Part of a fascinating Tweet thread
Think I’ve suddenly realised the exact size of the current mania we’re in . Won’t be touching with the world’s longest bargepole.
We is one hot pile of garbage built to enrich the founder, and no one else. I’m surprised the board let him get away with this.
If you want to invest in commercial real estate, just buy $IWG (Regus).
I have a feeling this is going to be gift that keeps on giving. $we
Let’s be clear, though: This company is profoundly shocking, and odd. It is at once perhaps the most controversial member of the last decade’s “unicorn” era of richly valued startups, and the one that perfectly encapsulates this moment in financial history. WeWork is so unicorn, it hurts.
(should’ve bought Pinterest shares…)
Reasons you might want to buy $we:
- You enjoy giving money away
- You enjoy charitable giving to unworthy causes (read: Adam Neumann)
- You are an eternal optimist, even in dark times (read: their S-1)
- You don’t think $18b+ in long-term lease obligations is a problem in a stagnating/slowing economy when your customer base aren’t obliged to keep paying for use of those leased buildings.
I’d like to ask that anyone wanting to invest in $we simply give me their money instead. You won’t get anything back from me, but you won’t get anything back from $we either so no real difference!
Grandpa… tell me a story…
I hope I’m wrong like the way I was wrong about $FB (Facebook) after it did an IPO…
He describes WeWork as a ‘capitalist kibbutz’ where weakness won’t be tolerated.
Japanese venture capitalist Masayoshi Son once gave Neumann 12 minutes to give him a tour of WeWork HQ. It was enough to convince him to invest £3.5 billion on the spot, telling Neumann he thought the company could be worth ‘a few hundred billion dollars’.
There’s just one fly in the ointment of such exuberance. Despite all the hype, WeWork made a £1.5 billion loss last year. Some say the firm, like so many in the tech world, is vastly over-valued and heading for a painful reckoning.
WeWTF by Scott Galloway is a good read. With a nice segue into the Tumbl
This Tweet thread from employee 17 is insightful as well.
This is also a good read on We world WeWork and the 2010s - Margins by Ranjan Roy and Can Duruk .
We went to a couple of different places, and all of them had these almost comical “interviews” where they wanted to make sure you were “good for the community”.
I so want to see the rejection rate for this
The winners of this kind of IPO will be the co-founders with large stock allocations and original investors/VCs. Softbank can print money and cash out but note that it itself also depends on borrowing and stuff.
This IPO looks more and more like a classic “pump and dump” on unsuspecting retail and institutional investors, as Professor Galloway said in his podcast.
Note the duration mismatch (CNBC):
The company signs long-term leases with landlords that last up to 15 years, which requires it to pay hundreds of millions of dollars in future rent, according to data provider CB Insights. In the S-1 filing, WeWork said future lease payment obligations were $47.2 billion as of June 30, up from roughly $34 billion at the end of 2018.
At the same time, WeWork offers short-term rental contracts to members, in an effort to provide flexibility, collecting rent at an average of a two-year timeframe, Smith said.
This is a boon for its members, but could present a risk to WeWork’s business, as these short-term renters could up and leave at any time, leaving the company on the hook for long-term rentals.
Apparently, ARK = Adam, Rebekah and Kids. So much for distancing themselves from the conflict of interest(s) by setting up ARK. If this thing follows the trajectory of Uber and Lyft’s IPOs, they will still be very rich.
Also, how about potential basic maths mismatch (Barron’s):
• WeWork has space that can hold a total of 522,000 workstations at locations where it already moved in or signed leases but not yet moved in. For comparison, the company had just over 600,000 workstations active at the end of the second quarter.
• Low penetration: WeWork believes it has a $945 billion revenue opportunity in the 111 cities it currently operates in, because those cities have a total population of 149 million, each of whom could pay WeWork about $500 a month.
As @Freetrade_Team1 pointed out, Adam Neumann cashed out $700 mln+ before the IPO - according to WSJ. So much confidence in his own company:
FT’s Alphaville (Something is Wrong on the Internet Series):
Breaking from the Wall Street Journal:
WeWork Cos. co-founder Adam Neumann has cashed out more than $700 million from the company ahead of its initial public offering through a mix of stock sales and debt, people familiar with the matter said—an unusually large sum given that startup founders typically wait for the IPO to monetise their holdings.
Mr. Neumann, who is chief executive of the shared office-space giant and remains its single largest shareholder, over several years has sold some of his stake in the company and borrowed against some of his holdings, the people said.
The exact size of Mr. Neumann’s current ownership in WeWork couldn’t be learned. He recently set up a family office to invest the proceeds and has begun to hire financial professionals to run it, they said.
Re/code has a great table that compares WeWork vs IWG (Regus):
Kara Swisher, a legendary tech journalist who’s sold Re/code to Vox and has interviewed and written about many top tech people (incl Uber’s co-founder Travis K), said in one of her podcasts she has refused to interview Adam Neumann because WeWork is not a tech company.
This is her with a now-retired Walt Mossberg, as well as Steve and Bill:
WeWork claims to have 1,000 engineers etc, but does it make them a “tech” company:
We have approximately 1,000 engineers, product designers and machine learning scientists that are dedicated to building, integrating and automating the complex systems we use to operate our business.
Source: pre-IPO S-1 filing
…having acquired Meetup (yes, they own Meetup) in 2018. But do take a look at this story: The Mess at Meetup
That number of eng staff would have been probably around 800 without the acquisition.
Former employees who spoke to Gizmodo estimated that as many as 20 people were fired or laid off during the acquisition, amounting to about 10 percent of the staff. Meetup, meanwhile, has publicly asserted that no one lost their jobs. “Our CEO/Cofounder Scott Heiferman is proud to continue leading Meetup, surrounded and supported by the same team of 200 Meetuppers,” the company said in a blog post after the acquisition. Burn.
While Meetup indeed needed an investment, how does hosting meetups at WeWork affect the metrics? Did they buy the company for the data or to drive traffic through the office doors? The free beer at WeWork in SanFran, London and Bangkok is good though, I’d come back for more. WeWork | Office Space and Workspace Solutions
Also, what is this (highlighted)?
Source: pre-IPO S-1 filing by WeWork
It’s either a strong mission statement or meaningless drivel - I can’t quite discern which