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Comment by puranjay | Hacker News Reader

It's an incredible mix of hubris (on the startup's part) and delusion (on the investors part) to call some of these "tech companies". Like WeWork. It's a real estate company that should be valued like a real estate company.

But somehow everyone concurred that it is, indeed, a tech company. How or why, no one bothered to ask.

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To be more specific it's a real estate company, that started out with a low asset ownership position.

Then it got into the asset game leveraging their revenue, but mostly leveraging some meaningless sociological/technological gibberish to skewer an investor.

I think this speaks to the state of the kind of people making decisions about things they don't even try to understand.

This is what amazes me; that there are so many supposedly intelligent individuals throwing money at shitty ideas.

Google investing in Juicero comes to mind.

It's like any semblance of due diligence is just an afterthought.

I think calling Juicero a shitty idea is too strong. It didn't end up working, and probably it was knowable in advance that it wouldn't, but the difference between early-stage Juicero and early-stage Keurig is smaller than most people gave it credit for. There's a strong and robust market (at least in the SF Bay Area) for weird expensive juices.

I agree, fresh juice on demand is a good idea (besides the fact that the amount of sugar is usually terrible for you).

But they had to have found out very early on with Juicero that squeezing the packets by hand basically produced as much juice as their expensive machine.

They did. As the Bloomberg article mentioned^, Juicero plus at least some of their investors knew, and multiple investors felt that the product Juicero delivered didn't live up to what they were pitched. (Note that Juicero didn't get any new funding between their initial launch and going out of business.)

^ https://www.bloomberg.com/news/features/2017-04-19/silicon-v...

Well, even if you can do something by hand, there's a market for a gadget that will do it more conveniently. There is a market for food processors and rice cookers. I don't think Juicero is a good example of "stupid money" craze. Theranos is.

Were that the case. But squeezing the juice out of the packet was far easier and quicker than putting it in the machine letting it get scanned, phone home, and then slowly squeeze the bag.

Kind of have to conclude intelligence for one area does not mean someone is not a mark when it comes to a different area.

Everyone? Virtually nobody thinks or thought WeWork was a high margin software company. Your comment is a narrative that has been regurgitated over and over again, yet who are these magical people who think WeWork is akin to Facebook?

Look at any article written about WeWork in the last 4 years. Every single article will regurgitate the Real Estate company pretending to be a tech company thing.

The people that matter - the investors - valued WeWork like a high margin software company. Then WeWork itself tried to value itself like a high margin software company in its S-1.

Because WeWork's margins and revenue are similar to another very similar company - Regus - yet their valuation is more than 10x

WeWork and its investors did not try to value it like a high margin software company. WeWork was valued like a standard, overly optimistic growth company. This is another narrative invented by tech journalists who don’t understand how valuation works.

Regus is a mature company with no plans for massive growth. Of course their Value (p/e of under 20 I believe) is going to reflect that.

Meanwhile, look at any non-tech company in growth stage. Take Shake Shack for example. Their P/E ratio is 170. Chipotle had a p/e of 400 a few years ago.

Nobody thinks Shake Shack and Chipotle are tech companies. These valuations reflect the prospects of growth—-not misplaced beliefs about restaurants being tech companies.

Adam Nuemann was certainly trying to push the "tech company" narrative. I heard a few old interviews with him and he was always sure to mention their "technology platform" and how they spent a very long time developing it.

So he must have thought someone was swallowing that.

The latest Wework TV ads sell it as an “operating system” for workspaces, among much other showy language filled with business-transforming technology buzzwords. It definitely sounds like they’re marketing as some unique proprietary tech, and I wouldn’t be surprised at all if the aim was to justify their absurd valuation figures.

Except, every company in 2019 is marketing themselves as if they have some unique proprietary tech. I just saw an ad for Holiday inn that did this.

None of these things mean smart investors (or even customers) are being hoodwinked by this marketing nonsense however.

It’s easy to get rose tinted glasses and call a firm a “tech company” when it has the growth profile that wework did. What everyone forgot is that the other thing “tech multiples” require is high margins.

How's it not a tech company? They have an app! /s

Did the company call itself such? Or was she invited to the party for her renowned riches?

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