As someone living in SF, I don’t think anyone in SF or SV would ever consider WeWork to be a “Silicon Valley” company in the same way that Uber or Twitter or Slack is.
The company has 0 tech brand among employees (how many ex-FB or ex-Google engineers work there?) and outside of Benchmark’s early round none of the VCs are SV-based.
Point is the media is making this out to be an indictment on some SV tech bubble but people in SV are looking at this from the outside like everyone else.
> "Point is the media is making this out to be an indictment on some SV tech bubble"
Its not the media, I think its just true. Had WeWork IPO'ed under the same conditions a year ago, I think it would have been 'fine'. but the glut of SV unicorns losing money, hating investors, and slowing growth has got people highly concerned.
This list of companies (slack, lyft, Uber, Pinterest, beyond meat, crowdstrike, tesla, spotify, Pinduoduo, Dropbox, Snap, Domo, Blue Apron, Box, Shopify, Zillow) has 310 billion in market cap and -18.67 billion $ in revenue (back of the envelope calculation).
EDIT: I am not saying all these companies are bad; I am invested in some of them! Just that the sheer size of these companies and their total losses are unnerving lots of people to such a point that the market had no appetite for WeWork.
You’re confusing revenue and earnings/net income. Revenue is the sum of the sales. Net income, or earnings, is how much money is left after accounting for expenses. Uber alone has tens of billions of dollars in revenue.
You're not wrong about OP's confusion, but a quick note that uber recently reported quarterly revenue of ~3.1bn which means "tens of billions" annually is exaggerating a little.
Does uber count it's fees as revenue or does it count fees and the fares (which get passed back to the drivers) as revenue?
My opinionated take is that if uber wants to pretend that drivers are not employees and it's just a marketplace then they shouldn't be booking the fare as revenue, just their cut but I'm not an accountant and I don't make the rules.
> My opinionated take is that if uber wants to pretend that drivers are not employees and it's just a marketplace then they shouldn't be booking the fare as revenue, just their cut but I'm not an accountant and I don't make the rules.
Good point, but Uber literally takes the money through its app, so I don't suppose that would be possible.
Yea, classic case of low vs. high margin businesses. Travel is a great example. You would think sites like Expedia would make a healthy margin on airline tickets. Due to the way it's set up (booking systems, airlines, competition) the actual net per ticket is something like $5 for domestic flights. Last I checked Expedia specifically, most of their revenue was on hotels.
Contrast that with a high margin business like consulting services or a proprietary technology/product and there's a huge difference in net profit between the two at $10m annual revenue.
A cynic might note that they're essentially selling pickaxes in the gold rush, so would be expected to do well in a tech bubble, even when their customers aren't :)
Some of those (e.g. Slack) are growing phenomenally fast though, and could become profitable quite easily. Others (e.g. Uber and Lyft) have a questionable business model.
Edit: wow I didn't realize Slack had such a large market cap. That is a LOT of growth priced in, probably more than is justified.
While this is true, I seem to miss what makes Slack special. We use it at work, and it is decent at what it provides, but we could probably just as well switch to Discord, Microsoft Teams or ICQ.
Microsoft Teams especially seems like a deliberate attempt to dethrone Slack, and while it is slightly more annoying to use, it just makes sense for companies to bundle their services and subsciptions.
Would you, though? My company was a very early user of Slack, and imported our history from Skype group chat, IRC and HipChat over various periods in history. You can get the data out of Slack easily enough, so I don’t see that as a major aspect of lock-in if there is a competitive product.
The integration story is more interesting, but to _be_ a competitive product many of these must already exist.
The job of competing with Slack is harder than it once was (just look at MS Teams) but not impossible (just look at Slack...) - there’s lots of room for improvement.
My company switched from Slack to Mattermost, and then back to Slack. We either did all these things, twice, or lived without them. Switching is not something you'd do on a whim, but it's not really difficult either.
The IT department moves in mysterious ways, its wonders to perform.
I think we moved from Slack to Mattermost because our infosec people weren't happy about Slack's handling of our data; there's a line in an email about "discussions with Slack over the past year regarding their data security and AI initiatives". But then Slack sorted that out to infosec's satisfaction, so we moved back, because running your own Mattermost installation is more of a hassle than paying Slack to do the equivalent.
For the same reasons (good and bad) companies periodically switch other software platforms despite switching costs. History is exportable, and I suspect that for every company that's built clever and essential integrations and comprehensive channel structures there's another one where it's an under-used message board...
Sorry, my comment was tongue-in-cheek. If revenue is defined as income from operations, having to pay people to use your product could be considered negative income, aka negative revenue (even if that's not how that actually works). I guess it was a bad joke if I have to explain it.
They don't hate investors, just the likes of you or I, and who can blame them? Softbank gives them money on a $47bn valuation, don't have to deal with reporting requirements, don't have short sellers (which SV types seem to be really annoyed by?!).
Twilio has been non-GAAP profitable for a year now with a positive EPS for the last four quarters (possibly five, but my brain is failing me and Yahoo Finance only lists the last four), but you list it as negative. So that leads me to wonder if many of the other figures you cite have similar issues.
On the merits, yes, We is not a tech company. But bear in mind that the company has gone to extraordinary lengths to cloak itself in the unicorn-tech narrative. It masquerades as a platform for other services; it ascribes its losses to a work-setting variant of the Uber fast-growth strategy; it draws parallels to Airbnb's disruption of the hotel business, etc.
Yes, Silicon Valley's smartest minds may see through it all. But in routine media coverage, the company's own version of its story (OVOIS) gets much of the ink. It takes a while for more investigative reporters to call BS and defy the company's OVOIS.
The general public's impression of WeWork isn't really relevant here, though. It's mainly the opinion of institutional investors that matters. And if they've had the wool pulled over their eyes and believe We to be a tech company, then... well, I'm even more worried than I thought for our financial system.
Actually, my feeling here is that institutional investors have realized that We isn't a tech company. That's why the IPO would probably only have fetched them at most a $20B valuation, rather than the higher valuation they've been awarded from the private markets as a supposed tech company.
So this may not be an indictment of "Silicon Valley IPOs" in particular, just investors saying "no" to a clearly overvalued non-tech company, and that company then deciding that it won't accept a likely more-reasonable valuation.
(Not saying there aren't plenty of overvalued tech companies! But this might not really have anything to do with that.)
I have a friend who joined there last year. He said that the interview process wasn't very hard and they focused on communication. He also said that the engineers there aren't impressive but he likes his coworkers and the job is okay, but the tech definitely isn't impressive at all.
It's not "Silicon Valley", it's Silicon Valley. As in the show.
My wife just started a contract at a new WeWork office in London. The lobby features a giant but non-functional as skateboard ramp, and two DJ booths, both manned (at 9am on a Monday). The bathrooms feature the very latest in digital toilets, but they aren't flushing, and nobody can figure out how to reboot them.
At an aesthetic level, this couldn't be more Silicon Valley if Mike Judge were in charge of the service design.
In this context, the media pile-on may be annoying -- but it's inevitable, and basically deserved.
I am imagining a bunch of microdosing firangi sitting in their gravity pods, asking each other what Indians do to be, like, all cool and stuff. "Build a successful business" is, like, way too square an answer, daddy-o. Anybody can be a dull old business man. Our customers want to be cooool. So what's cool and Indian?
Yoga?
Sure, man, but everyone does yoga. They probably do Yoga in Kansas these days, so how's that gonna build our brand? Yoga goes without saying. We need something way cooler than that. What is it?
(Long awkward silence.)
Ah, I've got it! Bollywood dancing! Yeah, they eat that shit up over there. Let's do that.
I take it this was just one example of something that didn't agree with you about the location. I've had a good experience at mine with better productivity vs working from home.
Keep in mind, this is an office that aims to keep individual workers paying it, not the other way around, so the environment is going to be different than a lot of employer-owned offices.
Personally, I don't like the chirpiness and faux motivation plastered everywhere. I don't need to be told by posters that my work matters or that "Thank God it's Friday!". I never wanted to be a part of that corporate culture which is why I pursued my own freelance career.
I guess some people don't mind that, but to me, it got too nauseating too quickly.
At my location, it also seems that outside of the dedicated desk area (which is where I sit), a lot of people are there just to get laid. Nothing wrong with that, but that's something I've only found at WeWork of all the coworking places I've been to.
The spaces where you're actually supposed to work are so hostile to productive work anyway - loud, public, and if you're not by a window or at least only one tier in from one, dark.
The graffiti in the Broad St. NYC location is cringe inducing.
On more than one occasion I've witnessed people omit that their office is based out of a we work location. Just too embarrassing to be associated with them.
>If you’re looking for workspace that revels in uptown funk but gets business done with downtown panache, choose WeWork Harlem.
>Our open and airy shared office at WeWork Harlem embodies the future of workspace while embracing Harlem’s rich cultural history. Inspired by the Harlem Renaissance and how Harlem culture continues to express itself today, we looked to jazz legends like Louis Armstrong, Dizzy Gillespie, and Duke Ellington, and teams like the Harlem Globetrotters for design inspiration. “The Stoop,” for example, a wooden elevated seating area with attached nooks, feels as much like a stage or basketball court as it does a common space—it’s an arena for connection. That’s not to mention the generous natural light, warm wood finishes, and vintage art and furniture. Book a tour today to see what WeWork Harlem can do to help your business sing while staying true to its roots.
I work at this location and I can tell you that although I've never read the description that you posted above (sounds very.. cringey) people are putting the common areas to good use, and this applies extra to the stoop. You've always got people sitting around it, getting comfortable and working on their laptops, I think it's something that WeWork has done done well at this location.
Wow. This seems like a very, very lazy interpretation of the jazz age by a particularly unmotivated high school student. Like they took the idea that required absolutely no thinking whatsoever and went with it.
The new one near Waterloo. The DJs are possibly a new-location promotional feature, but they've been around for the past few weeks at least. To be fair, the ones I've been to around town (mostly Moorgate) are generally much more reasonable.
What kind of music do djs play in a shared office at 9AM on a Monday morning? My imagination is failing me. You’d think it’d have to be brilliant to avoid an angry crowd.
Honestly, who cares about facebook or google employees? They don't actually represent the bulk of software engineers -- instead, a vanishingly small minority.
>Point is the media is making this out to be an indictment on some SV tech bubble but people in SV are looking at this from the outside like everyone else.
Question: How do you think this company got a $40B+ valuation?
Answer: By renting office space to "Silicon Valley" companies with equally silly ideas and terrible financials. It epitomizes SV.
Why would it matter if it's "tech" or not? Being "tech" somehow makes companies magically better than being "not tech"? If so, that's a bubble right there - your valuation depends on whether or not you're considered "tech", rather than what the financial performance data says.
Here's a news headline: "Tech company" brand value damaged by WeWork; WeWork not in the club key investors say
People work with prejudice, if they are aware of it or not. A bunch of companies from the tech sector have managed to earn absurdly high valuations in a short timespan by successfully monopolizing a winner-takes-all market for a service with high initial cost but very low additional cost per customer. This situation is pretty uniquely found only for a certain subset of digital services, but people have already generalized this kind of approach into the word "tech company" - even though far from all tech companies operate in such kind of markets.
What we see now is the second stage of this: companies which have a marginal involvement of technology in their core business (which is true for basically all companies today) try to paint themselves as "tech companies", with the goal being that investors put them in the same box as Amazon, Microsoft, Netflix, Salesforce et cetera.
And since investors are just as stupid as anyone else and just as susceptible to fall for herd-like behavior as anybody, this strategy works to a certain degree.
Precisely my point. Buy high because "OMG look at those past returns". Perfectly fits George Soros' concepts of fallibility ("tech" as a good label) and reflexivity (past returns drive shit ton of new money).
I reckon I should play this like Soros would: first add fuel to the fire, and then short the shit out of the dumpster fire once it becomes clear that it really is a dumpster. And the end is nigh, so keep within reach shortlists of things to short.
Too bad our salaries will suffer too. Nothing one can do about that.
Yeah, I'm not in the valley but I'm worried about a coming bubble-burst. The worst thing is it'll probably affect even those of us who don't work for vapid startups; "tech" will become a bad word instead of a good word, new initiatives even by established companies may dry up, etc. Trying to figure out if there's anything that can be done to prepare.
It's hard for a qualified specialist to diversify his income revenue, though.
Also, with all the bubble-busts it's never total destruction. We may get a haircut to the salary, but I doubt jobs will outright disappear, or even slide into average salary levels.
"And since investors are just as stupid as anyone else and just as susceptible to fall for herd-like behavior as anybody"
Well, you're commenting in a thread about how they didn't. This is one of those instances where I read something and instantly invert it in my mind and think "that makes a lot more sense".
It really isn’t. FB/Goog compensation is still the benchmark as far as industry comp goes, so a private co really needs to be convincingly successful to attract smart, high paid engineers at top tech companies. If they can’t then it’s a completely valid signal that something is up - either comp is well below market, growth story is fishy, management is weak, or something else.
His assumption is actually that smart engineers would chase good tech, high stock price increase potential. They already have good compensation being Facebook/Google engineers.
Work environment makes a huge difference. My current job is pretty harmonious among the coworkers, the bosses and team-leaders are all engineers themselves or at least tech-literate. They are also very preoccupied with the welfare of employees and even kept a completely unproductive (bad fit) employee on for half a year to help him score a new job first.
The customers are almost always happy with what we produce, and while it is certainly not fast growing, the company is steadily progressing in a good direction.
It's a useful proxy metric, but not a metric to optimize for. I wouldn't want to work for a startup that focused on hiring ex-FB or ex-Google engineers, but given that a large fraction of talented engineers have worked at FB or Google, you'd expect to find plenty of them at any reputable large startup.
> large fraction of talented engineers have worked at FB or Google
I'd actually dispute that. The tech world is really, really big. There are a great many extremely talented engineers that have never worked at FB or Google, but they're also the kind of engineers that don't write blog posts or attend conferences, so they're less visible.
Your point is quite reasonable in general but the discussion was for Silicon Valley and San Francisco. My GF has worked for Microsoft, Amazon, FB and now Google (and some startups over the years). How? Well they all have big tech offices close to Palo Alto. When she worked for various startups she was an ex-MS, ex-FB etc person.
If she'd stayed in Chicago (Northwestern grad), that's unlikely. Of course those companies have outposts there, but fewer tech roles by an order of magnitude or two.
I would still maintain that the parent is correct and there is a large quantity of talented developers in SV who have never worked at FB/Google/MS/etc.
I know quite a few of them (and would like to believe I'm talented, too).
A large fraction doesn't not mean "most". 1/4 is a large fraction. 1/10 is still a large fraction. Due to the large amount of people companies like fb, goog, apple etc employ, statistically you should expect that a SV startup on the verge of not being a startup anymore employs some ex-ers. Not having any, will raise questions. This doesn't mean the startup is bad, the answer to said questions might...
Not just "work for" but "have ever worked for" which is, at this point, a much larger number.
What percentage of developers that is I haven't the faintest clue. But definitely significantly more than 10% of my friends have worked for at least one of FAAMNG. And I have a lot of non-nerd friends too.
The propinquity is insane. When my GF decided to leave MS she walked from her MS building on her lunch break to her interviews at Google and LinkedIn (LI has subsequently moved). Of course the inverse is true too: there aren't many startups in that area, except in the Landings complex (where Cygnus used to be!).
You’re missing the point, not working at FB/Google/Microsoft/Yahoo!/Amazon/Apple doesn’t mean you aren’t a talented engineer, but the fact remains, having worked at one of those companies for several years or longer is a sure fire way to get recruiters to chase you. So not having any of those folks (which recruiters lust for) and yet being a “tech unicorn” is generally not a good sign.
I understood what you were replying too, just feel you focused to much on being literal with the “large majority”, hence my reply. Glad we agree on the other part, so cheers!
It is a great metric if you are trying to measure software innovation happening at a company. San Francisco/SV is still a relatively tight-knit community, and engineers move around a lot. A company has to pay top dollar AND have enough interesting work going on to retain top talent, or they will move on.
We Co isn't a tech company. Its a landlord subleasing commercial realestate as short term month to month leases with snazzy furniture. They happen to have a mobile app. Its functionality is so poor they removed the pay snack bar in my SF WeWork because no one could pay through the app.
The biggest difference between car companies and tech companies is return on invested capital.
According to that Tesla is somewhere inbetween a tech company and car company. Also it's the only car company that used software to substantially improve the performance of the car using software after selling it.
Have you got figures because I just googled for Telsa, Ford and Facebook at that doesn't seem to be the case, albeit with older figures.
Anyway at this stage Tesla are selling luxury cars to the converted, its unclear to me that they can keep doing that. Eventually they'll have to start selling to Joe Bloggs.
Hackers do this to traditional cars - you can turn a bog standard Audi A6 into almost a RS with some software mods an di think to be safe you beef up the suspension and brakes
There Is of course the fabled Ford FBI chip that was used on FBI pursuit vehicles, knackered the engine life of course. I was told this buy a guy who worked at a Ford dealership.
Yeah sure, but if its valued similar to Ford, you'd expect it to grow to the size of Ford, at least. That seems a tall order, so then you're looking for other reasons for the high valuation.
Well, those aren't incompatible statements. It just pre-supposes that GP doesn't like the sort of people that WeWork attracts, but that they like each other.
Personally I have no experience with WeWork, but I've never really found the urge to make much of an effort to know people from other companies in shared office environments. Sometimes it happens, sometimes it doesn't. But don't try to make me socialise with them, thanks ...
The Matt Levine saga on this for the past week or so has been fantastic. If you're vaguely interested in corporate / bank finance, I'd encourage subscribing to his newsletter. It's free.
> WeWork Co., is a clever financial engineering company that has managed to tell an appealing fast-growing-tech-company story to equity investors while also telling an appealing stable-real-estate-company story to lenders, but I must say that I am stumped by this:
Semi related but Blue Apron will forever be my favorite IPO.
5 stock splits and 3 CEOs later, day one investors will receive roughly 2 pennies back for every dollar invested just 2 years ago.
Only people who won were those who dumped free shares on the market (insiders), and maybe consumers for getting subsidized food of questionable quality.
Once valued at 2 billion USD, a paltry 150 million will get the job done now.
The idea is that it not only measures growth, but measures new customers in relation to churn, with the idea that it's a lot easier to have a long term successful business if you have, say, 1000 new customers and 50 that leave in a month (net 950 new customers) vs. 5000 new customers and 4050 that leave in a month (though also 950 net new customers).
Blue Apron was legendary for its huge churn rate and commensurate high customer acquisition costs. Curious what its quick ratio was, and whether it was just basically ignored.
The metrics, "rules of thumb", and "conventional wisdom" that apply to SaaS businesses do not extrapolate well to non-software subscription businesses. The main reason for this is SaaS has enormous gross margins, often upwards of 90%. This makes revenue a reasonable proxy for (gross) profit. The margins on physical goods are tiny by comparison, for food often in the low single digits, and subletting real estate is not much higher (if at alL). When profit is such a small percentage of revenue you have to be a lot more detailed in the math for lifetime value, acquisition cost, and so on, and you can no longer rely on simple formulas based on revenue and run rate.
While I agree with many of your points, I'd add that adding in the additional metrics you mention (lifetime value, acquisition cost, etc.) would make Blue Apron look even worse.
My main point is that basically the only thing Blue Apron had going for it was topline growth, but by pretty much every other metric it looked horrible and unsustainable. SaaS quick ratio alone should have clearly highlighted how unsustainable that topline growth was given their through-the-roof churn rates.
Zip Recruiter, until they fail also. I honestly use the ads in my podcasts as a way to know what companies not to invest in. Anyone want a used Quip toothbrush or some Me Undies?
Good thing you didn’t buy an Audible subscription, or use an Epson printer, FreshBooks invoicing, LastPass. Other podcast ads I’ve heard are for AmEx, Deloitte, LinkedIn, various conferences and educational institutions, and more. I agree that certain names always show up, but I’ve also been quite surprised over the years by who’s enlightened enough to advertise in podcasts. I’ll admit, though, I never did buy that Harry’s shaving kit. ;-)
Recently I've mostly been hearing one from the Irish government telling residents of Ireland using a UK drivers license to convert it to an Irish one immediately (they'll become invalid if there's a no-deal Brexit).
Of course, I'm not sure I'd want to invest in Brexit, so maybe it still holds.
I was just about to post the same thing. Clearly a lot of companies do negative-EV blanket podcast advertising to juice their customer numbers before an IPO. Sonos was another famous example (although I like Sonos a lot). There's no way ZipRecruiter is getting payback from their insane ad spend.
It's been a long time ago that I heard the last Blue Apron ad in a podcast.
Seems as if the stick was handed over to a suitcase company whose "smart" suitcases cannot be checked in to flights due to batteries, that already-mentioned annoying prefab website company and underwear manufacturers offering to put decorative metals around my testicles.
Definitely Squarespace and Skillshare. I still can feel the moment where I can exactly predict the Youtuber or Podcaster is about to launch into their canned sales pitch for how life got so much better and easier when they learned how to do xyz on zyx platform.
I'm surprised Youtube made the "tap here to move forward 30 seconds" feature because it always takes me right to the end of the "native ad"
Except that VCs themselves are highly focused on SaaS Quick Ratio to decide where to invest their own capital. That's quite different than coming up with some vanity metric to hoist a loser onto the public.
I actually still use Blue Apron. It's not that much more expensive than grocery shopping (I live in New York so groceries are expensive) and you never end up with wasted food. The recipes are generally very quick to make and far better than anything I could make on my own in a comparable amount of time. While the business may not have worked out so well their service is still pretty good.
Blue Apron just seems so unnecessary. You still have to do all the work! Just go to the grocery store and buy stuff there? You can get recipes online for free. I do all my shopping on Saturday at Trader Joe's and spend very little for lots of food which I then cook. There's so much wasted materials and trash with Blue Apron.
I don't get it, but then I don't have any trouble cooking for myself and my family. I didn't grow up learning how to cook. I spent a little bit of time figuring it out and then it became easy and didn't require a subscription to some sketchy company.
There's also no way that you're coming close to the prices at a supermarket when you're buying individual meal's worth ingredients instead of bulk, a bag of potatoes, or a bottle of seasoning instead of one potato and one pinch of whatever inside some single serving plastic wrapping.
> Blue Apron just seems so unnecessary. You still have to do all the work!
Not to mention the impact of the packaging materials and shipping. I can't speak to Blue Apron but my daughter used Freshly for a bit and I was shocked to the point of laughter at what was showing up at our house once a week: a big cardboard box with this thick, plastic-wrapped insulating material fitted to all six faces, and inside were nestled six individual meals, also packaged in cardboard with some plastic. My daughter told me they claim some level of recyclability for the insulating material, and of course the box can probably be shredded and re-boxified, but I bet 90+ percent goes right in the can and out to the curb.
However grocery stores and other businesses in that chain have bailers for the cardboard and other processes to insure recycling.
blue apron's fault is trying to enter a space too easily replicated by others including the very grocery stores who have everything mostly in place except for the recipes.
it wasn't long after services like Blue Apron came about and were newsworthy before many grocery stores started having prepackaged fresh items you could mix and match for a quick meal.
And just about everything that Blue Apron or any of these other companies package comes with similar invisible packaging, so the delta is still the same per amount of veggies. Or is your point something different that I missed?
Also note that the delta is a big big percentage of the base packaging, and I am willing to bet it's over 100%, if not 500%, just cause there are so many packages made from few large boxes.
Plus the existing physical stores have the advantage of economies of scale. I always wonder what that means for the whole B2C e-commerce supply chain compared to individual traffic to brick and mortar stores.
Just to elaborate: The comment is basically saying they are lying without any proof of such. Is it OK to blatantly and unfoundedly accuse companies of fraud like that?
This isn't an accusation of fraud. Note that the post you quoted includes the words "I bet", so you should know its speculation. Accusing them of fraud would be claiming the packaging materials aren't recyclable. Note that the OP's claim is that most of the packaging probably doesn't get recycled. I don't find this at all far-fetched, as many people who are environmentally conscious enough to care about recycling everything will also be bothered by the amount of packaging material.
Recyclable materials that end up in a landfill are no better than non-recyclables in that same landfill, as even organic materials don't really decompose in a landfill.
> Just to elaborate: The comment is basically saying they are lying
The comment absolutely does not accuse them of lying. They claim the material is recyclable, not that it is actually being recycled. I don't contest their claim that it can be recycled, and I simply speculate that most of it isn't.
It's the same reason, I sometimes still like to watch classic television; rather than choosing specific programmes to watch, I want them curated for me. And while television channels offer a mediocre experience on average, watching something I wouldn't have picked myself is a way to expand my horizons.
In the same vein, Blue Apron and Hello Fresh, I'd imagine, are there to expand your horizons in terms of culinary options. If it's just me going to the grocery store, then I'll just get for any old recipe I know.
They both remind me of a Danish company, Aarstiderne, which has been around since 1999, where the sales pitch is fresh organic vegetables with curated recipes by chefs every week. Particularly in 1999, when organic vegetables were harder to come by - even in Denmark, it made a lot of sense. Now they have so many different subscription choices (that offer different kinds of culinary experiences), that it's akin to picking the channel on television, but letting the programmers pick the programmes.
That's the appealing thing to me, it's actually less the convenience.
Download their online recipes and do a rand on them.
It's 100% about convenience. They offer nothing more than you picking up your own food. Plus they ship as much packaging as food so it's probably far from being the most ecological solution.
The problem with that approach is that often they include ingredients in very small quantities that most people won't have, and buying the ingredient yourself requires getting a container with 1000x the amount you need. Even if it's cheap, people balk at that.
But yes, the packaging is insanely wasteful, not to mention the ecological cost of shipping itself.
I definitely cooked more often when I had a HelloFresh subscription. And when I do cook now, the variety of things I make is much smaller.
>The problem with that approach is that often they include ingredients in very small quantities that most people won't have, and buying the ingredient yourself requires getting a container with 1000x the amount you need. Even if it's cheap, people balk at that.
This is more of a problem with how fucked American supermarkets are and how much food wasted is generated not just by too much being packaged.
I go out of my way to shop at Asian supermarkets because at least I can buy alot of produce individually and not massive bags of shit that'll spoil before I can eat it like American supermarkets push.
That's interesting because, by the nature of needing to appeal to everyone, I find Hello Fresh recipes to be very safe and often quite bland tasting. If you already know how to cook it's easy to make them tasty according to your preferences but if you don't I suspect people just churn out middling-tasting food.
I have no experience with Hello Fresh, but Aarstiderne in Denmark strives on making their offerings uncommon. They arrange their subscriptions by how difficult they are. Of course, there is no 'chef' level, so to speak, because if you're at that point, you don't really need something like this.
But as someone who is reasonable acceptable at cooking, I do like the idea of something where I can get outside my comfort zone.
Everything you said is accurate, but that doesn't mean there isn't a place in the market for Blue Apron.
People are paying for convenience. Think of it like a house cleaning service. You don't NEED to hire someone to clean your house, but it makes your life a little easier and for some, that's worth it.
Except this is like buying a small package of cleaning utilities for one cleaning and then cleaning the house with it yourself. In your analogy, the cleaning service would be ordering food from a restaurant.
The utility here is very marginal, and there are alternatives that make your life even easier.
You need to understand that people do irrational things all the time but feel like they get a positive benefit from it. Meal kit delivery is easier than picking out recipes yourself and then buying ingredients yourself. It's certainly not easier than ordering takeout from a restaurant. But there's the "feel good factor" of doing the cooking yourself but removing some of the prep and decision-making. It's not all about utility; emotion factors in heavily sometimes.
As a terrible cook I love that they do all the work of finding an achievable recipe and shopping for all the (sometimes obscure) ingredients. I've improved my cooking skills significantly as a result and I'm almost ready to move on from them now.
It's a valid first choice. Once you order and see what you get and understand how it's made reordering would be a challenge. The problem is the product teaches you how you don't need the product.
I have a coworker who puts in fairly insane hours and he and his wife do Blue Apron every single day.
They haven't missed a day in a few years. I only realized the importance of Blue Apron in his life when he told me he does about 8-10 hours at work and 2-8 hours at home most days.
Blue Apron affords them the time to get to even be a family.
I would still just do Whole Foods delivery and cook together if that’s what they’re after. It sounds like they’ve memorized the recipes if they really cook them that much.
Or order take out and save even more time and share dinner together.
Me, too. I already owned a bunch of cookbooks and knew how to cook before I started this sort of service. I still hate shopping and planning, after years of getting a box.
The introductory pricing was a reasonable deal for two people. We learned some new recipes (always nicely-printed and savable) and the meals were always tasty. But once the introductory pricing was over, and once we got tired of the obscene amount of packaging we had to throw away, we stopped it. Chalk up another churned customer.
Glad you like it and hope the price continues to be reasonable as they continue to cut expenses while trying to maintain food quality :)
For me I eat a very peculiar diet so I usually just pick up yogurt and fresh bread from the grocery store on my way home from work, and when I'm feeling particularly lazy I will order steamed chicken and steamed broccoli from the local Chinese shop who really have this amazing technique of steaming that I seem unable to grasp!!
This gets me thinking. They validated or at least thought they validated their idea because they gained traction at the start correct? But clearly they didn't validate the business because the price point wasn't at a profitable level? Was this the mistake?
Or is it that the price point allowed for marginal profits and they thought that by scaling up it would cover the fixed operational costs and thus lead to profits.
Back the day I had a short stint at Flixbus in Germany. Being an ops / logistics guy I wasn't that impressed by their operations at the team I was at (their line business seemed different but grew out of one of Flixbus earlier acquisitions, mein fernbus). Also the tech didn't look revolutionary. What was top notch, and backed by serious money, was advertising and marketing. They had all the metrics, the strategy, the budget, knew the processes, everything.
It was that what gave them the market penetration in new countries, out spending and out performing competition until competition faulted or was bought out. So, the lesson I took, was that a lot of the latest b2c e-commerce start-ups are to a very large extent marketing driven.
Google trends is probably not a good way to assess Pinterest.
Want to browse Pinterest? Open the app.
Want to get Pinterest? Go to the App Store.
Heard someone say 'pinterest' but don't know what it means? Search google.
Google Trends takes advantage of the Google knowledge graph for deeper understanding of entities and companies. This is showing "Pinterest the social network" not just "Pinterest the search term". You can toggle with the menu at the top.
Google also knows how many Android users search/download the app. I don't use pinterest, but if they use Google analytics or ads then Google also has a fair amount of data on usage.
Google is very much a panopticon, I doubt any other single entity has as much knowledge of the internet as a whole. Now whether this reflects in Google analytics I don't know, as I've never really used their analytics for anything serious.
And for "Facebook", Google Trends shows a 71% drop worldwide over the last 5 years. Their Q2 2019 earnings showed a 20% worldwide growth in monthly users over the last two years alone. "YouTube" shows a 45% drop over 5 years. "Google" itself shows a 60% drop over 5 years.
Google Trends can't reliably tell you anything useful about a site's growth or activity. I'm not denying it correlates with your specific app, but that doesn't mean it will work for everything, and it clearly works very poorly for popular services.
Remember when everyone was sharing youtube videos. Or when you would sit and endless watch. I feel like that faded about 45%.
Google dropping makes sense. I visit less sites and the search results are not that great for discovery. Most sites I visit by typing a letter in the browser and auto completing.
Facebooks earnings raising 20% makes sense as more people are advertising on it. I notice 71% less people less original activity.. photos/status updates more groups/ads filling the gap. I spent 71% less time on and reduced my daily visits.
We're always chasing yesterday's tail. I bet twitter's numbers are down.
And how do you know this is all wrong? At least I get to look at our app internal analytics and compare. Do you have access to their internal analytics? Also contrast this to https://trends.google.com/trends/explore?date=today%205-y&ge... . Instagram is 9 years old
Their finance doesn't look bad. Revenue trended up. Flush with cash. Making money. The 5 year chart look bad, but they've stabilized in the past couple years and it looks like they've found way to actually remain profitable.
That actually looks catastrophic. Stock price doesn't reflect it yet. Shadenfreude isnt my thing but this looks bad and insiders must already be aware.
To be clear, I dont trade stocks and couldn't care less which way this moves. Just seems like the Google trends data is a bit of information asymmetry that the market hasn't caught on to, yet.
"Disclosure: I am/we are long PINS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha)"
The lockup period does not expire till mid-october.
I read their 10-Q and found this gem about "user re-authentication":
"Users
MAUs at quarter-end were 300 million, representing growth of 30% year-over-year. This represents an acceleration in user growth, in part due to one-time changes to SEO algorithms and user re-authentication that impacted Q218. International growth drove the majority of global MAU expansion."
I can only interpret that they are talking about logged in users with accounts. The users were logged out during the pre-IPO and that resulted in some double counting in their second post IPO 10-Q.
I was researching this because I asked myself a general question: "Why is the stock price of non dividend paying companies correlated to the performance at all?"
I got a phone call from them recently. Not automated. Asking "how the experience has been". I wonder if they're increasingly panicking. I ordered less than a handful of boxes in the past few years with them.
That’s a parody from 2017. It’s probably more true now than ever. We actually cancelled our BlueApron last year in favor of another meal kit service - and might end up canceling them overall for grocery pickup from our local grocery chain.
Wonderful link. To be objective, one of my most recent handful of boxes arrived recently because I forgot to cancel it. Every few weeks, I login to turn off the next months' worth of auto-scheduled deliveries. The ingredient quality is still there. A third of the box is broccoli and it's still $60, so those features haven't changed.
I go to the grocery store and re-make a good number of the recipes. I'm appreciative of the expanded palate BA has given me as well.
BA was pretty decent. My wife subscribed us to it and we used it for a couple of months. Restaurant quality meals for real. But the whole business model is idiotic at the small scale. Amazon with its gigantic distribution network (as well as Whole Foods) could pull it off I suppose, but I just felt bad that this stuff had to be shipped to me from hell knows where, with lots of packaging, and an ice pack to boot. Not "environmentally friendly" in the least. Besides both my wife and I can cook perfectly fine without any help. So after 2 months we got rid of it.
Blue Apron and WeWork share a common problem, they’re viewed as tech companies, even when they’re clearly not.
Being tech companies means that they’re viewed as part of a group of companies who have pulled of billion dollars IPO, so they’re wrongly focus on “no less than the one billion”. Mentally the jump from 1 billion to 2 billion is also a lot less that the jump from 150 million to 1 billion, so why not go for 2 billion.
WeWork is a real estate company and not a software company. They don't have any worthy propriety tech and their business model is collecting rent. How they were once valued at 47 billion just straight up doesn't make any sense.
I don't think big investors are that stupid. They don't think an office rental business is a tech business, that's just a really convenient story to tell. Because if it's NOT a tech company, you have to look at why it's worth so much and come to the conclusion that all the fundamentals point to. It's worth a huge premium because it's getting a monopoly. My suspicion is that WeWork thinks that they can use their scale to drive their landlords prices down the way Uber does to their drivers, and jack up the rent.
"We're going to really fuck anyone willing to do business with us" is not a compelling story for a company trying to grow, but it's great for investors. Also, I'm not just talking about the landlords and customers, you better believe the plan is for the lenders to get pennies back on the dollar too.
I think the reason is softbank and other large late pre-IPO investors trying to push WeWork as a tech IPO. Once they dump their shares on the public market I guess they don't care that much again.
Doesn't change the fact WeWork is an overvalued real estate company that believes it is a tech company.
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> This target is tied to a $6 billion credit line We Company secured from banks last month, that calls for an IPO to take place by the end of the year and raise at least $3 billion, one of the sources said.
> Were the New York-based company to fail to meet this target by the end of the year, it would need to secure alternative funding.
When you read this and that Softbank has committed to buy 1/3 of the shares sold at IPO it does sound like it's going to pop sooner than later (that may include the vision fund if WeWork crashes)
I would not be surprised if Softbank's commitment ultimately changes to "we'll buy however many shares we need to buy to ensure the IPO raises at least $3B and the debt covenant is preserved".
So basically it depends on the founder / CEO to raise money to keep the burn rate up to keep the evaluation up. Stops working when the narrative changes.
WeWork is a huge success...for its founders. Neumann reportedly sold over 700 million worth of shares ahead of the IPO.
For some reason every startup nowadays is the next Amazon or Facebook. Poised to become the market leader in their field of expertise.
Most of the IPOs are losing big money yearly but the market is happy to support them with billions of dollars. Actions that would make Warren Buffet cringe but could make money if you're lucky.
This invites startups to take advantage of the situation. To me this is one of the dark sides of our society because the ones at the bottom of the pyramid losing their money are you and me saving for our pensions.
Indeed. For all the platitudes otherwise, the vast majority of startup founders do this primarily because they want to become rich. Judging a startup by any other metric is at the end of the day at least somewhat disingenuous.
If all you know about two startups is that in startup 1 the founder exited the company with $10 million in his bank account and in startup 2 the founder exited with $750 million in his bank account, which would judge the bigger success?
Not sure if I'm just young, but my friend's over 200k total comp would have made me think twice about an offer. It's not the highest, but seems fairly competitive in sf
How much was the cash comp? I would value any equity at 0. Plus they would have to offer extra cash as a premium for volatility and a negative brand image.
> The WeWork brand is strongly tied to Neumann, a freewheeling 40-year-old Israeli-born entrepreneur who has said that We Company’s mission is “to elevate the world’s consciousness”.
"Elevate the world's consciousness" --> Dont mean to be negative but what the hell does that even mean? Imagine your landlord told you that.
Been following this story closely and Adam Neumann is such a crook, from the outset he just wanted to take advantage of public shareholders. His intentions were to screw them. Don't forget that lot of the shareholders for big IPO's are pension and mutual funds and hard working middle class families indirectly or directly own a bulk of these. This is how they get screwed.
Selling the 'We' trademark to your own company is damning. It's difficult to feel like you need a deeper understanding of Neumann after that. Maybe even more so is WeWork entering into lease agreements with properties he had a stake in on the same day that he obtained that stake. Unbelievable.
Landlords having grand ideas about community, consciousness, relationships, etc. is actually pretty normal for any kind of formal, large scale roommate situation. Dorms, coops, co-living, intentional communities, communes, etc. Even for normal individual housing, developer marketing is selling you a lifestyle and a self-image much more than it’s selling you walls and countertops.
Additionally, I think this is great to think about as far as the entire story of IPOing a big tech company in 2019.
You start with the story the bankers sell you. They all want to tell you you're going to be bigger than you ever thought possible, because, well... those fees are awfully nice.
"We're going to IPO you at 20% of $PREVIOUS_VALUATION"
The counter-argument was, well, "We don't think you're worth that much, you're probably worth only $20B."
The problem is here... well there's not really a financial position you can take here especially as the short price skyrockets. Maybe you get some smug satisfaction, but overall, everyone in the early stage of trying to win the IPO for their bank is going to tell you what you want to hear.
Now... things suddenly change, you need to shop it around. Well, maybe you don't get the number you want. Maybe you do? You edge it a little down. Yet, all the benefits you have as a private company (insert your It's Always Sunny in Philadelphia Pepe Silvia meme of Mack trying to connect the dots) you can't really keep entirely as you try to collect that public check.
Matt was spot on here, of course, they're going to try and take apart some of those political rights that usually people grumble about (see Snapchat IPO) and then somewhat get over as time goes on.
Yet even that didn't do the trick! So you slash the economic upside, and once again that's not enough.
Maybe you even set the price low enough that you can hype it and it will go up, but at some point, the market will give its verdict and in this case: WeWork didn't cut it.
In many ways, it's an interesting litmus test of the health of the tech industry. Yes, there's been a bull market for this last decade, but bubble... maybe not. Maybe, this is great example of Wall Street being serious about how much large private companies are worth? Either way, what a crazy saga nonetheless. I wonder if they'll be able to (somewhat paraphrasing Matt) turn the dial from growth to revenue and approach the market later? Time will tell I guess.
Maybe we'll get an Alex Gibney documentary out of it!
This is something I don't get. Pretty much all of these businesses are aiming at dominance on some sector. They entered into the game with the understanding that it's all or nothing.
If they don't achieve that dominance, or if the sector itself turns out to be less than worthwhile, isn't it more likely that these companies are worth essentially zero, rather than some percentage of their target value?
At the returns the investors want, dominance is required.
Lots of consolidation happening in auto manufacturing too, along with most fields. Even of the car makers that exist, I wonder how many would be kept propped up by a country just to ensure they retain manufacturing capability in case of war.
The returns the original Investors want: definitely.
But everyone selling at a loss is getting their money from someone buying. Since the price of some of these companies is nonzero, someone must think they are a good deal at that price. Just speculating as to why.
As for war fighting capability: that is the legit justification for ag support, but modern factories can’t be repurposed that way. Nobody would expect IBM to be able to retool to build machine guns any more.
The right fix is many automated reconfigurable on-demand factories making goods close to point of consumption. But that’s a long way away, and wind use humans.
Because for Wall St capitalism, dominance is the product.
Which is why steady-but-slow niche businesses don't get this kind of attention, even if they have better long-term prospects.
The product being sold at IPO is the promise of dominance of a market - because that implies a whole set of predictable relationships with investors, employees, and customers.
The product as sold to customers - whatever that is - is almost irrelevant.
A successful IPO is a convincing statement of political intent. We has almost managed that - but not quite enough to get it over the line.
That's only true for tech companies, and companies like WeWork that brand themselves as tech companies in order to get investors to value them as such. Aramco aren't IPOing with a promise to someday sell all the oil in the world, they're content with merely a lot.
I think it's probably a financial engineering company over everything else, but I mean "tech company" insofar as this post is going to the top of HN in a way a post about Regus might not.
I agree but are you saying that if it was a tech company, it would be worth the 48 billion? Also, is it THAT much different from AirBnB that is considered a tech company? What 'tech' does AirBnB offer that qualify it is a tech company?
It's crazy how quickly we have come from newspapers having to print revisions and retractions to fix minor mistakes to an organization like Reuters changing an article to say the complete opposite thing in minutes.
IPO is back on. Not surprising when you look at their burn rate vs cash on hand. Or the fact that they entered into a $6B line of credit last month that is contingent on them raising at least $3B in an IPO by end of year. Beyond Adam and Softbank wanting to cash out eventually, the company needs this funding to continue to operate.
sorry, all the talk about comedic Silicon Valley (whether WeWork is 'tech' or not or whatever) and then I see this:
"My friend’s entire company is locked out of their WeWork office because an umbrella fell, jamming the door. No one can figure it out. It’s been like this for 2 days." --https://twitter.com/NeerajKA/status/1173997679363407872
Feels like the hinky stuff going on in the Gulf ought to be a bigger part of some of these stories than it is. The flood of oil money seeking something, anything, to be spent on seems to be drying up a bit.
In a world awash with negative interest rate investments, even loss-making enterprises are worthwhile. This may be the natural glide path at the end of growth: redistribution.
I hope it's now painfully obvious why Silicon Valley is getting behind the Long-Term Stock Exchange: they need to be able to pass these duds onto the uneducated public.
Is it true that WeWork is now the largest single lessee of commercial real estate in the US? Seems like a bad bankruptcy could have some broad ripple effects.
I should create a business to facilitate the transition from WeWork to leases, for the landlords. In 2 months I’ll be an intermediary worth... about 2bn.
I’m joking, I’m sure the CEO already has a reversion clause in the lease contracts, that leases should fall in the hands of his 3rd company in case of WeWork bankruptcy.
Well people are actually using the offices so prices will go down if they backrupt but they'll catch up. It would feel like an adjustment and not a bubble bursting.
It's anecdotal but I've been in half a dozen WeWork properties in the last 2 months and I've yet to see one more than 50% occupied. There were a couple buildings in Seattle that seemed almost empty.
Despite all their shortcomings (and I have ranted about them on here a lot in the past), the seem to have close to a 100% occupancy in Berlin. It does often look like they are less occupied though (partial empty offices) because the claim of "you can easily move to a bigger office" isn't true and companies rent offices that are bigger than they need them to be.
Doesn't Walmart own most of their real estate though? If so, they wouldn't be in the running for largest commercial lessee. Although it wouldn't surprise me if Walmart does have the largest square footage of commercial real estate, if you count parking lots & distribution centers it would be huge.
Another odd thought--would you count an oil company like halliburton's well leases? I know that square footage is normally used for buildings as to account for multiple stories, but if we count commercial land leases then either an oil/gas company or a large agribusiness would almost certainly come out on top.
We should now question the valuation of the other companies that have recently gone public. I understand WeWork was unusually tumultuous, but many of these talking points equally apply to recent IPOs.
A couple quarterly filings have already begun to bring some of these companies closer to reality.
Can you all be more specific about which "talking points" are similar? These companies had to submit financial statements ahead of their IPOs and as far as I know, WE has been a complete trainwreck in comparison to the others. Talking about "talking points" doesn't seem to address any knowledge of what exists in financial statements, it sounds way more abstract like we're trying to say that Uber, Slack, etc. all talk big about themselves but are actually not that great. Like that matters? In comparison to a CEO who has used his position to allow for absurdly corrupt looking deals and nepotism, which was not the case for Uber, Slack, etc.
Just saying, maybe you and the other person could be more specific about how WeWork is similar to Uber, Slack, etc. beyond "talking points" because financial statements are more substantial than how similar companies puff themselves up through PR and branding.
It's a shame WeWork is run by such scummy characters, the concept itself has the potential to make people's commutes much more flexible and shorter.
When on-boarding a new employee, companies would be able to automatically provision them a desk/office at the closest WeWork to them. This allows companies to have access to a much bigger pool of talent, and allows employees to have access to a bigger pool of companies.
On top of that, the flexibility means commutes are much shorter, as co-working spaces can be efficiently distributed across a city and its suburbs. Even when an employee moves to a new company, they could theoretically stay at the same WeWork site, rather than have to deal with a new commute.
Why even provide office space to folks? Just let them work from home and you save a lot!
I always felt this was the fatal flaw in WeWork’s model. Once telecommuter culture has been established, companies realize they can just make their employees pay for their office space and deduct it.
For most things where you benefit from “going in to the office”, the benefit is reliant on having a set of people in the same place. If everyone is all over the country, what is the point of office space in the first place?
This reminds me of the startups selling dog food that IPO'd during the first dot com bubble. At least collective sense seems to have prevailed this time around.
Does anyone know what happens to the liqPref (and hence the subordinated equity shares of early employees) if they IPO below their $12bn liquidation pref?
Depends entirely on contractual details likely not broadly known. Those details have not been broadly reported or discussed. In general in a generic sense it’s quite common for investors (those writing actual cheques into the business) to be made whole again and then some before options holders or others get to come to the table. First dibs on the rewards goes to those that took the most risk.
Reports out now are saying the likely market cap of the company is less than the cash raised by the company. Speaking generally that’s typically a beyond ugly situation for non-investors hoping their stake/options is going to make them some $. Think about it... it wouldn’t be right for some employee equity/options holder to get money while investors lose money.
Haven’t seen much written about the details specific to We/WeWork, but given all the crazy governance issues identified to date with its corporate structure it wouldn’t be surprising if such clauses are very complex.
Makes sense that at this point the cap table would be a bit of a mess.
Would be interesting to see something simple, like the total value of all the employee equity, according to different IPO prices/valuations, and then compare that to the changes in the CEO's wealth on the same axis.
If We does IPO, I'm going to buy some IWG shares. The only way We can justify their sky high valuation is buying out the bigger competitor who is way undervalued by the markets.
I’m not any kind of expert, but Airbnb has strong network effects, a clear business model, and is easily understood as a tech mediated disruption to hotels.
So, sounds like an easy sell. But it depends on the price.
Nope, anybody from developed world (UK, Europe, Japan etc) can buy or sell US stocks. You just need a proper broker, something like Interactive Brokers, IG etc
The company has 0 tech brand among employees (how many ex-FB or ex-Google engineers work there?) and outside of Benchmark’s early round none of the VCs are SV-based.
Point is the media is making this out to be an indictment on some SV tech bubble but people in SV are looking at this from the outside like everyone else.