WeWork Plans To File For Bankruptcy as Early as Next Week (reuters.com) 50
WeWork plans to file for bankruptcy as early as next week, Reuters reported Tuesday, citing a source familiar with the matter, as the SoftBank Group-backed company struggles with a massive debt pile and hefty losses. From the report: Shares of the flexible workspace provider fell 32% in extended trading after the Wall Street Journal first reported the news. They have fallen roughly 96% this year. [...] The company had net long-term debt of $2.9 billion as of June end and more than $13 billion in long-term leases, at a time when rising borrowing costs are hurting the commercial real estate sector. WeWork's filing for bankruptcy would mark a stunning reversal of fortune for the company that was privately valued at $47 billion in 2019 and a black spot for investor SoftBank that sunk billions.
WeDontWorkNoMore (Score:2)
Unfortunate name now...
Pro tip for VCs (Score:4, Insightful)
Don't sink hundreds of millions into scammy business models promoted by characteristic grifters.
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Charismatic - damned autocorrect
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I think you were technically correct.
To be fair (Score:4, Insightful)
The office rental business is more than a century old and does Very Nicely Thank You. Or did until covid but there will always be some requirement for it.
Where the investors went wrong (other than thinking it was a tech startup, not a very old school rental business) wasn't with the model itself but a particular financial detail: ie you can't sublet at a loss and still stay in business once all the investor cash has been spent.
Re:To be fair (Score:5, Insightful)
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I would fault the investors for not paying attention to other financial details like WeWork was renting a lot of space at a premium from a separate company owned by the founder. That did not seem strange at all.
Agreed. I think the concept of co-working at scale is legit. A small company have a scalable space is nice, as well as the idea of being able to have a working space if you are going between cities. Though I think implementation is tricky for a few reasons.
1) People individually are fairly cheap, and few people are willing to spend their own money for an office, so you're mostly relying on small companies and remote workers who are given a budget for office space.
2) You can have free coffee and some cheap s
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What the investors did wrong was treating a bog-standard office rental business as a tech play and ignoring financial fundamentals.
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Yes office rental is a thing. But reproducing WeWork's model is also a thing. It's basically just window dressing on the idea of renting out units in a more flexible way than fixed contracts. Besides that, the grift and nepotism of Adam Neumann were common knowledge and these VC idiots *still* threw money at the guy. Covid certainly didn't help the situation but this business was already on a precipice even before that. What's worse is this guy is still in business and there are still fools ready to part wi
Why not? (Score:2)
When you've got that kinda money it's sort of a heads you win, tails you win. The only losers will be the taxpayers when the stock is inevitably unloaded onto public pensions run by corrupt politicians and the employees who had no say in anything.
My complaint is they can take losses (Score:2)
Think of it this way, when I was a kid working fast food I made $4k a year tops. Imagine if I could treat that as a "loss" and "write off" $100k a year worth of taxes, effectively reducing my taxable income now to $0. That's
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Don't sink hundreds of millions into scammy business models promoted by characteristic grifters.
Pro-tip for people who don't understand how VCs work: Every business looks like a scammy model when proposed, some of them will make you a billionaire. Literally no VC is going to take your "advice" based on you pointing out that one of their investments didn't pan out. They know this, many don't pan out, and the reason why VCs are still here (and still loaded with capital) is because the risk of getting something wrong is for them outweighed by the benefit of getting it right.
No one saw that coming... (Score:2)
/sarcasm
Well.... (Score:1)
Amazon is looking for warehouse workers.....
Saw this back in 2017 (Score:5, Interesting)
Given the vendor in question, I knew there was no way they were paying even standard London prices for that office, let alone prices that included a free bar, cafe and snacks.
It was in no way sustainable in heady days of 2017, before the pandemic, before Brexit and before the current cost of living crisis. I had to wonder what their business model was besides trying to siphon as much VC cash into their own pockets as possible but utterly unsurprised it's come to an end.
Re:Saw this back in 2017 (Score:5, Interesting)
I visited a SF we work around 2014-15, same experience as yours in London and a buddy of mine is a mid level manager there for a long time so I had a tiny bit of inside info but admittedly not much.
The idea was that they were renting out open unreserved spaces at a high per hour cost to the startup customers but the customers could afford it because it was cheaper than getting a real office and they didn't need a real office anyway. Then once the startups grew they'd just stay and get a larger space and overpay for it because hey we're already here.
Could this have actually worked? Uh, maybe in some other universe where startup industry doesn't go through extreme high/low business cycles.
The other problem WW had was they were buying or long term leasing huge office spaces. No matter what the business cycles and economy we're doing they still had large static costs on real estate. RE is a very inflexible non-liquid investment whereas their customers lived in a highly flexible economy.
Unless they saved money during good times to get through the bad or they somehow arranged their own costs to be as flexible as the economy (good luck doing that with RE), they were doomed. Even aside from management "issues" the math just doesn't work long term.
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We looked at WeWork along with a couple other similar setups back in 2018 when we were renewing our lease in Los Angeles. One actually made economic sense, but the catch was that rates could change month to month. At the time, co-working spaces were sucking up all available Class A office space which sent rent up to what we considered unsustainable levels.
Daughter #2 uses them in NYC. (Score:2)
A real estate company viewed as a tech startup (Score:5, Insightful)
Larry Ellison of Oracle called this 100% 4 years ago, calling them essentially worthless: WeWork was essentially worthless because they are really just a real estate company masquerading as a tech startup. They have huge fixed costs and basically picked the absolute worst time to start renting office space as the world has gone remote due to Covid-19.
Re: A real estate company viewed as a tech startup (Score:5, Funny)
very appropriate, coming from the founder of a lawsuit company viewed as a tech company.
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very appropriate, coming from the founder of a lawsuit company viewed as a tech company.
This 1000%. I worked for Sun Microsystems during the Oracle buyout. Had an interesting conversation with one of the upper support folks in Oracle. They viewed Sun as a trojan horse to get into new companies and do their infamous "audits"....
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The real scam is the conflict of interest in that they were renting a lot of space from companies their founder had an interest in.
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There are real estate companies that are more or less solely focused on helping you sell or buy property. Given that their focus was still on property management type stuff (subletting in this case), I can see it being considered a real estate company.
Not a good real estate company, mind you.
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Except WeWork similarly has nothing of value, because they don't own the space they sublet. It's all liabilities, not assets.
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Larry Ellison of Oracle called this 100% 4 years ago
Opinions are like arseholes in that Larry Ellison is one. Wait that's now how that saying goes, but the point is for everything that has ever occurred in human history you can point to some prominent person predicting it. Just because Larry Ellison called it 4 years ago doesn't mean he is in any way to be trusted about anything else.
Noooo.... (Score:2)
Sigh. I wish they just raised the prices a little, and maybe cut some services (snacks, coffee).
Re:Noooo.... (Score:4, Interesting)
There are plenty of spaces that do this, I rented one of those places 2 decades ago before WeWork even existed when I had my own startups.
The biggest difference between those places and WeWork is that WeWork basically became a search engine on top of those spaces and then started building out all sorts of ancillary things (free coffee, sure, but also sensors to measure and pass through your presence, cleaning services that measured and shamed you for producing too much trash, reducing heat, light and other electric use to uncomfortable levels etc etc). It became a dystopia of sensors and spy tech, I was surprised the CCP wasn't sponsoring them to get the data.
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The biggest difference between those places and WeWork is that WeWork basically became a search engine on top of those spaces
Yes. And WeWork is awesome because it provides a nice interface that doesn't require hours of phone calls to coordinate scheduling and availability. It also doesn't require long-term commitments.
It became a dystopia of sensors and spy tech, I was surprised the CCP wasn't sponsoring them to get the data.
You probably should stop huffing Sovereign Citizens propaganda so much. Try shrooms instead.
Re: Noooo.... (Score:2)
You probably should look into what WeWork was selling, not just the space but also the data on your use in the space. They had Bluetooth sensors, IR and CO2 sensors, consumption tracking, all to track your movement and presence which your boss could query or anyone else interested in that data. Slashdot had several articles on it in the past, as with many, if itâ(TM)s too cheap or free, youâ(TM)re the product.
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presence which your boss could query or anyone else interested in that data.
BS. Corporate clients can request the punch-in data for employees, but that's it. WeWork also experimented with using Bluetooth-based devices to enter the space, but it went nowhere.
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https://www.bloomberg.com/news... [bloomberg.com]
I don't get the WW hate on Slashdot. (Score:2)
WW is basically AirBnB for office space, but unlike AirBnb, they don't impose nearly the negative externalizes on the surrounding area.
they are renting out lower cost built to suit commercial spaces, fitting them out with basic office infrastructure and snack bar and subletting it at high daily rates.
That is a pretty reasonable business plan. The pandemic happened the public policy response to it made a lot things that had been working not work. A lot of business are trapped in above market rental contract
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WeWork was losing money even before the pandemic. The challenge with a co-working space that allows for daily usage (as opposed to successful ones that
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They could have been AirBnB for office space, but Neumann was a much better VC scammer than a businessman, so they never were.
By making huge up front investments with long term leases a lot of money had to flow through the company and there was a lot of it to divert. If they had just been a middle man for short term leases the company would have required vastly less capital and he would actually have had to run the company well to become a billionaire.
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They are as much of a parasite as AirBnB. Needed just like them as well, but a parasite none the less. They essentially absorbed all available desirable space in a sub-market and used the shortage to jack up rates. Worked well until vacancy rates increased.
non-tech tech company fail (Score:2)
Yet another non-tech "tech" company failing after it burnt through all its cash. Tesla will fall sooner or later. Or at least it will be valued appropiately as a car company and lose ~1/5 to 1/10 its market cap.
-=-=-=-=-=-=-=-=-Tesla Toyota
Market cap---------622B 300B
Income(Dec22)----3.7B 1.3T
Does the above make sense to anyone? I could see it if FSD were around the corner, but we've heard Musk say that for a decade now. At some point its as believable as someone saying flying cars will be available
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Google tells me Tesla's revenue/income in 2022 was 81/21 and Toyota's was 267/25 Billion, what exactly are those dec22 numbers supposed to be?
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It makes sense when you realize that Toyota just doubled down on not-EV's for the future, where basically the rest of the industry says they are crazy still trying to make hydrogen work at scale.
Toyota is doubling down on a sunk-cost fallacy, hoping that somehow the very real engineering and logistic challenges around hydrogen-powered transport magically are solved before they're totally fucked on internal-combustion. And the markets have priced this in.
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ford and gm are valued as automakers.
On top that, rather than stock alone, it would make more sense to add outstanding debt to that value to get total "capital-like"--and I think they have far higher debt:stock ratios than Tesla.
Tesla is not simply an automaker; it has not only significantly greater projected growth, but also presumably valuable technology that may eventually lead to huge licensing fees.
Both of those factors should add to the stock price--but I'm not going to guess as to whether it's too li
They forgot to (Score:1)
...stuff AI into their mission statement to attract gullible investors.
Newmans golden parachute (Score:3)
I guess stupid does pay when it comes to VC money.
Re:Newmans golden parachute (Score:5, Informative)
The pitch was simple: office space is poorly utilized, with a sharing model it can be used optimally. COmpanies only pay for office when they need it, and land is better allocated. Makes sense.
The VCs were stupid. They failed to detect that WeWork leased the buildings from Adam's personal business. They failed to detect that WeWork didn't even own the brand WeWork, the company rented the brand from Adam who owned it. Adam took out massive loans to buy premium office real estate, which he was able to do with a guaranteed client: WeWork. The VCs poured in cash on the promise of optimizing limited resources, ie land, the cash paid rent on the real estate- to Adam who owned the buildings. The VCs couldn't even get out with out paying him a golden parachute, because fundamentally WeWork owned nothing, Adam owned all the assets.
In the deal, Adam turned over all the assets to WeWork, but they had to buy him out to do so. He had a windfall at the expense of the VCs, who are now stuck with a bunch of offices in premium markets that have limited value in a post-Covid environment.
Adam is an unethical con artist, but he's not stupid. Mashiyosi-Son is stupid, WeWork has nearly sunk Softbank.
How did they make it this long? (Score:2)
I'm shocked that this is happening only now, with office space going unused everywhere since 2020. Sure, offices have rebounded, but nowhere close to where they were in 2020. And the very design of WeWork is to offer office space on demand, for short periods. This is the very first kind of office space to be released, compared to the long leases most businesses sign up for.
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sunken cost fallacy. investors had put so much money in already that they accepted to keep putting even more in just for the hope of a market change and/or the "charisma" of the ceo, which only delayed the bust and made it just worse. he indeed has to have a lot of charisma because he basically fooled them all, clean and efficient, but got away unscathed and probably will still be in business for a long time.
Losing their cred and their 'k'. (Score:2)
WeWork --> WeWere