Not really. For example there’s a pretty noticeable difference in the amount of wealth a society will have if they choose to build 890,721 intricate snowmen on the island of Manhattan instead of housing, power plants, and infrastructure.
You seem to be consistently conflating potential value with real value, but potential value is and always will be a red herring, so it's important to distinguish them and treat them each separately.
Real value can be destroyed. Dollars can be printed, planes can crash. Crops can grow, or rot. The effort of humans can be deployed wastefuliy, like making snowmen, or not, like planting crops and building shelter.
Wealth represents an assessment of the value to humans of existing resources and it can go up and down based on the decisions of how to allocate that wealth.
There’s absolutely no controversy whatsoever about this concept despite your desire to not acknowledge it.
Opportunity cost is a very interesting concept. As you mention, if the wealth doesn't exist, it cannot possibly be destroyed. Why would anyone "leave money on the table" though?
Glutting the wealth creation is not fundamentally destructive - what if a specific location cannot actually sustain high production levels because their housing supply, energy supply, or talent supply is insufficient? What if unfettered growth will lead to a collapse that destroys a lot more value than the potential future wealth destroyed? What if a company heavily invests in business and retail construction and a global pandemic happens?
Wealth creation is impossible to separate from public policy. For Manhattan to exist, a large amount of money had to be poured into its fundamental blocks.
'The parable of the broken window was introduced by French economist Frédéric Bastiat in his 1850 essay "That Which We See and That Which We Do Not See" ("Ce qu'on voit et ce qu'on ne voit pas") to illustrate why destruction, and the money spent to recover from destruction, is not actually a net benefit to society.'
What if there is no reconstruction? Not every catastrophe is a catalyst for reconstruction.
If a house is destroyed in a fire, it loses its value as a house. Now you have the value of the land, which will be offset by the cost of clearing it. So the value of the land is below market. The asset has depreciated.
Large scale construction tends to be very good for the economy because it both increases economic activity (construction is expensive, and a lot of people get paid to do a lot of labor in the whole chain, from lamps to concrete to engineers to meal makers), and sets infrastructure that will be used by highly productive companies (white collar offices) to make a lot of money.
But there is no value transfer from rubble to construction companies. That asset owner took a hit.
Surely some of these costs / economic activities are just like the parable of the broken window? For example, the meal makers. Construction works buy their lunches from shops nearby - that's great for those shops. But how is this improving the economy? Those workers would have needed lunches anyway. If they weren't working, they could have made their lunches at home, and not had to eat out. It would have (probably) been cheaper for them than buying lunches from the local shops.
So maybe the workers spent more money buying their lunches, but that's just extra inefficiency, and not extra economic acitivity. Just like the broken window, the workers spend more in one area and so have less money to spend elsewhere.
> But how is this improving the economy? Those workers would have needed lunches anyway.
In economics this is called hedonic adjustment. The economy is improved because the workers value purchasing a lunch more than making their own.
It's cheaper to listen to the radio, or even buy a CD, than to go to a concert. Going to a concert is not seen as economically inefficient.
9 foot ceilings are not seen as economically inefficient compared to 8 foot ceilings. The additional foot is seen as value.
A house made of bricks is valued more than a house made of straw, despite them both functioning equally as well as long as a huffing and puffing wolf isn't around.
I was talking about catastrophic events and how it can make you lose money without necessarily transfering it. In the case of wework, the catastrophe is the rapid decline in inflated prices, which makes the assets lose value without a real transfer in wealth.
> the catastrophe is the rapid decline in inflated prices
Using the word "catastrophe" to describe a financial process not going in one's favor doesn't actually turn it into a natural disaster that physically destroys objects.
If you buy a stock for 100 dollars, and due to a series of bad results which led to price adjustments, the stock is now worth 1 dollar, you lost 99 dollars. Nobody else picked up those 99 dollars.
Person A holds 1 stock, valued at 100.
Person A sells 1 stock to person B. Now Person A holds 100 in cash, and 0 in assets.
Person B now holds 0 in cash, and 100 in assets.
Fast forward 5 years. The stock price has crashed to 1 dollar.
Person A still holds 100 in cash and 0 in assets. Person B holds 0 in cash, and 1 in assets.
There was no transfer of 99 dollars back from Person B to Person A. Person A's holdings were invariant because they don't own the stock anymore. The losses brunt by Person B were not transferred to anybody else.
Correct - the transfer happened when you bought the stock. What you have lost is the expectation of getting it back (or at least the expectation of getting it back today.)
Unrelated to this is the distinction between money and wealth.
The challenge for a company like Weework is that it's hard to identify what wealth they generate- at least for me.
In other words, what are they making (goods) or doing (services) that provides value to the world (wealth).
I suppose they'd say that their core value is making it easy to rent space quickly. This is certainly providing some value, but I hardly think it's one that's heavily differentiated.
I bring this up because the conflation of money and wealth is so often what gets people in trouble. Decoupling the two lets us examine what the value of a company is, at its core.
It's simpler than that! They just need to charge more than they spend. The fundamental economics of WeWork never worked because they were a con by its founder, who used WeWork to buy buildings in his name and rent them back to WeWork, amongst other financially boneheaded decisions. WeWork was never meant to be a successful business, it was meant to enrich the founder.
Post founder, WeWork was finding itself as a scalable office provider, where companies were willing to pay a premium for a flexible contract, and add or remove seats as needed. It was an interesting idea, and there were signs of growth. Then COVID happened. I'm surprised they are even still operating.
WeWork certainly provides value to the companies that rent their offices (including the one I work for). If someone else were looking for office rental options I'd recommend WeWork on the basis of the experience I've had working within their office space over the last 8 months or so. But obviously it was massively oversold as being a lot more than an office remodeling/ maintenance/ cleaning/subletting service.
Because the seller sets a lower boundary for selling, and the buyer sets an upper boundary for buying. There is no price over the counter for individual stocks. The ticker that you see is based on transaction execution, but not on the negotiated price.
If there was an overnight discovery of infinite energy supplies, Exxon would wake up to a very different price than the night before, as any potential buyers would severely reduce their upper boundary. Sellers would need to continually lower their price until it finds a willing buyer.
If there is a sufficiently impactful information, investors will reassess their valuation and pricing strategies.
Company X's stock are worth 100 dollars. A scandal breaks out, revealing that their second most important product must be removed from the market immediately due to health concerns. The company will survive, as it has other products, but it is clear that their income will go down and they will spend a fortune on litigation.
Suddenly Investor A wants to sell this stock, because they don't want to hold a risky asset. But who will buy it? Investor B is willing to buy this stock, and will reassess their targets, decide that this stock is now worth around 75, and only buy it at this price.
Investor A has two options now: hold a risky asset, or take a loss. If they decide to take a loss, the stock is now priced at 75. If they decide to hold it, then the price might be artificially 100, but this asset is not liquid now, as nobody is willing to buy it at 100.
So the price has already dropped, before any transactions happened.
It’s not finite. Shares are trivially created and wealth is trivially destroyed.
Consider the example of a company that is founded and immediately issues and sells a million shares for a dollar each, and then burns the dollars in a bonfire.
There’s less dollars at the end of the story. It’s not a zero sum game.
Yeah, finance can be messy for those who just get into it at the smaller to medium scales but who only have some experience in analyzing investments at the micro scales without really understanding the macro scale economics behind it.
If the stock market responds to sales by spooking investors who then sell at lower prices, then the market cap was always a scam. Exchange value of the collection of stock shares for the shareholders is actually not last_price * outstanding_shares but a much smaller amount that exponentially decreases as people sell out.
The use value for the company too is not represented by market cap because short term speculators aren't going to be around long enough to allow you to realize those investments as assets, and anyway there's a large contingent of shareholders who either don't understand or don't agree on company leadership's decisions, so the true value is much lower than depicted.
It's basic economics. Value is what can be done with the set of assets and the collective beliefs held about them, not the projection of such from some pseudo-equilibrium state.
However, big finance depends on you either believing their falsehoods or getting out quick enough that the grift is completed so that average Joes are left holding the bag. They're not on your side, so why continue playing by their rules?
I think those are different, because they are frequent small transactions where having a smooth flow is essential. Renting an office is a longer term relationship so a marginal improvement in transaction cost doesn't really move the needle in the same way.
Those businesses have some shared infrastructure and brand--maybe more than WeWork--but they're still largely city-by-city labor-intensive retail businesses that still can't clearly profitably operate at scale, at least at their current cost structure.
I feel like Uber's losses are deliberate at this point, like Amazon's lack of profit.
If you look up their losses per journey it's something completely trivial like 50c. Uber's customers are not that price sensitive so if they really did want to make a profit they could probably just raise their prices a little bit.
With Amazon, you could point to what they were spending the money on. With Uber, it's a lot less clear what they are doing other than gaining market share with discounts. They are going to lose a lot of that market share when the discounts go away.
But I think the consensus is that (unlike Amazon) there is no more scale for them to reach which would make their business model profitable enough to justify the valuation - their only route to large profits is to destroy the rest of the competition and raise prices.
But that won't work will it. Here in Karachi, when careem (the rideshare company uber bought) raises prices, you just have two other ride share companies (bykea, and indrive) undercut it.
You can make cabs dissapear, but copycats are a paradox because you are "validating" their business model with your "success", so they will cannibalize you
Twitter and YouTube don’t make profits, yet are still wildly successful. With a high enough amounts of hype, stock price, and money, a company can stave off reality in seeming perpetuity.
Their net income back in 2021 was -223.32 mil. So only ~0.6 million per day.
The interest payments on the $12.5 billion of debt Musk offloading to its balance sheet to fund his 'purchase' is way more than that.
Basically Musk alone costs Twitter about the same as 4000 - 8000 employees. Which is why he had to fire that many people.. Seems like a great deal.
Not that I mind him running Twitter into the ground it's horrible format/platform for any meaningful communication aside from public single sentence public announcements..
As always, you are (were) using Twitter wrong. I follow authors, artists and journalists. Now, since Musk, the comments on anything newsworthy is a cesspool of paid subscribers with inane comments or just a string of emojis.
If you had told me 6 months ago that I would grow to hate the clown emoji, I would have been bewildered.
> As always, you are (were) using Twitter wrong. I follow authors, artists and journalists.
Well yeah, but those authors, artists and journalists can only use Twitter to share links and images (and announcements) since no meaningful content can fit into 230 chars. The worst is when people split a single paragraph text into 5+ tweets, that just brain damage inducing UX....
IMHO removing the limit would've been the only good thing Musk did if it was available to everyone.
Science and likewise machine learning twitter are interesting in the game theory sense of the whatever Twitter is. Same with journalists. It's distinct from the influencer phenomenon. Also distinct from what you see in the author/podcast world.
The only thing saving YouTube from going down under is that Google supplies it with bandwidth. Egress-dominated bandwidth is hella expensive, and video (especially if you're going 4K) demands tons of it.
Netflix eases that problem by providing ISPs and other interested parties with racks full of what are essentially ultra-performant NAS systems [1] for free, but that's only realistic because the utter majority of Netflix's load comes from their top movies/series and it saves them all the egress fees and the ISPs a hefty chunk of their connectivity needs - ~15% of all Internet traffic is Netflix [2] and even serving a quarter of that by ISP-local caches takes off a lot of load.
Youtube, Vimeo and their smaller competitors, in contrast, have way too much different content to make such an expense worth it.
I’m not so sure that YouTube isn’t dominated by a small cacheable percentage of content. They could probably save significant bandwidth just by caching Baby Shark (and if they’re not, they’re missing something).
Egress bandwidth is pretty cheap if you’re not paying a cloud provider for it.
Coworking in general is a hideous working environment. The offices are fishbowls. There's no privacy. It's worse than open plan offices, because at least at the office, everybody works for the same company.
The only times I've found decent coworking spaces, they've been ad-hoc affairs to make use of an old building on cheap real estate. No software startups, nobody chasing VC money, no espresso machines, no free snacks (or maybe just a few sad granola bars for emergencies), just a solid wooden door, wifi, and natural light from a window. I don't think arrangements like that last, though.
One of the founders I worked for mentioned that all of his businesses actually started in the corner of a real-estate office. They just rented a few desks to work from, then whenever they grew they moved up to a small lease.
There is a cowoking place well hidden near my home. It has 3 quite passable conference rooms, 6 "working bays" where you can use with a laptop in a very uncomfortable way, and a free desk at the side of those bays.
It looks like the perfect place to do a meeting and go away, and indeed it looks like people do use it that way a lot. Also, you can rent it at the moment, without any planning. I imagine it's successful.
It is indeed not the kind of place you want to go to do quiet work. But spaces leading to quiet work are plentiful anyway.
Yup, if you’re going to coworking spaces to actually work you’re a chump.
The real value of the cowork space was to be around other entrepreneurial types and perhaps even meet a young and hot ambitious babe. The “work” was an excuse to just hang around the same place day after day.
I bet you could come up with bullshit like: “WeWork is a platform! We can also do food delivery and sell other add-ons…”. Saudi investors would be delighted five years ago.
I am pretty sure "WeWork is a platform" was actually something they pitched. Or maybe it was WeWork as a service.
WeWork labs was the most genius thing though. Build a tech lab straight up for no other reason than to have a tech lab for the optics of having a tech lab.
Is it Uber for offices? Uber's model is that individual people with cars and spare time effectively loan out that car and their time to people wishing to make journeys, with the two parties being connected and the deal arranged by Uber, who take a cut. All the vehicle ownership risk was shoved onto the driver, and in the event that there was suddenly zero demand somewhere, that risk also was borne by the driver (at least, until various jurisdictions started enforcing minimum wage so that drivers who had no rides all day still got paid).
WeWork's model didn't appear to involve individual people with spare office capacity loaning it out for short periods to other people needing an office for a short while. WeWork's model appeared to be that WeWork itself leased office space, and rented it out to people. WeWork paid for the lease, and took on all the risk of that and all the risk of the demand vanishing.
The AWS bet is that some companies, especially when starting out, will pay a high premium to not have to manage certain physical resources, and to have the flexibility to scale up or down easily.
Which makes sense. Startups don't like signing 5-year lease agreements, so renting individual offices with all infrastructure taken care off is very attractive, and there are lots of companies offering that. But WeWork tried to sell a very specific brand of that, notably open-plan workspace with great interior design. Which is the opposite of "cheap office space where people can get stuff done", putting them in a tough spot when money isn't plentiful for startups. And it didn't help that was run like a Silicon Valley startup, but in a business where there are very little efficiencies of scale. Just about anyone can start a viable local competitor, allowing the market to adapt far quicker than any one company can.
> The AWS bet is that some companies, especially when starting out, will pay a high premium to not have to manage certain physical resources, and to have the flexibility to scale up or down easily
It's not even a high premium if you need what cloud offerings have.
Management is expensive. Scaling is expensive. Security and compliance is expensive.
Cloud isn't for everyone, but when you need what it offers it can be amazingly cost effective.
It’s sold as Uber for offices. But the majority of customers rent one office (car) and just use it for years.
It’s like Hertz raising money on short term rental possibilities but all they do is lease cars to people long-term.
As the other poster said, it’s kind of like how some percentage of AWS just uses it as a dumb server and probably they’d be better off just renting bare metal.
The time for this company might still not have arrived yet. I just don't see what they could have done at the time and either way Covid would have bankrupted them.
Regus is doing reasonably well, providing the same services as WeWork. So the time was right, just that WeWork was both, a badly managed shit show, and a well executed money grift (millions forbthe name We paid from WeWork to Neuman and WeWork leasing expensive office space from Neuman). No business succeeds, or survives, under that management. Not that VCs care, as long they can dump their shares at some greater idiot down the line before things implode.
In fairness they must have spent at least $10B on truly amazing interior design and designers. At least, I hope so. In earnest, I've never seen a bad WeWork interior, and I'm glad those folks got the work.
Surely if they owned $10B in valuable property that’d be reflected in the value of the company. So spending that much on not terribly liquid assets is lighting the money on fire from their creditors perspective if they’re not paying for themselves.
I'm sure that plenty of that $22B came from the sale of other inflated assets to buy into WeWork. WeWork isn't the only scam out there; the economy seems largely dominated by scams (things whose values are determined by their moment by moment success in hyping bullshit) and cons (things that make money by providing services enabling the hyping of bullshit.)
Financialized economy, no manufacturing base, etc etc. Don't want to doomer I guess, but the land has plenty of resources and educated people so recovery wouldn't be too difficult.
The idea, as I understand it, was co-working spaces. They were there to optimize that, extracting the maximum profit in the way they leased stuff. Ok, fine.
Is co-working still going on? Has something desirable been lost? Were they creating any value that couldn't be recreated by someone else.
I can't care one way or another about fake valuation of market cap. But I do care if work is getting done, and that people are trying to find new ways to do it.
So can someone tell me if there is a there there or if this is just very rich people complaining that they didn't get richer?
If WeWork goes out of business and closes down, many people will lose their jobs and many people will lose the place where they work. That seems like something of value will be lost.
Yes, coworking is still going on for many sole proprietors, small teams, and remote workers. Remote work does not mean work from home.
> If WeWork goes out of business and closes down, many people will lose their jobs and many people will lose the place where they work.
Why? Assets don't usually just vanish; they merely change hands. The spaces will physically be there. If an individual space is viable and has existing customers then the creditors will sell it to someone who will likely continue to run it. If it is not viable then it will go, but then it's hard to argue it had value.
No the offices will be bought by someone else. The coworking lease will be cheaper. Most of the jobs will be preserved. Everyone will be happy except WeWork investors.
It’ll be replaced with other short-term, small commitment office space leasing providers. Some will surely be less efficient, meaning more people are employed in total.
Coworking will continue even as the providers of it come and go.
One could speculate whether things would have turned out differently if Covid and the raise of the home office had not happened? If Covid emptied out WeWork's spaces like it cleared out corporate HQs, companies probably just dropped all those contracts and stopped paying WeWork?
I can also imagine individuals and very small companies that might have defaulted to co-working spaces pre-pandemic who have been in home offices for a few years, are used to working that way now, and just default to keeping things the way they are. (There's also very little call for companies to lease overflow space at the moment.)
I'm sure co-working is still going on but I work at a fairly remote company and I don't know the last time I've been on a call with someone in a co-working space.
OTOH WeWork became an attractive option for small enough businesses that they terminated office leases during Covid and afterward wanted to have an office space available for employees that can't/don't want to WFH full time. At any rate the Wework building I'm in seems fully occupied - I suspect it would be even if they shrunk some of the "shared spaces" that don't seem like particularly efficient use of real estate (there's 6 floors, all with nearly half dedicated to it!).
For me, a couple things stand out, mcdonalds like consistency. I've been to wework in several countries and each time it's quick to get setup and on with your day. Generally, they're run in a consistent manner with an overarching corporate, which takes some of the interesting local customs out of doing business. Think about renting an office for a month in a 3rd world country.
They're community spaces also, group get togethers of similar minded people abroad. The spaces are generally pretty good too. I've been to a bunch of events at my 'local' foreign wework.
They're expensive, but when you're working sometimes that doesn't matter so much or is paid for by your company.
Like Uber, they're not perfect but they enable a cool way to live for me.
It was poorly allocated capital. Akin to building an expensive bridge to nowhere. Sometimes there are silver linings to those situations - eg dark fibre after the dot com crash. Here there will be discounted coworking space. Regardless, failure in the market demonstrates that there are better things the effort could have gone to as far as we know at this moment. Therefore it's justified to say that value was lost.
Poorly allocated indeed. I still remember the outrage over how the founder of WeWork used the company to buy stuff like branding assets and real estate from himself at very good (for him) prices...
Coworking is absolutely still going on. My wife and I go to https://kiln.com/ which is a fantastic option if you are in SoCal or Utah. They seem to be thriving. The workspaces are fantastic, they get us all the benefits of going to a (very nice) office with none of the downsides (we choose when to go, and they're a five minute bike ride from the kids school.) Lots of opportunities to meet other members, network, and a place to go to when we need high speed internet and an environment conducive to work. At $325/mo on SWE salaries it seems like a no-brainer.
But it will never be a good fit for VC funding. It's just a high quality, profitable small business with happy customers. The WeWork valuation never made any sense.
I’ll never understand why you would want to subject yourself to an office AND pay for that experience. Networking aside (why can’t that be done outside of a co-working environment), I don’t see any benefits.
I would rather dump the $3,900 per year into my mortgage or other debt tbh.
And that’s totally fine because unlike a corporate office, the only people there are those who find value in it. In my case, my house is often a circus of kids, grandparents, and caregivers so it’s well worth it to have a place I can escape to work. And if my circumstances change, it can be cancelled in 30 days unlike a long-term CRE lease.
It’s a great service for those of us who value it, and it’s popular enough that it’s not going anywhere. It is not, however, a billion dollar company lol.
Yes its a huge value loss but isn't this part of the VC model - invest in some companies knowing most will probably whither away in one way or another but a few will hit it out the park? The article mentions Benchmark and Insight have done ok in their other investments.
Softbank though is a bit of an outlier - maybe it was a one-hit-wonder with Alibaba. They don't appear to have invested like other VCs at any rate.
One new theory is that the new VC model, as postulated in Venture Predation [0] is to create the illusion of potential to success so that you can dump your shares on the market at a sky high price. After that, VCs don't care if the company loses $50B in value, they already had their exit.
I don’t even think that is new, it is the oldest play in the book. We see it in crypto and stock IPOs constantly. Sell early tiers of shares to insiders at very discounted rates, dump on the plebs when it is listed on exchanges at several multiples of the price you bought in at that think they are getting a good deal early. You bought shares at 0.25 and it launches at $10 and keeps going down to $5, $2 but you just don’t care because even at the lows you are 4x’ing your money.
People say no value was lost with WeWork but that is very untrue. Hard working, misguided people and funds bought WeWork stock from the SPAC and let Adam Neumann turn lies and smokescreens into real cash. He’s no different than Elizabeth Holmes from Theranos except her lies involved something that can be proved was incorrect since it was medical testing. His real estate ideas were equally wrong and impossible. His net worth is now 2.2 billion.
The bogleheads ideal of investing in massive index funds helps somewhat avoiding these, but it just means you have to be a big enough scam to get on the index.
This is exactly what some VC firms do. They are interested in generating returns for their investors, if the company trades to zero after an IPO they will have already generated a significant return.
I imagine the only shame the investors feel is that they couldn’t pump up the share price higher, so they got an even bigger windfall before screwing over everyone that would be left holding the bag.
I find it very convenient for the Fed to have kept QE while inflation was flashing red hot just so Wall Street could finish making money off of all these SPAC deals. Only when Wall Street finished, did Fed magically come to senses with inflation. Whole thing is rigged.
In Adam’s defense he created what’s actually an excellent product. I’m a happy WeWork customer it’s a great experience as a customer. Things would be a lot different for Holmes if that’s what she did.
Given their losses your rent would have to roughly double for WeWork to have any profit. May I know if the services provided to you are worth that much?
>I’m a happy WeWork customer it’s a great experience as a customer.
>Things would be a lot different for Holmes if that’s what she did.
I think you're correct.
If Holmes would have actually had an excellent product or happy customers, Wework gives an idea of the much bigger scale of fraud that could have been accomplished.
If there was no greed involved whatsoever, and all were providing actual value added, odds are there would be more than one skyrocketing to beyond unicorn status, fully sustainable for the forseeable future.
Without further investment, just respectable returns.
The VCs backing him are in on the con to. They want to pump and dump their stake on the real market.
SoftBank was the real con person in the WeWork saga…Neumann just left them holding the bag, and they couldn’t successfully dump it on retail investors or sell it to a greater fool.
The reason VCs continue to back people like Neumann is they have succeeded many times (e.g, Uber, Postmates, Lyft, Chamath Palihapitiya’s SPACs, etc.).
The economic concept of market rationality was never that the market is always rational in all cases, but that overall people make rational choice on avg.
It’s a shame they bought (and sold) meetup.com. A great place for clubs in the before times for a small fee. The sold it, but I don’t think it’s the same.
What's a bigger shame is that Meetup can't seem to succeed on their own. (I think they were on their Series F when WeWork bought them.)
They are one of the few remaining vestiges of the "old" pre-social media Internet and are successful in getting people together without walled gardens.
I’ve ridden this stock down almost all the way (came in at $5 then 2.50 then again at $0.50). I am a pretty bad investor in that my top criteria is to buy stocks that produce a good or service I love and then stick with them a long time.
As an operator WeWork adds so much value to us as we staff up all over the world. I love being able to go into any city and have a fun energetic and aesthetically beautiful environment. When I look at the WFH shift, I struggle to rationalize how companies wouldn’t rather utilize flex space as needed for group huddles than commit to long term leases. Their pricing is variable which is inflation resistant. Top line growing at 20% and they removed $2bn in run rate expenses. The list goes on…
Anyway I was wrong on literally every account. This was a huge (and expensive) lesson for me. Stocks always have room to go down no matter how low you came in at.
> When I look at the WFH shift, I struggle to rationalize how companies wouldn’t rather utilize flex space as needed for group huddles than commit to long term leases.
It still requires that everyone be in the same city more or less. Basically only applies to companies that had an office and now don't want one, and even then only for a while.
Once you're working fully remote anyway you're giving up one of its major advantages (geographically unconstrained hiring pool) by keeping to one city like that. If you find meeting in person to be advantageous enough to justify that, you probably should capitalize on it and just have an office.
It's one of those things that sounds good on paper, and kinda was good during some periods of the pandemic. But it's a compromised middle ground that realizes none of the advantages of committing to either approach.
> "I struggle to rationalize how companies wouldn’t rather utilize flex space as needed for group huddles than commit to long term leases."
Because larger companies have a stable enough need for space, even in the remote realm, to make it worthwhile to have long-term leases. Even if offices become group-meetup spaces rather than more traditional desk space, it still makes sense to run your own if your scale justifies it. A company like Microsoft for example has enough persistent need that they should just reformat their existing holdings to be group-meetup-y. They have no need for an intermediary like WeWork.
Which leaves the market only to companies too small to justify running their own offices - which coincidentally is the same market WeWork targeted pre-pandemic, so remote hasn't actually changed much, much less significantly expanded their TAM.
Also worth a heavy and hearty thumbs-up on the other reply: be aware if the service you love is because the company is very well-run or has some technological advantage... or if it's because you're being sold $100 worth of goods/services for $50.
That’s what I got wrong. You outgrow a WeWork at about 8-10 people which is where customers are most stable. I assumed they could adapt but the economics aren’t there.
In full transparency I didn’t do much analysis. At $5 it was trading at 1-2x revenue growing at 20% in a horrible market with a great operator. The issue is too maturities and running out of cash.
They provide an excellent, consistent service at global scale that no competitor even comes close to matching. They are a fantastic operator from the customer’s vantage point.
I used to work at Microsoft and loved the ability to fly to different cities and have a great workspace where everything "just works" and stimulating conversations with new people in the field. A valuable "invisible" tool of thought if you do R&D. I didn't think this could be possible if you didn't work at a bigco, but then along came WeWork.
I don't have access to their internal data so don't understand their complete model, but it seems to me they have significant value and could definitely comeback.
I bought FitBit heavy, dollar cost averaging in and at one point paid around $40 a share, and ended up losing a decent amount (I think my average price was $10 and GOOG bought it at $7), but here I am years later still wearing a FitBit and it's great. I hope the same happens with WeWork, that they survive this dip and figure out the economics (maybe getting acquired). Come to think of it, could be a good buy for GOOG–they could pitch Google Cloud heavy to all WeWork users.
I wanted to love the concept but couldn't really. I couldn't afford renting a whole office so just had the cheap day pass that lets you use the facility. It's like going to a cafe with the benefit of leaving your laptop while you go to the bathroom or wonder around. Nothing like an office. I want a dedicated desk and office chair, external keyboard and monitor, a quiet area, conference rooms that don't charge you by the minute, etc. We Work is nothing like that.
WeWork has always been a shitty REIT marketed and valued as a tech company. Not surprised at its demise.
The only thing I’m sad about is: Neumann is not rotting in jail. He defrauded investors, misled people yet he was actually rewarded with a golden parachute.
Per article he is now pushing some other junk product with rental housing. Probably buying up distressed properties, applying cheap aesthetic fixes, and jacking up the prices and pushing out people from their homes.
It’s not even an REIT. If they had purchased the properties instead of long term leases they might be able to transition into an REIT and slurp up real estate on the cheap.
The crack dealer of real estate. Poorly run and insanely overvalued in the first place because they somehow convinced people they were a tech company. Pretty unsurprising.
This was always the weird thing about WeWork, after the collapse of it's ridiculous valuation people were like "Well, it's still a business, similar to IWG, it has some value". But the truth is no, the only thing WeWork had was a series of liabilities. They had signed a bunch of agreements to rent office space long term at a high price. The valuable part of IWG is that they have rental agreements with buildings that are low cost and they rent that space out to businesses for more money. That's how they make money. But WeWork didn't have that, at best they had expensive leases they needed to walk away from and some potential customer demand that is elastic enough that it'd go to 0 when they started charging above their own costs.
The article makes out like WeWork lost 47Bn over the last 5 years. No! It was probably worth 0 when the first IPO blew up. The only thing that kept it alive was Japanese face saving.
edit: to be serious... there's certainly a lot of difficulty in achieving what he did no matter the failure, but when we use the word work to compare an employee worker and a ceo owner, let's be more specific with what we mean. we all understand work here and we talk about its structures day in day out. a ceo's day to day work has you running memeified mental contortions to understand how it translates into customer or employee value. their duties have more to do with the operations and growth of a business in a competitive landscape. this isn't "work to produce", it's work to manage and grow an organization's marginal returns and to seek monopolization in market in various ways as far as the law permits. I personally don't have the same casual respect for these two categories of work in terms of their social worth and am skeptical when people talk of them as equally comparable when talking about things like respectability, social good, whose participation is necessary to produce something, etc
'A single parent working three jobs just to cover rent and food works hard.'
Is this a reality though? I was desperate for work many years ago and all the part-time jobs were optimized for a specific time of the day - say 10 am to 2pm or thereabouts.
I can imagine a scenario where someone is holding down 2 jobs but 3, this is hard to comprehend?
For context, I should add I am in the UK where there are perverse incentives to only have one job where you work a maximum of 16 hours because this is where all the work-related benefits (welfare) start to fade away.
Not that I was claiming benefits but the 'benefit trap' is where most of the employers set their nets.
> Is this a reality though? I was desperate for work many years ago and all the part-time jobs were optimized for a specific time of the day - say 10 am to 2pm or thereabouts.
> I can imagine a scenario where someone is holding down 2 jobs but 3, this is hard to comprehend?
I only ever had two at a time, but it would have been possible to cobble three together (I effectively did this for a semester as I had two jobs, and was also commuting between two college campuses for classes). I managed 3.5 hours of sleep a night except for the weekend. And got to a point where the third energy drink of the day triggered a feeling of sleepiness.
For a person without a credential:
Early AM) Newspaper delivery or Load line at UPS/FedEX/DHL.
Most certainly in the age of the gig economy. Even my own partner has about 4 different jobs now - as a registered nurse. They don't necessarily add up to a massive number of hours a week but she'd no doubt prefer not to have to jump back and forth between so many employers, each with their own set of expectations and management styles etc.
But she'd have to settle for a pretty crumby base salary for any sort of full time position.
A CEO presumably is also keeping those jobs alive. Businesses don't run themselves. _Somebody_ has to do it and I bet it's a shot job.
Makes you start to understand why certain cultures vehemently upheld arranged marriages. Having kids with the wrong person makes for a lifetime of hell.
Depending on your definition of 'success' he may be one of the most successful. After all, he apparently managed to profit off a business that was worth little to nothing.
Is success making lot of money for yourself. Or building a business that in general makes money and world a better place. That is generates societal wealth.
Success is personal. If your goal is to increase the amount of wealth for everyone then go for it.
With that said, remember the following. While the economy is not zero sum and we can increase the amount of wealth in the world, power is zero sum. Power is finite and very scarce. You can create tremendous wealth and later find out it ended in the hand of a single person. And that person is not willing to share.
If his goal was to amass personal wealth at the expensive of others. But again, it depends on the person. A cab driver that barely makes ends meet can be successful while a multimillionaire isn't. If you wake up and do what you want to do, you are successful.
Absolutely the man was a pioneer of the graft that is payment for order flow. His biggest mistake was living too long if he had died a year or 2 earlier he would have gotten away with it
On your deathbed, is “I made so much money and earned so much power” really going to be satisfying? As opposed to family/charity/invention/politics/etc. Not a rhetorical question, honestly curious what you think
I like making money and exercising power. I like the feeling of getting what I want when I want. To help people (family/charity) you need money, resources and health (being able to). Politics is fundamental at all times, meaning human relations.
My wish is to die without a single penny in the bank. As I get older it gets clear how much time is worth. We have so little time to actually do what we want before we get too old.
> power is zero sum. Power is finite and very scarce.
As technology[1] increases power increases. It is social capital to convince others that is zero sum (holding the number of people constant).
[1] - and here I mean all technology, not what's commonly called 'tech' today.
> You can create tremendous wealth and later find out it ended in the hand of a single person. And that person is not willing to share.
Having a lot of money doesn't mean people have to do business with them. Undoubtedly some will, but you don't have to. It also doesn't prevent others from doing business with made-up currencies (e.g. Ithaca Hours, cryptocurrencies) or through barter.
Note the fact that I did not mention money. I mentioned wealth. Holding a huge bag of money is useless because as you stated, people can now choose to use another currency and I lose all my money, it becomes worthless. Or people can work for each other, without money.
But what if I own all the productive land? What if I own a corporation that manufactures a product you depend on? This is wealth.
> But what if I own all the productive land? What if I own a corporation that manufactures a product you depend on? This is wealth.
If people won't take your money to defend your wealth, then your wealth belongs to whoever takes it. It's only the rule of law that allows material wealth to exist.
This is a very strong force, and is effectively insurmountable in most circumstances in lands with well-functioning governments. But things like the following do, very rarely, happen even in them: https://morbidology.com/the-town-that-got-away-with-murder/
The most fucked up thing I heard is about people investing in artificial wombs.
You want to know the actual reason they’re doing this? It’s not because some restrictive laws were passed or to keep the physical toll low on the mom, etc. maybe it is, but that would be found in the marketing slide.
“We are too generous with how much leave we offer”
Everything is to extract as much value out of everyday things as possible. In this case, their thinking is along the lines of how can they can get women to stay in the office longer while the kid bakes at homes. Maybe offer a short leave after it’s ready. But the economy grinds harder since the woman employee didn’t have to take time off for doctors visits or to recuperate post birth.
90% of the ideas and products that come out of here have a solid dystopian underpinning to them.
Mine was supposedly to be… hmmmmm, let me see now… the fourth episode of the series. My title was “Mister Meat.” Now, TV writing in those days was a two-step process: “story with option to teleplay,” they called it. You wrote a ‘story,’ a short plot outline with all the major beats and characters. Then, when the showrunners, studio, and network all approved it, you went on to write the teleplay.
“Mister Meat” never got that far, alas. The showrunners and my fellow Maxxies loved it, as I recall, but when ABC saw the story they reacted with horror. Way too disturbing and offensive, they announced, driving a spike firmly through my concept and sending me on my way. Which I why I never got hired onto MAX HEADROOM and wound up on staff on BEAUTY AND THE BEAST instead.
I got a second chance when MAX was picked up for a second season, however. As a freelancer, I got the choice assignment of writing the Christmas episode. And this time I went to town. Wrote the story, rewrote the story, wrote the teleplay, revised the teleplay. “Xmas” was the title of the episode, and it got as far as pre-production…
And then the show was cancelled. Rather suddenly and unceremoniously, I must say. America was spared from celebrating Xmas with Max.
I always liked the intro. Police busting into someones apartment, Edison Carter (jourrnalist) wanting to know what the problem was. Cop flips over a pillow by the TV, says something like:-
What does an artificial womb have to do with parental leave? Mothers already spend historically low times recovering in hospitals post delivery.
Parental leave is about bonding with the child and providing care for it while it is especially vulnerable. That's why it is called parental leave- some countries and a growing number of companies offer it to fathers as well.
I'm in the US so I have no clue about other countries.
Like I said in my post, the doctors visits while carrying the baby, the PVT due to stress and other factors, and the maternity/paternity leave (at companies I've worked they allow 6-9+ months maternity and 2-4 months for paternity). Companies know they will offer these leaves, but the in the lead up to that there is a lot of OOO and unrealized effort.
There are people at every company and at large who are crunching efficiency numbers while we sit there hammering out features and fixes.
I think you're missing the obvious - paternity leave is expanding. It wasn't even a thing in the US when I started my career.
The idea that the only reason artificial wombs are being investigated is "corporate greed wants workers to take less time off for pregnancy" is so far fetched it might just be the silliest conspiracy theory I've heard in awhile. The amount of money going into the design, research, regulatory hurdles etc will not be paid off by decreased PTO usage. If anything, it'll just get used up again when the infant inevitably gets sick or a care worker isn't available to watch them.
whatever makes you happy, making up whatever conclusion from what you read! FWIW I did not mention paternity/maternity in my post at all... 10/10 reading comp..
You claimed all health and other benefits to investing in artificial wombs are purely bad faith marketing gimmicks. The "real" reason is to keep employees in the office working.
From your first post:
> In this case, their thinking is along the lines of how can they can get women to stay in the office longer while the kid bakes at homes. Maybe offer a short leave after it’s ready. But the economy grinds harder since the woman employee didn’t have to take time off for doctors visits or to recuperate post birth.
I argued that is an absurd justification, citing the rise of paternal leave (both availability and increased duration) as an example. I later argued that any PTO saved by not visiting the doctor would end up used as soon as the kid gets sick, needs someone to stay at home, etc.
To repeat myself, it will take an obscene amount of money to get an artificial womb to market. The payoff in doing so is certainly not going to be in the form of people taking less PTO.
I was talking about the reasoning behind it man.. "We are too generous with how much leave we offer". Look at the context of the whole discussion.. who I replied to.. what they said. But sure.
The fact that someone literally said that, and was serious about it, was kind of f'd up to me. There are people like this everywhere, who think like this.
I don't personally think of "micro-optimizations" of people this way, code sure. That's probably why I'm could be a better entrepreneur lol.. This person probably thinks cool I save 1-2 weeks PTO per year x 1 million people is a lot of time saved.
Again, I am not talking about leaves, but rather the type of "vibe" that was given off by that statement.. I personally found that person's line of thinking objectionable and so I posted about it.
Most businesses do not "make the world a better place". It was a mistake to ever believe that it's realistic that every business can do that and really only served the egos of those who have uttered those words. Most businesses are providing a service or a product, that thing may be useful, but there's a pretty high bar from that point to "making the world a better place".
Well, for their customers they are making the world a better place. Given there's no absolute standard for that, people wanting your product or service so much they'll pay you money for it is about the best measure we have.
This is a well-established and researched part of market failure. It involves the idea of negative externalities, like how a market for heroin creates a social cost that is borne by the general public.
And you're right that a market transaction is the best measure of "good" that we have. To get some sense of "what society might pay" to limit or eliminate such a market, an analyst must resort to more difficult methods like cost-benefit analysis. It's a huge topic and is used by major governments.
Indeed. But given negative externalities are not the job of companies to compute (because they don't get to define them) the establishing and enforcing of non-mark-distorting negative externalities is government's, and it's government's failure when it's not done, or not done well.
idk, im pretty sure that my internet company or the train company or my local grocer are actively trying to make their customers life worse and succeeding. and the answer isn't "oh but without them you'd have to walk/grow your own food/lay your own cable"
for starters none of the companies mentioned did that themselves, train company didnt build infrastructure, supermarket didnt grow food, internet company didnt lay cable. Sure they provide some value I suppose in logistics or whatever but lets be real its not that hard given some capital. If they didn't someone else would gladly step in and do it instead, theres no world in which the customer is forced to actually go without.
You might say "but these are all distorted markets", and to that i'd say: they are pretty much the main points of interaction I and a lot of people have with the economy (and we can think of dozens more examples). If these are all exceptions, the market is one big exception.
I feel like making the world a better place requires a much greater standard than just "someone paid you for some resource/commodity you hoarded". I grant you sure, in a simplified model where there are countless competitors & perfect information available to all consumers, buisnesses would have to compete on providing good services, but thats not the world we live in.
It's frankly ridiculous that it's not enough reward to be richer than croesus, people want us to believe that they are moral because they got all that wealth.
> "someone paid you for some resource/commodity you hoarded"
I don't think conversations like this can ever progress when this constant misrepresentation takes place. No one is talking about hoarding. If I get paid to write someone some software, what hoarding happened?
Success as an individual is doing well for yourself. Success as a society is building a system where people do well for themselves by making other people better off.
As Maryland state senator Clay Davis used to say, "sheeeeeeeeit, I ain't saying no if someone's just giving money away." Grift those Saudi princes for all you can, king.
If we've learned anything from SVB, the crypto craze, how the rich somehow keep falling for ponzi scams, and all the weirdly unsound startups, it's that these deep pocket people are terribly, remarkably, average and their status comes from things unrelated to their merit or prowess.
I don't know why this is shocking. Money is a social construct so its allocation is also socially constructed. It is results oriented, but it's a more complicated kind of result than investment ROI.
For instance, Michael Spindler and Gil Amelio were paid more for their flopped tenure at Apple than I could ever hope to make. Gil walked away with nearly 8 million his final year after overseeing 708 million in loses. Good gig. Almost every c-level exec I've met at $1 billion+ firms leaves me with the same impression: "a charismatic overconfident idiot"
If you want to do things that require capital, knowing how this stuff actually works is required.
I doubt those billionaires give only their own money. (But well, that puts the real problem elsewhere. I have no issue with that either, up to the point where the company was put on the stock market, then I have issues.)
WeWork at it's core was a bet that 'if we lock in 30-year mortgages at market rates, office rent inflation will mean that in 2045, we will have significant cost advantages.'
You can argue the pandemic merely accelerated remote work, so it was always probably a bad bet.
SilverBirch - You may be correct, and I agree with your point about IWG is a genuine business. However, it also is worth pointing out that their stock has been the lowest it has been over the past 5 years (I believe 5 years is a fair window that overlaps with WeWork).
Co-working could be a great place for people to meet people working on interesting ideas. If WeWork had focused on producing great collaborations, it really would have been a game changer.
This model is probably workable, but more under a airbnb type model where other people hold the liabilities and rent over a platform. The parent (ie wework) would take a cut, and companies could lease excess space over the platform. Instead wework holds the liabilities, which they got at high values, and now can not rent them. There was a long bull run, and money was flowing at many types of different projects - many which have or will end up failing. It is the same cycle as in the past which really shows itself after a few years of the run where suddenly it seems bear markets can't happen again, dumb ideas are making money and if you are not in you are loosing out. Covid led to work from home, which really killed wework's concept, but if it wasn't covid it would have eventually run out because it didn't make any money.
> He's back with a new startup that raised $350 million from the VC giant Andreessen Horowitz in August, 2022 — its biggest check ever — and is back on the tech-speaker circuit.
smh. This really sets a new standard in grift.
Now, if he only had good kompromat on all those investors, he'd be up there with Jeffrey Epstein. Come to think of it...
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[ 3.4 ms ] story [ 129 ms ] thread"Renting offices to work in" was never going to be a silicon valley style success, because it just can't scale that way.
Wealth represents an assessment of the value to humans of existing resources and it can go up and down based on the decisions of how to allocate that wealth.
There’s absolutely no controversy whatsoever about this concept despite your desire to not acknowledge it.
This concept isn’t particularly subtle or arguable. If you have a lot of food and you are wealthy and then you let it spoil you’re less wealthy.
Nobody else got that wealth (assuming you don’t count the microbes) and absent another source of resources then you are also dead.
Glutting the wealth creation is not fundamentally destructive - what if a specific location cannot actually sustain high production levels because their housing supply, energy supply, or talent supply is insufficient? What if unfettered growth will lead to a collapse that destroys a lot more value than the potential future wealth destroyed? What if a company heavily invests in business and retail construction and a global pandemic happens?
Wealth creation is impossible to separate from public policy. For Manhattan to exist, a large amount of money had to be poured into its fundamental blocks.
https://en.m.wikipedia.org/wiki/Parable_of_the_broken_window
If a house is destroyed in a fire, it loses its value as a house. Now you have the value of the land, which will be offset by the cost of clearing it. So the value of the land is below market. The asset has depreciated.
Large scale construction tends to be very good for the economy because it both increases economic activity (construction is expensive, and a lot of people get paid to do a lot of labor in the whole chain, from lamps to concrete to engineers to meal makers), and sets infrastructure that will be used by highly productive companies (white collar offices) to make a lot of money.
But there is no value transfer from rubble to construction companies. That asset owner took a hit.
So maybe the workers spent more money buying their lunches, but that's just extra inefficiency, and not extra economic acitivity. Just like the broken window, the workers spend more in one area and so have less money to spend elsewhere.
In economics this is called hedonic adjustment. The economy is improved because the workers value purchasing a lunch more than making their own.
It's cheaper to listen to the radio, or even buy a CD, than to go to a concert. Going to a concert is not seen as economically inefficient.
9 foot ceilings are not seen as economically inefficient compared to 8 foot ceilings. The additional foot is seen as value.
A house made of bricks is valued more than a house made of straw, despite them both functioning equally as well as long as a huffing and puffing wolf isn't around.
Etcetera.
Using the word "catastrophe" to describe a financial process not going in one's favor doesn't actually turn it into a natural disaster that physically destroys objects.
Asset depreciation is a fundamental concept that you should be familiar with, as it influences several aspects of your personal finance: https://www.investopedia.com/terms/d/depreciation.asp
Except the person who sold the stock for $100.
Person B now holds 0 in cash, and 100 in assets.
Fast forward 5 years. The stock price has crashed to 1 dollar.
Person A still holds 100 in cash and 0 in assets. Person B holds 0 in cash, and 1 in assets.
There was no transfer of 99 dollars back from Person B to Person A. Person A's holdings were invariant because they don't own the stock anymore. The losses brunt by Person B were not transferred to anybody else.
Money doesn't travel back in time.
Correct - the transfer happened when you bought the stock. What you have lost is the expectation of getting it back (or at least the expectation of getting it back today.)
The challenge for a company like Weework is that it's hard to identify what wealth they generate- at least for me.
In other words, what are they making (goods) or doing (services) that provides value to the world (wealth).
I suppose they'd say that their core value is making it easy to rent space quickly. This is certainly providing some value, but I hardly think it's one that's heavily differentiated.
I bring this up because the conflation of money and wealth is so often what gets people in trouble. Decoupling the two lets us examine what the value of a company is, at its core.
Post founder, WeWork was finding itself as a scalable office provider, where companies were willing to pay a premium for a flexible contract, and add or remove seats as needed. It was an interesting idea, and there were signs of growth. Then COVID happened. I'm surprised they are even still operating.
Stocks don't reprice without transactions.
If there was an overnight discovery of infinite energy supplies, Exxon would wake up to a very different price than the night before, as any potential buyers would severely reduce their upper boundary. Sellers would need to continually lower their price until it finds a willing buyer.
That could be me, for instance, putting a bid into the market because I read a hot tip on HN.
Or you may prefer to imagine an automated market-making model that moves its price for Ford because it just saw a big sell-off in GM.
Or consider prices at the open each day, which are set before any transactions take place.
Company X's stock are worth 100 dollars. A scandal breaks out, revealing that their second most important product must be removed from the market immediately due to health concerns. The company will survive, as it has other products, but it is clear that their income will go down and they will spend a fortune on litigation.
Suddenly Investor A wants to sell this stock, because they don't want to hold a risky asset. But who will buy it? Investor B is willing to buy this stock, and will reassess their targets, decide that this stock is now worth around 75, and only buy it at this price.
Investor A has two options now: hold a risky asset, or take a loss. If they decide to take a loss, the stock is now priced at 75. If they decide to hold it, then the price might be artificially 100, but this asset is not liquid now, as nobody is willing to buy it at 100.
So the price has already dropped, before any transactions happened.
See also pre market trading: https://www.investopedia.com/terms/p/premarket.asp
Consider the example of a company that is founded and immediately issues and sells a million shares for a dollar each, and then burns the dollars in a bonfire.
There’s less dollars at the end of the story. It’s not a zero sum game.
If you today form a company having 1 billion and 1 shares and I agree to buy 1 share from you for a dollar, you aren’t a billionaire.
If the stock market responds to sales by spooking investors who then sell at lower prices, then the market cap was always a scam. Exchange value of the collection of stock shares for the shareholders is actually not last_price * outstanding_shares but a much smaller amount that exponentially decreases as people sell out.
The use value for the company too is not represented by market cap because short term speculators aren't going to be around long enough to allow you to realize those investments as assets, and anyway there's a large contingent of shareholders who either don't understand or don't agree on company leadership's decisions, so the true value is much lower than depicted.
It's basic economics. Value is what can be done with the set of assets and the collective beliefs held about them, not the projection of such from some pseudo-equilibrium state.
However, big finance depends on you either believing their falsehoods or getting out quick enough that the grift is completed so that average Joes are left holding the bag. They're not on your side, so why continue playing by their rules?
"Food delivery services" was never going to be a silicon valley style success, because it just can't scale that way.
Neo taxi and food delivery companies are just matching apps that connect sellers with buyers and, in case of taxis, set prices.
Adding or removing a new service provider doesn’t have as much sunk costs as leasing a giant office space for several years.
Deliveroo, likewise: https://www.businessofapps.com/data/deliveroo-statistics/
These are not successful companies, except insofar as they are very successful at handing out investor money.
If you look up their losses per journey it's something completely trivial like 50c. Uber's customers are not that price sensitive so if they really did want to make a profit they could probably just raise their prices a little bit.
But I think the consensus is that (unlike Amazon) there is no more scale for them to reach which would make their business model profitable enough to justify the valuation - their only route to large profits is to destroy the rest of the competition and raise prices.
"On Monday morning, an Uber from Manhattan to JFK Airport was $100—nearly double the fixed yellow cab rate. But good luck finding a yellow cab" https://slate.com/business/2022/05/uber-subsidy-lyft-cheap-r...
The could have been profitable maybe if they didn't spend ~$400million on stock based comp!
You can make cabs dissapear, but copycats are a paradox because you are "validating" their business model with your "success", so they will cannibalize you
By now, I wouldn't believe Elon tellong me it's raining while being soaked in rain, waiting for one the millions of Tesla's robot taxis to pick me up.
The interest payments on the $12.5 billion of debt Musk offloading to its balance sheet to fund his 'purchase' is way more than that.
Basically Musk alone costs Twitter about the same as 4000 - 8000 employees. Which is why he had to fire that many people.. Seems like a great deal.
Not that I mind him running Twitter into the ground it's horrible format/platform for any meaningful communication aside from public single sentence public announcements..
If you had told me 6 months ago that I would grow to hate the clown emoji, I would have been bewildered.
Well yeah, but those authors, artists and journalists can only use Twitter to share links and images (and announcements) since no meaningful content can fit into 230 chars. The worst is when people split a single paragraph text into 5+ tweets, that just brain damage inducing UX....
IMHO removing the limit would've been the only good thing Musk did if it was available to everyone.
Netflix eases that problem by providing ISPs and other interested parties with racks full of what are essentially ultra-performant NAS systems [1] for free, but that's only realistic because the utter majority of Netflix's load comes from their top movies/series and it saves them all the egress fees and the ISPs a hefty chunk of their connectivity needs - ~15% of all Internet traffic is Netflix [2] and even serving a quarter of that by ISP-local caches takes off a lot of load.
Youtube, Vimeo and their smaller competitors, in contrast, have way too much different content to make such an expense worth it.
[1] https://openconnect.netflix.com/en/
[2] https://www.statista.com/chart/15692/distribution-of-global-...
Egress bandwidth is pretty cheap if you’re not paying a cloud provider for it.
"What people actually do at WeWork" - https://news.ycombinator.com/item?id=16292423
The only times I've found decent coworking spaces, they've been ad-hoc affairs to make use of an old building on cheap real estate. No software startups, nobody chasing VC money, no espresso machines, no free snacks (or maybe just a few sad granola bars for emergencies), just a solid wooden door, wifi, and natural light from a window. I don't think arrangements like that last, though.
It looks like the perfect place to do a meeting and go away, and indeed it looks like people do use it that way a lot. Also, you can rent it at the moment, without any planning. I imagine it's successful.
It is indeed not the kind of place you want to go to do quiet work. But spaces leading to quiet work are plentiful anyway.
The real value of the cowork space was to be around other entrepreneurial types and perhaps even meet a young and hot ambitious babe. The “work” was an excuse to just hang around the same place day after day.
A lot of "Silicon Valley success" fits this model too.
"Mini-cab firm" is not a SV success story either.
WeWork labs was the most genius thing though. Build a tech lab straight up for no other reason than to have a tech lab for the optics of having a tech lab.
WeWork's model didn't appear to involve individual people with spare office capacity loaning it out for short periods to other people needing an office for a short while. WeWork's model appeared to be that WeWork itself leased office space, and rented it out to people. WeWork paid for the lease, and took on all the risk of that and all the risk of the demand vanishing.
The AWS bet is that some companies, especially when starting out, will pay a high premium to not have to manage certain physical resources, and to have the flexibility to scale up or down easily.
It's not even a high premium if you need what cloud offerings have.
Management is expensive. Scaling is expensive. Security and compliance is expensive.
Cloud isn't for everyone, but when you need what it offers it can be amazingly cost effective.
It’s like Hertz raising money on short term rental possibilities but all they do is lease cars to people long-term.
As the other poster said, it’s kind of like how some percentage of AWS just uses it as a dumb server and probably they’d be better off just renting bare metal.
The time for this company might still not have arrived yet. I just don't see what they could have done at the time and either way Covid would have bankrupted them.
$12B from 2014-2018 [https://www.statista.com/chart/17705/uber-revenue-costs-and-...]
$25B from 2019-2022 [https://therideshareguy.com/uber-statistics/]
"WeWork has raised a total of $22.2B in funding over 23 rounds."
https://www.crunchbase.com/organization/wework/investor_fina...
The idea, as I understand it, was co-working spaces. They were there to optimize that, extracting the maximum profit in the way they leased stuff. Ok, fine.
Is co-working still going on? Has something desirable been lost? Were they creating any value that couldn't be recreated by someone else.
I can't care one way or another about fake valuation of market cap. But I do care if work is getting done, and that people are trying to find new ways to do it.
So can someone tell me if there is a there there or if this is just very rich people complaining that they didn't get richer?
Yes, coworking is still going on for many sole proprietors, small teams, and remote workers. Remote work does not mean work from home.
Why? Assets don't usually just vanish; they merely change hands. The spaces will physically be there. If an individual space is viable and has existing customers then the creditors will sell it to someone who will likely continue to run it. If it is not viable then it will go, but then it's hard to argue it had value.
tabloid-y source: https://nypost.com/2021/07/17/the-shocking-ways-weworks-ex-c...
Coworking will continue even as the providers of it come and go.
I'm sure co-working is still going on but I work at a fairly remote company and I don't know the last time I've been on a call with someone in a co-working space.
They're community spaces also, group get togethers of similar minded people abroad. The spaces are generally pretty good too. I've been to a bunch of events at my 'local' foreign wework.
They're expensive, but when you're working sometimes that doesn't matter so much or is paid for by your company.
Like Uber, they're not perfect but they enable a cool way to live for me.
But it will never be a good fit for VC funding. It's just a high quality, profitable small business with happy customers. The WeWork valuation never made any sense.
I would rather dump the $3,900 per year into my mortgage or other debt tbh.
It’s a great service for those of us who value it, and it’s popular enough that it’s not going anywhere. It is not, however, a billion dollar company lol.
Softbank though is a bit of an outlier - maybe it was a one-hit-wonder with Alibaba. They don't appear to have invested like other VCs at any rate.
[0] https://news.ycombinator.com/item?id=36003096
People say no value was lost with WeWork but that is very untrue. Hard working, misguided people and funds bought WeWork stock from the SPAC and let Adam Neumann turn lies and smokescreens into real cash. He’s no different than Elizabeth Holmes from Theranos except her lies involved something that can be proved was incorrect since it was medical testing. His real estate ideas were equally wrong and impossible. His net worth is now 2.2 billion.
Company is long gone. Founders and select investors for rich. Everyone else was left wondering how to feed their families.
https://news.crunchbase.com/startups/report-adam-neumann-ben...
Shame of the investors for giving this sky high valuation through SPAC.
What's bad about pension funds? People need, you know, to live off something when they are old.
The old model "we have a lot of kids and they will take care of us" no longer works as people have no kids...
Also that’s not the only variable in the equation it seems likely there’s at least one expense that could be cut.
>Things would be a lot different for Holmes if that’s what she did.
I think you're correct.
If Holmes would have actually had an excellent product or happy customers, Wework gives an idea of the much bigger scale of fraud that could have been accomplished.
If there was no greed involved whatsoever, and all were providing actual value added, odds are there would be more than one skyrocketing to beyond unicorn status, fully sustainable for the forseeable future.
Without further investment, just respectable returns.
Someone once said, SV values bigger failures than small success. Fail big.
The fact that this legendary con man has ultimately suffered no consequences for his actions demonstrates how the market is fatally irrational.
SoftBank was the real con person in the WeWork saga…Neumann just left them holding the bag, and they couldn’t successfully dump it on retail investors or sell it to a greater fool.
The reason VCs continue to back people like Neumann is they have succeeded many times (e.g, Uber, Postmates, Lyft, Chamath Palihapitiya’s SPACs, etc.).
They know they would do better.
They are one of the few remaining vestiges of the "old" pre-social media Internet and are successful in getting people together without walled gardens.
https://pluralistic.net/2023/05/19/fake-it-till-you-make-it/
As an operator WeWork adds so much value to us as we staff up all over the world. I love being able to go into any city and have a fun energetic and aesthetically beautiful environment. When I look at the WFH shift, I struggle to rationalize how companies wouldn’t rather utilize flex space as needed for group huddles than commit to long term leases. Their pricing is variable which is inflation resistant. Top line growing at 20% and they removed $2bn in run rate expenses. The list goes on…
Anyway I was wrong on literally every account. This was a huge (and expensive) lesson for me. Stocks always have room to go down no matter how low you came in at.
It still requires that everyone be in the same city more or less. Basically only applies to companies that had an office and now don't want one, and even then only for a while.
Once you're working fully remote anyway you're giving up one of its major advantages (geographically unconstrained hiring pool) by keeping to one city like that. If you find meeting in person to be advantageous enough to justify that, you probably should capitalize on it and just have an office.
It's one of those things that sounds good on paper, and kinda was good during some periods of the pandemic. But it's a compromised middle ground that realizes none of the advantages of committing to either approach.
Which makes it not very desirable as an investment.
Because larger companies have a stable enough need for space, even in the remote realm, to make it worthwhile to have long-term leases. Even if offices become group-meetup spaces rather than more traditional desk space, it still makes sense to run your own if your scale justifies it. A company like Microsoft for example has enough persistent need that they should just reformat their existing holdings to be group-meetup-y. They have no need for an intermediary like WeWork.
Which leaves the market only to companies too small to justify running their own offices - which coincidentally is the same market WeWork targeted pre-pandemic, so remote hasn't actually changed much, much less significantly expanded their TAM.
Also worth a heavy and hearty thumbs-up on the other reply: be aware if the service you love is because the company is very well-run or has some technological advantage... or if it's because you're being sold $100 worth of goods/services for $50.
Free shit is always a good product.
P.S. Is the about link in your profile correct? https://finsight.com/about/our-products seems to 404.
Thank you for the note on the link, updated it.
I used to work at Microsoft and loved the ability to fly to different cities and have a great workspace where everything "just works" and stimulating conversations with new people in the field. A valuable "invisible" tool of thought if you do R&D. I didn't think this could be possible if you didn't work at a bigco, but then along came WeWork.
I don't have access to their internal data so don't understand their complete model, but it seems to me they have significant value and could definitely comeback.
I bought FitBit heavy, dollar cost averaging in and at one point paid around $40 a share, and ended up losing a decent amount (I think my average price was $10 and GOOG bought it at $7), but here I am years later still wearing a FitBit and it's great. I hope the same happens with WeWork, that they survive this dip and figure out the economics (maybe getting acquired). Come to think of it, could be a good buy for GOOG–they could pitch Google Cloud heavy to all WeWork users.
Disclosure: I don't own any WeWork.
The only thing I’m sad about is: Neumann is not rotting in jail. He defrauded investors, misled people yet he was actually rewarded with a golden parachute.
Per article he is now pushing some other junk product with rental housing. Probably buying up distressed properties, applying cheap aesthetic fixes, and jacking up the prices and pushing out people from their homes.
But that’s boring and not investable.
The article makes out like WeWork lost 47Bn over the last 5 years. No! It was probably worth 0 when the first IPO blew up. The only thing that kept it alive was Japanese face saving.
Now he is with Marc Andreessen (another hokey) in Saudi raising more money for the next hot air balloon.
What a delightful grift.
edit: to be serious... there's certainly a lot of difficulty in achieving what he did no matter the failure, but when we use the word work to compare an employee worker and a ceo owner, let's be more specific with what we mean. we all understand work here and we talk about its structures day in day out. a ceo's day to day work has you running memeified mental contortions to understand how it translates into customer or employee value. their duties have more to do with the operations and growth of a business in a competitive landscape. this isn't "work to produce", it's work to manage and grow an organization's marginal returns and to seek monopolization in market in various ways as far as the law permits. I personally don't have the same casual respect for these two categories of work in terms of their social worth and am skeptical when people talk of them as equally comparable when talking about things like respectability, social good, whose participation is necessary to produce something, etc
Grifting hedge funds maybe isn’t easy, but get no sympathy from me for “working hard.” Lots of people work hard.
Is this a reality though? I was desperate for work many years ago and all the part-time jobs were optimized for a specific time of the day - say 10 am to 2pm or thereabouts.
I can imagine a scenario where someone is holding down 2 jobs but 3, this is hard to comprehend?
For context, I should add I am in the UK where there are perverse incentives to only have one job where you work a maximum of 16 hours because this is where all the work-related benefits (welfare) start to fade away.
Not that I was claiming benefits but the 'benefit trap' is where most of the employers set their nets.
> I can imagine a scenario where someone is holding down 2 jobs but 3, this is hard to comprehend?
I only ever had two at a time, but it would have been possible to cobble three together (I effectively did this for a semester as I had two jobs, and was also commuting between two college campuses for classes). I managed 3.5 hours of sleep a night except for the weekend. And got to a point where the third energy drink of the day triggered a feeling of sleepiness.
For a person without a credential:
Early AM) Newspaper delivery or Load line at UPS/FedEX/DHL.
Regular hours) A regular job during the day
Evening hours) Unload line for UPS/FedEX/DHL
Weekends) Babysitting, or whatever.
Sleep) Good luck!
Most certainly in the age of the gig economy. Even my own partner has about 4 different jobs now - as a registered nurse. They don't necessarily add up to a massive number of hours a week but she'd no doubt prefer not to have to jump back and forth between so many employers, each with their own set of expectations and management styles etc. But she'd have to settle for a pretty crumby base salary for any sort of full time position.
Makes you start to understand why certain cultures vehemently upheld arranged marriages. Having kids with the wrong person makes for a lifetime of hell.
With that said, remember the following. While the economy is not zero sum and we can increase the amount of wealth in the world, power is zero sum. Power is finite and very scarce. You can create tremendous wealth and later find out it ended in the hand of a single person. And that person is not willing to share.
He clearly set out to make a lot of money with his scheme, and he did that successfully. Then he failed.
My wish is to die without a single penny in the bank. As I get older it gets clear how much time is worth. We have so little time to actually do what we want before we get too old.
As technology[1] increases power increases. It is social capital to convince others that is zero sum (holding the number of people constant).
[1] - and here I mean all technology, not what's commonly called 'tech' today.
> You can create tremendous wealth and later find out it ended in the hand of a single person. And that person is not willing to share.
Having a lot of money doesn't mean people have to do business with them. Undoubtedly some will, but you don't have to. It also doesn't prevent others from doing business with made-up currencies (e.g. Ithaca Hours, cryptocurrencies) or through barter.
But what if I own all the productive land? What if I own a corporation that manufactures a product you depend on? This is wealth.
If people won't take your money to defend your wealth, then your wealth belongs to whoever takes it. It's only the rule of law that allows material wealth to exist.
This is a very strong force, and is effectively insurmountable in most circumstances in lands with well-functioning governments. But things like the following do, very rarely, happen even in them: https://morbidology.com/the-town-that-got-away-with-murder/
It's all about getting the larger personal high score. Building a viable business is secondary.
You want to know the actual reason they’re doing this? It’s not because some restrictive laws were passed or to keep the physical toll low on the mom, etc. maybe it is, but that would be found in the marketing slide.
“We are too generous with how much leave we offer”
Everything is to extract as much value out of everyday things as possible. In this case, their thinking is along the lines of how can they can get women to stay in the office longer while the kid bakes at homes. Maybe offer a short leave after it’s ready. But the economy grinds harder since the woman employee didn’t have to take time off for doctors visits or to recuperate post birth.
90% of the ideas and products that come out of here have a solid dystopian underpinning to them.
https://www.dailymotion.com/video/x4jl2mm
I don't know if it's the best intro to the series, it was the final episode in fact.
https://georgerrmartin.com/notablog/2017/03/30/max-headroom-...
Mine was supposedly to be… hmmmmm, let me see now… the fourth episode of the series. My title was “Mister Meat.” Now, TV writing in those days was a two-step process: “story with option to teleplay,” they called it. You wrote a ‘story,’ a short plot outline with all the major beats and characters. Then, when the showrunners, studio, and network all approved it, you went on to write the teleplay.
“Mister Meat” never got that far, alas. The showrunners and my fellow Maxxies loved it, as I recall, but when ABC saw the story they reacted with horror. Way too disturbing and offensive, they announced, driving a spike firmly through my concept and sending me on my way. Which I why I never got hired onto MAX HEADROOM and wound up on staff on BEAUTY AND THE BEAST instead.
I got a second chance when MAX was picked up for a second season, however. As a freelancer, I got the choice assignment of writing the Christmas episode. And this time I went to town. Wrote the story, rewrote the story, wrote the teleplay, revised the teleplay. “Xmas” was the title of the episode, and it got as far as pre-production…
And then the show was cancelled. Rather suddenly and unceremoniously, I must say. America was spared from celebrating Xmas with Max.
"It's an off switch. She'll get years for that".
Parental leave is about bonding with the child and providing care for it while it is especially vulnerable. That's why it is called parental leave- some countries and a growing number of companies offer it to fathers as well.
Like I said in my post, the doctors visits while carrying the baby, the PVT due to stress and other factors, and the maternity/paternity leave (at companies I've worked they allow 6-9+ months maternity and 2-4 months for paternity). Companies know they will offer these leaves, but the in the lead up to that there is a lot of OOO and unrealized effort.
There are people at every company and at large who are crunching efficiency numbers while we sit there hammering out features and fixes.
The idea that the only reason artificial wombs are being investigated is "corporate greed wants workers to take less time off for pregnancy" is so far fetched it might just be the silliest conspiracy theory I've heard in awhile. The amount of money going into the design, research, regulatory hurdles etc will not be paid off by decreased PTO usage. If anything, it'll just get used up again when the infant inevitably gets sick or a care worker isn't available to watch them.
Thanks for the chuckle.
whatever makes you happy, making up whatever conclusion from what you read! FWIW I did not mention paternity/maternity in my post at all... 10/10 reading comp..
From your first post:
> In this case, their thinking is along the lines of how can they can get women to stay in the office longer while the kid bakes at homes. Maybe offer a short leave after it’s ready. But the economy grinds harder since the woman employee didn’t have to take time off for doctors visits or to recuperate post birth.
I argued that is an absurd justification, citing the rise of paternal leave (both availability and increased duration) as an example. I later argued that any PTO saved by not visiting the doctor would end up used as soon as the kid gets sick, needs someone to stay at home, etc.
To repeat myself, it will take an obscene amount of money to get an artificial womb to market. The payoff in doing so is certainly not going to be in the form of people taking less PTO.
The fact that someone literally said that, and was serious about it, was kind of f'd up to me. There are people like this everywhere, who think like this.
I don't personally think of "micro-optimizations" of people this way, code sure. That's probably why I'm could be a better entrepreneur lol.. This person probably thinks cool I save 1-2 weeks PTO per year x 1 million people is a lot of time saved.
Again, I am not talking about leaves, but rather the type of "vibe" that was given off by that statement.. I personally found that person's line of thinking objectionable and so I posted about it.
And you're right that a market transaction is the best measure of "good" that we have. To get some sense of "what society might pay" to limit or eliminate such a market, an analyst must resort to more difficult methods like cost-benefit analysis. It's a huge topic and is used by major governments.
for starters none of the companies mentioned did that themselves, train company didnt build infrastructure, supermarket didnt grow food, internet company didnt lay cable. Sure they provide some value I suppose in logistics or whatever but lets be real its not that hard given some capital. If they didn't someone else would gladly step in and do it instead, theres no world in which the customer is forced to actually go without.
You might say "but these are all distorted markets", and to that i'd say: they are pretty much the main points of interaction I and a lot of people have with the economy (and we can think of dozens more examples). If these are all exceptions, the market is one big exception.
I feel like making the world a better place requires a much greater standard than just "someone paid you for some resource/commodity you hoarded". I grant you sure, in a simplified model where there are countless competitors & perfect information available to all consumers, buisnesses would have to compete on providing good services, but thats not the world we live in.
It's frankly ridiculous that it's not enough reward to be richer than croesus, people want us to believe that they are moral because they got all that wealth.
I don't think conversations like this can ever progress when this constant misrepresentation takes place. No one is talking about hoarding. If I get paid to write someone some software, what hoarding happened?
I don't know why this is shocking. Money is a social construct so its allocation is also socially constructed. It is results oriented, but it's a more complicated kind of result than investment ROI.
For instance, Michael Spindler and Gil Amelio were paid more for their flopped tenure at Apple than I could ever hope to make. Gil walked away with nearly 8 million his final year after overseeing 708 million in loses. Good gig. Almost every c-level exec I've met at $1 billion+ firms leaves me with the same impression: "a charismatic overconfident idiot"
If you want to do things that require capital, knowing how this stuff actually works is required.
Which means there’s not as much buy long sell short as you’d expect, because they’re just competing directly with other leasers.
You can argue the pandemic merely accelerated remote work, so it was always probably a bad bet.
Stock price: https://finance.yahoo.com/quote/IWG.L/
"Collaboration" by forcing employees back into the office doesn't work either.
smh. This really sets a new standard in grift.
Now, if he only had good kompromat on all those investors, he'd be up there with Jeffrey Epstein. Come to think of it...