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> I still contend that most of the value of Uber is tied up in their brand, and I think the same is true of We. I’m not sure either of their operations are all

> I still contend that most of the value of Uber is tied up in their brand, and I think the same is true of We. I’m not sure either of their operations are all that valuable. What good is a brand if it's losing money?

wayoutthere 7y ago
Because a brand is all about revenue. The entire purpose of VC financing is to build a brand with outsized mindshare before the market is mature enough to have established players and then fix the operations later.
- MegaButts 7y ago
  But aren't they still supposed to fix the operations before they IPO, or at least enough to convince investors it's a good buy? We're not talking about companies that hope to stay private for the foreseeable future - these are companies that are trying (and failing) to IPO or very recently had unsuccessful IPOs. A brand is only so useful if it's attached to a money fire.
  - wayoutthere 7y ago
    Absolutely agree, the whole WeWork IPO has been a dumpster fire. They should have had their house in order long before an S-1.
- munk-a 7y ago
  It is sort of amazing that this is still happening - when your brand is heavily reliant on network based social effects then taking a loss to build up that network is hard to swallow but potentially correct. But, if I were to build a steel mill and take this approach it'd be idiotic - some tech companies do benefit from network effects, but others do not. WeWork simply doesn't - if it'd been an office space renter with an emphasis on style and the social environment that had started in SF and spread organically it totally could have made it, but money was wrecklessly pumped into a business that shouldn't ever be in the red (outside of asset acquisition including software components, that's totally reasonable).
  - wayoutthere 7y ago
    I completely agree with you. But the problem with markets with strong network effects is that those network effects usually aren’t obvious until you’ve struck gold. The markets with obvious network effects tend to be too heavily competitive to actually ever get there.
    - Glibaudio 7y ago
      This is an interesting observation. Can you share a link/case study? Kind of makes sense, but curious of how you developed your certainty. thnx
Someone 7y ago
Eventually: nothing. That may take a while, though. As an example, check what the “Commodore” brand went through. https://en.wikipedia.org/wiki/Commodore_International#Demise https://en.wikipedia.org/wiki/Commodore_International#Demise: ”Commodore declared bankruptcy on April 29, 1994, and ceased to exist” https://en.wikipedia.org/wiki/Commodore_International#Post-Commodore_International_Ltd https://en.wikipedia.org/wiki/Commodore_International#Post-C.... : “In late 2004, Tulip sold the Commodore trademarks to Yeahronimo Media Ventures for €22 million” That’s 10 years after they went bankrupt, and the story didn’t even end there.
- kjs3 7y ago
  Yeah, but Commodore did ~US$1B in sales per year in the early 80s. So, sure, there's some residual value in a well known brand, €22 million is a tiny pittance compared to the pre-fall valuation of the brand. Will C= become another multi-billion dollar company under Yeahronimo? Maybe, but given other resurrected nostalgia brands (see: Bell+Howell shilling crap flashlights on late night TV) I wouldn't bet on it.

wayoutthere 7y ago

Because a brand is all about revenue. The entire purpose of VC financing is to build a brand with outsized mindshare before the market is mature enough to have established players and then fix the operations later.

MegaButts 7y ago
But aren't they still supposed to fix the operations before they IPO, or at least enough to convince investors it's a good buy? We're not talking about companies that hope to stay private for the foreseeable future - these are companies that are trying (and failing) to IPO or very recently had unsuccessful IPOs. A brand is only so useful if it's attached to a money fire.
- wayoutthere 7y ago
  Absolutely agree, the whole WeWork IPO has been a dumpster fire. They should have had their house in order long before an S-1.
munk-a 7y ago
It is sort of amazing that this is still happening - when your brand is heavily reliant on network based social effects then taking a loss to build up that network is hard to swallow but potentially correct. But, if I were to build a steel mill and take this approach it'd be idiotic - some tech companies do benefit from network effects, but others do not. WeWork simply doesn't - if it'd been an office space renter with an emphasis on style and the social environment that had started in SF and spread organically it totally could have made it, but money was wrecklessly pumped into a business that shouldn't ever be in the red (outside of asset acquisition including software components, that's totally reasonable).
- wayoutthere 7y ago
  I completely agree with you. But the problem with markets with strong network effects is that those network effects usually aren’t obvious until you’ve struck gold. The markets with obvious network effects tend to be too heavily competitive to actually ever get there.
  - Glibaudio 7y ago
    This is an interesting observation. Can you share a link/case study? Kind of makes sense, but curious of how you developed your certainty. thnx

Someone 7y ago

Eventually: nothing. That may take a while, though. As an example, check what the “Commodore” brand went through. https://en.wikipedia.org/wiki/Commodore_International#Demise https://en.wikipedia.org/wiki/Commodore_International#Demise: ”Commodore declared bankruptcy on April 29, 1994, and ceased to exist” https://en.wikipedia.org/wiki/Commodore_International#Post-Commodore_International_Ltd https://en.wikipedia.org/wiki/Commodore_International#Post-C.... : “In late 2004, Tulip sold the Commodore trademarks to Yeahronimo Media Ventures for €22 million” That’s 10 years after they went bankrupt, and the story didn’t even end there.

kjs3 7y ago
Yeah, but Commodore did ~US$1B in sales per year in the early 80s. So, sure, there's some residual value in a well known brand, €22 million is a tiny pittance compared to the pre-fall valuation of the brand. Will C= become another multi-billion dollar company under Yeahronimo? Maybe, but given other resurrected nostalgia brands (see: Bell+Howell shilling crap flashlights on late night TV) I wouldn't bet on it.