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This whole thing has been nuts. It's clear no one who invested late ever actually believed in the valuations -- matt levine says it better "We came to market a

This whole thing has been nuts. It's clear no one who invested late ever actually believed in the valuations -- matt levine says it better "We came to market and public investors informally expressed some skepticism and its private backers were immediately like “wait this company isn’t profitable, why did no one tell us, burn it all down.” I am not saying that the public markets are wrong, but I kind of wanted there to be a difference of opinion; I kind of wanted the people who bought WeWork at a $47 billion valuation to act like they meant it."

Hongwei 7y ago
Even simpler: it's fraud and they got caught. Hopefully it doesn't paint other great IPOs in a bad light.
- cj 7y ago
  > Hopefully it doesn't paint other great IPOs in a bad light. Are you thinking of any in particular? Attention toward IPOs (especially on HN) go almost exclusively to bad IPOs. Fair offerings seem to get ignored. Edit: Peloton is one that comes to mind. Nearly $1 billion in sales, up 40% YoY. Although even they are posting a net loss of a quarter billion.
  - meritt 7y ago
    Zoom [1], Cloudflare [2], and Datadog [3] had a fairly warm reception on HN and they're solid companies with high gross margins. [1] https://news.ycombinator.com/item?id=19465860 https://news.ycombinator.com/item?id=19465860 [2] https://news.ycombinator.com/item?id=20706702 https://news.ycombinator.com/item?id=20706702 [3] https://news.ycombinator.com/item?id=20781610 https://news.ycombinator.com/item?id=20781610
  - sk5t 7y ago
    > Peloton is one that comes to mind Is it not possible that both investors and the public will find the shine off the apple of pairing two independently somewhat unattractive things--a stationary bicycle and a hefty monthly fee--as used models start to hit the secondary market? Have you ever tried to sell a used stationary bicycle? It ain't easy! The evidence of the gulf between good intentions and regular use is right there.
    - ghaff 7y ago
      It's certainly not hard to imagine Peloton is something of a fad. There is no shortage of those in the fitness space--in addition to the, as you say, general omnipresence of New Year's resolutions vs. ongoing use.
      - bduerst 7y ago
        Or Pelotron could be the start of communal home fitness, taking the place of gym (e.g. Soul Cycle) subscription fees. Point is there is no way to know for certain.
      - deleted 7y ago
        [deleted]
    - rconti 7y ago
      We have a Peloton bike and treadmill both. I haven't watched too closely, but occasionally people ask about selling their bikes (or buying a used bike to save money), and the impression I get is that they hold their value relatively well. Then again, asking price != sale price. I'm trying to validate but all I'm finding on sfbay.craigslist is coupon codes and "Peloton style spinning bike" and so forth.
      - sk5t 7y ago
        What I've observed, very very anecdotally, is that Peloton buyers become emotionally invested, and it turns out that they don't use the thing much, but resist strongly the idea of selling it at a huge loss and admitting defeat. Because buyers tend to have quite a bit of disposable income, it takes a long time to drift down to a market-clearing price.
        15155 7y ago
        eBay has something to say about this: new Peloton bikes run $2245 on their site, they're clearing for about $1700-$1800 on eBay right now. This is a significant value drop, but not huge given the logistical difficulties of this specific resale market (shipping these things is hard.)
- perseusprime11 7y ago
  It is less fraud and more like gambling. They want the next Google or Facebook desperately to make big money.
- harryh 7y ago
  In order for something to be fraud there has to be deception. This was never the case with WeWork.
  - deleted 7y ago
    [deleted]
  - Hongwei 7y ago
    I think the shenanigans they were pulling (crazy governance, conflicts of interest enriching the founder and wife, bad acquisitions) were obvious to the HN and analyst community, but possibly they hoped it would be over the heads of retail investors. Now obviously, in this case, it was too blatant and stunk bad enough that even retail investors shied away.
    - harryh 7y ago
      The vast majority of shares purchased at IPOs are by institutional investors writing very large checks, not retail investors. Retail investors shying away had nothing to do with the IPO getting pulled. And even if this wasn't the case it's still not fraud: if retail investors have all the data (which they did) but still want to buy something, it's not deception.
    - xkcd-sucks 7y ago
      Most of the ethical red flags seem to be identical to municipal government corruption, e.g. enriching family members and giving contracts to companies one owns. It's been going on for hundreds of years, you'd think retail investors would be wise at this point
    - fullshark 7y ago
      Well speaking for myself it was obvious to me, but it was NOT obvious it wouldn't work. A lot of companies had successful IPOs with those issues.
  - e12e 7y ago
    Isn't the most basic fraud to advertise fraud? My Google fu fails me, but in general I seem to recall the absolute most common con is to "recruit" people for a made up con (essentially: if you give me 1k we can defraud this mark for 100k and share the profit (the con obviously being that your partner simply pockets the 1k))?
- maehwasu 7y ago
  How is it fraud? They disclosed everything, people said “this is crap,” and they all had to take a huge bath. Yes, Softbank and others will lose a lot of money, and Neumann made money off them, but they’re all grownups who knew what they were getting into.
deleted 7y ago
[deleted]

Hongwei 7y ago

Even simpler: it's fraud and they got caught. Hopefully it doesn't paint other great IPOs in a bad light.

cj 7y ago
> Hopefully it doesn't paint other great IPOs in a bad light. Are you thinking of any in particular? Attention toward IPOs (especially on HN) go almost exclusively to bad IPOs. Fair offerings seem to get ignored. Edit: Peloton is one that comes to mind. Nearly $1 billion in sales, up 40% YoY. Although even they are posting a net loss of a quarter billion.
- meritt 7y ago
  Zoom [1], Cloudflare [2], and Datadog [3] had a fairly warm reception on HN and they're solid companies with high gross margins. [1] https://news.ycombinator.com/item?id=19465860 https://news.ycombinator.com/item?id=19465860 [2] https://news.ycombinator.com/item?id=20706702 https://news.ycombinator.com/item?id=20706702 [3] https://news.ycombinator.com/item?id=20781610 https://news.ycombinator.com/item?id=20781610
- sk5t 7y ago
  > Peloton is one that comes to mind Is it not possible that both investors and the public will find the shine off the apple of pairing two independently somewhat unattractive things--a stationary bicycle and a hefty monthly fee--as used models start to hit the secondary market? Have you ever tried to sell a used stationary bicycle? It ain't easy! The evidence of the gulf between good intentions and regular use is right there.
  - ghaff 7y ago
    It's certainly not hard to imagine Peloton is something of a fad. There is no shortage of those in the fitness space--in addition to the, as you say, general omnipresence of New Year's resolutions vs. ongoing use.
    - bduerst 7y ago
      Or Pelotron could be the start of communal home fitness, taking the place of gym (e.g. Soul Cycle) subscription fees. Point is there is no way to know for certain.
    - deleted 7y ago
      [deleted]
  - rconti 7y ago
    We have a Peloton bike and treadmill both. I haven't watched too closely, but occasionally people ask about selling their bikes (or buying a used bike to save money), and the impression I get is that they hold their value relatively well. Then again, asking price != sale price. I'm trying to validate but all I'm finding on sfbay.craigslist is coupon codes and "Peloton style spinning bike" and so forth.
    - sk5t 7y ago
      What I've observed, very very anecdotally, is that Peloton buyers become emotionally invested, and it turns out that they don't use the thing much, but resist strongly the idea of selling it at a huge loss and admitting defeat. Because buyers tend to have quite a bit of disposable income, it takes a long time to drift down to a market-clearing price.
      - 15155 7y ago
        eBay has something to say about this: new Peloton bikes run $2245 on their site, they're clearing for about $1700-$1800 on eBay right now. This is a significant value drop, but not huge given the logistical difficulties of this specific resale market (shipping these things is hard.)
perseusprime11 7y ago
It is less fraud and more like gambling. They want the next Google or Facebook desperately to make big money.
harryh 7y ago
In order for something to be fraud there has to be deception. This was never the case with WeWork.
- deleted 7y ago
  [deleted]
- Hongwei 7y ago
  I think the shenanigans they were pulling (crazy governance, conflicts of interest enriching the founder and wife, bad acquisitions) were obvious to the HN and analyst community, but possibly they hoped it would be over the heads of retail investors. Now obviously, in this case, it was too blatant and stunk bad enough that even retail investors shied away.
  - harryh 7y ago
    The vast majority of shares purchased at IPOs are by institutional investors writing very large checks, not retail investors. Retail investors shying away had nothing to do with the IPO getting pulled. And even if this wasn't the case it's still not fraud: if retail investors have all the data (which they did) but still want to buy something, it's not deception.
  - xkcd-sucks 7y ago
    Most of the ethical red flags seem to be identical to municipal government corruption, e.g. enriching family members and giving contracts to companies one owns. It's been going on for hundreds of years, you'd think retail investors would be wise at this point
  - fullshark 7y ago
    Well speaking for myself it was obvious to me, but it was NOT obvious it wouldn't work. A lot of companies had successful IPOs with those issues.
- e12e 7y ago
  Isn't the most basic fraud to advertise fraud? My Google fu fails me, but in general I seem to recall the absolute most common con is to "recruit" people for a made up con (essentially: if you give me 1k we can defraud this mark for 100k and share the profit (the con obviously being that your partner simply pockets the 1k))?
maehwasu 7y ago
How is it fraud? They disclosed everything, people said “this is crap,” and they all had to take a huge bath. Yes, Softbank and others will lose a lot of money, and Neumann made money off them, but they’re all grownups who knew what they were getting into.

deleted 7y ago

[deleted]