WeWork Warns of Possible Bankruptcy(cnbc.com)
cnbc.com
WeWork Warns of Possible Bankruptcy
https://www.cnbc.com/2023/08/08/wework-warns-of-remaining-going-concern-and-says-bankruptcy-possible.html
149 comments
>That guy got incredibly rich creating a company that was clearly not viable and seems likely to bankrupt.
WeWork is an extreme case, but this kind of thing happens with tech companies all the time.
Why do you think people in Silicon Valley equate an "exit" with success? Because at that point the insiders are paid out. What else matters?
Look at companies like Uber, Coinbase or Snap. Even Tesla. Insiders have accumulated billions in compensation that dwarves the value generated by the companies themselves (as measured by earnings).
WeWork is an extreme case, but this kind of thing happens with tech companies all the time.
Why do you think people in Silicon Valley equate an "exit" with success? Because at that point the insiders are paid out. What else matters?
Look at companies like Uber, Coinbase or Snap. Even Tesla. Insiders have accumulated billions in compensation that dwarves the value generated by the companies themselves (as measured by earnings).
This is just capitalism working as intended.
No, quite the opposite actually
The issue pointed out by these two comments come from a conflation of vocabulary (which is typically intentional at least at some point in the education). A truly "free market" would ensure that things like WeWork wouldn't happen because the ultimate material inputs and outputs of the company don't square. "Capitalism" is the seeking of profit at the expense of all others, where having a viable company no longer is an objective in itself but simply is a means to increase personal wealth. In such a system, WeWork makes a lot of sense because the long term solvency of the company does not impact how the market measures it's success.
Thank you for coming to my Ted Talk
Thank you for coming to my Ted Talk
No capitalism is private ownership of capital. The profit seeking at the expense of others is a leftist caricature of capitalism just as laziness is the right wing caricature of socialism. No economic system exists to incentivize the stuff that happened during the rise and fall of WeWork.
> "Capitalism" is the seeking of profit at the expense of all others
No, that's not what defines capitalism at all. That's a degenerate form more usually called "predatory capitalism".
No, that's not what defines capitalism at all. That's a degenerate form more usually called "predatory capitalism".
We have the largest wealth inequality since the gilded age, and the Federal Reserve solution to runaway inflation was forcing workers to either settle for lower salaries or become unemployed.
In what was is predatory capitalism not the rule of the day?
In what was is predatory capitalism not the rule of the day?
If we're trying to define precise terms here, "free market" and "capitalism" don't overlap at all. Capitalism is a type of government, free markets are a (group of) polic[y/ies].
I don't see where the logic of your comment comes from either way though - capitalists are typically in favour of a free market, no? And typically the "purpose" of a free market is accruing wealth as part of a private enterprise?
I don't see where the logic of your comment comes from either way though - capitalists are typically in favour of a free market, no? And typically the "purpose" of a free market is accruing wealth as part of a private enterprise?
Free markets are sometimes useful tools in making profits but are also sometimes hinderences towards being able to extract the highest amount of profit from consumers.
That's why we see so many mergers and intensive lobbying for government regulation in things like healthcare, telecoms, and air travel, it's way easier to make money if you can restrict competition in your market and it's something essential to consumers
That's why we see so many mergers and intensive lobbying for government regulation in things like healthcare, telecoms, and air travel, it's way easier to make money if you can restrict competition in your market and it's something essential to consumers
I see! I apologise for my naïvitié, thanks :)
> Capitalism is a type of governmen
E.g.: Democracy, oligarchy, dictatorships are forms of government.
Capitalism, socialism, etc... are economic systems.
I point this out because people in my country sometimes forget that it's a system of elected officials that govern us, not capitalism.
E.g.: Democracy, oligarchy, dictatorships are forms of government.
Capitalism, socialism, etc... are economic systems.
I point this out because people in my country sometimes forget that it's a system of elected officials that govern us, not capitalism.
what would be the correct/ideal way it would function in that regard?
The founders of businesses that fail don't get billion dollar exit packages. They lost the competiton.
This is the American version of capitalism working as intended.
I agree, but I think we probably disagree about whether or not this is a good thing
[deleted]
"Neumann’s ability to negotiate such rich terms was helped by the fact that his shareholdings controlled 10 times the votes of a normal shareholder, and he was able to argue for a higher price to cede control."
Correctly or, more likely, not - it seems the payoff was made in early 2021 at a time when valuations were soaring and there was a renewed push for an IPO. Neumann could have blocked that.
If I'm parsing a quick read of the data correctly, they backdoored an IPO in October 2021 at an $8bn valuation - and shares jumped 13% (so + $1Bn). A snapshot at that time could be used to argue they paid Neumann $x00 million to realise a multi-Billion dollar valuation and $1Bn+ growth in market cap.
Could they have forecast the rapid decline thereafter? Maybe some of those investors didn't care, as long as they got some return? If Neumann had dragged the battle out for another year, into 2022 when the markets went South, it probably would have cost WeWork a lot more on paper than whatever they paid him.
Correctly or, more likely, not - it seems the payoff was made in early 2021 at a time when valuations were soaring and there was a renewed push for an IPO. Neumann could have blocked that.
If I'm parsing a quick read of the data correctly, they backdoored an IPO in October 2021 at an $8bn valuation - and shares jumped 13% (so + $1Bn). A snapshot at that time could be used to argue they paid Neumann $x00 million to realise a multi-Billion dollar valuation and $1Bn+ growth in market cap.
Could they have forecast the rapid decline thereafter? Maybe some of those investors didn't care, as long as they got some return? If Neumann had dragged the battle out for another year, into 2022 when the markets went South, it probably would have cost WeWork a lot more on paper than whatever they paid him.
I was referring to the fiasco of 2019 where WeWork went from $50B to $5B while giving Adam Neumann a $1B payoff - did you miss that, it was on here all the time?
https://www.businessinsider.com/wework-ipo-fiasco-adam-neuma...
The SPAC merger (not IPO) in October 2021 at $9B but then it has continued to slide now down to $250M. That IPO does seem to be trying to get some value out of this turkey by passing it off to public investors.
There was never a viable business here, just hype. Going through its finances that are public, it has never made any money. Its net losses per year are roughly its income in most years. Its valuations were completely speculative.
https://www.businessinsider.com/wework-ipo-fiasco-adam-neuma...
The SPAC merger (not IPO) in October 2021 at $9B but then it has continued to slide now down to $250M. That IPO does seem to be trying to get some value out of this turkey by passing it off to public investors.
There was never a viable business here, just hype. Going through its finances that are public, it has never made any money. Its net losses per year are roughly its income in most years. Its valuations were completely speculative.
Don't get me wrong - I never saw the value! Just answering the question.
Why in 2021 did they give him that payout? Likely because they thought it offered the best ROI moving forward (and for some shareholders, especially anyone who sold at the post-listing peak, it did).
It definitely wasn't recognition for past success.
Why in 2021 did they give him that payout? Likely because they thought it offered the best ROI moving forward (and for some shareholders, especially anyone who sold at the post-listing peak, it did).
It definitely wasn't recognition for past success.
[deleted]
'We paid Neumann too much to exit quickly, because we knew the company prospects were bad and we needed an IPO to exit ASAP' probably isn't a crime, assuming there weren't errors on financial disclosures.
But it's certainly dubious enough to warrant a lawsuit to see if there were false claims made.
But it's certainly dubious enough to warrant a lawsuit to see if there were false claims made.
> at a time when valuations were soaring and there was a renewed push for an IPO. Neumann could have blocked that.
"We invested in a company structured so that the CEO could hold us to ransom, and agreed the bad terms because we thought the CEO would have breached his fiduciary duty to other shareholders and blocked advantageous exits if we didn't pay his ransom first" doesn't sound any better...
"We invested in a company structured so that the CEO could hold us to ransom, and agreed the bad terms because we thought the CEO would have breached his fiduciary duty to other shareholders and blocked advantageous exits if we didn't pay his ransom first" doesn't sound any better...
But not illegal, no?
I actually kind of respect Neumann. Not in a moral/ethical way, of course, but in a defend-yourself-at-all-times way.
He never would have gotten that payout if he hadn't legally fortified his position like he did, and then successfully maintained it through SoftBank's initial due diligence.
"Heads, I win. Tails, I win." type stuff.
I actually kind of respect Neumann. Not in a moral/ethical way, of course, but in a defend-yourself-at-all-times way.
He never would have gotten that payout if he hadn't legally fortified his position like he did, and then successfully maintained it through SoftBank's initial due diligence.
"Heads, I win. Tails, I win." type stuff.
>A snapshot at that time could be used to argue they paid Neumann $x00 million to realise a multi-Billion dollar valuation and $1Bn+ growth in market cap.
This makes no sense to me.
Why would you pay hundreds of millions of dollars to someone for a paper valuation and market cap? It was all meaningless.
This makes no sense to me.
Why would you pay hundreds of millions of dollars to someone for a paper valuation and market cap? It was all meaningless.
Not meaningless, just temporary in a way they didn’t forecast.
Imagine you could buy a house for $200,000, live in it for a year, and then sell it for $1M. Would you take that deal, even if you didn’t like the seller?
Imagine you could buy a house for $200,000, live in it for a year, and then sell it for $1M. Would you take that deal, even if you didn’t like the seller?
Liquidity. It's the difference between initial equity holders being able to sell and not.
Still more amazing to me is that he got a16z to invest 350 million into his new real estate debacle just after all this. This dude must really be a master hypnotist or something.
I've been around a few of these people in my life (albeit not nearly as successful). One guy in particular got people to invest millions in his sinking ships. Some people have a reality distortion field around them. Pair that with a half decent pedigree (school, neighborhood, city) and while money was cheap it was fairly easy for them to get whatever they wanted.
It's sometimes surprising how shocking simply knowing people is.
It's sometimes surprising how shocking simply knowing people is.
If you think the goal of investing in these companies it to be ultimately profitable and make huge earnings, investing in successful con men doesn’t make any sense. If you think the goal is to cash out by dumping the company on a bigger sucker (or even better, retail investors) then obviously you’re going to seek out the biggest huckster. Look at what investment funds do, not what they say.
Nah, this time Andreessen thought real estate is really eating the world :) So jump in early.
> . Otherwise, the public fund managers should go after this complete lack of governance and oversight.
The public fund managers would be the ones guilty of not doing their due diligence.
The public fund managers would be the ones guilty of not doing their due diligence.
SoftBank in particular seems to fund a lot of fraudsters. I wonder why? Just the number of total investments SoftBank makes or is there less DD? Just yesterday I saw this news: https://techcrunch.com/2023/08/04/softbank-sues-irl-over-ela...
DD? Softbank just throws gobs of money at companies with founders Masayoshi Son likes.
Softbank's "investment strategy" would've ended the company decades ago if it didn't buy a quarter of Alibaba for $20m, a share that would end up being worth over $100b a few years ago.
Softbank's "investment strategy" would've ended the company decades ago if it didn't buy a quarter of Alibaba for $20m, a share that would end up being worth over $100b a few years ago.
It appears that SoftBank also made a huge profit on Sprint. Although it was less than they initially expected and took much longer to exit.
https://www.wsj.com/articles/softbanks-boss-bet-22-billion-o...
https://www.wsj.com/articles/softbanks-boss-bet-22-billion-o...
Masayoshi Son is a gambler that invests more on gut instincts than fundamentals...most of his investments seem to fail, but a few have kept SoftBank going for so long, e.g, Alibaba, Sprint, etc.
Softbank vision fund was poorly designed.
At a 100 billion size, the fund must deploy a ton of money to create venture returns. Assuming a 10 year maturity and 5 years of investment period, they would need to deploy 20 billion per year into companies just to run the fund. If you invest in 100 companies then check-size must be a few hundred million to billions of dollars.
Implications: They then pushed companies to expand way faster then was appropriate. This meant that companies made decisions that was not justified by the profitability, just because they needed to spend the money.
An example would be when WeWork started offices in most expensive areas of manhattan and served them to customers at effective discount, hoping that the market would shift. Originally, WeWork took office space in distressed areas and made them viable for companies to use at a markup--creating value and being profitable overall. Under the pressure, they made stupid unprofitable decisions. Under this environment, even solid companies are forced to spray and pray money.
Generally speaking, money brings greater velocity but founders and investors should understand if the market will change at the same rate. For WeWork, commercial office space has leases with lengths of 5-10 years. Bottomline, there is not enough "liquidity" to absorb that quick an expansion.
Implications: They then pushed companies to expand way faster then was appropriate. This meant that companies made decisions that was not justified by the profitability, just because they needed to spend the money.
An example would be when WeWork started offices in most expensive areas of manhattan and served them to customers at effective discount, hoping that the market would shift. Originally, WeWork took office space in distressed areas and made them viable for companies to use at a markup--creating value and being profitable overall. Under the pressure, they made stupid unprofitable decisions. Under this environment, even solid companies are forced to spray and pray money.
Generally speaking, money brings greater velocity but founders and investors should understand if the market will change at the same rate. For WeWork, commercial office space has leases with lengths of 5-10 years. Bottomline, there is not enough "liquidity" to absorb that quick an expansion.
just glad that the 2019 IPO didn't materialize, otherwise the innocent retail shareholders would have paid for all the nuisance
I'm also glad the 2019 IPO didn't materialize, but if it had, anyone who bought in would have been deserving of no pity and I wouldn't call them "innocent retail investors". As badly managed as WeWork was, this was not a case of fraud. Everything was wide out in the open, for anyone with eyes and a brain to see. Heck, the whole reason the 2019 IPO didn't go through is that WeWork's original S-1 was such a shit show of epic proportions, with nothing but red ink as far as the eye could see and completely made up vanity metrics, that Wall Street's collective reaction was "Are you fucking kidding me?"
Matt Levine's contemporaneous take on the WeWork IPO and associated shenanigans by Neumann: https://archive.is/qkJXl
Matt Levine is a national treasure.
How much tax did he pay?
He built an enormous global business and brand, and the investors wanted to buy his shares and push him out in a transparent negotiated commercial transaction.
He deserved every penny of it as far as I can see.
What’s the alternative? That his stock and voting rights went to SoftBank for free?
He deserved every penny of it as far as I can see.
What’s the alternative? That his stock and voting rights went to SoftBank for free?
> He built an enormous global business and brand
Brands built upon selling product for less than it is worth are easy to build up. That isn't a real business though, it is just VC-funded make believe.
> What’s the alternative? That his stock and voting rights
Wouldn't it have been better back when WeWork's IPO failed to materialize in 2019 for SoftBank to just stop investing in WeWork it dropped from a planned $100B to $5B in a span of a year or so? And then SoftBank continued to invest to gain control and keep it afloat. Definitely a situation where someone is throwing good money after bad. Should have just left it for dead then.
That is the alternative. And it would have been best for the investors for sure.
In the end SoftBank just offloaded this turkey to the public via a SPAC merger. Did SoftBank end up making any money off this at all? I suspect there was no liquidity for the shares in this SPAC thus I bet they recouped almost nothing from this whole debacle.
Brands built upon selling product for less than it is worth are easy to build up. That isn't a real business though, it is just VC-funded make believe.
> What’s the alternative? That his stock and voting rights
Wouldn't it have been better back when WeWork's IPO failed to materialize in 2019 for SoftBank to just stop investing in WeWork it dropped from a planned $100B to $5B in a span of a year or so? And then SoftBank continued to invest to gain control and keep it afloat. Definitely a situation where someone is throwing good money after bad. Should have just left it for dead then.
That is the alternative. And it would have been best for the investors for sure.
In the end SoftBank just offloaded this turkey to the public via a SPAC merger. Did SoftBank end up making any money off this at all? I suspect there was no liquidity for the shares in this SPAC thus I bet they recouped almost nothing from this whole debacle.
> He built an enormous global business and brand.
Why do people think selling dollars for 75 cents is some incredible achievement to be lauded?
Why do people think selling dollars for 75 cents is some incredible achievement to be lauded?
He is the role model for quite a lot of people here. See those half-ass CRUD apps launch as world changing Cloud SAAS everyday.
He's a bare-footed scamming dopehead that belongs in prison.
In my opinion the writing for a way out of this mess has been on the wall for a long time now, post-Covid. This is with the only viable, but still heavily under-utilized product they have left: hot-desking and community workspaces.
Having rented multiple dedicated offices from WeWork I can attest that the corridors are become more and more like a post-apocalyptic landscape as the tenants — no longer taking advantage of introductory rents — move out one after the other. Go to the hot-desking spaces floors and you’ll find it bustling and sometimes not even possible to get a seat somewhere.
Why they haven’t aggressively cut underperforming locations and consolidated more hot-desking space into the better buildings is beyond me. Especially in the current work environment where arrangements with companies are flexible and the line between home and work becomes ever blurred. It seems like the perfect base to start on to build a new offering for companies that can provide employees with hot-desks on a flexible basis.
Having rented multiple dedicated offices from WeWork I can attest that the corridors are become more and more like a post-apocalyptic landscape as the tenants — no longer taking advantage of introductory rents — move out one after the other. Go to the hot-desking spaces floors and you’ll find it bustling and sometimes not even possible to get a seat somewhere.
Why they haven’t aggressively cut underperforming locations and consolidated more hot-desking space into the better buildings is beyond me. Especially in the current work environment where arrangements with companies are flexible and the line between home and work becomes ever blurred. It seems like the perfect base to start on to build a new offering for companies that can provide employees with hot-desks on a flexible basis.
They probably enter into long term lease for the building they can’t get out overnight?
Good point - goes to show it’s always easier to criticise behemoths like this from the outside.
However, I wager that they have had long enough to plan around this one - _surely_ there are a non-negligible amount of leases they can trade or sell on / do something with as most WeWork locations are in highly desirable spots.
However, I wager that they have had long enough to plan around this one - _surely_ there are a non-negligible amount of leases they can trade or sell on / do something with as most WeWork locations are in highly desirable spots.
> they have had long enough to plan around this one
WeWork’s core model has always been borrowing long and lending short; they are inherently vulnerable to a sharp spike down in commercial rents.
Apart from financially hedging that, or penning fancy outs when they signed their leases, it’s tough to see how even prescience a few years ago could have saved them. And that’s amidst Silicon Valley’s attitude in 2021-22 that the Fed couldn’t—not wouldn’t, couldn’t—raise rates or else America would go bankrupt or some nonsense.
WeWork’s core model has always been borrowing long and lending short; they are inherently vulnerable to a sharp spike down in commercial rents.
Apart from financially hedging that, or penning fancy outs when they signed their leases, it’s tough to see how even prescience a few years ago could have saved them. And that’s amidst Silicon Valley’s attitude in 2021-22 that the Fed couldn’t—not wouldn’t, couldn’t—raise rates or else America would go bankrupt or some nonsense.
Commercial leases are usually 7 years. If they bought in during the go-go run in 2018-2019, they've still got years left. Breaking a commercial lease in good times is already very difficult (I was lucky to get out of one a year early in 2019 because I found someone to take it over that the landlord liked). And who would take over or sub the lease today? Everyone is trying to get out of their leases right now because office space is underutilized with WFH.
Also good point. However, while commercial spaces in general are (as you say) underutilized, my gut feel (non-empirical here) from being in large cities is that there is somewhat of a boon for hot-desking / blurred-work-life-balance "office leisure spaces".
Without having your experience of breaking a commercial lease, I would imagine one avenue to explore would be trying to offload some of these leases to emerging companies doing what I refer to above.
Without having your experience of breaking a commercial lease, I would imagine one avenue to explore would be trying to offload some of these leases to emerging companies doing what I refer to above.
Sure they could offload them (commercial leases are usually transferrable/sublettable),but if you offload them for pennies on the dollar, that looks really bad on the balance sheet.
Better to keep them and tell your shareholders that this is a temporary blip, and profits will be coming any day now...
Better to keep them and tell your shareholders that this is a temporary blip, and profits will be coming any day now...
If I ran WeWork my evil plan would be to move to a franchise model, collect a franchise fee from each lucky winner of the franchisee stakes and transfer the leases to them. And then I would sit back and collect a modest fee based on revenue (say 10%) for the branding and the concept.
Isn’t this a microcosm of the broader story with commercial real estate? Values are down massively. Trying to break the lease is like realizing those losses for WeWork.
It's a significant money investment to renovate a space for co-working. Also, if you move spaces, you will lose some customers to attrition. There's a lot of overhead... it's not like everyone just teleports to a different building.
You're assuming that they:
a) have long term leases
b) paid a reasonable amount for them
c) those leases can be traded
d) those leases are actually worth enough to be useful.
a) have long term leases
b) paid a reasonable amount for them
c) those leases can be traded
d) those leases are actually worth enough to be useful.
I do recall hearing that this is/was precisely their business model: given that rent always* goes up (and never* down), lock in rates with a 10- or 20-year lease, wait for rent to increase for other people, [???], profit.
Rent inflation is built-in to every single real estate investment model ever. Even individuals getting a first property to rent out tend to model out rent increase when calculating yield over more than a few years.
Their dedicated office space is just absurdly expensive. I'd pay $2000/month for a 10sqm office when I can get a 20sqm office from the market for $1000/month. Of course the locations are not equivalent, but it's just not really relevant for those of us working remote anyway.
But $1000 a month seems cheap compared to an office manager?
That is, a dedicated employee for receiving, kitchen stocking, security management, and even utility management (how many novice office managers try cable Internet before buying fiber)
That is, a dedicated employee for receiving, kitchen stocking, security management, and even utility management (how many novice office managers try cable Internet before buying fiber)
Yes, and an office manager that doesn't have to be told what to do about anything, who actually manages workplace facilities, equipment, and operations fully autonomously, is likely to run between $5K and $10K a month, at least (more if salaried with benefits).
> But $1000 a month seems cheap compared to an office manager?
Only if you use $1000 worth of office manager every month.
Only if you use $1000 worth of office manager every month.
It's exactly this. Our company got a great, large dedicated office space during the peak of Covid for a pretty great deal. Note at the time it was still one of the most expensive options, but the location, amenities and quality of the office space made it worth it.
When it came time to renew they tried to more than double the rent. We then downsized to a space less than a fourth the original space - just a couple desks and a small meeting room. That worked out great - most employees are now firmly remote anyway, but we have a good space, and anyone can use our block of credits, so if we need to have a bunch of folks onsight for an in-person meeting we just book a large meeting room and it works great.
I think WeWork was horribly mismanaged by Neumann, but I still think they'd be in giant doodoo even if they had great management. The pandemic really fundamentally changed work patterns forever.
When it came time to renew they tried to more than double the rent. We then downsized to a space less than a fourth the original space - just a couple desks and a small meeting room. That worked out great - most employees are now firmly remote anyway, but we have a good space, and anyone can use our block of credits, so if we need to have a bunch of folks onsight for an in-person meeting we just book a large meeting room and it works great.
I think WeWork was horribly mismanaged by Neumann, but I still think they'd be in giant doodoo even if they had great management. The pandemic really fundamentally changed work patterns forever.
> Go to the hot-desking spaces floors and you’ll find it bustling and sometimes not even possible to get a seat somewhere.
Weirdly I'm writing from a WeWork floor in central London that has about 3 people in a room sized for about 30. I've never seen it even half full, though I don't drop by very often.
Even the common areas have enough space to go sit in and have a meeting on demand.
The conference rooms are pretty busy however.
Weirdly I'm writing from a WeWork floor in central London that has about 3 people in a room sized for about 30. I've never seen it even half full, though I don't drop by very often.
Even the common areas have enough space to go sit in and have a meeting on demand.
The conference rooms are pretty busy however.
Interesting. If companies are fleeing WeWork, it might explain a phenomenon that I've noticed over the past couple months: every cafe in my area has increasingly become a loud crowded hellscape of video chats, in-person meetings, phone calls, and groups working together for hours.
This is especially apparent on Tue/Wed/Thu, when previously cafes were recently less busy, due to these days commonly being in-office days for hybrid workers.
This is especially apparent on Tue/Wed/Thu, when previously cafes were recently less busy, due to these days commonly being in-office days for hybrid workers.
Should have happened in 2021 but our "brightest VC minds" thought it would be a good idea to burn even more "free" money on this pit.
To be fair, WeWork is just another roll of the dice company from the Uber era of free money. Let's pump it up and become too-big-to-fail! It appears WeWork wasn't big enough..
And they can blame COVID all they want, but the business model was already showing sights of failure before 2020. Yes, COVID accelerated this but it was not the cause.
To be fair, WeWork is just another roll of the dice company from the Uber era of free money. Let's pump it up and become too-big-to-fail! It appears WeWork wasn't big enough..
And they can blame COVID all they want, but the business model was already showing sights of failure before 2020. Yes, COVID accelerated this but it was not the cause.
We need to be more detailed about this as it highlights a demographics problem underlying it....
1. Free Money was the tail end of boomers investments pools 2. There will be a 12-year gap until the next investments pools increase from the new workers entering the working market. 3. Next investments pool increase from the new worker cohorts group will be smaller than the boomers.
All this indicates that the strategy of throw money at getting monopoly of market is sun setting and VCs will now have to have the slow growth strategy in their toolbox.
That also means potential founders now need to have that in their toolbox, things to look for:
1. Founders getting creative and partnering up with older experienced people in the domain they are creating their product in.
1. Free Money was the tail end of boomers investments pools 2. There will be a 12-year gap until the next investments pools increase from the new workers entering the working market. 3. Next investments pool increase from the new worker cohorts group will be smaller than the boomers.
All this indicates that the strategy of throw money at getting monopoly of market is sun setting and VCs will now have to have the slow growth strategy in their toolbox.
That also means potential founders now need to have that in their toolbox, things to look for:
1. Founders getting creative and partnering up with older experienced people in the domain they are creating their product in.
Am I the only one who just stops reading any comment if it contains the word "boomers"? It's entered a tidy lexicon with "lol" and "This." and [any smiley].
While "boomers" is sometimes used mockingly, it also describes an actual generation of people who do have a significant impact on society, and do have enough common ground to make discussion of that generation useful in sociological dialogue. So no, I do not stop reading at the word "boomer" any more than I stop reading at the word "millennial".
> 1. Free Money was the tail end of boomers investments pools 2. There will be a 12-year gap until the next investments pools increase from the new workers entering the working market. 3. Next investments pool increase from the new worker cohorts group will be smaller than the boomers.
This is voodoo statistics and just plain bad math, a bit like what I like to call "astrology technical analysis". Actual populations don't fit as nice into specific generations that demographers like to put them in. People enter and leave the workforce all the time.
This is voodoo statistics and just plain bad math, a bit like what I like to call "astrology technical analysis". Actual populations don't fit as nice into specific generations that demographers like to put them in. People enter and leave the workforce all the time.
The story of WeWork is fascinating and sad to watch (for the employees). Adam got his but his employees didn't.
The financial numbers are pretty sad too.
- Market cap below $500 million.
- Lost $700 million in 6 months this year
- Lost $2.3 billion in 2022
- Roughly 3 billion in debt
- Total liquidity of only $680 million (only 1/3 is cash).
The financial numbers are pretty sad too.
- Market cap below $500 million.
- Lost $700 million in 6 months this year
- Lost $2.3 billion in 2022
- Roughly 3 billion in debt
- Total liquidity of only $680 million (only 1/3 is cash).
What is crazy is that he was able to raise 350 millions from a16z for what is basically a simple property management company. After all the sh*t he did. And then you go to a16z with an idea, and they reject it because it is not innovative enough. Then VCs wonder why 80% of their investments fail to produce the expected money on average.
https://techcrunch.com/2022/08/16/how-a16zs-investment-into-...
https://techcrunch.com/2022/08/16/how-a16zs-investment-into-...
Reminds me of Matt Levine's fantastic Moviepass article
https://www.bloomberg.com/opinion/articles/2019-08-07/moviep...
https://www.bloomberg.com/opinion/articles/2019-08-07/moviep...
archived as https://archive.is/tX1c5
Don’t forget that the VCs backed him again on a somehow even shadier, blatantly dystopian startup idea with a metric ton of money again [1].
1. https://fortune.com/2023/07/11/adam-neumann-new-company-flow...
1. https://fortune.com/2023/07/11/adam-neumann-new-company-flow...
What in the hells?! This is absurd. How does someone that steers their company into the gutter get financed to the tune of $350M again?
Because it's who you know, rather than what you know, that drives the VC ecosystem for the most part.
They know that one day Adam Neumann is gonna sit on the other side of the table, and whoever is clearing the financing right now will take his turn in proposing his AI-crypto-{NEW TREND HERE} venture and get the money.
They know that one day Adam Neumann is gonna sit on the other side of the table, and whoever is clearing the financing right now will take his turn in proposing his AI-crypto-{NEW TREND HERE} venture and get the money.
He's a made man, as the Mafia used to say. Once you're in the circle you can keep failing upwards.
One hopes the last 10 years have proven beyond any doubt that personal wealth & success are in no way correlated with skills or value to society.
One more number to put these in perspective:
- Adam Neumann's exit package $445 million
- Adam Neumann's exit package $445 million
I had several WeWork employees in my friend groups in SF
they were gullible as hell and were educated people that couldn't understand a single word of Wall Street Journal and the investment banking community's dunking and pile-ons about WeWork
they couldn't understand the tech community's dunking and pile-ons about WeWork
everyone was saying "why are investors buying shares of this company at prices as if its a tech company"
employees were like "my first tech company omg guys I love shares and family"
just collect a paycheck, its fine, but the hopium was flat out dumb. its one thing to be at a startup that never tells you its valuation or gives you a clear answer about the strike price of your options in a way for you to model an outcome, its another thing for the financials to be presented clear as day and put blinders on.
they were gullible as hell and were educated people that couldn't understand a single word of Wall Street Journal and the investment banking community's dunking and pile-ons about WeWork
they couldn't understand the tech community's dunking and pile-ons about WeWork
everyone was saying "why are investors buying shares of this company at prices as if its a tech company"
employees were like "my first tech company omg guys I love shares and family"
just collect a paycheck, its fine, but the hopium was flat out dumb. its one thing to be at a startup that never tells you its valuation or gives you a clear answer about the strike price of your options in a way for you to model an outcome, its another thing for the financials to be presented clear as day and put blinders on.
It is difficult to get a man to understand something, when his salary depends upon his not understanding it.
Still $25B more in green than Uber!
Company I work at went from a trashy long and cramped room in a WeWork where the toilets were always breaking and the elevator buttons didn't line up with the floor numbering because it was two buildings stuck together to a two floor small warehouse style building, same area for less than WeWork cost.
Even without the push from some to WFH WeWork was a terrible product in the 3 WeWorks I've had to work in.
Even without the push from some to WFH WeWork was a terrible product in the 3 WeWorks I've had to work in.
WeWork's most recent 10-Q where the warning comes from: https://www.sec.gov/ix?doc=/Archives/edgar/data/0001813756/0...
> The spectacular collapse of a company once valued by SoftBank at $40 billion has been years in the making, but is still surprising given the number of large commercial buildings around the world that don the company’s name.
Is it actually surprising? If you too many assets that you bought with variable interest rate debt, then going bankrupt in a higher-interest-rate environment is exactly what I would expect.
Is it actually surprising? If you too many assets that you bought with variable interest rate debt, then going bankrupt in a higher-interest-rate environment is exactly what I would expect.
Did they actually buy buildings? I thought they just took long term leases from owners and sold short term to their customers? I once read an article saying that for all the tech bs, weworks was basically just a (at the well timed) commercial rent play: fix low rent and then charge rising rents as the market goes up.
I might be wrong though?
I remember thinking it was like a bank (exposed to time risk) but with property...
I might be wrong though?
I remember thinking it was like a bank (exposed to time risk) but with property...
It might have worked on 2008 levels and then ride the elevator up.
But to fuel the growth story they needed to go international where they could not enjoy the same once-in-a-lifetime opportunity.
> fix low rent
This is not so easy as it sounds at scale, landlords aren't stupid. AFAICT, the main model is that WeWork simply charged more per desk/office/unit of surface area than they paid in rent to the building owner. This can intuitively work because they rent office space in bulk but rent out individual desks, and prices for individual "items" are almost always higher than buying in bulk. Obviously that model only makes a profit if you can maintain high occupancy rates though, and with COVID and rising interest rates the demand for expensive pay-as-you-go office space fell through the floor.
Through that lens WeWork is indeed like a bank: they rent long-term and rent out short-term. Companies like that are very vulnerable to a "run" where all the short term renters suddenly leave but the long term liabilities don't.
This is not so easy as it sounds at scale, landlords aren't stupid. AFAICT, the main model is that WeWork simply charged more per desk/office/unit of surface area than they paid in rent to the building owner. This can intuitively work because they rent office space in bulk but rent out individual desks, and prices for individual "items" are almost always higher than buying in bulk. Obviously that model only makes a profit if you can maintain high occupancy rates though, and with COVID and rising interest rates the demand for expensive pay-as-you-go office space fell through the floor.
Through that lens WeWork is indeed like a bank: they rent long-term and rent out short-term. Companies like that are very vulnerable to a "run" where all the short term renters suddenly leave but the long term liabilities don't.
Several years ago while hustling as a single founder, I hoped to get a desk in a private office (anything but open-space), so I would have a place to come to to focus on work, socialize and feel at work.. So I went to see what WeWork have to offer.
There I saw a nice floor with nice looking private offices, finally taken to what they thought might be relevant for me, they showed me a tiny space where half a diner table is hung on the wall and over a diner sofa with the second wall behind the sofa, (now-days these types of rooms are used for private 1 on 1 meetings and zoom calls..) for the price of what I would pay a private office of say 2/3 people (pre-WeWork shared office spaces).
Just the audacity of the person showing me this for this price struck me how greedy and disconnected WeWork are, got me so insulted I would never check them out again.
This is what you get when you get an MBA type business management constantly looking for ways to up the contract prices like its a B2B SaaS business (not that I'm saying this makes more sense there..)
>This is what you get when you get an MBA type business management constantly
I love how HN blames MBAs for everything.
This was greedy "tech people", nothing more nothing less. Maybe if a few of the characters in this saga had MBAs they would have been able to better judge the value of the business, as opposed to gut and vibes. After all, it was the MBAs who pulled the IPO, while the tech crew continued to push this garbage on the public.
I love how HN blames MBAs for everything.
This was greedy "tech people", nothing more nothing less. Maybe if a few of the characters in this saga had MBAs they would have been able to better judge the value of the business, as opposed to gut and vibes. After all, it was the MBAs who pulled the IPO, while the tech crew continued to push this garbage on the public.
> I love how HN blames MBAs for everything.
> This was greedy "tech people", nothing more nothing less.
It's hard to talk about WeWork without talking about Adam Neumann. And looking him up, it seems that he does have a degree in business -- albeit only in 2017 -- rather than a degree in something like computer science or engineering. And prior to WeWork, he apparently founded a children's clothing company: not exactly a "tech people" industry.
So I'm not getting tech people vibes from him.
[1] https://techcrunch.com/2017/06/05/weworks-adam-neumann-is-gr... [2] https://en.wikipedia.org/wiki/Adam_Neumann
> This was greedy "tech people", nothing more nothing less.
It's hard to talk about WeWork without talking about Adam Neumann. And looking him up, it seems that he does have a degree in business -- albeit only in 2017 -- rather than a degree in something like computer science or engineering. And prior to WeWork, he apparently founded a children's clothing company: not exactly a "tech people" industry.
So I'm not getting tech people vibes from him.
[1] https://techcrunch.com/2017/06/05/weworks-adam-neumann-is-gr... [2] https://en.wikipedia.org/wiki/Adam_Neumann
> how greedy and disconnected WeWork are…what you get when you get an MBA type business management constantly
Apparently not greedy nor MBA enough!
Apparently not greedy nor MBA enough!
Honestly surprised WeWork is still around after that documentary on it in 2021
i've never even heard of it before so i doubt it's very mainstream
Fair point! It did win an Emmy and is distributed by Hulu though so it’s not super fringe.
I only watch a couple documentaries a year and I saw it the year it released....
Frankly I'm a little saddened so few who consider themselves "in the know" about these things didn't at least know of the doc...
Frankly I'm a little saddened so few who consider themselves "in the know" about these things didn't at least know of the doc...
HN is my favourite site by far (I lost my login details to my old acc but have been here for quite a few years), but, HN users tend to be very vocal on areas they don't really "know". My wife is an MRI researcher and I share most threads on that topic, normally saying some comment seems really cool, where she quickly shoots it down as flawed. If it isn't directly related to programming I have a large salt shaker nearby :)
To be fair I know I do the same no matter how much I try not to!
To be fair I know I do the same no matter how much I try not to!
Oh it wasn't a comment on HN users but people in general.
So often someone will spout off on a topic as though they know a great deal but when I start actually trying to have discourse on it I discover they actually know very little.
Dunning-Krueger type thi g I'm sure, but it's just so common as to be mentionable.
So often someone will spout off on a topic as though they know a great deal but when I start actually trying to have discourse on it I discover they actually know very little.
Dunning-Krueger type thi g I'm sure, but it's just so common as to be mentionable.
I'm somewhat surprised by this. I'm currently working out of a WeWork and not only was it hard to get an office there, but they are constantly expanding the location I'm in and just opened the fourth location in a 1.5km radius. Cost is also rather high for a very small office (supposed to be for 4 persons, but if with 3 people it feels very crowded). The business of renting office space en masse and renting it out in smaller, much more expensive parts seems rather lucrative to me.
I'm in Hamburg, Germany for reference.
I'm in Hamburg, Germany for reference.
Let's say I start a lemonade stand. I sell lemonade for a pretty big markup... say €3 a cup. I add lots of ice to it as well, this is not a good deal for lemonade for the customer... but people seem REALLY thirsty and I am getting a good flow of customers. A local businessman approaches me and says he will lend me money to expand operations. He offers me €5 million. I take his money and I use €1 million to expand operations, I use €3 million to invest in the rights to every street corner in town, and I pocket €1 million. Then the value of the contracts for every street corner in town plummets. Suddenly these street corner contracts are worth €700,000 and I paid €3 million.
Now my business is worth €1.7 million. €3.3 million disappeared and I owe that businessman + interest.
If I sell lemonade for €3 a cup, but I'm only getting 50 customers a day with my expanded operations it will take me 60 YEARS just to pay down the principle.
Even if my product is expensive. Even if it seems like, for a lemonade stand, I'm doing well. Debt, the value of my assets, and mismanagement or corruption can vastly outweigh these factors.
Now my business is worth €1.7 million. €3.3 million disappeared and I owe that businessman + interest.
If I sell lemonade for €3 a cup, but I'm only getting 50 customers a day with my expanded operations it will take me 60 YEARS just to pay down the principle.
Even if my product is expensive. Even if it seems like, for a lemonade stand, I'm doing well. Debt, the value of my assets, and mismanagement or corruption can vastly outweigh these factors.
To stay in your metaphor: I'm saying I see long queues at all lemonade stands and lots of sold lemonade in my area. This perception doesn't fit with the lemonade business's (WeWork's) EBITDA being negative.
The value of assets (which I doubt WeWork has a lot to begin with, I would assume they rent as well) and the amount of debt doesn't factor in there.
The value of assets (which I doubt WeWork has a lot to begin with, I would assume they rent as well) and the amount of debt doesn't factor in there.
I was under the impression that WeWork was basically a commercial real estate company moonlighting an office space renter. I thought they were primarily in the business of buying up and building as much commercial real estate as they could, and the work spaces were incidental to their actual business model. Kind of like how McDonalds isn't really in the business of selling burgers, but owning prime commercial real estate.
The value of commercial real estate is plummeting. I don't know how/if this is reflected in EBITDA.
The value of commercial real estate is plummeting. I don't know how/if this is reflected in EBITDA.
They decreased their price in Hamburg a lot. It was around 40€/day for hot desks, now it is around 20€/day.
I got 3 month for free with WeWork just before covid (hotdesking only). I went there 2-3 times and found it to be a significantly worse working environment than even a starbucks. The chairs were extremely uncomfortable, the acoustics of the room made it noisy. Really didn't see the point and can't imagine how they can get people to use them.
It might be different in other locations but at least the two locations I've visited in Hong Kong were really not great.
It might be different in other locations but at least the two locations I've visited in Hong Kong were really not great.
Same. Got a subscription from work. Never really used it. The few times I tried them in HK they were horrible. Only the New Street building was nice enough but for some reason they were allegedly always 'full' (they clearly weren't) and wouldn't let me in. Enough nice cafes in the area that are more comfy and have friendlier personal.
VC capitalism over the past decade resembles the free spending era of Communist central planners tasked with rapidly industrializing their economies.
1) Dump enormous amounts of zero-interest capital into {{ sector }}
2) Entrust leadership to charismatic politicians rather than domain experts (Adam Neumann)
3) Craft a PR narrative emphasizing innovation and diminishing critics (Softbank "Vision Fund", "swinging for the fences", "transformational" )
4) Construct Potemkin villages to show the world that all is well (going public)
5) ...followed by eventual rapid decline and collapse
WeWork is the most egregious example, but the same fate awaits the likes of UberEats and Lime and what have you.
1) Dump enormous amounts of zero-interest capital into {{ sector }}
2) Entrust leadership to charismatic politicians rather than domain experts (Adam Neumann)
3) Craft a PR narrative emphasizing innovation and diminishing critics (Softbank "Vision Fund", "swinging for the fences", "transformational" )
4) Construct Potemkin villages to show the world that all is well (going public)
5) ...followed by eventual rapid decline and collapse
WeWork is the most egregious example, but the same fate awaits the likes of UberEats and Lime and what have you.
It makes sense to divide late-stage, large-cheque VC from classic early-stage, small-cheque VC in the same way we separate money-losing, unlevered PE from classic cash-flow positive, leveraged PE. (Hint: the latter are the same.)
Your accurate post made me think of a great blog title... "A Canticle For Potemkin"
The similarities are startling, it's all a consequence of reducing power to a small set of people who progressively lose touch with what the market actually needs.
It doesn't matter if its "public" or "private" it's the concentration that causes the negative effects.
Made more annoying by how difficult it is to explain that simple concept to the pseudo libertarian crowd that tends to congregate here.
It doesn't matter if its "public" or "private" it's the concentration that causes the negative effects.
Made more annoying by how difficult it is to explain that simple concept to the pseudo libertarian crowd that tends to congregate here.
It doesn't matter what happens to WeWork. Adam Neumann and the other VCs already exit scammed out of it with their millions and additionally dumped on retail.
They successfully got away with it, despite knowing that the business has hundreds of millions of dollars of losses pre-IPO, which was over $900M+ [0]; the biggest of all red flags as I said 4 years ago. [1]
This company could only exist in a cheap money era with decades long quantitate easing. Now just look at the ship sinking faster as the interest rates are now much higher with no cheap money this time.
WeWork is the gold standard of unprofitable companies who are good at losing money whilst pretending to be a 'tech company' or 'tech startup' and was just used as a vehicle for an IPO at an extremely inflated valuation before the bubble burst.
[0] https://www.cnbc.com/2019/08/14/wework-releases-s-1-filing-f...
[1] https://news.ycombinator.com/item?id=21213365
They successfully got away with it, despite knowing that the business has hundreds of millions of dollars of losses pre-IPO, which was over $900M+ [0]; the biggest of all red flags as I said 4 years ago. [1]
This company could only exist in a cheap money era with decades long quantitate easing. Now just look at the ship sinking faster as the interest rates are now much higher with no cheap money this time.
WeWork is the gold standard of unprofitable companies who are good at losing money whilst pretending to be a 'tech company' or 'tech startup' and was just used as a vehicle for an IPO at an extremely inflated valuation before the bubble burst.
[0] https://www.cnbc.com/2019/08/14/wework-releases-s-1-filing-f...
[1] https://news.ycombinator.com/item?id=21213365
> Neumann and the other VCs already exit scammed out of it with their millions and additionally dumped on retail
Given the outright fraud prevalent in today’s tech landscape, it’s difficult to call WeWork a scam. Stupid, yes. But fraud; for that we lack evidence.
Given the outright fraud prevalent in today’s tech landscape, it’s difficult to call WeWork a scam. Stupid, yes. But fraud; for that we lack evidence.
It's a commercial property management company that identifies as a tech company to get dumb investment money. Maybe not outright fraudulent, but definitely scammy.
> Maybe not outright fraudulent, but definitely scammy
Scams are attempts to defraud. No fraud, no scam. If it feels scammy, that means (or should mean) you sense fraud.
I know this seems pedantic. But drawing clearly that line--between fraud and blind optimism--seems like a good takeaway from this past cycle.
Scams are attempts to defraud. No fraud, no scam. If it feels scammy, that means (or should mean) you sense fraud.
I know this seems pedantic. But drawing clearly that line--between fraud and blind optimism--seems like a good takeaway from this past cycle.
The era of cheap money is frequently invoked to explain this grand fiasco but macroeconomic variables have the same relation with any specific project that climate change has with an unusual heat wave.
Due diligence, focus on good governance etc are more directly influential in weeding out dodgy propositions and these behavioral aspects need not be closely correlated with any risk-free momey rate.
Due diligence, focus on good governance etc are more directly influential in weeding out dodgy propositions and these behavioral aspects need not be closely correlated with any risk-free momey rate.
The TrashFuture episode on WeWork was a delight, and I was actually surprised to learn WeWork was still around: https://www.podchaser.com/podcasts/trashfuture-543791/episod...
I go to one about once a week to get out of the house (paying the ad-hoc rate), and they make it impossible to get a membership or even talk about how much a single person office would be (guessing out of my price range, but I actually have money to spend on it so I'd like to talk). Maybe if you could give them money they wouldn't be in trouble.
My company has an office in a London WeWork. They are drastically attempting to control costs, e.g. things like the air con "not working", more like they don't want to turn it on because it's expensive.
I expect that they will renegotiate the lease on this building to more favourable terms. It's either that or the building goes empty.
I expect that they will renegotiate the lease on this building to more favourable terms. It's either that or the building goes empty.
I liked the spaces but their price are crazy expensive. It makes not sense to spend so much for a wood desk and a chair.
This company is an anomaly in the capital markets. Investors should do their due diligence or they’ll get taken in by an idiot or charlatan and lose their shirt.
Just look at their financials: $3.7b in the hole and continual losses pulling them ever further into the red. Even operating cashflow is negative. [0]
[0] valustox.com/WE
Just look at their financials: $3.7b in the hole and continual losses pulling them ever further into the red. Even operating cashflow is negative. [0]
[0] valustox.com/WE
They also carry long overvalued leases on their books at a time commercial real estate is in the dumps still.
Some of my friends have been climbing hard into Commercial REITS now for a few years, hoping for that big upswing in office work to boost them.
It's not like temp office space companies didn't exist no one knew the risks. They'd been around for years and the pitfalls were well known. But this is what happens when you have lots of cheap money, low returns and massive fomo. Will they learn from this? Of course not, the AI bubble is currently being pumped up and I'm sure there's going to be a few more wonder industries to lose a fortune in just round the corner.
I secretly root for Adam Neumann or any other entrepreneur that hustled their way into hundreds of millions and left VCs holding the bag in the free money era circa 2020...VCs were the ones doing the pump and dump for too long, and someone needed to give them a taste of their medicine.
I'll never admire Neumann because he squandered over $18bn(!), but there's a bit of poetic justice in how he took SoftBank for a ride..
I'll never admire Neumann because he squandered over $18bn(!), but there's a bit of poetic justice in how he took SoftBank for a ride..
What does WeWork actually sell? I mean... what is their source of revenue, or is it just dumb me and it's my own fault that I don't know that?
Working space. You can rent a single desk or multiple, and they charge you money every month. Bog standard stuff, has been done a million times all over the world.
The problem for WeWork is that they chose to grow incredibly fast, positioned themselves a a very high-end premium type of service, and funded it all with lots of debt and VC (mostly SoftBank) investments, despite nearly every financial professional warning them that they were over-exposed and any small disruption to their earnings would cause huge troubles for the company.
Then COVID happened, interest rates started rising and the demand for expensive rented offices dried up. Now they have a ton of bills and not enough paying customers to cover them all.
The problem for WeWork is that they chose to grow incredibly fast, positioned themselves a a very high-end premium type of service, and funded it all with lots of debt and VC (mostly SoftBank) investments, despite nearly every financial professional warning them that they were over-exposed and any small disruption to their earnings would cause huge troubles for the company.
Then COVID happened, interest rates started rising and the demand for expensive rented offices dried up. Now they have a ton of bills and not enough paying customers to cover them all.
Ah, essentially they are selling office desks to start-ups who don't need them anymore post-covid. Sounds bulletproof to me /s.
I think that many fast-growing start-ups have decided that it's cheaper and safer to work from home, so maybe WeWork needs to start working and look for other sources of revenue. or do nothing and implode.
I think that many fast-growing start-ups have decided that it's cheaper and safer to work from home, so maybe WeWork needs to start working and look for other sources of revenue. or do nothing and implode.
No, you're misunderstanding. First, they sold a lot to established companies who would get a whole office in the building to seem cool. I believe that's where most of the profits came from. The startup/hotdesking was there as well, but I don't believe it was as profitable. Otherwise, WFH would be a boon to them. Companies have paid for WeWork desks for their WFH employees/meetings to avoid needing office space. They would be doing great now.
The problem is their business model was to sign long-term leases with buildings and short-term leases with their customers. So they are paying 2018-2020 rates on office space, but leasing out at spot rates of 2023 office space.
The problem is their business model was to sign long-term leases with buildings and short-term leases with their customers. So they are paying 2018-2020 rates on office space, but leasing out at spot rates of 2023 office space.
Sad about this because I have a hot desk membership in New York, and it's an amazing experience that I'd probably pay more for honestly.
Funny you mention paying more, but they actually cut prices for many members recently.
In the past 6 months, WeWork split their buildings into 2 tiers. The All-Access pass at one tier is $149 and the other is $299. $299 also gets you access to both tiers of buildings.
I only go to the locations here in Portland and went from paying $299 a month to $149. They didn’t advertise this change to me, I had to find out from a friend who just signed up. I emailed the salesperson and asked why I wouldn’t make the change given my situation. He just replied defeatedly, “I’ll start the paperwork.”
In the past 6 months, WeWork split their buildings into 2 tiers. The All-Access pass at one tier is $149 and the other is $299. $299 also gets you access to both tiers of buildings.
I only go to the locations here in Portland and went from paying $299 a month to $149. They didn’t advertise this change to me, I had to find out from a friend who just signed up. I emailed the salesperson and asked why I wouldn’t make the change given my situation. He just replied defeatedly, “I’ll start the paperwork.”
Oh wow. Did not know about this. Thanks for the tip!
What makes it amazing?
Really great space to work in. And in NYC, there's probably like 30/40 WeWorks so it's very convenient when you have meetings around the city.
Spent the last few months in NYC and also enjoyed the large variety of Weworks to pick from each day. But a common theme was how empty most of them were and devoid of rented offices. Some of them even shut down entire floors for the time being. Man I wish I would have shorted this stock, and I kept thinking about it each time I visited another ghost town Wework.
I have had 4 or 5 attempts with them at upgrading offices. For instance, from the ad-hoc membership to on-demand, then from on-demand to a small office. Their sales staff just don’t seem interested. It’s been a “please take my money” situation for much of the last 3 years.
My company recently moved from a wework equivalent to a much cheaper serviced office. A few less of the flashy features and perhaps a slightly less prestigious address (5 minutes down the road) for a third of the price.
The idea that this was a tech company because they have a integrated portal for management of your office subscription was always laughable.
The multiples were ridiculous for what basically is a internet connected REIT.
The multiples were ridiculous for what basically is a internet connected REIT.
[dupe]
More discussion over here yesterday: https://news.ycombinator.com/item?id=37055563
More discussion over here yesterday: https://news.ycombinator.com/item?id=37055563
They're not bankrupt yet? I thought the pandemic basically killed the business.
that will be a lot of furniture
I feel most awful for Softbank. WeWork was such a terrible investment.
Would also be interested to know what % of Spacs have shown success.
For who/what do you mean?
You mean SPACs that actually acquired a company? SPACs where the initial SPAC investors (pre-acquisition) made money? Those that have a solid company behind them, regardless of if investors made/lost money on the price movement since it announced? People who bought SPAC shares post-acquisition where the price went up?
(For pre/post acquisition investors, I assume you mean retail investors).
You mean SPACs that actually acquired a company? SPACs where the initial SPAC investors (pre-acquisition) made money? Those that have a solid company behind them, regardless of if investors made/lost money on the price movement since it announced? People who bought SPAC shares post-acquisition where the price went up?
(For pre/post acquisition investors, I assume you mean retail investors).
Should I look forward to season 2 of WeCrashed?
> WeWork founder Adam Neumann received $245m in company stock [....] In addition to the $245m grant, Neumann received $200m in cash, was able to refinance $432m in debt on favorable terms, and allowed a finance company controlled by the former chief executive to sell $578m in WeWork stock. [1]
That guy got incredibly rich creating a company that was clearly not viable and seems likely to bankrupt. Corporate government seems to be non-existent here.
Who are the people that are left holding the bag? Hopefully it is mostly just private money like the Saudis + SoftBank (if they screw up, they suffer the consequences, that is great) and not public pension funds. Otherwise, the public fund managers should go after this complete lack of governance and oversight.
[1] https://www.theguardian.com/business/2021/may/27/wework-foun...