3 ms·
The mass media pile-on to the WeWork story has been ridiculous and overblown. I keep hearing references to Theranos and Enron as if the two companies are even
by pembrook 7y ago
The mass media pile-on to the WeWork story has been ridiculous and overblown.
I keep hearing references to Theranos and Enron as if the two companies are even comparable (they are not).
Theranos was an outright fraud. WeWork has over 500,000 paying customers in a fully viable real estate business as proven by Regus.
The supposed loss of “massive value on the order of Enron” was fictional as WeWork is a private company. This was the risk taking of a few institutional investors who wanted that kind of risk! Venture funds lose money on a majority of their picks. So obviously Softbank’s largest-in-history 100B venture fund is going to have largest-in-history venture losses.
It’s actually a good business at its lower valuation now! Ask Regus how valuable 500,000 customers with that kind of growth rate would be to them.
- notahacker 7y ago> Ask Regus how valuable 500,000 customers with that kind of growth rate would be to them. I guess their 3bn market cap is a pretty good indication of what that kind of customer base is worth to them, given that they have acquired it without incurring massive losses per desk to do so. That's still a good deal north of WeWork's down round...
- pembrook 7y agoRegus is valued at 3b because they’re only growing at 5-6% per year. WeWork was growing at 10x that, however who knows now that this PR disaster of the century has happened. With the ouster of Neumann now and a sensible CEO I wish they had gone public so I could invest. It’s a perfect contrarian scenario. I doubt you’ll see this much negative sentiment about a growth-stage company again for a long time.
- notahacker 7y agoI feel the reason Regus is only growing at 5% per year being because of their insistence on charging occupants more than they rent the space for probably matters here...
- pembrook 7y agoOr...maybe it could be because nobody knew Regus even existed prior to all these articles about WeWork coming out and mentioning them. And most people still don’t know they exist!
- sokoloff 7y agoRegus owns Spaces, which I suspect a lot of people in the market for WeWork type space would have heard of (or would turn up in the first page of their search results).
- nknealk 7y agoI think a better comp might be to Movie Pass because both business were growing like mad but with negative gross margins. Both got huge and then ran up to bankruptcy because they no longer had cash to burn to sustain growth at negative margins.