here: https://siccode.com/business/wework-46 https://siccode.com/business/wework-46
- alphast0rm 7y ago
  Ben Thompson wrote an interesting article "What Is a Tech Company?" on Stratechery [1] recently where he discusses the trademark characteristics of tech companies and makes a convincing argument as to why WeWork is not one: So what about companies like WeWork and Peloton that interact with the real world? Note the centrality of software in all of these characteristics: - Software creates ecosystems. - Software has zero marginal costs. - Software improves over time. - Software offers infinite leverage. - Software enables zero transaction costs. ... - WeWork claims it has a software-created ecosystem that connect companies and employees across locations, but it is difficult to find evidence that this is a driving factor for WeWork’s business. - WeWork pays a huge percentage of its revenue in rent. - WeWork’s offering certainly has the potential to improve over time. - WeWork is limited by the number of locations it builds out. - WeWork requires a consultation for even a one-person rental, and relies heavily on brokers for larger businesses. Frankly, it is hard to see how WeWork is a tech company in any way. [1] https://stratechery.com/2019/what-is-a-tech-company/ https://stratechery.com/2019/what-is-a-tech-company/
bonzini 7y ago
Link: https://www.bloomberg.com/opinion/articles/2019-09-11/we-can-be-weird-or-it-can-be-public https://www.bloomberg.com/opinion/articles/2019-09-11/we-can...

duxup 7y ago

I wonder how much of this is about timing and perception of potential public investors? Early enough and maybe you don't get as much money, but the public money might be more willing to take a chance on who knows what might happen. Too late and enough people have pointed out that the emperor has no clothes and people start to belive / realize it.

rajacombinator 7y ago

Any studies out there of returns on companies that have made “governance concessions” as you describe them? I’d wager they outperform substantially. WeWork not being a good example, since it was obv a well crafted scam from the beginning.

fragmede 7y ago
Any company that offers preferred stock and non-voting stock is participating in some form of "governance concessions", a number of which are hugely successful (eg Google's stock-split in 2012). WeWork went a step or two further than most with their LLC and holding company shenanigans before this announcement.

acchow 7y ago

"that will mark a sort of end of an era. At the height of the unicorn boom, big tech companies could" Except WeWork isn't a tech company.

pearjuice 7y ago
They have successfully marketed themselves as one and apart from a relatively small group, the common denominator perceives them as such.
- ianferrel 7y ago
  Their troubles with an IPO suggests that they have not successfully marketed themselves to the broader investor class.
- acchow 7y ago
  According to wikipedia "WeWork investors as of 2014 included J.P. Morgan Chase & Co, T. Rowe Price Associates, Wellington Management, Goldman Sachs Group, the Harvard Corp., Benchmark, and Mortimer Zuckerman, former CEO of Boston Properties" They basically convinced a bunch of non-tech investors that they're a tech company.
  - ackbar03 7y ago
    I'm pretty sure the banks invested just to get a shot at collecting fees for ipo work
- MR4D 7y ago
  Actually, they haven’t. They hold themselves out as Real Estate Agents & Managers. You can see their SIC & NAICS codes here: https://siccode.com/business/wework-46 https://siccode.com/business/wework-46
alphast0rm 7y ago
Ben Thompson wrote an interesting article "What Is a Tech Company?" on Stratechery [1] recently where he discusses the trademark characteristics of tech companies and makes a convincing argument as to why WeWork is not one: So what about companies like WeWork and Peloton that interact with the real world? Note the centrality of software in all of these characteristics: - Software creates ecosystems. - Software has zero marginal costs. - Software improves over time. - Software offers infinite leverage. - Software enables zero transaction costs. ... - WeWork claims it has a software-created ecosystem that connect companies and employees across locations, but it is difficult to find evidence that this is a driving factor for WeWork’s business. - WeWork pays a huge percentage of its revenue in rent. - WeWork’s offering certainly has the potential to improve over time. - WeWork is limited by the number of locations it builds out. - WeWork requires a consultation for even a one-person rental, and relies heavily on brokers for larger businesses. Frankly, it is hard to see how WeWork is a tech company in any way. [1] https://stratechery.com/2019/what-is-a-tech-company/ https://stratechery.com/2019/what-is-a-tech-company/

bonzini 7y ago

Link: https://www.bloomberg.com/opinion/articles/2019-09-11/we-can-be-weird-or-it-can-be-public https://www.bloomberg.com/opinion/articles/2019-09-11/we-can...