WeWork Goes Bankrupt
bloomberg.com
bloomberg.com
Shifting the revenue to a franchise model seems like it solves the majority of their lease issues, and still lets them be useful, even in smaller markets. Their value, IMO, is in the "seamless" experience. Knowing I can paratroop into a city and will have a space to work that's of a consistent quality is great, someone sell me that!
It’s not self dealing if everyone is on the same page. Neumann didn’t hide any of this. From SoftBank. From the public.
Neumann launched Flow, a residential real estate startup funded by the venture capital firm Andreessen Horowitz, in August 2022." (https://en.wikipedia.org/wiki/Adam_Neumann)"
This guy is just a greed engine at full steam!
Although to be fair, they seemed to be interested in scamming true crypto believers in that space, more than their partners, they'd get a bunch of shitcoins in the ICO and then offload them asap.
What's their advice to Neumann this time?
"I hope you are more discreet this time so your scam lasts long enough for us to exit"???
> A candidate who displayed empathy for the entrepreneur would answer the question about Neumann with something like the following, Horowitz said: "He did an unbelievable thing in that he built something that almost nobody has done, which is he built a consumer brand in commercial real estate." The person might add, "He told that story so beautifully that he was able to raise a gigantic amount of money and fund this incredible growing operation."
People never like to be told they’re mugs
I'm not astonished: WeWork made VCs lots of money - not counting SoftBank as they were the unsophisticated marks/bag holders.
https://www.businessinsider.in/wework-ceo-adam-neumann-has-r...
Unless it was a 0% fixed interest only for 100 years or something crazy.
Feels like a better scenario than that money spent on parties or a datadog bill.
> 200 Sears locations were sold to a REIT and leased back to the retailer.
https://therealdeal.com/national/2021/10/21/the-man-who-raid...
I understand they're currently liquidating it, TBD if the common stock investors see anything left after BH gets paid back (and then preferred stock holders, currently trading pretty close to par)
edit: REIT has been converted into a C-Corp, possibly to carry-forward losses better as it becomes not-a-Sears-property owner? https://therealdeal.com/new-york/2022/07/08/seritage-growth-...
Most retailers, banks, and companies realized that owning realestate is not part of their core competency. Canadian tire rolled their realestate into a REIT and then rents the locations back.
There's no double dealing or anything nefarious about it. Heck there is a huge company called Brookfield that has made a living out of buying commercial realestate from companies and renting it back to them while spining the realestate out into a REIT.
That's just smart business for the company who gets money upfront and a stable knowing rental price.
Most commercial tenants are still resonsibile for maintenance, which is the primary ongoing expertise.
It can be a useful way to free up capital, but only useful if it's used to expand the business and deliver a greater return.
Too often it's used to artificially increase the share price or pay out dividend. In these cases the company commits to never ending rent payments for no actual benefit.
There are whole bunch of businesses who have bucked this MBA trend, kept their freeholds and have ended up with a more resilient business better able to weather a change of economic circumstances.
Edit: haha j/k they also went bankrupt.
For customers, it should still be relatively the same service. I expect some amenities to change, but you should still be able to rent a desk (for at least the near term).
You're not allowed to eat food or bring your own drinks into the common areas because they want you to pay for their overpriced coffee and sandwitches. The coworking space closes at 5 and you have to leave. It opens at 8:30 and you can't enter before then. They will randomly close half the common area because someone rented it for a party. In the private office there are no power outlets at the desk. There is exactly one hookup place in the middle of the floor and we have extention cables everywhere. Despite paying (way above market) for a private office only a limited number of preaproved people are allowed to use it, anyone extra has to have a spaces subscription too. Despite allegedly renting the private office we are not allowed to use our own furnature, or electronics, or place anything on the walls (we can, but this would be paid extra).
Overall, it looks nice and has a nice view but once you see the rulebook it becomes an extremely unwelcoming experience.
I do have a dedicated desk in a standard Regus location and for the most part, it’s fine. Unlimited access 24:7, clean kitchen, etc. Unlike WeWork, the coffee machine isn’t free and there isn’t an on-site barista, but I don’t care about that anyway. No weird rules about food or anything else.
I asked around and apparently the same is true for all "special" meals, I thought it was interesting. Finding some related data to analyze has been on the back of my mind for a bit now.
And yes, often people are just okay with you bringing your own. I guess it works everywhere except prison, based on SBF.
Their mother company iwg PLC has less than stellar reviews on trustpilot.
https://www.trustpilot.com/review/iwgplc.com
Am I missing out by looking elsewhere? They were by far the cheapest and most flexible, but I don't have time to deal with administrative bullshit and protecting myself against predatory sales.
I have heard negative experiences from people renting an entire office, but I only rent a desk.
Editing to add a few more details: their app and tech stuff is a little clunky and not as good as WeWork's. You have to pay via an invoice system (at least in my EU country) which is again a little clunky. Otherwise I haven't had any issues with billing, etc. – but I reiterate that I only talked to the guy on the phone to set up a meeting, and then did everything else in person.
Not really:
https://globalinsolvency.com/headlines/iwg-plans-set-regus-i...
Guess which other companies filed for chapter 11 bankruptcy? Sears, BedBath&Beyond, and Circuit City. I don’t see them coming back at all.
Not saying that there is no possible comeback from chapter 11, there is. But seeing a chapter 11 filing and assuming the company will get out of it just fine is a bit preposterous.
Most of the time, the whole point of “reorganization” under chapter 11 is to keep generating whatever cash flow they can in the process, to make sure the creditors recoup as much of their investment before the (most likely inevitable) shutdown and the operations are wound down as gently as possible.
General Motors, American Airlines, Marvel Entertainment, Hertz ...
0. https://www.forbes.com/2008/09/25/chapter-11-bankruptcy-ent-...
I do agree, a lot of the media is saying this is a tactical move to re-negotiate a lot of expensive leases and they plan to get out of chapter 11 when they do.
The reality might be that there are enough co-working spaces and you can paratroop into anyone and check before hand that it meets your expectation. There is nothing to franchise.
What’s next? We gonna SWAT into Hartford for an insurance sales conference?
To say the least. I recently signed up for an office at a Regus location with the explicit purpose to incorporate a company there. All went well until a few weeks later when I went there to pick up post for the company and was told I was not allowed to do so until I had submitted a particular document. Only problem is that this document can only be sent to the registered company address by post. The woman in the reception literally had the document they needed in an envelope behind her desk but could not give it to me until I had submitted that same document. Zero understanding or willingness to escalate the issue to make an exception, just hiding behind "process".
In the end I managed to get in touch with someone else in the organization who realized how ridiculous the situation was and convinced them to make an exception so I could hand in the document but I'm not impressed at all by the company, to say the least.
Tried to book an office for my sister’s exam in a city with Regus but no WeWork and had to get a hotel room instead as we couldn’t figure out how to actually book any space. There was just a fill out a form and we will call you option.
Could allow CRE landlords to fill space temporarily, much the way pop up shops, sample says, food halls and halloween stores do..
Much better business model to just take a cut of a fee than take on all the lease risk for a startup.
It worked when investors didn't care about losses because the losses were hidden as technology investments that they thought would get smaller with scale.
I'm not sure how this would've worked out for WeWork.
[0] https://www.google.com/search?q=youtube+mcdonalds+you%27re+i...
Ford is a pension fund that happens to make cars.
Berkshire Hathaway is an insurance company that makes a lot of investments.
A supermarket is a bank that sells food.
GE at one point was also more or less a financial company that sold industrial goods.
I guess the thing is once you take a financial view of how a business works, a lot of things don't look like what they normally look like.
At the time of the construction of WeWork's business model, actually being on the deeds would have been seen as reducing the risk profile (by not being beholden to variability/increases of renting). At the time, private capital would have seen being on the deed as a low risk benefit to the business plan.
Obviously how we think about commercial real estate, particularly 'downtown' office space has changed heavily, and it seems like wework for whatever reason was unable to pivot. It's arguably very difficult to move the direction of that much capital on w you've made the opposite argument and are already holding the bag.
Thats a good question. I wonder if security (hidden cameras and network and stuff) could be a reason.
I'd be curious to know how this trajectory played out past the IPO blunder, but at the time they were already focused on the "enterprise" model of being the best place for a large firm to go to source/spin-up offices around the world (where in some sense you could understand the coworking spaces as dogfooding their own systems of vendor/space management for quickly spinning up and operating office space around the world). I.e. rather than either having to maintain profitability at a global network of coworking spaces or whatever franchise model you become the outsourced office team for the world's largest/high growth firms, who want to focus on their core competence not sourcing furniture vendors in China.
Rather than partaking in the joy of mocking WeWork's obvious hubris leading to their downfall, I think the interesting question, especially in this time of high interest rates, is what this bankruptcy signals for the future of "tech-accelerated" firms that want to primarily focus on the real world not software (ie without marginal cost of 0) -- who want to achieve the exponential scale of software yet who have to operate with the margin/cost structure constraint of a traditional firm. Tesla/SpaceX are of course the big success here, but I doubt we'll see anything equivalent until interest rates are back to 0...
I guess it's all about where and when you draw the boundaries, Mush has just managed to lose $20bn on "X" so the Tesla/SpaceX empire may not be counted as a big success for ever.
WeWork could have succeeded with the franchise model you describe or the focus on being a flexible leasing option for enterprise… but we wouldn’t have heard of them, that wouldn’t be the WeWork we ever knew. WeWork only became big because of the mythology, otherwise it would just be a nicer Regus… which existed before WeWork and will exist long after.
WeWork’s core business was mythology, like Uber, and every other “technology” business from the 2010s. You can peel back all the bullshit and say that their “core business” was good but it was all the bullshit that made WeWork, WeWork.
The beauty of this idea is that they could make some money while all of this settles out, and then it would pave the way for another PE to come along and start rolling up all of the most profitable locations until they re-consume all the properties again.
1. Like many companies who go through Chapter 11, WeWork will come out stronger after they cut a lot of their debt, offload leases on non-performing locations, and shrink to only be in those locations that can be sustainably profitable.
2. WeWork users are likely to also be happy, as with the greatly reduced debt WeWork can invest in their product (though I think most folks that used it always thought their product was good). Of course, this assumes the locations you use don't get cut.
3. Some landlords are going to take a bath as their leases are terminated during what is essentially a depression in commercial real estate. Given how big WeWork is in many cities, it remains to be seen whether this will have any cascading effects.
> The Company maintains the strong support of its key financial stakeholders and has entered into a Restructuring Support Agreement (“RSA”) with holders representing approximately 92% of its secured notes to drastically reduce the Company’s existing funded debt and expedite the restructuring process.
There is nothing fundamentally wrong with WeWork's core product. Users are generally big fans of their services, they have huge brand recognition and are basically synonymous with co-working spaces, and while the need for corporate office space is drastically reduced post-pandemic, the flexibility that WeWork provides is exactly what many companies want.
The problems with WeWork are nearly entirely with their capital structure. They expanded way too fast, they signed many leases that would never have been profitable (often in bizarro 0-rate environment world sweetheart deals with Adam Neumann), and their ridonculous valuation made them take on way too much debt to fund further expansion. Chapter 11 gets rid of all that. WeWork will be a much smaller company in the rather mundane business of office and property management, but it serves none of their stakeholder's interests to liquidate.
You have to justify this for a company that has just entered bankruptcy.
I suppose it depends on how you define “core”. But even if you take the most conservative definition and call their core product “office space” even that market has been thrown into massive turmoil.
There is plenty wrong with WeWork’s core product and much of what made it popular also made it unprofitable.
For having really nothing wrong with the company, it needs to be able to scale profitably too, by having a RoI that is larger than the interest on its assets.
The first part is clearly true for WeWork. On that strict sense, the company is quite alive, and its creditors would lose by closing it down. On the second sense, well, I don't think anybody can really say.
Getting paid 50k as a software engineer is still positive income, just unsavvy compared to getting paid 150k.
I’m also a big fan of paying below cost for my goods and services. The seller, not so much.
The idea from WeWork management would be to shed the bad properties and keep the good ones and operate them as post-BK WeWork.
Creditors could say, great idea, but we want to sell that remaining business for cash rather than leave it in your hands because we don't trust you to continue to run this.
This is what they are doing in terms of bankruptcy protection. A liquidation is different - there is no intent to continue operating afterward.
Commercial real estate needs to pull its head out of its ass soon and start heavily discounting spaces or shit’s going to get real real.
Looking at SF, I think it is not only a discount thing. The way it was rented before: "open space" office with bare wall, rows of desks and insanely high price per sqft or a mall is probably not gonna work anymore. They need to repurpose it: convert to apartments, smaller open space offices, regular offices, etc. Trying to do any kind of construction in SF is ridiculously complicated. When money was flowing it created many layers of bureaucracy and complexity, but it was affordable. Since then money flow dried up but complexity and bureaucracy is still there.
Agreed - so many viable businesses have been forced to close due to rent hikes but the underlying problem is that there a lot of investors who were promised guaranteed high returns for commercial property. They should be forced to accept the downside of that gamble but as a group they have so much political clout. Pretty much all of the “return to office” hype machine is driven by those very well-connected people and cities are receptive because most downtowns were heavily over-focused on subsidizing suburban car commuters, which can’t easily be converted into more attractive spaces for actual residents.
They pretty much sounded like "this doesnt make any sense. I don't understand how it is possible. It shouldnt be possible. But they are doing it so they must be doing something right and we need to follow in order to not be left behind"
So i guess they saw that something didnt make sense but then they got fooled by the old "everyone else celebrates them and everyone else cant be wrong"
There might be a sense in which bubbles are getting more ridiculous over time (e.g., NFT) but it would be hard to prove it in any objective sense.
IMHO, the key driver to NFT were a bunch of early crypto whales who wanted/needed to cash out. Just dumping their coins on the open market would tank the valuation, but create a demand frenzy by contracting some high-profile influencers and now you can dump as many coins as you want and people will still buy them.
Now, a lot of people are holding very very deep bags.
In any case though, 'FOMO' is an equally good term for both phenomena.
Remember tulips? [0]
I think tulips were probably at least as ridiculous as NFTs.
The role of scarcity is something interesting to consider as input. Scarcity (perceived or actual) is more natural with tulips or anything that is a tangible, real object.
NFT's tortured way of creating "digital scarcity" sets them, imho, apart from other bubbles. Given how much of modern life revolves around digital they are probably the forerunner of much worse to come.
strange but true, scarcity comes in different sizes. Is the infinity of NFT's the same as that of paintings? How many types of infinite junk are there? Or is this infinite itself?
In contrast, while digitally reproduced crap is also fundamentally finite, it can be replicated gazillion upon gazillion times more without any effort or sacrifice.
This is the so-called zero-marginal cost of (re)production [1]. Some people think its a blessing, some people think its a curse.
With AI algorithms it gets even worse. You don't only have infinite copies of the original, you also have infinite variations of the original.
Interesting times.
[1] https://books.google.nl/books/about/The_Zero_Marginal_Cost_S...
Expecting others to enter a bubble and trading accordingly can be a perfectly rational calculation following observations of behaviors in a given market context.
[1] https://theconversation.com/tulip-mania-the-classic-story-of...
It could have been rational to spend a lot on a good one as you could then cultivate it a grow lots of that type.
There's just too much legal complexity, operational costs are heavy.
Real estate is a well established and highly competitive industry, you can't "tech" it much imho.
The actual news is more accurately captured in the title of the "dupe" thread where it says "WeWork Files for Bankruptcy".
Its a relief for all those owners of small shared spaces, who created the market, and were worried to see the market taken from them. It's a relief for everyone who thinks this can only work on a franchise basis. And for everyone else who felt this was going too fast in this dystopian future laid out in Neil Stephenson's Diamond Age where you have enclaves, etc.
Now I'm looking forward to seeing someone try the illustrated primer business...
So they end up wasting money and effort on constantly acquiring new customers to offset existing customer churn.
He said that one time his 4 year old niece asked for an IPod for Christmas. He said that he didn’t know what that was; but if a 4 year old did, then it was probably gonna be big.
So basically if common folks in your network interact with a particular product; then there is a good chance that it’s a billion dollar product. The inverse is the same, in that if few people have heard of a product, then it’s probably not a unicorn.
Applying that logic to both WeWork and Theranos back when Uber was at peak, I asked around within my network if people knew of the anyone who had experience with either company.
People said nope; never heard of it or used it. I thought that was very strange considering how often both companies were dominating HN at the time with mindshare about their insane success.
If it walks like a duck, and talks like a duck; it’s probably a duck.
A cross section of people in your age bracket, people in your neighborhood, people in your family, people you work with, and people you buy things from should give you better info than just one of those groups.
I kept seeing them pop up in strange places as I traveled the country for work; but I hadn’t ever met any business who used them, and I kept seeing them headline HN about being the next great unicorn.
I thought it was strange that I didn’t know at least a single person in my business network with any experience of WeWork; most said “Who?”
Then I later asked some of my non tech common folk friends if they knew anyone with any type of experience with WeWork. Same response lol..
Wasn’t long after that headlines started to come up in the news about turmoil.
Rule 1: If everyone loves it including toddlers; it’s a good buy
Rule 2: If your gut tells you something isn’t right; prod around and get some feedback on your instinct. If things aren’t adding up, just stay away. It’s not worth the risk or effort if things are fishy. Things might not unravel immediately, but usually where there is smoke, there is fire.
If it walks like a duck, and talks like a duck, and even looks like a duck… It’s probably a duck honk honk :)
Doesn’t mean there is stability within.
Then analyze the inverse of this as a control test.
It claims to be a unicorn, and is dominating major cities…
But the people in the suburbs and sticks have never heard of said company before.
Starting to look like more a duck, rather than a unicorn.
So I'm especially glad to see the current crash, as for me it represents businesses founded on "fuck around" finally finding out what business fundamentals are.
I'll be interested to see what happens with other massive capital consumers from this era, with the poster child being Uber. It's plausible to me that even on its own terms Uber will never generate profit above the $20 billion of capital it took. Let alone getting into the black once we count its more obvious externalities.
Their product was letting people take leveraged gambles on crypto, so arguably not a social good.
I do agree that this era of low interest rates has led to some companies getting absolutely massive without ever turning a profit. But hey, that playbook worked for Amazon. Most tech companies have substantially lower capital requirements than WeWork, and can weather this sort of downturn as long as they have a reasonable cash position. Sure, Uber might not make back the amount of funding it's burned through, but that's different than it having a business where the unit economics will never work out.
I also think Amazon is distinct in that they chose to not have profits because they saw better uses for the money. Bezos could have declared big profits long before he did, and there was a noisy contingent of investors who were agitating for it. Bezos instead chose long-term investment in ways that upended our notion of commerce, and whose effects are still playing out.
I think that's very different than WeWork and Uber, where a lot of investor money was burned on subsidizing the core business. At least in Uber's case there was a theory, which was basically, "Use the rise of mobile to capture the global taxi market (while externalizing the capital costs to the desperate) and then use pricing power to extract Google-size monopoly rents." Maybe not a great theory, but at least something articulable. Whereas WeWork never made any sense as a business beyond a hazy "Uber for offices" handwave.
In terms of warehouse square footage, they are the biggest by a wide margin (~320M sqft - probably more now) https://www.bigrentz.com/blog/amazon-warehouses-locations
Now they're playing the card of AWS but for physical logistics. They're opening up their warehouses and logistics as a service to others.
Every company ought to be investing it's profits for long term gains.
The fact that Apple is sitting on so much cash that it doesn't know what to do is not a great play.
I'm willing to bet that in 10 years, Amazon will be bigger than Apple in market cap.
ISTR the banks just got caught out having made egregious poor bets.
AIG though is a bunch of fucking criminals.
That said, with this I agree 100%:
>I'm glad we're saying goodbye to this weird story of excess, and I won't ever have to read about WeWork again.
They're just going through bankruptcy, not dissolving the company. WeWork will be around for many years to come.
It felt so weird after being spoiled by WeWork and left a very negative impression about Regus/Spaces.
What's the WeWork moat? Because there's an insane operational costs that have to be passed down to the customer.
Yes it's true that normal co-workings take a bit more, but I have never spent more than 3/4 minutes and that's not nearly enough of an annoyance to pay off for the much higher prices.
Most people just want a table, a chair and internet.
Personally, it was absolutely worth knowing that I’d have a clean, organized space, coffee, not need to fiddle with the Wi-Fi, not need to sign contracts in foreign languages, etc.
Most coworking places are clean, organized, have snacks, do not have Wi-fi issues. Most of them also have contracts in english or don't even ask you for a contract at all.
I keep not seeing the moat. The customer you describe "picky and willing to pay double normal rates when travelling to foreign countries" is quite of a niche use case.
Most people simply find the coworking that is closest to their hotel/train station.
It's also extremely unlikely that local coworking spaces in random countries around the world can be relied on to have robust contracts in English.
People with stuff to do don't want to waste time figuring out the nuances of a dozen different coworking spots. This is the entire use case for half of the hotel industry and why chains like Holiday Inn or Marriott exist.
Your cost argument also doesn't make much sense either, as if anything, using a service like Regus or WeWork is cheaper because you get both the travel benefits and the local space for the same price. You don't need to sign up for a separate coworking space and pay a separate fee for every place you visit. I get access to thousands of Regus locations around the world with my single flat fee.
In terms of actual monthly prices, I pay about 1/3 more than I would at a comparable local coworking space. Not double.
So yes, for a slightly larger fee (something like $150 more per month), that extra stuff is worth it.
You would think so, but this is incorrect. Every single WeWork you go to, across the globe, offers the same fantastic experience from "feel good vibes" to functional meeting rooms, wifi, and ad-hoc services.
But even if there are local gems, it becomes another chore to browse listings, read reviews, spend time deciding between Coworking Space A and B and C. With WeWork and Regus/Spaces, you save a lot of time and can just get there, and get busy.
> The customer you describe "picky and willing to pay double normal rates when travelling to foreign countries" is quite of a niche use case.
Not OP but just like luxury hotels are niche, WeWork is not your local coffeeshop and does cater to a different crowd. Whether that's profitable for them or not, looks like not for now.
Local co-working office spaces are options of course, but with WeWork's brand you already know what to expect rather than gambling on something new.
Is anybody else having a similar experience? Is there anything outside the US with a similar level of quality?
So many nice buildings in world class cities must have cost a fortune to establish, but the short term rental market cannot bare that much of a premium so it left us with a great product for only a slightly higher fee.
I agree the whole setup is nice, though the customer service leaves something to be desired.
It was cheap money subsidizing what they hoped would turn into a monopoly.
I've not found the environment at most WeWorks to be anything special compared to most of these others, often not as good. WeWork's one big advantage is how uibiquitous they are in major cities, which is incredibly handy when travelling.
[1] https://secondhome.io/ [2] https://www.theofficegroup.com/uk/workspaces/coworking
edit: Also, given that startup investments are way down right now, tech is in a recession and there are recessionary tail winds this is a great way to get out of leases to downsize to a smaller footprint. Either way I don't have their stock or any ties to them and all of this could be wrong, but it is an interesting theory.
Bagholders never lose hope. Even if "We" comes out ahead, the equity holders will be wiped out.
Sometimes now is the right time to move in ... but I'm typing this from an apartment so don't listen to me.
Oh, and you keep personal ownership of 'We' as a trademark, so they have to lease that too.
And then, when it all starts to crumble, walk away with a multi-hundred-million dollar exit package.
I can't imagine how this guy still walks free and isn't being sued into the ground by investors.
Doesn’t mean they’ll be successful of course.
People aren't "speculating". WeWork has said outright that is exactly what they're doing, and that is the entire purpose of Chapter 11 bankruptcy, to allow a company to shed some debt, and in return equity holders lose everything and some debt holders take stakes in the reorganized company.
It's almost entirely false if you're talking about a business that's turning a profit, especially over years or (better) decades.
Also, there's an obvious difference between day trading and long-term investing.
I suppose it's a fun curiosity to hear the detail of somone's speculation, but it shouldn't be taken for much and it shouldn't be a surprise that there is some. There always is.
I would put it differently: an IPO is what most tech startups aim for or are pressured into.
I'm a founder and have talked with few people (albeit I'm not looking for money) and you could clearly see disappointment in money-bringing people hearing you want to stay private.
Looks like he has a couple billion dollars in the bank, so if you have any suggestions on how one might dummy themselves down to "idiot billionaire" level, I am all ears.
I'm currently at "erudite hundredaire" level.
Lacking scruples seems to be more important than having intelligence.
There are plenty of nutty rich people like this. If you would like to follow the path to lunatic billionaire, I'd suggest you start by being very tall so as to impress and dominate people. Definitely come from a broken home, the wilder the better. A sufficiently dysfunctional early environment will fuck you up for life, but it also gives some the ability to thrive in chaos. Make sure to be a charming sociopath, so that you can manipulate people, quite a lot of people, without being crushed by the moral weight of the harm you do. You'll also need some desperate character flaw that makes you insatiable: sane people will get enough money and stop, but you'll have to have some sort of unfillable void that compels you to keep going beyond all need.
Lastly, make sure to be very lucky. You must be born into the right moment, such that there are people foolish enough to give you a lot of money. Luckier still to fall into the right context, so that you have plenty of enablers around you who will effectively institutionalize you. Even luckier that your crimes against society are of the sort that either aren't currently illegal or are sufficiently inconvenient to prosecute.
I think intelligence is helpful, but not a necessary component to become really rich. I think there can be combinations of luck, opportunity, and charisma. It doesn't hurt that silicon valley investors appear to be the most gullible people on the planet.
I don't know the guy, but I did hear reports of him constantly drinking and smoking weed at the office, and him claiming that they're making a "human based operating system", a claim that does not make sense.
If Neumann catches some years for defrauding investors, will he still be a smart crook?
Neumann took stupid VC money for a ride. Unethical? Yes. But they giving it to him very willingly. His actions arguably could do more damage, because maybe WeWork bankruptcy can finish off SF commercial real estate market – I don't know how much of their 13 billion lease obligations are in the city. But it's hardly his fault that the system is so brittle.
Guess what happens when demand falters? Though, to be fair, they were losing money before the pandemic...just much closer to break even.
The anecdotes are not aligning with the observations. So what’s the deal here?
I don't know of this happening to a large corp, but if a local restaurant goes bankrupt, or a local construction company, and the owner is not also bankrupt, they can be forced to pay employees. Usually they are also bankrupt. Not sure if those debts survive through personal bankruptcy.
You may be referring to employees losing retirement or other benefits like that, but the worst of those loopholes have been closed (the pension can't be in the company's own stock, that type of thing)
no they cannot. Shareholders can only lose at most the capital they put in originally - they cannot be liable for additional debt.
> the owner is not also bankrupt, they can be forced to pay employees.
That would be because the owner mixed their own personal wealth with their business (e.g., as a single entity), instead of a limited liability company. Therefore, any assets the owner has is subject to be sold to pay the debt of the business. It's why only small businesses, owned by a single owner (who would have nothing else) is done this way (cheaper administratively i presume).
https://cmmllp.com/shareholder-liability-for-unpaid-wages/#:....
Those owed debts can lose much of what they are owed. In the case of WeWork, landlords will likely lose a lot of owed rent, and lease agreements will be cancelled or renegotiated at much lower rates.
Employees are meant to be at the top of the list to be paid what they’re owed, but that’s still contingent on funds being available to pay them.
Looks like another "Yahoo! Japan" situation.
* Tower Records
* Dean and Deluca
* Mister Donut
* Lawson
Um, maybe try archive.md (aka https://archive.md/HVL3N) and see if that works?
I only know of archive.today/vn/md though. There may be others, but I just don't know them.
Edit: oh, I think I've figured out the why! From the JS comments, I think it's used to get around captchas on archived sites (well, at least LinkedIn) sometimes:
var widgetId = grecaptcha.render('g-recaptcha', {
'sitekey': '6LeQbtsSAAAAAHevV56qhVr_0JhQI7N-zTPoOoWJ', // my
//'sitekey': '6Lc7CQMTAAAAAIL84V_tPRYEWZtljsJQJZ5jSijw', // linkedin's
'callback': function(response) {
// [...snip]The alternative would be to use an anti-captcha service that outsources captcha solving to people in low-wage countries, but that's probably a bit expensive given archive.today's scale.
I guess its worth a little less than 10T now.
I suspect it’s popular because there isn’t really anything better out. WeWork figured out operations and culture of running a productive office space and it’s probably worth it for business to just rent this infra. If WeWork shuts down, someone will definitely come in and acquire all these
I'm a member of one of the newest locations which, when packed "full," still tops out at 200 people, and in 3 months, I have never seen more than 100 people in a single day.
I expect about 400k MXN per month in revenue; let's double it to be safe, to 800k per month. Yet, most of the people are on the all-access plan, so that's 2k per customer per month only.
The rent for these two new floors is at least 1 million MXN per month. I also see 4 janitors, 4 front-desk staff, and 2 guards to operate the elevators, all full-time. This is not counting utilities and extra services such as coffee, mouthwash, etc.
At the same time there is often some value (though not necessarily actual money) left in the brand name and some other intangible things like business processes. Outright killing the company until the debts get paid (which they won't) is just needlessly destructive and leaves money on the table that could have been at least partially recouped. The whole point of chapter 11 bankruptcy is to try and recapture some of that value to try and pay off the debts a little bit more than would be possible otherwise.
Mind you, there's also the "flatpack" version where the company technically disappears but all its assets are bought by a different company that just happens to be run by the same people.
Ultimately there's nothing hugely bad about the lessors getting stiffed in the bankruptcy - at least they still have the asset! Suppliers often end up worse off if they've shipped actual goods but not had their invoice paid. This is why landlords do credit checks and ask for deposits.
Before I took my current job in 2019, I interviewed at WeWork and apparently I did really well (per the recruiter) as they really liked me technically, except that one person (the guy who went through my resume with me) vetoed me.
Apparently, when he asked me why I left a certain job, I was honest and said, it wasn't the right fit for me enjoyable wise, while I could do the job well, it wasn't what I wanted to do. So he asked, did you follow up with your manager about your issues. I replied honestly, and said that I had a very good relationship with him, and that because of that I didn't know how to tell him I didn't like my job/role so was easier for me to find a role outside the company. I noted that this is something I have to work on. Apparently, the interviewer interpreted what I said as leaving without giving notice (and hence the veto). If he would have asked, he would have found out that after I accepted an outside offer, I gave my manager as much time as he needed from me (was about a month) to transition everything.
I was upset at the time, but pretty soon afterwards I (and the rest of the world) learned what bullet I dodged.
They didn't stand a chance, as most sane commercial companies no longer maintain locations in high-tax neighborhoods post 2008. Only legal and financial services tend to cling to the traditional tower blocks.
Should convert the assets into retirement village care facilities, as this is a projected growth market in the next 10 years. =)
To which some responded "I don't think you guys have the money to sue me, you'll bankrupt long before".
https://inc42.com/buzz/wework-globals-bankruptcy-will-have-n...
I haven’t been following the market lately but CRE has been getting absolutely crushed all year, remember the “return to office” hubub? And WeWork is a big player in terms of the news cycle but tiny in comparison to the market as a whole.
Will we see fewer skyscrapers, as fewer people clamber for downtown apartments to live close to their jobs? Downtowns are generally desirable in themselves, but that's often because of the retail and restaurants that popped up to serve the people working there. If nobody works there anymore, does it generate a vicious cycle in which retail and restaurants can no longer sustain themselves, being forced to close, and thus downtowns lose their inherent desirability?
Do the cheaper and sparser places get pushed further and further out, until we end up with more sprawled-out megacities replete with suburbs and shorter buildings like Los Angeles?
The world changes a lot and it's trivial to get caught in situations where it is unavoidable.
Bankruptcy provides a legal way to force some restructuring to hopefully save the company.
This could be the start of the real state crisis every body was anticipating for some time.
Higher interest rates are the final nail in the coffin. Commercial estate is generally bought through variable rate mortgages, not fixed ones.
This means that at the same time lenders are under a deadly combination.
On one hand, higher rates means that owners need to raise rent fees (which they could for more than a decade consistently) to pay down their much expensier mortgages.
On a second hand, there's no market for their property, and if there is, it's at way reduced prices than it was before.
Third, the property value crashes, thus putting even more pressure on these mortgages to be refinanced with banks unwilling to come to terms and negotiate.
Over the next few years, a lot of leases are coming up for renewal and I'm guessing a lot of companies are looking to reduce the amount of square meters they have and what they pay for that.
We'll see a lot of decay, building operators trying to make ends meet with ever cheaper office tenants, before informal factory floor type conversions happen. Wouldn't be surprised if, very much unlike those old factory floors, buildings are well beyond effective service life by then. (because architecture has become depressingly good at being on schedule in terms of design service life)
I'll probably split my time between indie coworking spots and "unofficial" coworking spots (in SF, Celo space).
If WeWork went away completely and I couldn’t find a local coworking space that I really liked it’d probably be the impetus I need to find a job at an on-site only company.
There's plenty, plen of people who love remote work, so it would be net positive if your job became available.
I have a job I like a lot. But it’s a remote job.
I can put up with the remoteness for now but if I didn’t have a good place to work that I enjoyed working from, I’d reconsider my options.
I can’t find the link now, but there was a good piece in Money Stuff about how previously being a CEO is a major requirement for future CEO jobs, even if you lost millions and did your job horribly.
Are they going to be forced to find a new office?
It's amazing how much money you can make just by re-labeling something with the latest fad.
Changing the world... indeed.
They will almost certainly be cutting a bunch of locations.
If you make a set of claims and forward-looking statements that it's unlikely to be possible to deliver, get a lot of money on that basis, and then fail to deliver, was that just incredible over-optimism ("stupidity") or intentional fraud? In the case of SBF and Holmes it was unambiguously proven-in-court fraud. WeWork seems to have escaped that, although a lot of the deals make Adam's counterparties look especially stupid. Such as Softbank, who've lost a huge amount of money.
To use a car metaphor - there's how fast your car can go, and what direction you're driving it in.
And often the latter beats the former.
[1] https://www.bloomberg.com/opinion/articles/2019-10-23/how-do...
https://www.businessinsider.com/wework-ceo-gives-back-millio...
Either way, he is failing upward. With Andreessen Horowitz's blessings this time he's back to rent-seeking schemes, this time it'll be the small people who will experience his flare: https://en.wikipedia.org/wiki/Flow_(real_estate_company)
I expect he'll do it all in the open view, but again the mass land buying-spree he's been on, it can't help but invite disdain for the guy and worry for those who will be in his eye-sight.
They're super heavy into crypto. That can't be working out for them. Yet they keep writing checks.
I think it actually has a lot more to do with the social disgust reaction to a big failure, than any well reasoned distinction between fraud and hustle.
[0] https://www.entrepreneur.com/science-technology/how-steve-jo...
Holmes straight up lied about the result.
Neumann lost company's money too. WeWork is not a success. What are you talking about???
Still, they are not comparable to Neumann.
WeWork was simply a bad idea with bad execution. Theranos as an idea didn’t work at all.
Yes, we want to reward people who create value. If someone invents a fusion power plant or a cure for cancer, they should get a fat payoff.
But this thing, the guy has gotten paid a lot of money for creating no value.
Of course, investment is a game about uncertainties. People paid him out based on projections that turned out not to happen. You buy a thing, it turns out not to work, you are out money. That seems fair enough too.
But somehow it still seems wrong that a guy can sell a thing that turns out to not do anything useful, and get a similar payoff to someone who eg becomes all-time top musician.
The only thing I can think of that might seem relevant here is that there were relatively few people involved in judging whether WeWork was gonna work. The amounts of wealth concentration make this possible.
Contrast that with Taylor Swift, who still needs to spend her time touring to make her money. She's dependent on the decisions of a large number of consumers.
WeBankrupt
WeDefendant
WeLiquidate
We341UnderOath
For every wildly-ambitious founder or founder team, they need to bend an ear toward the sage advice of a conservative corporate CFO to ensure the venture stays alive and has a chance to thrive. Surrounding oneself with "toxic economic positivity" is a recipe for failure.
> In late 2015, WeWork was completing an investment round led by Beijing-based Hony Capital Ltd. that pushed its valuation to $16 billion. Mr. Neumann invited its CEO, John Zhao, to a party at 110 Wall Street, where WeWork was about to open its first WeLive dormlike apartment building. Toward the end of the night, Mr. Neumann led others to the roof of the 27-story building. There, guests passed around tequila shots. Mr. Neumann picked up a fire extinguisher and set it off, spraying Mr. Zhao and others with white foam.
> The deal went through. Mr. Zhao joined WeWork’s board in July 2016.
https://www.wsj.com/articles/the-money-men-who-enabled-adam-...
I sincerely believe if SBF or Holmes were raising money for a new startup today, they’d have at least a few notable names lined up to throw money their way.
There’s a famous NFL quote from the general manager of the Arizona Cardinals that goes, “I've said this before - If Hannibal Lecter ran a 4.3 (40-yard dash) we'd probably diagnose it as an eating disorder.”
It’d be “worth a shot” as it were.
Threads about this over the last week.
- https://news.ycombinator.com/item?id=38091216 (101 comments)
- https://news.ycombinator.com/item?id=38092585 (91 comments)
- https://news.ycombinator.com/item?id=38101996 (105 comments)
- https://news.ycombinator.com/item?id=38096508 (113 comments)
I have no idea about your town in particular, but there's a company called Regus who have a presence in the US, UK, France, Australia, Singapore, Japan ... actually according to their website they're in 120 countries.
They are not cool. They are not new. They have not spun themselves a reputation of being an awesome, new, disruptive, special, fun, aspirational, Silicon Valley tech-adjacent service like WeWork did. But if you want an office or a meeting room for a day or a week or a month, they can do it.
Having used their services in the past, the rise of WeWork was massively surprising to me. It was touted as disruptive, as new, as amazing! It's gonna be huge! But there are already these boring companies doing this exact thing, boringly, making money but hardly earth-shattering. I guess it's testimony to Neumann's charisma as much as anything else.
A lot of places do also have more casual co-working spaces. Worth looking to see if there's one near you. You mention coffee shops - in Southampton UK, where I lived pre-pandemic, one of the coffee shops took the initiative to open a co-working space on an upper floor. Which would have been a great business move if the pandemic hadn't hit and f*cked everything.
(edit - I am rate limited so cannot reply below, but I wanted to add that I have used Regus in Australia as a private individual with a credit card. Obviously I don't know how it works in every country, but here it seems to be very easy)
In the olden days, getting a Regus desk required an office tour appointment, followed by paperwork. Now they have an app, and nobody needs to send or receive a PDF.
In the Adam Neumann can do no wrong era this was their “corporate mission”. Honestly I can understand people using WeWork’s service, but at this point anyone who is a shareholder or creditor is either completely reckless or is strapped in, expecting a bumpy ride.
There’s no way you go in eyes open to a company that:
- used to spout BS like that
- has had to ditch the “visionary” founder and cut back on hubris
- has had to ditch its IPO and go public in a SPAC deal
…etc etc …and not expect things to be rough. I sort of get SoftBank’s position at this point. They are chained to the mast and they just need to see it through, knowing it’s going to be painful as anything.