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> Doubt Softbank will ever recover what they invested in there though That’s virtually guaranteed. They’ve put over $17 billion into WeWork, and the entire com

by yashap 3y ago

> Doubt Softbank will ever recover what they invested in there though That’s virtually guaranteed. They’ve put over $17 billion into WeWork, and the entire company (which they only own a portion of) is currently valued at $121 million. I’m not sure how much it’s value would have to rise for them to break even, but … it would have to be a lot. 300x? Something like that.

potatolicious 3y ago
This is part of why I wonder if WeWork will actually be rescued into some smaller but sustainable business. Softbank has already lost >99% of their investment - and VCs are infamous for being willing to sacrifice a sustainable business model for a shot at nearly impossible odds. What incentive does Softbank have to actually turning WeWork into a far less profitable going concern, vs. taking yet another wild swing at a thing?
- thiago_fm 3y ago
  It can, but it needs to be able to renegotiate their leases and break out of the bad leases. The problem with WeWork is that Adam Neumann closed really bad leases (which are typically like decade long) which makes certain locations not profitable at all, no matter how WeWork provides a good service. Once you remove the rotten stuff, they've got actually pretty good business, 75%+ occupancy rate and people who use WeWork actually like it. It's also a memorable brand and that business model they have is actually good. But you need to "reshape" completely the company, and only through bankruptcy laws you could achieve it.
  - flutas 3y ago
    I do wonder (and truly mean wonder, because I have no clue), what percentage of the 75%+ occupancy is attributed to the bad leases. Are their most used buildings "bad leases" and their good leases are sitting empty? i.e. are the most sought after / used locations are also the most costly to WeWork.
    - yowzadave 3y ago
      I'm sitting in a WeWork in Manhattan right now, which I would guess is one of the "bad" (meaning, WeWork overpaid) leases. It has fairly low occupancy--definitely less than 50%.
  - AlexandrB 3y ago
    > It's also a memorable brand In the same sense as Juicero.
- libraryatnight 3y ago
  Feels like part of the culture problem in business of building things just to exit rich, lots of things to me appear that they could have been nice sustainable businesses (which in my mind net community and cultural health benefits we don't see with acquired or companies that go public and turn to being run like banks). I wish more of the entrepreneurs here valued building something to last not to sell - but it's sort of baked into the silicon valley DNA it seems. Move fast and get acquired/IPO before the loans run out.
  - potatolicious 3y ago
    I share your frustration and agree. I think the last decade+ has been a lost decade for our industry - where we went from producing products people want that are highly profitable, to producing products of either dubious value or money-losing, or both. We've gone from an industry of delivering real, tangible advancements (and the profits it entails) to an industry that largely delivers hot air, and whose primary money-making mechanisms is the pump-and-dump, and absconding with the winnings before the smoke clears. Uber, WeWork, the "metaverse", pretty much the whole of crypto... the list goes on. It's endlessly frustrating, especially because it demonstrates such a cynical view of technology. There's value to be produced! Real products that improve your lives, and make money doing it! We haven't even begun to run up against the limits of what technology can do for people! It's doubly frustrating when certain high-profile people in our industry blame society's "techno-pessimism" for their own failures. They're the ones who funded a decade-long orgy of wasted money shoveled endlessly at an infinite sequence of companies that produced nothing of value. They're the ones who funded pump and dump after pump and dump - and now they're crying foul and claiming that the rest of us are the cynical ones.
deleted 3y ago
[deleted]
solardev 3y ago
Maybe after covid-24, 26, and 28?
onlyrealcuzzo 3y ago
And it has $2.9B in long-term debt (not counting $13B in lease obligations). They're in the hole $20B (plus lease obligations), and best case scenario is that they make a couple hundred million per year. That wouldn't even pay for interest on the debt in the ZIRP world.

by yashap 3y ago

potatolicious 3y ago

This is part of why I wonder if WeWork will actually be rescued into some smaller but sustainable business. Softbank has already lost >99% of their investment - and VCs are infamous for being willing to sacrifice a sustainable business model for a shot at nearly impossible odds. What incentive does Softbank have to actually turning WeWork into a far less profitable going concern, vs. taking yet another wild swing at a thing?

thiago_fm 3y ago
It can, but it needs to be able to renegotiate their leases and break out of the bad leases. The problem with WeWork is that Adam Neumann closed really bad leases (which are typically like decade long) which makes certain locations not profitable at all, no matter how WeWork provides a good service. Once you remove the rotten stuff, they've got actually pretty good business, 75%+ occupancy rate and people who use WeWork actually like it. It's also a memorable brand and that business model they have is actually good. But you need to "reshape" completely the company, and only through bankruptcy laws you could achieve it.
- flutas 3y ago
  I do wonder (and truly mean wonder, because I have no clue), what percentage of the 75%+ occupancy is attributed to the bad leases. Are their most used buildings "bad leases" and their good leases are sitting empty? i.e. are the most sought after / used locations are also the most costly to WeWork.
  - yowzadave 3y ago
    I'm sitting in a WeWork in Manhattan right now, which I would guess is one of the "bad" (meaning, WeWork overpaid) leases. It has fairly low occupancy--definitely less than 50%.
- AlexandrB 3y ago
  > It's also a memorable brand In the same sense as Juicero.
libraryatnight 3y ago
Feels like part of the culture problem in business of building things just to exit rich, lots of things to me appear that they could have been nice sustainable businesses (which in my mind net community and cultural health benefits we don't see with acquired or companies that go public and turn to being run like banks). I wish more of the entrepreneurs here valued building something to last not to sell - but it's sort of baked into the silicon valley DNA it seems. Move fast and get acquired/IPO before the loans run out.
- potatolicious 3y ago
  I share your frustration and agree. I think the last decade+ has been a lost decade for our industry - where we went from producing products people want that are highly profitable, to producing products of either dubious value or money-losing, or both. We've gone from an industry of delivering real, tangible advancements (and the profits it entails) to an industry that largely delivers hot air, and whose primary money-making mechanisms is the pump-and-dump, and absconding with the winnings before the smoke clears. Uber, WeWork, the "metaverse", pretty much the whole of crypto... the list goes on. It's endlessly frustrating, especially because it demonstrates such a cynical view of technology. There's value to be produced! Real products that improve your lives, and make money doing it! We haven't even begun to run up against the limits of what technology can do for people! It's doubly frustrating when certain high-profile people in our industry blame society's "techno-pessimism" for their own failures. They're the ones who funded a decade-long orgy of wasted money shoveled endlessly at an infinite sequence of companies that produced nothing of value. They're the ones who funded pump and dump after pump and dump - and now they're crying foul and claiming that the rest of us are the cynical ones.

deleted 3y ago

[deleted]

solardev 3y ago

Maybe after covid-24, 26, and 28?

onlyrealcuzzo 3y ago

And it has $2.9B in long-term debt (not counting $13B in lease obligations). They're in the hole $20B (plus lease obligations), and best case scenario is that they make a couple hundred million per year. That wouldn't even pay for interest on the debt in the ZIRP world.