3 ms·

Well actually… didn’t they lease buildings with shell companies and almost no recourse by building owners? I think a bunch of commercial real estate holders are

Well actually… didn’t they lease buildings with shell companies and almost no recourse by building owners? I think a bunch of commercial real estate holders are gonna be holding a bag of pants.

60secs 3y ago
Seems he internalized the lessons from Ray Kroc, only he used real estate to extract wealth from investors/shareholders instead of franchisees. "owning the land on which the burger is cooked" https://techcrunch.com/2019/01/16/we-company-ceo-in-hot-water-over-being-both-a-tenant-and-a-landlord/ https://techcrunch.com/2019/01/16/we-company-ceo-in-hot-wate... Scene from "The Founder" "You have a miniscule revenue stream, no cash reserves, and an albatross of a contract.... What you ought to be doing is buying up plots of land, then turning around and leasing said plots to franchisees, who as a condition of their deal should be permitted to lease from you and you alone. This will provide you with two things: One, a steady, upfront revenue stream. Money flows in before the first stake is in the ground. Two, greater capital for expansion. Which in turn fuels further land acquisition, which in turn fuels further expansion. And so on and so on. Land... That’s where the money is. (BEAT) And control." https://www.youtube.com/watch?v=uxCL2RqCuiY https://www.youtube.com/watch?v=uxCL2RqCuiY
- illwrks 3y ago
  In the modern take, replace land with users/eyeballs.
  - rchaud 3y ago
    Not anymore. See Reddit. Eyeballs aren't worth anything without a solid advertiser inventory.
- userinanother 3y ago
  Seems like he did a bit of both.
croes 3y ago
It is merely a translation error on my part, I meant own or possess. Uber and Airbnb outsourced the risks of these assets. If some cars or flats are suddenly no longer in demand, there is no cost to them. If WeWork had functioned like an Airbnb for offices, underperforming locations would have been less of a problem.

Well actually… didn’t they lease buildings with shell companies and almost no recourse by building owners? I think a bunch of commercial real estate holders are gonna be holding a bag of pants.

60secs 3y ago

Seems he internalized the lessons from Ray Kroc, only he used real estate to extract wealth from investors/shareholders instead of franchisees. "owning the land on which the burger is cooked" https://techcrunch.com/2019/01/16/we-company-ceo-in-hot-water-over-being-both-a-tenant-and-a-landlord/ https://techcrunch.com/2019/01/16/we-company-ceo-in-hot-wate... Scene from "The Founder" "You have a miniscule revenue stream, no cash reserves, and an albatross of a contract.... What you ought to be doing is buying up plots of land, then turning around and leasing said plots to franchisees, who as a condition of their deal should be permitted to lease from you and you alone. This will provide you with two things: One, a steady, upfront revenue stream. Money flows in before the first stake is in the ground. Two, greater capital for expansion. Which in turn fuels further land acquisition, which in turn fuels further expansion. And so on and so on. Land... That’s where the money is. (BEAT) And control." https://www.youtube.com/watch?v=uxCL2RqCuiY https://www.youtube.com/watch?v=uxCL2RqCuiY

illwrks 3y ago
In the modern take, replace land with users/eyeballs.
- rchaud 3y ago
  Not anymore. See Reddit. Eyeballs aren't worth anything without a solid advertiser inventory.
userinanother 3y ago
Seems like he did a bit of both.

croes 3y ago

It is merely a translation error on my part, I meant own or possess. Uber and Airbnb outsourced the risks of these assets. If some cars or flats are suddenly no longer in demand, there is no cost to them. If WeWork had functioned like an Airbnb for offices, underperforming locations would have been less of a problem.