[HN Gopher] WeWork Plans to File for Bankruptcy as Early as Next...
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WeWork Plans to File for Bankruptcy as Early as Next Week
Author : tempsy
Score : 85 points
Date : 2023-10-31 20:52 UTC (2 hours ago)
(HTM) web link (www.wsj.com)
(TXT) w3m dump (www.wsj.com)
| croes wrote:
| At least they owned their assets and didn't just exploit the ones
| of their users, looking at you Uber and Airbnb.
| woleium wrote:
| I don't think that's true, didn't they sign a bunch of hard-to-
| get-out-of leases for properties that Adam Neumann purchased
| personally? How he got that past the board is beyond me.
| drjasonharrison wrote:
| Before he was the majority voting shareholder he couldn't.
| After he gained control of 65% of the votes....
|
| Wall Street Journal article from 2019:
| https://www.wsj.com/articles/weworks-ceo-makes-millions-
| as-l...
|
| Accessed via: https://archive.ph/jzsxI
| userinanother wrote:
| Well actually... didn't they lease buildings with shell
| companies and almost no recourse by building owners? I think a
| bunch of commercial real estate holders are gonna be holding a
| bag of pants.
| 60secs wrote:
| Seems he internalized the lessons from Ray Kroc, only he used
| real estate to extract wealth from investors/shareholders
| instead of franchisees. "owning the land on which the burger
| is cooked"
|
| https://techcrunch.com/2019/01/16/we-company-ceo-in-hot-
| wate...
|
| Scene from "The Founder" "You have a miniscule revenue
| stream, no cash reserves, and an albatross of a contract....
|
| What you ought to be doing is buying up plots of land, then
| turning around and leasing said plots to franchisees, who as
| a condition of their deal should be permitted to lease from
| you and you alone. This will provide you with two things:
| One, a steady, upfront revenue stream. Money flows in before
| the first stake is in the ground. Two, greater capital for
| expansion. Which in turn fuels further land acquisition,
| which in turn fuels further expansion. And so on and so on.
| Land... That's where the money is. (BEAT) And control."
|
| https://www.youtube.com/watch?v=uxCL2RqCuiY
| illwrks wrote:
| In the modern take, replace land with users/eyeballs.
| rchaud wrote:
| Not anymore. See Reddit. Eyeballs aren't worth anything
| without a solid advertiser inventory.
| lxgr wrote:
| Do they own a lot of buildings? I thought most of them were
| long-term leases. Their balance sheet only lists $3 Billion of
| property assets and equipment [1]; that's not that much office
| space in the tech capitals of the world.
|
| [1] https://investors.wework.com/news-and-events/press-
| releases/...
| paxys wrote:
| What assets? Almost all of WeWork's office space is leased. The
| company owns nothing.
|
| The "exploiters" Uber and Airbnb were at least able to build a
| sustainable business. WeWork was a scam from day one.
| potatolicious wrote:
| Ehh, I disagree. OP is incorrect in that WeWork owns little
| of their own real estate, but from what we can tell they were
| leased at fair market rates from their actual owners (some of
| whom are Adam Neumann himself, which is... bad).
|
| The only parties that really got fleeced here were Softbank
| and their totally unclothed VC siblings who bought Neumann's
| messianic complex like rubes. Building owners by and large
| seem to have been treated fairly?
|
| I would argue the gig economy has been worse, since those who
| got fleeced were largely working people being squeezed and
| having massive externalities and liabilities dumped onto
| them.
| FireBeyond wrote:
| Hah, not so much. Many times, WeWork loaned Neumann the money
| (at spectacularly good interest rates), he personally purchased
| the property, and then leased it to WeWork.
| rchaud wrote:
| Reminds me of Enron, where the clowns in charge happily
| handed their corrupt CFO Andrew Fastow hundreds of millions
| to run a private equity fund that purported to purchase loss-
| making assets at a profit to Enron.
|
| Then, after Enron reported good quarterly numbers, this fake
| fund would simply sell the stake back to Enron, with the CFO
| taking a gigantic management fee for orchestrating the
| charade.
|
| Public companies have been banned from doing this, but I
| guess anything goes when you're private.
| purpleblue wrote:
| How does Softbank still keep standing? They keep losing on the
| vast majority investment they've made, and yet they haven't come
| up against any financial issues? I feel like Softbank going
| bankrupt is going to be the Black Swan that affects Silicon
| Valley the most.
| alephnerd wrote:
| They got a couple wins recently with the ARM IPO, Coupang IPO,
| and ByteDance (aka TikTok). WeWork (and Uber) has been a
| massive hole, but SoftBank is diversified enough that they can
| withstand it.
|
| They have historically been one of the biggest movers in
| Chinese and Indian Growth VC, and have a significant presence
| in American Growth VC too.
|
| They made oodles of money off Slack and DoorDash for example,
| and their 2010s investment phase was thanks to them being flush
| with profits from Alibaba and Tencent.
|
| At the end of the day, compared to most other Growth Funds,
| they tend to hire some solid investors who know how to find
| capable operators.
|
| Though, lapses of judgement do happen a la Neumann, but that's
| like saying anyone who invested in Pivotal or Joyent is dumb.
| This is VC. It's not guaranteed returns. There's a reason why
| it's called VENTURE capital.
| tpmx wrote:
| Saudi oil money.
| alephnerd wrote:
| The Saudis pulled out. Vision Fund 2 (aka SoftBank today) is
| primarily Softbank's own money [0]
|
| [0] - https://pitchbook.com/news/articles/softbank-earnings-
| vision...
| tpmx wrote:
| Do you also base that on something more reliable than that
| vague article?
| paxys wrote:
| Alibaba, ARM, Bytedance, Coupang, Oyo, Xiaomi, Didi, Slack,
| Doordash...Softbank has plenty of hits to make up for its
| losers. That's how the VC industry works.
| seydor wrote:
| it better be described as "spiritual ascension" or "weBust" or
| something
| ilrwbwrkhv wrote:
| He is a billionaire now and is raising money with Marc Anderson
| in Saudi.
| willsmith72 wrote:
| Paywalled, what's happening with their assets? Is there a buyer?
| ksherlock wrote:
| It's Chapter 11 bankruptcy which means the company still exists
| and becomes property of the creditors (debtor in possession).
| cbron wrote:
| Reuters has some info, no apparent buyer:
| https://www.reuters.com/markets/deals/wework-plans-file-bank...
| aragonite wrote:
| Delta, Six Flags and GM filed and successfully exited chapter
| 11 in recent memory.
|
| I hope at least my local wework (in Brooklyn) doesn't get shut
| down! More and more people are coming in to use hot desks,
| though the private offices are still half empty.
| Mistletoe wrote:
| I think the problem is more that the idea isn't sustainable
| in any way.
| willsmith72 wrote:
| it's kind of interesting that it's not though, isn't it?
|
| intuitively, a shared office space makes sense to me. I
| find it really useful as a remote employee to get out of
| the house a couple of days a week, and for my employer it's
| pretty cheap and is a perk which helps them hire from all
| over the world, also cheaper than hiring american
| engineers.
|
| Is it just a pricing issue? Hot desks are about 250
| USD/month
| ilamont wrote:
| _I 've been telling entrepreneurs to "know your limits." Knowing
| your own limitations gives rise to endless possibilities. Because
| I understand that my abilities are limited, I've surrounded
| myself with entrepreneurs who are more talented than me, and by
| letting them take the lead, infinite possibilities come to light.
|
| I believe that the information revolution will last 300 years --
| from PCs to the internet and on to AI. How do I make SoftBank
| into a corporate group that will keep growing for 300 years?
| Understanding that an organization can't be sustained with just
| one technology, one business model or one leader will let it
| prosper for a long time._
|
| - SoftBank Group chief Masayoshi Son, 2019
| https://asia.nikkei.com/Editor-s-Picks/Interview/I-had-a-cha...
| thumbsup-_- wrote:
| When times are good, everyone has wisdom and is a visionary.
| paxys wrote:
| Kudos to WeWork for surviving the first five implosions I guess.
| The charade went on for far longer than I thought it would.
| m0llusk wrote:
| This is really good news for actual real players in the coworking
| space. Being disruptive with venture money conceivably helps new
| offerings along, but in this case it was never anything but a
| massive fraud that distorted the entire market.
| CPLX wrote:
| No it's not. The only other real player is Regus and they are
| absolutely f'cking horrible with bad poorly run spaces and
| predatory billing. They're a scourge.
|
| The WeWork product is fantastic and I've tried all
| alternatives. I'm in a different city basically every week and
| if they go under or stop being basically the same I'll
| seriously mourn the loss.
| Daishiman wrote:
| Seems like Regus might be closer to the real cost of renting
| commercial space.
| CPLX wrote:
| It's not the cost they're both sort of comparable and
| WeWork isn't really like the discount option.
|
| It's that WeWork is SO MUCH better run. The keycards work
| the website works and has current accurate information and
| so on.
|
| Regus/Spaces makes the DMV look like an elite customer
| service organization. The _second_ time you book on their
| app and end up at a building under construction you'll say
| the same.
| paxys wrote:
| There are no real players in the coworking space, and any
| interest for startups in the field was destroyed by WeWork. So
| no, this is not good news, just a nail in the coffin for the
| industry.
| muttantt wrote:
| Yikes. Sitting at a WeWork right now... Love it, I often have an
| entire floor jus to myself. Many locations are ghost towns, some
| have entire floors shut down.
| artdigital wrote:
| I have a personal WeWork subscription and love ever bit of it.
| I travel a lot and can use any of the WeWork locations to get
| my work done. Far better than any cafe I would ever be able to
| find (obviously)
|
| As a private, non corporate costumer, I'm sad to see them go.
|
| "Ghost town" probably depends on your location and country. The
| ones here are sometimes so full that if you don't book in
| advance, you can't get a seat for on-demand
| stevage wrote:
| Wait, you enjoy the experience of going to a co-working space
| with no one else around? Why is that?
| dmix wrote:
| Not everyone like's working at home. The walk to an office is
| nice and gets you focused.
| Mistletoe wrote:
| I love the irony of this.
| Rapzid wrote:
| I lived down the road from a startup I worked for with work
| from home Thurs/Fri. Worked from the office every day.
| tomlockwood wrote:
| To be honest, I thought this had already happened. Maybe I'm just
| an idiot, considering I'd thought that had happened, and yet
| worked from a WeWork a couple months ago.
| jameslk wrote:
| I'm curious how hard this is going to hit commercial real estate,
| which already seems to be on the brink of collapse. What are the
| cascading effects like the subprime mortgage crisis?
| rottencupcakes wrote:
| Afaict, the reason they announced that they most definitely may
| be going into bankruptcy next week is to play hardball with
| their commercial land lords and try to get a deal which will
| keep them alive.
|
| The idea being that the landlords (and everybody) knows that
| the commercial real estate market is super depressed, so if
| WeWork disappears the landlords may be stuck with an empty
| building for years.
| Rapzid wrote:
| Has it really dried up or is it good for a few more pumps?
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(page generated 2023-10-31 23:01 UTC)