21 ms·
WeWork parent pulls IPO following pushback: sources
- urs2102 7y agoIt's been incredible watching each part of this unfold exactly as Matt Levine called it each week prior.
- urs2102 7y agoAdditionally, I think this is great to think about as far as the entire story of IPOing a big tech company in 2019. You start with the story the bankers sell you. They all want to tell you you're going to be bigger than you ever thought possible, because, well... those fees are awfully nice. "We're going to IPO you at 20% of $PREVIOUS_VALUATION" The counter-argument was, well, "We don't think you're worth that much, you're probably worth only $20B." The problem is here... well there's not really a financial position you can take here especially as the short price skyrockets. Maybe you get some smug satisfaction, but overall, everyone in the early stage of trying to win the IPO for their bank is going to tell you what you want to hear. Now... things suddenly change, you need to shop it around. Well, maybe you don't get the number you want. Maybe you do? You edge it a little down. Yet, all the benefits you have as a private company (insert your It's Always Sunny in Philadelphia Pepe Silvia meme of Mack trying to connect the dots) you can't really keep entirely as you try to collect that public check. Matt was spot on here, of course, they're going to try and take apart some of those political rights that usually people grumble about (see Snapchat IPO) and then somewhat get over as time goes on. Yet even that didn't do the trick! So you slash the economic upside, and once again that's not enough. Maybe you even set the price low enough that you can hype it and it will go up, but at some point, the market will give its verdict and in this case: WeWork didn't cut it. In many ways, it's an interesting litmus test of the health of the tech industry. Yes, there's been a bull market for this last decade, but bubble... maybe not. Maybe, this is great example of Wall Street being serious about how much large private companies are worth? Either way, what a crazy saga nonetheless. I wonder if they'll be able to (somewhat paraphrasing Matt) turn the dial from growth to revenue and approach the market later? Time will tell I guess. Maybe we'll get an Alex Gibney documentary out of it!
- rabeener 7y agoWe is not a tech company.
- urs2102 7y agoOkay, you got me: """tech company""". I think it's probably a financial engineering company over everything else, but I mean "tech company" insofar as this post is going to the top of HN in a way a post about Regus might not.
- caseyf7 7y agoand not even a good real estate company
- tinytim69 7y agoI agree but are you saying that if it was a tech company, it would be worth the 48 billion? Also, is it THAT much different from AirBnB that is considered a tech company? What 'tech' does AirBnB offer that qualify it is a tech company?
- x0x0 7y agoAirBnB is asset free. We is long $47B of leases.
- JMTQp8lwXL 7y agoTo my understanding, We needed to go public to continue financing operations. Who's going to want to lend to them now after all of this publicity?
- deleted 7y ago[deleted]
- human20190310 7y ago> you're probably worth only $20B This is something I don't get. Pretty much all of these businesses are aiming at dominance on some sector. They entered into the game with the understanding that it's all or nothing. If they don't achieve that dominance, or if the sector itself turns out to be less than worthwhile, isn't it more likely that these companies are worth essentially zero, rather than some percentage of their target value?
- 9nGQluzmnq3M 7y agoLink: https://www.bloomberg.com/opinion/articles/2019-09-09/we-might-not-be-working https://www.bloomberg.com/opinion/articles/2019-09-09/we-mig...
- techslave 7y agoproof we’re not in a bubble?
- Wowfunhappy 7y agoTo the extent that "I didn't literally jump off a bridge" is proof that I'm intelligent, sure.
- whateveracct 7y agoIt's a start!
- ganeshkrishnan 7y agoCalling dibs on the bankruptcy/restructuring.
- outside1234 7y agoAnd next, the bankruptcy episode...
- JMTQp8lwXL 7y agoWe should now question the valuation of the other companies that have recently gone public. I understand WeWork was unusually tumultuous, but many of these talking points equally apply to recent IPOs. A couple quarterly filings have already begun to bring some of these companies closer to reality.
- elpakal 7y agolike which ones?
- hendzen 7y agouber, lyft, to a lesser extent slack
- isoskeles 7y agoCan you all be more specific about which "talking points" are similar? These companies had to submit financial statements ahead of their IPOs and as far as I know, WE has been a complete trainwreck in comparison to the others. Talking about "talking points" doesn't seem to address any knowledge of what exists in financial statements, it sounds way more abstract like we're trying to say that Uber, Slack, etc. all talk big about themselves but are actually not that great. Like that matters? In comparison to a CEO who has used his position to allow for absurdly corrupt looking deals and nepotism, which was not the case for Uber, Slack, etc. Just saying, maybe you and the other person could be more specific about how WeWork is similar to Uber, Slack, etc. beyond "talking points" because financial statements are more substantial than how similar companies puff themselves up through PR and branding.
- skinnymuch 7y agoWhy Slack and none of the other recent tech IPOs? There have been. A lot in the past year.
- ginkgotree 7y agoWe Co isn't a tech company. Its a landlord subleasing commercial realestate as short term month to month leases with snazzy furniture. They happen to have a mobile app. Its functionality is so poor they removed the pay snack bar in my SF WeWork because no one could pay through the app. CloudFlare... Now there's a proper tech company.
- ben_jones 7y agoThe furniture isn’t snazzy it seems like cheap ikea stuff
- ada1981 7y agoWeWork has created an incredible sort of social filter though. At least in NYC, if someone is a member at WeWork its a strong signal you don’t want them at a party. Maybe it’s some sort of AI they’ve built in house?
- GhettoMaestro 7y agoLol how full circle -- WeWork-membership being a negative selector. I remember when folks were telling me not having a WeWork space was a sign you didn't want to network with other like-minded folks.
- swish_bob 7y agoWell, those aren't incompatible statements. It just pre-supposes that GP doesn't like the sort of people that WeWork attracts, but that they like each other. Personally I have no experience with WeWork, but I've never really found the urge to make much of an effort to know people from other companies in shared office environments. Sometimes it happens, sometimes it doesn't. But don't try to make me socialise with them, thanks ...
- ttul 7y agoYes! They even use lava lamps in their lobby to generate entropy.
- nugget 7y agoIs it true that WeWork is now the largest single lessee of commercial real estate in the US? Seems like a bad bankruptcy could have some broad ripple effects.
- codyb 7y agoHmm. Despite that there still a very small percent of all office space. I see 26 locations in NYC, I’m sure I’m missing a few so say 30. Even if all those offices were the whole building (I think many (most) are just a subset of the floors that’s not much for the entire city. Although it’d be interesting for all the people working in them, I wonder how that’d work out.
- asdff 7y agoIf wework folds, owners of the buildings might just market leases to the existing tenants
- alexis_fr 7y agoI should create a business to facilitate the transition from WeWork to leases, for the landlords. In 2 months I’ll be an intermediary worth... about 2bn. I’m joking, I’m sure the CEO already has a reversion clause in the lease contracts, that leases should fall in the hands of his 3rd company in case of WeWork bankruptcy.
- pvarangot 7y agoWell people are actually using the offices so prices will go down if they backrupt but they'll catch up. It would feel like an adjustment and not a bubble bursting.
- nugget 7y agoIt's anecdotal but I've been in half a dozen WeWork properties in the last 2 months and I've yet to see one more than 50% occupied. There were a couple buildings in Seattle that seemed almost empty.
- situational87 7y agoWhat a wild ride. Maybe there is hope for the bullshit industrial complex around tech to finally start unwinding a little bit.
- quaquaqua1 7y agoSemi related but Blue Apron will forever be my favorite IPO. 5 stock splits and 3 CEOs later, day one investors will receive roughly 2 pennies back for every dollar invested just 2 years ago. Only people who won were those who dumped free shares on the market (insiders), and maybe consumers for getting subsidized food of questionable quality. Once valued at 2 billion USD, a paltry 150 million will get the job done now.
- vuln 7y agoWhat a true unicorn.
- JMTQp8lwXL 7y agoI got a phone call from them recently. Not automated. Asking "how the experience has been". I wonder if they're increasingly panicking. I ordered less than a handful of boxes in the past few years with them.
- mikehollinger 7y agoAhem. https://www.mcsweeneys.net/articles/please-forgive-us-at-blue-apron-for-this-weeks-meals-weve-been-having-a-tough-time-lately https://www.mcsweeneys.net/articles/please-forgive-us-at-blu... That’s a parody from 2017. It’s probably more true now than ever. We actually cancelled our BlueApron last year in favor of another meal kit service - and might end up canceling them overall for grocery pickup from our local grocery chain.
- JMTQp8lwXL 7y agoWonderful link. To be objective, one of my most recent handful of boxes arrived recently because I forgot to cancel it. Every few weeks, I login to turn off the next months' worth of auto-scheduled deliveries. The ingredient quality is still there. A third of the box is broccoli and it's still $60, so those features haven't changed. I go to the grocery store and re-make a good number of the recipes. I'm appreciative of the expanded palate BA has given me as well.
- 7y ago
- hourislate 7y agoWepocalypse.....
- tempsy 7y agoAs someone living in SF, I don’t think anyone in SF or SV would ever consider WeWork to be a “Silicon Valley” company in the same way that Uber or Twitter or Slack is. The company has 0 tech brand among employees (how many ex-FB or ex-Google engineers work there?) and outside of Benchmark’s early round none of the VCs are SV-based. Point is the media is making this out to be an indictment on some SV tech bubble but people in SV are looking at this from the outside like everyone else.
- saagarjha 7y ago> how many ex-FB or ex-Google engineers work there? This sounds like an awful metric.
- tempsy 7y agoIt really isn’t. FB/Goog compensation is still the benchmark as far as industry comp goes, so a private co really needs to be convincingly successful to attract smart, high paid engineers at top tech companies. If they can’t then it’s a completely valid signal that something is up - either comp is well below market, growth story is fishy, management is weak, or something else.
- hendzen 7y agoRIP Softbank Vision Fund 2.0
- thrower123 7y agoFeels like the hinky stuff going on in the Gulf ought to be a bigger part of some of these stories than it is. The flood of oil money seeking something, anything, to be spent on seems to be drying up a bit.
- nabla9 7y agoDelaying IPO buys some time for Sofbank. IPO with low valuation forces huge write-down for SoftBank. Now they can still pretend. I suspect that SoftBank & Saudi money will be the biggest casualty of current tech boom. They just throw money around.
- pishpash 7y agoIn a world awash with negative interest rate investments, even loss-making enterprises are worthwhile. This may be the natural glide path at the end of growth: redistribution.
- benj111 7y agoThey can't really pretend. I doubt legally they can do it, and no ones going to be taken in by it, it just casts doubt on all the other investments by Softbank.
- miguelmota 7y agoWeWork is a real estate company and not a software company. They don't have any worthy propriety tech and their business model is collecting rent. How they were once valued at 47 billion just straight up doesn't make any sense.
- bwilliams18 7y agoAnd the tech they do have is crappy, error prone, and inconsistent. If they could figure out how to do printing without PCClient, now that would be a business worth 47B all on it's own...
- ohadpr 7y agoSo true!!!
- edoceo 7y agoRaspberry Pi + CUPS. Can I have some billions now?
- winrid 7y agoIf you're good enough at sales, probably.
- benj111 7y agoYou need to dress it up a bit, like this: Rpicup.com, the global leader in non augmented reality solutions, leveraging modern technologies to anticipate trends in the digital/reality interface. Rpicup brings printing, or as we like to say rpinting(tm) in to the 21st century. Rpicups: Print your way to world peace. Edit: I am of course available for consulting work, and to ensure my neutrality in such matters will only take my very modest fee as cash, no options.
- ulfw 7y agoHas Softbank rung you up yet?
- myth_buster 7y agoScott Galloway victory lap incoming 3... 2...
- yalogin 7y agoRecruiters from WeWork reach out to people with a pitch that they are unicorn tech company. They lose me with that line.
- lampdoorpost 7y agoNot sure if I'm just young, but my friend's over 200k total comp would have made me think twice about an offer. It's not the highest, but seems fairly competitive in sf
- lotsofpulp 7y agoHow much was the cash comp? I would value any equity at 0. Plus they would have to offer extra cash as a premium for volatility and a negative brand image.
- victor106 7y ago> The WeWork brand is strongly tied to Neumann, a freewheeling 40-year-old Israeli-born entrepreneur who has said that We Company’s mission is “to elevate the world’s consciousness”. "Elevate the world's consciousness" --> Dont mean to be negative but what the hell does that even mean? Imagine your landlord told you that. Been following this story closely and Adam Neumann is such a crook, from the outset he just wanted to take advantage of public shareholders. His intentions were to screw them. Don't forget that lot of the shareholders for big IPO's are pension and mutual funds and hard working middle class families indirectly or directly own a bulk of these. This is how they get screwed. I am so glad the market called his bluff.
- semi-extrinsic 7y agoNo-one knows what it means, but it's provocative. It gets the people going!
- Zeebrommer 7y agoNah, it's gross.
- selimthegrim 7y agoHe’s quoting Will Ferrell from a film.
- Zeebrommer 7y agoMe too (well, John Heder)
- tiborsaas 7y agoIt's placebo marketing, like homeopathic medicine, doesn't mean anything but sounds great.
- closeparen 7y agoLandlords having grand ideas about community, consciousness, relationships, etc. is actually pretty normal for any kind of formal, large scale roommate situation. Dorms, coops, co-living, intentional communities, communes, etc. Even for normal individual housing, developer marketing is selling you a lifestyle and a self-image much more than it’s selling you walls and countertops.
- ruchirule 7y agoDo I need citizenship in the USA if I want to trade on this stock?
- sobani 7y agoNo. I live in the Netherlands and most brokers here allow you to invest/trade in US companies. I'm sure this also goes for a lot of other countries.
- dagw 7y agoNo, but if you want to invest prior to the IPO you have to get what's called Accredited Investor Status by the SEC. Once the stock has gone IPO anybody can trade.
- richardknop 7y agoNope, anybody from developed world (UK, Europe, Japan etc) can buy or sell US stocks. You just need a proper broker, something like Interactive Brokers, IG etc
- loeg 7y agoThe Matt Levine saga on this for the past week or so has been fantastic. If you're vaguely interested in corporate / bank finance, I'd encourage subscribing to his newsletter. It's free.
- nabla9 7y ago> WeWork Co., is a clever financial engineering company that has managed to tell an appealing fast-growing-tech-company story to equity investors while also telling an appealing stable-real-estate-company story to lenders, but I must say that I am stumped by this: https://www.bloomberg.com/opinion/articles/2019-09-06/people-are-worried-about-we https://www.bloomberg.com/opinion/articles/2019-09-06/people...
- v77 7y agoI've moved almost all my news reading to the various Bloomberg newsletters (of which Levine's is the best). They are fantastic, and free. https://www.bloomberg.com/account/newsletters https://www.bloomberg.com/account/newsletters
- dochtman 7y agoLooks like the title changed? TFA now says: WeWork parent says IPO still on despite setbacks
- volkadav 7y agoAny wagers on the price of fancy, used office chairs in 6-12 months? :) #dotbombveteran
- tibbydudeza 7y agoDo they still make Aeron chairs ???.
- sofaofthedamned 7y agoI got 2 nice Aeron chairs for £100 from the Government agency in the UK I used to work for. They had tonnes of them.
- weworksmb 7y ago> This target is tied to a $6 billion credit line We Company secured from banks last month, that calls for an IPO to take place by the end of the year and raise at least $3 billion, one of the sources said. > Were the New York-based company to fail to meet this target by the end of the year, it would need to secure alternative funding. Does this mean, its now a ticking time bomb?
- mytailorisrich 7y agoIt definitely is. When you read this and that Softbank has committed to buy 1/3 of the shares sold at IPO it does sound like it's going to pop sooner than later (that may include the vision fund if WeWork crashes)
- DebtDeflation 7y agoI would not be surprised if Softbank's commitment ultimately changes to "we'll buy however many shares we need to buy to ensure the IPO raises at least $3B and the debt covenant is preserved".
- hef19898 7y agoSo basically it depends on the founder / CEO to raise money to keep the burn rate up to keep the evaluation up. Stops working when the narrative changes.
- thedudeabides5 7y agoDoes anyone know what happens to the liqPref (and hence the subordinated equity shares of early employees) if they IPO below their $12bn liquidation pref?
- code4tee 7y agoDepends entirely on contractual details likely not broadly known. Those details have not been broadly reported or discussed. In general in a generic sense it’s quite common for investors (those writing actual cheques into the business) to be made whole again and then some before options holders or others get to come to the table. First dibs on the rewards goes to those that took the most risk. Reports out now are saying the likely market cap of the company is less than the cash raised by the company. Speaking generally that’s typically a beyond ugly situation for non-investors hoping their stake/options is going to make them some $. Think about it... it wouldn’t be right for some employee equity/options holder to get money while investors lose money. Haven’t seen much written about the details specific to We/WeWork, but given all the crazy governance issues identified to date with its corporate structure it wouldn’t be surprising if such clauses are very complex.
- thedudeabides5 7y agoMakes sense that at this point the cap table would be a bit of a mess. Would be interesting to see something simple, like the total value of all the employee equity, according to different IPO prices/valuations, and then compare that to the changes in the CEO's wealth on the same axis.
- doppp 7y agoThe headline has been changed to "WeWork parent says IPO still on despite setbacks".
- paxys 7y agoIt's crazy how quickly we have come from newspapers having to print revisions and retractions to fix minor mistakes to an organization like Reuters changing an article to say the complete opposite thing in minutes.
- mathieuh 7y agoI started at Arm last week on an R&D project around eUICC HSMs I don’t know enough about how SoftBank manages it’s children to know if I should be worried...
- farseer 7y agoThis reminds me of the startups selling dog food that IPO'd during the first dot com bubble. At least collective sense seems to have prevailed this time around.
- buboard 7y agoWhat will i do with all that popcorn now?
- trippytyping 7y agoIf We does IPO, I'm going to buy some IWG shares. The only way We can justify their sky high valuation is buying out the bigger competitor who is way undervalued by the markets.
- gandutraveler 7y agoNot necessarily related, but curious to know what hn community thinks about Airbnb and how it will do in a IPO
- erikpukinskis 7y agoI’m not any kind of expert, but Airbnb has strong network effects, a clear business model, and is easily understood as a tech mediated disruption to hotels. So, sounds like an easy sell. But it depends on the price.
- DebtDeflation 7y agoIPO is back on. Not surprising when you look at their burn rate vs cash on hand. Or the fact that they entered into a $6B line of credit last month that is contingent on them raising at least $3B in an IPO by end of year. Beyond Adam and Softbank wanting to cash out eventually, the company needs this funding to continue to operate.
- marcinzm 7y agoHasn't Adam already cashed out $700 million during a previous round?
- navigatesol 7y agoI hope it's now painfully obvious why Silicon Valley is getting behind the Long-Term Stock Exchange: they need to be able to pass these duds onto the uneducated public.
- jhcl 7y agoWeWork is a huge success...for its founders. Neumann reportedly sold over 700 million worth of shares ahead of the IPO. For some reason every startup nowadays is the next Amazon or Facebook. Poised to become the market leader in their field of expertise. Most of the IPOs are losing big money yearly but the market is happy to support them with billions of dollars. Actions that would make Warren Buffet cringe but could make money if you're lucky. This invites startups to take advantage of the situation. To me this is one of the dark sides of our society because the ones at the bottom of the pyramid losing their money are you and me saving for our pensions.
- dagw 7y agoWeWork is a huge success Indeed. For all the platitudes otherwise, the vast majority of startup founders do this primarily because they want to become rich. Judging a startup by any other metric is at the end of the day at least somewhat disingenuous. If all you know about two startups is that in startup 1 the founder exited the company with $10 million in his bank account and in startup 2 the founder exited with $750 million in his bank account, which would judge the bigger success?
- john_moscow 7y agoWarren Buffet grew up during the great depression. The rest of the market will have to learn it the hard way.
- KoftaBob 7y agoIt's a shame WeWork is run by such scummy characters, the concept itself has the potential to make people's commutes much more flexible and shorter. When on-boarding a new employee, companies would be able to automatically provision them a desk/office at the closest WeWork to them. This allows companies to have access to a much bigger pool of talent, and allows employees to have access to a bigger pool of companies. On top of that, the flexibility means commutes are much shorter, as co-working spaces can be efficiently distributed across a city and its suburbs. Even when an employee moves to a new company, they could theoretically stay at the same WeWork site, rather than have to deal with a new commute.
- wayoutthere 7y agoWhy even provide office space to folks? Just let them work from home and you save a lot! I always felt this was the fatal flaw in WeWork’s model. Once telecommuter culture has been established, companies realize they can just make their employees pay for their office space and deduct it. For most things where you benefit from “going in to the office”, the benefit is reliant on having a set of people in the same place. If everyone is all over the country, what is the point of office space in the first place?
- ChrisArchitect 7y agosorry, all the talk about comedic Silicon Valley (whether WeWork is 'tech' or not or whatever) and then I see this: "My friend’s entire company is locked out of their WeWork office because an umbrella fell, jamming the door. No one can figure it out. It’s been like this for 2 days." --https://twitter.com/NeerajKA/status/1173997679363407872 https://twitter.com/NeerajKA/status/1173997679363407872 Too good.
- selimthegrim 7y agoFinancial Twitter on fleek (h/t Financial Times front page) https://www.twitter.com/nickatfp/status/1171613239580516352 https://www.twitter.com/nickatfp/status/1171613239580516352