Now Worth $10B, Is WeWork a 2000 Redux?

> But who supplies the VC's with money?

Ultimately, all "money" these days is supplied by central bankers.

There aren't a lot of good ways to short this stuff, at least if you aren't someone like BlackRock. That's especially unfortunate because it means no one is going to make money on the downside, offsetting others' losses. In every transaction there is still a winner or a loser, it's just that in this case the winner is going to be the people selling chunks of worthless companies for big money today. Just like in 2008 the winners were people who sold overpriced and overhyped real estate in 2006 and 2007. So if I were you, I'd go found a worthless company, pay the "tech press" to hype the holy living fuck out of it, raise a dozen rounds at obviously nonsense "valuations", and use the money to pay yourself and your friends nice fat salaries and lots of silly perks for the next 3 or 4 years while everything implodes around you. That's not how you short the madness, but it's how you profit from it which is really what your question is about.

There are plenty of opportunities to bet against many of these markets, some more direct than others.

To bet against the Canadian housing market, for instance, you could look at shorting vulnerable financial institutions (Canadian banks and lenders with exposure to the Canadian housing market). You could also look at the Canadian dollar, which could conceivably fall if there's a housing crash.

Private startups are obviously a more difficult target, but you should consider that the types of events likely to push the private startup market into meaningful decline would in most cases also be bad news for publicly-traded tech companies as well, and you can short just about all of these. There are numerous advantages to targeting publicly-traded companies (liquidity, availability of information, in a major market correction there will be forced selling, etc.).

There is an interesting answer from Mark Cuban on Quora about how he preserved his money during the Dot-Com crash... http://www.quora.com/How-did-Mark-Cuban-save-his-wealth-from...

Succintly, government-sponsored VCs have a better performance until they get so much money they start to underperform.

Still, in the U.S only 4.53% of enterprises get GVC(p.20).

http://www.nber.org/papers/w16521.pdf

You keep your cash, wait for the crash, then buy up the leftovers at fire-sale prices.

No you can't and that is a "good" thing in that you don't end up with short sellers driving the prices around in addition to the speculators.

Did we read the same article? I really doubt WeWork is happy about the WSJ pointing out how much they look like a company about to take a spectacular fall. That wasn't quite a hit piece, but it was not a favorable article.

Companies do pay PR firms to get tech articles written about them. These types of articles actually make up a lot of what makes it to the front page of HN.

Those places don't have a $10 Billion valuation. That gets articles written, not a novel idea.

We had beer taps at my previous job, and nobody drank during business hours even though they could have. Any work past 5 or so might have been under the influence from time to time, but we really only drank in any quantity after quittin' time.

In case of the China Town WeWork in DC. They switched to cold brew coffee. I'm guessing you can't just have an open tap in the kitchens in DC?

You're paying for no lease. You can get a 3-10 person office in a downtown SF with no lease. No other place offers that.

My wife's workplace currently has a WeWork office, as well as a manufacturing facility outside of the city. They typically alternate days, switching between being at the office (which has the 'prestigious' New York City address and most of the paperwork), and the warehouse out on Long Island.

They used to have a bigger office, and my wife would typically be the only one using 1 of the 3 desks - the others belonged to the engineer, who would be at the warehouse more frequently, and the sales manager, who was out making sales. It might be under-utilized, but both engineering and sales still needed their own desk, file storage, etc. for the times that they were in the office.

One of the many signs that things are getting toppy is that everyone stops working. Or rather, they "work from home". It wouldn't surprise me if many of these tenants are underutilizing their space because most of the people who were supposed to fill it are out somewhere else goofing off, sleeping, etc. There's no need to worry about being productive when (a) your employer can't readily hire a replacement for you and (b) there are 50 other possible employers who would fall all over themselves to give you a job (and a raise!) regardless of your competence or diligence. Besides, who cares if you're leasing twice the space you need for a bunch of employees who don't come to the office and do no work? It's not like you can't just raise another huge round whenever you want.

Real estate transaction costs can be huge, IF the rent is reasonable (apparently not this case) then paying rent on underused space is basically a real estate options market. There is a viable business model here, its like insurance that if you need an additional long term office next Monday, just walk in to "your" space. It might be cheaper to make one transaction, pay your 6% or more of commissions and fees, underuse the space, than to pay two 6% commissions and fees (and labor to do the second deal).

Several employers ago I got to learn about financial industry disaster recovery plans and you'd be surprised how many traders have an empty office squirreled away on the other side of the city as their tornado/fire recovery plan. Sure only 1/20th the employees would fit, but its only 5% the rental cost of the real office and some bean counter said that was an acceptable loss to provision an office with no people and a stack of server hardware. If they let people work from the D.R. site that would be a public admission that people don't need to work in a bullpen and could just as well work from starbucks or home, but that would not meet the emotional need to intimidate people in person and demonstrate butts-in-seats metric goals so using the D.R. space for actual work would be unthinkable unless the main office was literally on fire.

This combines with open office style, such that people can't avoid noticing unused space, although unused space is hardly a new feature of the business world. There's a small room right down the hall from me, but its behind a locked door, so no one notices. If they were not an open office company, they'd just lock a door and no one would notice. Placing their capacity on display like this is arguably an architectural design fail, they should have found an architectural way to "hide" empty space from casual visitors in an attractive and cheap manner.

In the case of the place I go, WeWork is different in that it's significantly more expensive.

In fairness, the advertised prices for the London ones are surprisingly competitive, but then that just raises the are they making enough to ensure they keep the lights on if they're not too busy? question...

The real problem for the valuation if not the business itself is that apart from free beer, they're not really doing anything differently from most of the other spaces, and their brand and scale really isn't much of a draw for their audience. And they're notionally valued at over 5x the value a firm operating essentially the same business on a much larger scale...

Well he would, wouldn't he?

He talks his book like everyone else. He's a trader, not an oracle.

Please link to your sources.