WeWork nears bankruptcy | Hacker News Reader

WeWork nears bankruptcy

arstechnica.com

104 pointskurthr106 comments

Whenever I look at a coworking space, I feel like they are missing the point.

Companies are globally distributed and people spend a LOT of time on conference calls, but most coworking spaces have an open layout that is at best not conducive to conference calls, and often they are not allowed.

I have been working effectively remotely for the past 15 years. Until COVID hit, still commuted to the office, but had very little interaction with local co-workers for actual work. I did appreciate the social aspect, though—water cooler conversations, lunches, company events.

Now that I am fully remote, I would appreciate the opportunity to get out of the house one or two days a week, but I am unable to find a single coworking space that offers private cubicles. They all want you to rent an entire meeting room for conference calls at an exorbitant price.

Bingo. I spent about six months working out of a reserved office at a WeWork, and because it was just a satellite office for my company, there were tons of conference calls I needed to be on. I couldn't join those calls in the open plan office, so I spent a ridiculous amount of time walking the halls of the WeWork trying to find an unoccupied booth. Half the time I couldn't find one, and when I did they were dark and cramped.

A lot of self storage lockers would be better places to work from than WeWork.

This very much matches my experience with co-working. When the time spent on calls went over 2 or 3 hours a day for me, my days became a constant hunt for comfortable and private places to make calls. I ended up making a room in my condo into an office.

I did find co-working to be quite enriching though. I made a few friends, and it was nice to see some of the same faces each day. It was very key that none of the people that I socialized with at the co-working space were people that I was working with.

I think people often go to them in the afternoons, maybe when they have fewer calls. Or just grab a booth when they need to do a call that others shouldn't listen in on. Or just do the calls from the open area.

I go to coworking space to get a bit of human interaction in my day after feeling isolated at home or on zoom.

Precisely. I do utilize coworking spaces quite a bit, however I tend to go in on days where I don't have many calls scheduled. Also, my home office setup (ultra wide external monitor + 4K external camera and mic etc) wins when I actually need to be productive.

Yes, most coworking spots have phone booths, but they can tend to be claustrophobic and limited in availability.

Every WeWork location I've ever used in New York (about a half dozen, I think) has multiple private single-person cubicles available for use. Actually, I've never seen a co-working space that doesn't have this.

I do wish each location had way more of these booths, though.

But open layouts are so conducive to serendipitous collaboration! And collaboration is key to generating creative solutions in today’s information economy! All the CEOs say so!

What I want in a co-WORKING-space: min 2 screens, a proper desk and chair. I'll bring my own keyboard.

If I to sit on a couch drinking coffee, I'll go somewhere else.

when you charge by the desk, packing 'em like sardines into a open plan office looks very attractive.

One day, I hope, people will inherently understand that Market Value != Business Value. Particularly in these days of extremely high valuation.

The stock market does not equal the economy. At best, it equals what 1% of the population thinks they can get out of the lower 99%.

Do you think that will happen before or after they understand the difference between debt and deficit?

Agreed.

I also hope that people understand why certain industries or companies trade at certain multiples, and that a company that clearly isn't in that industry can't magically claim that they are so they get a huge multiple.

WeWork is not tech. It was never tech. It will never be tech. It shouldn't have ever traded at tech multiples or valuations. The closest thing WeWork was to tech is that some tech workers worked out of places owned by WeWork. End of the day it's fucking real estate, nothing more, nothing less. Real estate that was poorly managed by a shady dude, nonetheless.

But alas, people want hype, and even more people want to believe the hype.

"WeWork is not tech. It was never tech. It will never be tech. It shouldn't have ever traded at tech multiples or valuations."

TBH, most tech shouldnt be traded at tech multiples of valuations.

That is also true, but the subset of companies that can be, does not include non tech companies. I mean, there are non tech companies that are worth a lot, lien coca-cola, or oil companies, or Walmart, but you can see what and how long it took to get there. They were not rocket ships.

> One day, I hope, people will inherently understand that Market Value != Business Value.

Interesting, can you flesh out your idea a bit more here. You make the claim but don't explain why or what those terms mean.

Business value is the value that a business creates through sales or services. So essentially, income - expenses + goodwill.

Market Value is the price of the stock x outstanding shares. The problem lies in that a stock price does not necessarily correlate to how well the business is doing or not doing. And the stock price can be manipulated by the Business (cut expenses to the bone to make the QTR/YR look fantastic) or by rumors or by loud mouths on TV who have a vested interest in the company, so they talk it up. Or by a tweet by the CEO claiming they'll be able to do something which everyone knows they won't, but hell, why not buy the shares.

Appreciate it!!

> Business value is the value that a business creates through sales or services. So essentially, income - expenses + goodwill.

Well WeWorks’ business value was negative as expenses always(?) exceeded revenue

Goodwill is the excess paid for a business over the value of the assets so it’s a fudge factor at best

When a founder of a company that’s never really made money walks away will hundreds of millions and everyone else gets stiffed you know there was something very wrong going on

Well this argument is really dumb as anyone could profit if they believe that the valutation will come down soon enough. For many failed startup this is at best benifit of hindsight. As wework proved that a company can't fool investors long term.

There are people who are sure the same will happen for Uber, Airbnb etc. Well profit off of it then by taking no risk.

I don't think you're wrong exactly, depending on what you really mean here, but it's pretty misleading to frame this as an indictment of the stock market. WeWork's wild overvaluation was due to being privately held. As soon as they tried to IPO and had to present audited financials to accredited investors was when the valuation tanked. I don't know what better proxy measure exists for a business' "true value" if not market cap of publicly-traded equity.

But my MBA teachers working at FED told me that market value is a discounted sum of all future profits! How could they have been wrong?! [they somehow must have a crystal ball as well, or some Turing oracle for technical analysis]

It was MBAs and investment managers raising the alarm when they reviewed WeWork's S-1 in 2019 ahead of their IPO.

Marc Andreessen and the other insider techbros however continue to happily preach the gospel of Adam Neumann.

Hard to do that when the so-called business media simply regurgitate opaque private investor valuations as if they were real and reproducible.

> The stock market does not equal the economy. At best, it equals what 1% of the population thinks they can get out of the lower 99%.

WeWork's ridiculous valuation was not the stock market, it was VC private investors (mostly SoftBank) who hyped up the valuation.

When WeWork hit the stock market is actually when reality started to hit. They have NOT done well on the stock market and this is part of why they're about to go bankrupt.

Used to use a co-working space for my own stuff. Mostly to get out of the house. In the two years I was there, in the same building, the co-working company changed three times. Mostly the same layout and all that, but everything/one else was cycled out. Good spot in the city, too.

Nothing else to add except anecdata. Feels like a losing industry at the whim of the building owners. Also the upper management was filled with leeches.

In our town we have at least four different coworking spaces. All apparently profitable, none of them operated by big companies.

It's a simple business model: commit to a long-term lease, add furniture and sublet the space in lots of small flexible short term leases. The setup also seems to be similar everywhere, with some mix of flexible desks, fixed desks and closed offices available. You mostly differentiate on location, how hip it looks, and what kind of community you can build. WeWork had efficiencies of scale on the looking hip part, but on the community building a local group can easily outcompete a multinational company.

It's like a hotel for offices.

Or maybe more like a hostel.

I often work from home, but I've long been part of a coworking space down where I live. They've got a great model because they're a non-profit, and partake in all sorts of things to help local businesses, like accelerators, talks, etc. I feel like that's the right model for this type of thing, because it does seem like the unit economics don't work for profit-driven business.

https://www.weare1909.org/

how much of this coworking space is supported by taxes (via West Palm Beach Downtown Development Authority)?

That's a good question, I don't have an answer unfortunately. I can say that I pay about $100/month for an open-seating membership. It's something like $300 for a dedicated desk. Pretty cheap, especially for the area, so I imagine there's quite a bit of support (though idk where it comes from).

Same (and bonus, it operates from the perspective of an Arts non-profit, so I have an art studio for myself that doubles as an office, but I can still use the co-working space at will, 24-7): https://www.localcolorsj.org/

Interesting; makes me see the potential of a coworking space from a very different perspective — not as "a bunch of businesses renting space" but rather as a generalization of a maker-space, for people who aren't necessarily making physical goods.

Though admittedly it'd be really cool if there was a co-working space that included maker-space facilities, both for the constant use of the people who are makers, and for the less-frequent use by the people who aren't.

(And so that the people who are makers would end up seated next to the people who aren't. This starts to get into "arts college" territory — where someone doing an illustration project can wander over to a friend in the woodworking department to get their illustration turned into a carving...)

Heck, while we're at it, let's throw in other facilities that would lure in people with complementary skillsets to most businesses. A teeny-tiny colo in the basement for your dev servers! Podcast recording rooms! A screening room for videos!

Funny enough, this has been kind of a dream of mine. I didn't go to a normal university, I went to art school (memphis college of art). The college shut down back in 2020, and though I'm not sure what became of the building, I really wanted to see it turned into a kind of co-working space with all the same facilities that a college offers. It was small enough that it would have been doable. You could turn the cafeteria into a coffee-shop, the auditorium into a concert hall, and everything else into individual membership shops. It would've been amazing.

I was in a WeWork in London on the day of the original Softbank-induced meltdown 4 years ago. It was surreal to be in a building that you weren't sure still operated as a business, with employees who were unsure if they were in fact still employed. We were all taking bets on how many days it would take for us to be kicked out of the office, and our company immediately found us a hotel conference suite to rent while the office situation was sorted out. Of course, we were never evicted and WeWork somehow survived, but it was weird.

> I was in a WeWork in London on the day of the original Softbank-induced meltdown 4 years ago

Should we really blame Softbank for the meltdown? We can certainly blame them for believing Adam Neumann and investing to start with, but not for admitting their failure after the IPO mess.

I think the meltdown would have been less dramatic had it not been for softbank inflating their valuation to gargantuan size for basically no reason.

yes, a bank's job is to do due diligence, not to blindly believe anything a startup founder says without reading any of their bookkeeping.

I was at a company that had a pretty firm verbal commitment on a multi-million dollar software project with WeWork. When the meltdown happened our CEO got a call that the project was cancelled, the whole team we were working with at WeWork was getting let go and the guy on the call was getting let go as soon as he hung up. heh, it was pretty abrupt.

In the Bay Area, I really recommend checking out the Groundfloor coworking spaces if you want a more social coworking space. I totally realize many people just want to put their heads down and crank. GF is not for you then. But I really like being able to banter and hang out in between work stretches.

I tried wework for a month and it was absolutely silent. I asked someone if they'd ever seen someone use the ping pong table and nope. The weirdest thing about the wework was their library of books. It was simply the same 10 books repeated 15 times. Had an odd Truman Show type vibe. I can't believe how unfriendly the whole energy was at wework. And just had this stale corporate-ness to it that was unshakeable. I mean, they had these really cool custom neon signs. But I would have just taken that and invested it into other things.

Wework in NYC, maybe 5-6 years ago was so insanely warm. Everything you are looking for. Then the price crunch happened and things got shaky and then boom. none of that.

Almost exactly a year ago they named a "Turn Around CEO": https://www.reuters.com/business/wework-appoints-david-tolle...

I’m a cofounder at a two person currently bootstrapped startup here in NYC. Do y’all know of any good coworking spaces? No frills, just one where we can work together at odd hours with monitors and some coffee.

Even with commercial real estate as cheap as it is now, it feels more cost efficient to upgrade to a bigger apartment in Manhattan instead of getting a coworking space with a dedicated desk. It defies logic.

Highly recommend Bat Haus in Williamsburg. They often have deals too.

I'm surprised it's not already bankrupt honestly. No one working at a WeWork has ever asked me to badge in, or show any kind of proof that I have paid for a day pass to be there.

Going there for team events is the same thing, everyone is supposed to pay for a day pass but does not so the entire day for 15 people ends up only costing whatever you spend on shared meeting rooms. It's pretty easy to just go into a meeting room that isn't reserved and use that for free, again with no checking from the staff there.

I guess the private offices that people pay for there are making some money, but not enough to justify the massive real estate bill WeWork has to pay for the great locations they usually have space in.

From the media coverage it appears WeWork was particularly dysfunctional but are the other giant "disruptors" (Uber, Zillow, meal kits), that went up against industries that were probably already pretty efficient, going to go down eventually as well?

Yeah in hindsight it's easy to act superior as if it was never going to work, but at least they tried something new, that's how all innovation happens

It worked for a remarkably long time, WeWork was founded all the way back in 2010. Back then coworking was somewhat new (the wikipedia article called it "an emerging trend" in the first revision in 2007). And WeWork did a lot to popularize it.

In hindsight it seems obvious that the company was way over-valued, there aren't many efficiencies of scale or entry barriers; anyone with enough money to furnish an office and commit to a five-year lease can open a coworking space. Lots of people said so at the time too. I wonder if they would have been more successful if they hadn't gone the tech-VC route and become a "boring" real-estate business.

With a creepy leader bilking the company it was more like a innovation in long cons

What was the new thing they tried?

what was baffling about wework's valuation is that it wasn't anything new at all: the product and business model already existed and was well understood, and well understood to not be worth anywhere near that much. The only new thing was the founder managed to convince a bunch of VCs that it was a tech company somehow.

> Uber

No. They've killed taxis, and they're way more convenient. Now their pricing will rise to match the actual business and the era of under-cost ride hailing will end.

Their food delivery business will continue to battle it out with the other contenders until the market consolidates.

> Zillow

Realty sucks due to the MLS monopoly. Redfin is trying to break free of this. We'll see how it goes. In any event, modern home shopping almost always begins on one of these "tech" realty sites.

> meal kits

Anything with "kit" or "club" in the name is going to wither up and die.

I don't think Uber is sustainable. It seems everyone is getting shafted - the drivers, the customers, the Investors. Their only profitable part is the food delivery service, which is neither novel nor particularly good in comparison to others. Once the Saudi/UAE-Softbank money dries up or gets cold feet Uber is dead. At this point I guess it is mainly a money laundering service, like the entire city of London property market.

How are customers getting shafted? Uber is still cheaper to the airport than a taxi (for me). I don’t use it for anything else, so genuinely curious.

I assume in this context it means not getting rides for way under what traditional cabs cost. But those prices are just pretty much what a ride costs. If you decided to structure your life around cheap on-demand rides, then you may have to make changes.

For all their faults, Uber/Lyft/etc. did make hailing a ride using your phone a much better experience than cabs in many cities. Not for everything; I still use a car service for airport rides.

> Uber is still cheaper to the airport than a taxi (for me).

Sometimes. If you know the price it's obviously easy to compare. I do happen to know taxi prices from a few airports to central areas and Uber used to always be cheaper. Significantly cheaper years ago. Today it's a crap shoot and the taxi's are often faster since you don't have to wait. If the taxi is no more than 5$ more expensive then I take the taxi. I'd say it's about 50-50. Sometimes the Uber is a good deal ($10 or so) cheaper.

You have it backwards. Uber Rides has been profitable and subsidizing the Uber Eats growth.

I think the drivers are really getting shafted, not sure about customers.

I have not taken a taxi or Uber for years but had to take 3 in the last few months. First a ten minute ride for £6 (UK) felt like what I'd have expected to pay a taxi 20 years ago.

Then a 35 minute ride in traffic for £11 feels like it should break some minimum wages laws after overheads are considered.

Finally a 70 minute ride for 6 through city traffic costing £45. At which point it's on par with public transport costs (trains).

Uber is shit now. More expensive than a regular taxi and you're waiting 15 minutes to get a driver to accept you because your run isn't long enough for them to make money on.

I just use my local firm.

> Anything with "kit" or "club" in the name is going to wither up and die.

Why? And does this include non tech like Dollar Shave Club?

Considering Unilever bought them for a $1B premium [1] and then dumped them onto private equity last week [2], I think so.

[1] https://www.imd.org/research-knowledge/strategy/articles/uni...

[2] https://www.retaildive.com/news/unilever-sells-razor-subscri...

> No. They've killed taxis, and they're way more convenient.

In your area.

> Now their pricing will rise to match the actual business and the era of under-cost ride hailing will end.

Fortunately the barrier to entry is extremely low. Now practically all taxi companies I know use apps (with varying level of user friendliness, with at least one superior to the one by Uber). So I think Softbank and the Saudis will be screwed again in the end. I kind of pity them because even if everybody is telling them the same they don't have any choice, they can't just take their money out and admit defeat now that Uber is a household name.

I've stopped using Uber in my city (Vancouver) and gone back to traditional taxis because they're providing a more reliable service at equivalent or cheaper prices.

The last few times I've tried to use Uber, immediately after matching with a driver they'll message me telling me to cancel the trip because they don't want to go where I'm going. When I refuse, they'll play chicken and drive around in circles refusing to come pick me up and refusing to cancel themselves if they don't want the job, trying to make me pay the cancellation penalty rather than them. When I fly into YVR, it's so much more convenient to walk to the taxi stand and get a ride home within a few minutes for $50, than to order an Uber, wait 20 minutes for it to arrive, and pay $60-80 for the privilege.

Vancouver is one of the cities where the incumbent taxi lobby won concessions to allow ride hailing, one of those being they all have to charge the same base rate. While some companies like Uber have checkered growth history, ride hailing in general has been a boon where taxi oligopolies have treated their customers poorly (Vancouver was no exception here). I personally love that Evo car sharing in Vancouver extends to the airport, so I have a real option to both.

> Realty sucks due to the MLS monopoly

Would we say that nasdaq or the NYSE cause trading to suck? Because listing services are just the real estate equivalent: a market. I don’t think the public fully appreciates how these services came about to reduce information asymmetry in North American real estate - many countries don’t even have listing services. We pay for their existence as realtors, you the public benefit in information that once upon a time only existed in the private files of realtors. I can’t begin to imagine why you think Zillow is being held back by listing services or why you would hold Redfin up as some kind of model.

Realtors take a huge commission (~6% of sales price) for the work that they do, and one of the pillars of this enterprise is exclusive, monopolistic access to MLS.

If you're selling, there's an enormous pressure to get listed on MLS to get picked up. And then you're opted into paying middlemen.

Realtors will pressure sales, sometimes against buyers' or sellers' interests.

Realtors earn more in areas of higher home prices -- sometimes 2-5 times more -- , despite the workload being fungible across the state in which they practice.

Realtors are like travel agents, except extremely expensive, and a near market monopoly.

> We pay for their existence as realtors

Oh, you're a realtor!

> I can’t begin to imagine why you think Zillow is being held back by listing services or why you would hold Redfin up as some kind of model.

What do you think would happen if Zillow and Redfin could scrape MLS without restriction? Recent data -- not the days to months of stale info that is par for the course with MLS.

What if they could use this MLS data and also allow for sellers to post on their platforms without a realtor representative?

Because that's what should happen. That's an efficient market.

NYSE is publically available information from the exchange directly. Listing services lock listings behind portals only accessible to agents that are members of NAR, the general public has no access to those listings or that data.

There is still much information asymmetry in NA real estate as many metropolitan regions may feature 2, 3, or more MLSs. The state of Georgia has 25 MLSs in total, of which few, if any, share their listings with each other. So an agent in Atlanta who is a member of FMLS, has to pay $300 or more (plus a broker paying $800+) to become a member of the Golden Isles MLS if they have a client that wants to sell in Savannah, or even if they themselves want to buy in that area.

Zillow is what helps reduce this information asymmetry on a national scale, but they have to pay licensing fees to these individual MLSs/NAR to access that information. As NAR requires agents to list properties on their local MLS (and advocates against posting on other sites separately), NAR creates a market where Zillow is reliant on them, and NAR becomes the arbiter of who has access to what information. Information that, for no reason, should really be remaining available to the general public.

NYSE's real time data is a paid product. Their free quotes are delayed, and available anywhere (Yahoo Finance, Google Finance, your brokerage, etc)

While real-time data is paid, publicly available data is only delayed by 20 minutes. MLS data is never publicly available, unless you are a licensed agent, a member of your local Board of Realtors, a member of NAR, and lastly a member of that specific MLS.

Typical realtor response. It's simple, realtors use MLS monopoly to earn more than their fair share of the profit. It's not an open market.

> We pay for their existence as realtors

Doesn't this mean that buyer pays for their existence?

> and the era of under-cost ride hailing will end.

I want to know where you are because it seems like Ubers are already equivalent to taxis in pricing.

Last time I checked there were still loads of of taxi services around, so Uber having killed Taxis might be a premature conclusion.

Still waiting for Amazon to go out of business due to losses. or Netflix, Uber, or Tesla. Pundits are really bad at predicting this sort of stuff, and losses are not predictive of failure

There's a difference between overall corporate losses from outlays, and companies selling their products at a loss.

Netflix may lose a ton of money QoQ, but they still make money for every new subscription.

Meal kits and most grocery delivery services will either go down on unit economics as soon as VC money dries up (I talked to some people doing beverage wholesale and distribution to restaurants and groccery stores, and they do offer a service for consumers as well that piggy backs on their larger volume runs, and they simply cannot meet the prices those start-ups offer). So, either those companies raise prices or go bust, or they try run a hail mary with the money they have in some huge market consolidation.

It’s pretty obvious to me that WeWork, the brand, is going nowhere. With commercial real estate prices crashing and shift to hybrid work, this is actually the perfect time for WeWork’s business model to take off.

The problem is they’re locked in long term leases that haven’t reset to today’s prices - an unnecessary cost base that wework will free themselves of through bankruptcy.

If I had to guess, after going through bankruptcy, wework (or a direct competitor) will re-emerge as a billion dollar company. If I had time, I’d be looking into taking over their office spaces myself.

The only coworking space I use and love, which is still around and nearly as old as WeWork, is a 'mom-a-pop' one in Brooklyn that never franchised and is used by owners as their office. It has a decent community, including people outside of tech. Of course, they barely make any money.

Worked in one for 2 years and it was a good time.

Beer Keg + Happy Hour Wine on Thursdays was a fun time.

Too and it wasn't sustainable.

Are these submissions on WeWork getting flagged for some reason?

There’s been a few these in the past day that quickly gained a lot of points and have since fallen off the homepage quickly:

https://news.ycombinator.com/item?id=38091216

https://news.ycombinator.com/item?id=38092585

https://news.ycombinator.com/item?id=38096508

Seems like it would be better for it not to be flagged if so since people seem to want to submit these and talk about it.

No one ever valued WeWork at $47B. Not for one minute of one day. These lofty numbers came exclusively from WeWork's own propaganda.

From Wikipedia:

>In November 2018, SoftBank acquired a warrant to buy up to $3 billion worth of shares in the company by the end of September 2019 at a $42 billion valuation.

Valuation comes from how much stake you buy blown out as if the rest of the shares cost that much. This naturally doesn't make a lot of sense because the price would go up as you bought the rest of the shares. Still the valuation is ball park correct it was just a complete cock-up on the buyers part.

More SoftBank smoke and mirrors. Nobody was ever going to buy $3B at $42B valuation. Likely they were just doing that to give the appearance of such a valuation, aka, manipulating the public.

No, they bought $2B at $47B valuation a year later.

This is sad . They are still unmatched

Is that because they provided benefits at the expense of being a sustainable business?

Everybody loves a free lunch.

So was MoviePass (in its original incarnation)

who doesn’t love companies that give you $2 back for every $1 you spend?

yeah i wonder if that contributed also to it losing so much money. the same amenities that made wework so great also hastened its demise.

Probably more about elevated rents paid up the CEO then amenities

OpenAI

If anyone is ever pitching a non-tech product as a "tech" product, don't touch it with a 100 foot pole.

For companies we traditional would consider "tech", the product margins (the cost for each unit of X you sell) needs to be non-linear, and approaching zero.

It's clear that existing real estate and service industry investors laughed their heads off at WeWork's valuation. Adam Neumann's trick was to market his business to naive investors as "tech" and ride the rest as a speculative bubble. But fleecing the initial investors was tantamount to legalized fraud.

Other famous businesses that are also "not-tech" include Spotify, Tesla, SpaceX, and Apple's hardware division.

Well if my Tesla, SpaceX and Apple isn't technology I don't know what is...

We're talking about "tech" as a stock market categorization. Tesla and SpaceX should flatly be compared to other manufacturing companies when evaluating their fundamentals.

And I was pretty clear when I said Apple's hardware. Their real cash-cow is their app store.

well for their definition of tech "approaching zero cost", the only tech companies are pure software ones, the cost of manifacturing a rocket can hardly approach zero

Totally. And my favourite: Netflix. They spent so much time and effort with the whole microservices architecture and being a "tech business" that they forgot that companies like PornHub do a much larger scale of video and networking than they do without any of that complex nonsense.

What makes Netflix not a tech business?

Do you have any sources for that claim that MindGeek uses a much more boring setup vs. what Netflix is doing?

PH has the advantage that it's only browser based and doesn't have to be available on a massive number of (legacy) devices, tv platforms, game consoles, phones etc.

Their product is TV shows, not "tech". Same as Spotify with audio. Walmart has a ton of tech underpinning their supply chain...should they be valued as a tech company too?

Netflix is like 10% of all internet traffic. Pornhub doesn't move nearly as many bits.

https://inform.tmforum.org/features-and-opinion/six-companie...

Is Netflix a tech company today? Probably not. They're more of a media company. They focus so much on original content these days. I'd say back when they were pretty much creating the movie streaming industry they were though.

>Netflix is like 10% of all internet traffic. Pornhub doesn't move nearly as many bits.

On the other hand they serve more people/visitors

Also Netflix uses edge/ISP-level CDNs more heavily because e.g they have way, way, way less content than PH

https://about.netflix.com/en/news/how-netflix-works-with-isp...

>We also give qualifying ISPs the same Open Connect Appliances (OCAs) that we use in our internet interconnection locations. After these appliances are installed in an ISP’s data center, almost all Netflix content is served from the local OCAs rather than “upstream” from the internet. Many ISPs take advantage of this option, in addition to local network interconnection, because it reduces the amount of capacity they need to build to the rest of the internet since Netflix is no longer a significant factor in that capacity. This has the dual benefit of reducing the ISP’s cost of operation and ensuring the best possible Netflix experience for their subscribers.

How is even Netflix 10% of all traffic with those "CDNs" at ISP's server room?

How is it even accounted in your statistics, I do wonder.

Netflix is a also a low margin business because most of their content now has per-view licensing fees associated with it.

But at least they are transparent with themselves and investors about their margins and are not promising huge future windfalls!

I agree with what you're saying, but terminology needs to be clarified.

"Tech" nowadays means the more-narrow "information tech".

There are other industries that have technology (for example aircraft) but the pace of development is so slow nobody considers it tech anymore.

Well that's kind of my point that "tech" is an ill defined word, but people use it to "heavily imply" a certain kind of business model.

It would also be silly to call an aircraft company a "technology" company - I think most investors should consider them a manufacturing concern.

True nowadays but if you're living in the year 1920, aircraft is much more of a tech company.

They made their money manufacturing planes, not developing the technology. In the year 1920 they would have called themselves manufacturers and described themselves to investors as manufacturers. And investors would have cared about things like unit economics.

I understand what you are saying, but when we describe a company as a "tech company" we are talking about something specific about their business model - not necessarily how innovative their products are.

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