Totally tangental, but I recalled while reading this a documentary I saw on some African tribe. It was years ago so this is a pretty loose description. The tribe was a late discovered tribe that until shortly before the documentaries filming had been hunting and gathering in some remote jungle. Recently some industry expansion into their territory had forced modern life onto them and the government had moved them to a new location. This new environment lacked pretty much everything they needed to maintain their old life, so they had become completely destitute and reliant on the government.
Their chief was a rain maker shaman kind of character. His job was to do a literal rain dance, which in their old lives would have been to water crops. This dance would involve the entire tribe when times were tough. When the chief was interviewed he was sober about their situation. The new life they were forced into lead to depression for many of the young men in the tribe. He felt that his responsibility was to keep the young men dancing. This was better than them sitting around taking handouts from the government. They interspersed snippets of the young men talking about their chief and they all were positive, giving him much praise. The chief never missed a day of dancing, always had a positive attitude and this seemed to give them some hope.
The chief mentioned that his father had been the rain man before him, and his grandfather before that. He said that the secret of the rain dance was that no matter how long it takes, it will rain again. And what can you do until it rains? You might as well dance.
I often think of some forms of entrepreneurs/founders in this context. They are just like tribal rain men. If they dance long enough, it rains. They aren't really responsible for the rain but they keep everyone hopeful and around long enough that when it finally does rain everyone is ready.
I know it's fun to laugh at how kooky Adam Neumann is and how comically grandiose The We Company's vision became over time as they raised more and more money. But one thing that still bothers me about this documentary (and now the newyorker's review of it) is that it doesn't make even the slightest attempt at telling both sides of the story.
The most glaring omission is that it doesn't stop to acknowledge at all the impressive growth that WeWork saw. Yes, there were all kinds of problems with the way they managed their growth, and some major challenges with the basic fundamentals of their model. But there were many (hundreds of thousands?) of real users in many cities paying them money for office space. To just write that off as "lol, you re-invented the office" is a little ridiculous. They made a product people loved, and that IMO genuinely was an order of magnitude better in user experience than most other short-term office space that existed at the time. It saved time on all kinds of things, from basic cleaning, coffee and tea, flexible meeting rooms and private phone booths, and a generally comfortable space to work in. Those are things that have real value to anyone who is busy working on their company and just wants a productive turnkey place to work. It's weird to write all that off as just shallow millenials being too vain to work out of a Regus (which is a company I had never even heard of before the documentary, despite having been in this position of needing a small short-term office space for my startup in the past).
Maybe I'm just a crazy, biased shill and a sucker for any startup story, but IMO it would have been a much better documentary if they delved into this side of the narrative - how did such an out of touch, seemingly crazy person manage to build an actually good product that found quick product market fit in the crowded real estate space?
> The most glaring omission is that it doesn't stop to acknowledge at all the impressive growth that WeWork saw.
WeWork would rent the office space, and then rent it out for less money than they were renting it. It's not hard to grow when you can raise billions to sell dollars for pennies.
I'm pretty sure I could sell millions of phones a year, just give me billions to buy those phones and then I'll sell them at a 90% discount and I'll dominate the phone market!
I worked in this industry briefly - I'm pretty sure a wework successor or several will come out of it very successful, without the baggage that Adam Neumann brought, because the model is smart.
The basic model is to take distressed real estate, chop it up, sublease it and use some of the money to set up a mid high end space with plug and play offices, community events and a doorman. It works, but it is not easy to execute properly.
WeWork is fundamentally real-estate, shouldn't trade at the multiples of a tech company.
But it's interesting what they did with their real-estate by repackaging it as the "Cloud Computing" of office space. Fundamentally, they solved the issue of selling office space to folks who either needed to add capacity in a short time or who just had to go month to month because no landlord would talk to them (a startup with N months of runway might not be the best tenants. Prime real-estate is rented out with leases that are in the 5+ years durations).
Their network was also an interesting feature: For folks traveling for business it might be an interesting value proposition to be able to just go to any of their locations worldwide. That's a real differentiator from most coworking spaces around (I'm thinking Hanahaus and the likes) that only have in the single digits locations.
> It's weird to write all that off as just shallow millenials being too vain to work out of a Regus (which is a company I had never even heard of before the documentary, despite having been in this position of needing a small short-term office space for my startup in the past).
Regus is huge (wikipedia says over 3000 spaces as of 2019), but it is no surprise that most people - outside of traditional, multinationals corporations- have heard of it. Regus started as a serviced-office, which serves a very different market than coworking spaces - though now the two have blurred.
If you're a small business or start-up, Regus isn't the place. It's incredibly expensive and very conservative looking. My company's Regus space (for 4 people, as it was a new country office) in Malaysia costed us as much our eventual +20 person office space.
I've worked from numerous Regus spaces via multinational consultancy I used to work with. They were always in prime, high-end locations and incredibly stuffy. Regus offices (felt like, pre-WeWork) a place to impress bankers and and Fortune500 clients. Regus has remade themselves because of WeWork, which is an improvement.
It's a good point, but I think they touch on it a bit with the thread about user churn (which prompted WeWork to kick-out the company that published that analysis based upon some "happiness" clause violation...)
Is it "product-market fit" if the company is literally buying that growth? Or does it become true "fit" once you can monetize those users reliably?
Ex: I buy a butt-ton of Airpods, put them in glass cases, and give them out on a nice table outside my house - for free. If I go out of stock on my first day outside, does that indicate "product-market fit" for my glass cases? (Answer: not really)
It wasnt a good product. It was constantly losing money. Maybe you mean communal workplaces were popular and people liked them, but the way adam implemented it drove them into the ground
I mean, if someone gives you a few hundred million dollars and you completely ignore costs and sustainability of the business, and I’m sure you could make it seem like you knew what you were doing for a few years too.
Yeah, their valuation is down a lot from what they were going for with the initial IPO, but it is still providing a very valuable service. This isn’t like Enron or Theranos where the company is fraudulent, it’s a real, valuable business that was overvalued for a while.
Overall, WeWork is a success, not a failure. If it were in Europe, it would be one of the most successful European startups in years.
They turned 20+ billion into < 8 billion. That's a success similar to the joke about how the easiest way to make a small fortune is to start with a a large one.
> This isn’t like Enron or Theranos where the company is fraudulent, it’s a real, valuable business that was overvalued for a while.
SPACs have a long and well-earned reputation of being associated with fraud so perhaps it's too soon to conclude that WeWork is unlike Enron and Theranos.
> The story of WeWork’s rise and fall is the story of the past decade: a strange time when greed, technology worship, and low interest rates combined to produce throngs of supposedly billion-dollar startups, known as “unicorns.”
I think the use of past tense here is unwarranted. I'm sure there are many WeWorks and Theranoses still out there right now.
>I think the use of past tense here is unwarranted. I'm sure there are many WeWorks and Theranoses still out there right now.
Many of whom are SaaS companies and who receive hundreds of millions of dollars of investment on what merit? Good story? Sexy products? Expensive growth? Look at us we are next Oracle or Salesforce.
The most bizarre twist in this whole tale would be if the rise of flexible working post covid-19 did actually create a gap in the market for a company to come along and provide flexible office space with short notice and minimal commitment: A real Uber for office space.
The underlying problem hasn't gone away though. A company which gets into long-term corporate leases in the most expensive real estate markets in the world and rents out the space by the day (or with a monthly subscription) exposes itself to too much risk due to market fluctuations and economic downturns. Plus, the level of service people expect out of these spaces is just unrealistic for the price they are willing to pay.
A quiet working space in a fancy office building in the most upscale commercial area of the city with tech company amenities included is going to realistically cost a lot more than $200/month. There is a reason WeWork set billions of dollars on fire.
I'm thinking post-covid, with the glut of vacant spaces in the coming quarters, there will be many commercial real estate companies offering "flexible office space with short notice and minimal commitment". It quite probably will become one of the standard contracts in the "new normal".
I'd be open to that... but the pricing on these things are sometimes absurd. Unless my employer were to pay for it, I'm not paying for it, I'll hack it out at home.
One company tried to open a space like that for individual office rentals out in suburbia where I am.
Monthly price was more than half my monthly mortgage payment, I'm not going to do that for a tiny bit of office space.
I suspect that unless employers are happy pay for it the price I'm willing to pay wouldn't float these companies...
i want a place to go M, W, F from 11am to 2pm with great food, wifi, places to sit with my laptop, bathrooms... I want a tech conference (no speakers or agenda, just normal work-day) hosted and paid for by my company at various hotels around my city 3 times a week. Best of both worlds. Still get to see my co-workers and eat with them often, but never feel trapped in an office or commute.
WeWork's "delusion", in my view, was the amount of value they perceived themselves to add to the equation. On the consumer facing side, they were billing their space as some mass facilitator, incubator, and inspiration for startups, freelancers, and what-not. On the business side, it was that WeWork would be beneficial to landlords, as they'd snatch up large swaths of space, drive businesses desire to "colocate", and offer flexibility to tenants that didn't have things in place to deal with the expanding real estate needs of their business.
Fundamentally though, WeWork was a middle man, and one that shifted as much liability towards the landlords as possible. While you can debate how much value they added, I don't think it's a stretch to say that their valuation far exceeded the actual value they brought to the table. Fundamentally though, space is far more of a commodity than WeWork would have you believe, and in an economy situation where people aren't co-working or that there's a lot of unleased space on the market, WeWork's proposition is certainly depleted.
Combine the inflated view of their value with feel-good marketing about changing the world, unrealistic valuations and shadiness from the founders and ownership, and you get a company that went far beyond where they should have and duped a number of investors along the way.
If the financials worked out nobody would care about how delusional the story of "We" was. I'd wager that the vast majority of people using WeWork Spaces didn't care about the fluff or the community or social events.
They had a desirable product for a reasonable price, and I enjoyed working out of WeWork spaces.
It seems like the only truly delusional party was well-capitalized investors throwing money at an (poorly executed) old-school business model with a thin veneer of innovation.
When Theranos was still a popular golden child company, I went to a party in SF thrown by a partner at a prominent local law firm. At the party a husband of one of the lawyers happened to be a lab worker at a biotech startup. He and I ended up chatting in a small group of spouses while the firm lawyers were clustered in another part of the house gossipping about work.
Over the next 30 minutes or so this guy explained to us non-scientists why he thought Theranos might very likely be a fraud. People nodded their heads and said "interesting" but I don't think anyone really took the guy very seriously. It's easy to dismiss such concerns from people in parallel startups as jealousy or misguided.
But the thing that has stuck with me since is that if a relatively junior guy working as in a startup lab had this insight about Theranos, why didn't all these major investors with world class experts know any better?
It seems to me the more interesting story in regards to WeWork and Theranos is why are the incentives in these investment funds not aligned with the purpose of rooting out such fraudulent or overblown claims.
I honestly could care less about the flamboyant personalities involved. The system failures are more interesting to me.
One thing I haven't seen mentioned in this thread that definitely played a part in WeWork's explosive growth is the cult-like religious aspect of it. Adam wasn't just selling office space. He was selling a philosophy of working together as inexperienced entrepreneurs to perhaps create better companies. Whether you believe in this model or not (I don't), it is appealing to young professionals without much traditional business experience. The summer camp, "let's help everyone and have fun" environment was more valuable (and played a bigger role in the strategy and market fit) than the office space itself.
Regus, as pointed out, sold co-working space before WeWork and still does. They don't, however, sell religion and it's likely that any future co-working brand will forego that aspect, too. Of course, cult-like attraction does work for some companies... if you can get enough believers.
Yep. WeWork was always a non-tech real estate play with some very bad finance built into it; it was NEVER a tech company in any way shape or form simply because it had a web site!
But that was the lie told - "We will have double-digit tech growth rates and market domination!"
What I saw in the documentary were a lot of hard-working, non-technical people that were offered the chance to work in a "tech" startup. Without knowing it explicitly, they were betting on WeWork having a moat like Facebook, Google, etc... Real estate has no such moat.
If you are a young founder or startup employee,I recommend learning every type of business moat there is and using that as a key criteria for evaluating opportunities. It won't guarantee success but it will filter out so much garbage.
As long as I keep hearing the BS line from VC's and similar communities that "we're investing in the TEAM, not the Product or idea," we will continue seeing WeWorks / Theranos(es) of the world, with little to learn.
Rather than doing the fundamental analysis, investing without emotions, etc. - the market will keep rewarding "charismatic" and well-connected individuals with shitty-ideas and/or no business sense.
It's easy to scapegoat Adam Neumann or Elizabeth Holmes, and say they were sociopathic liars or the like - but these cases read like a market inefficiency in venture capital, rather than one-offs.
I hear this critique a lot and I used to believe it more but now I think it's just too facile. It's true that VCs have a lot of room for improvement in essentially doing fraud detection. They do a disservice to their LPs and probably to society at large as a result of this. In fact, that's probably where the misaligned incentive emerges -- VCs have a strong incentive to play the greater fool game and ostensibly were doing that with WeWork before they got their hands caught in the cookie jar.
Having said that, the idea that the solution is fundamental analysis, investing without emotions, or what have you -- that all strikes me as a bit naive and without much evidence. The market is a Keynesian beauty contest first which serves the needs of humans, hence the existence of Veblen goods et al. It also strikes me as a bit naive that there's anything wrong with "charismatic" and "well-connected individuals" being in positions of leadership. Recruiting is the most highly leveraged thing early stage company leaders can do and is the flip side of fundraising -- so it only makes sense to have firm's leader excel at that.
I think we can critique Neumann and Holmes for being unethical fraudsters who deliberately misled their stakeholders without making a categorical error about corporate executives. I won't say that they're the exception and not the rule, but I will say they're not really the goal to aspire to.
> these cases read like a market inefficiency in venture capital, rather than one-offs.
Considering that venture returns have historically out-performed public markets[1], they're probably just that: one-offs. I think there's an argument to be made that Fed QE policies and junk bond bailouts have perhaps over-incentivized risky investments, but in aggregate venture capital has been "efficient" in the economical sense. Consider that the total investment into Theranos and WeWork are a rounding error as far as the total pie is concerned.
The VC and to some extent the Private Equity industry can subsidize money hemmoraging business models and fuel massive growth of bad unit economics until they dump them on the public. Uber and WeWork are just two high profile examples.
In fact, then openly admit they stay away from sustainable and profitable businesses in favor of massive subsidized “traction”.
That’s the loophole - same as colleges can jack up prices on liberal arts degrees and then student loans get bought by Freddie and Fannie.
> the market will keep rewarding "charismatic" and well-connected individuals with shitty-ideas and/or no business sense.
VCs need to make money first and foremost. I doubt they care about one Theranos out of every 1000 or even 100 companies they invest in (I refuse to compare Theranos and WeWork).
The idea that you invest in the team appears to be a winning strategy considering historical returns. So the question is, why would they change this?
You are right. Investors, including VCs should look for an intersection of team, product and timing. A world changing product will not change the world without a team that can execute (part of executing is marketing and selling). A great team will fail without a product. And even the best team, and the perfect product can fail if the timing is too early or late. Business is hard.
It's easy to scapegoat Adam Neumann or Elizabeth Holmes, and say they were sociopathic liars or the like - but these cases read like a market inefficiency in venture capital, rather than one-offs.
You misunderstood the business model here. The plan was to dump it on retail investors, cashing out and leaving them holding the bag. It was just a longer “pump” phase than usual. The sociopaths here are SoftBank.
Isn't 80% of startup world delusional, Empirically speaking ?
WeWork, Nikola, Theranos, Blue Apron, Grubhub (walking dead),Uber Autonomous, could go on and on. We have been told these companies have the best and brightest board members.
[+] [-] reggieband|5 years ago|reply
Their chief was a rain maker shaman kind of character. His job was to do a literal rain dance, which in their old lives would have been to water crops. This dance would involve the entire tribe when times were tough. When the chief was interviewed he was sober about their situation. The new life they were forced into lead to depression for many of the young men in the tribe. He felt that his responsibility was to keep the young men dancing. This was better than them sitting around taking handouts from the government. They interspersed snippets of the young men talking about their chief and they all were positive, giving him much praise. The chief never missed a day of dancing, always had a positive attitude and this seemed to give them some hope.
The chief mentioned that his father had been the rain man before him, and his grandfather before that. He said that the secret of the rain dance was that no matter how long it takes, it will rain again. And what can you do until it rains? You might as well dance.
I often think of some forms of entrepreneurs/founders in this context. They are just like tribal rain men. If they dance long enough, it rains. They aren't really responsible for the rain but they keep everyone hopeful and around long enough that when it finally does rain everyone is ready.
[+] [-] curiousllama|5 years ago|reply
[+] [-] elliekelly|5 years ago|reply
[+] [-] Dracophoenix|5 years ago|reply
[+] [-] cactus2093|5 years ago|reply
The most glaring omission is that it doesn't stop to acknowledge at all the impressive growth that WeWork saw. Yes, there were all kinds of problems with the way they managed their growth, and some major challenges with the basic fundamentals of their model. But there were many (hundreds of thousands?) of real users in many cities paying them money for office space. To just write that off as "lol, you re-invented the office" is a little ridiculous. They made a product people loved, and that IMO genuinely was an order of magnitude better in user experience than most other short-term office space that existed at the time. It saved time on all kinds of things, from basic cleaning, coffee and tea, flexible meeting rooms and private phone booths, and a generally comfortable space to work in. Those are things that have real value to anyone who is busy working on their company and just wants a productive turnkey place to work. It's weird to write all that off as just shallow millenials being too vain to work out of a Regus (which is a company I had never even heard of before the documentary, despite having been in this position of needing a small short-term office space for my startup in the past).
Maybe I'm just a crazy, biased shill and a sucker for any startup story, but IMO it would have been a much better documentary if they delved into this side of the narrative - how did such an out of touch, seemingly crazy person manage to build an actually good product that found quick product market fit in the crowded real estate space?
[+] [-] Judgmentality|5 years ago|reply
WeWork would rent the office space, and then rent it out for less money than they were renting it. It's not hard to grow when you can raise billions to sell dollars for pennies.
I'm pretty sure I could sell millions of phones a year, just give me billions to buy those phones and then I'll sell them at a 90% discount and I'll dominate the phone market!
[+] [-] ameister14|5 years ago|reply
The basic model is to take distressed real estate, chop it up, sublease it and use some of the money to set up a mid high end space with plug and play offices, community events and a doorman. It works, but it is not easy to execute properly.
[+] [-] 908B64B197|5 years ago|reply
But it's interesting what they did with their real-estate by repackaging it as the "Cloud Computing" of office space. Fundamentally, they solved the issue of selling office space to folks who either needed to add capacity in a short time or who just had to go month to month because no landlord would talk to them (a startup with N months of runway might not be the best tenants. Prime real-estate is rented out with leases that are in the 5+ years durations).
Their network was also an interesting feature: For folks traveling for business it might be an interesting value proposition to be able to just go to any of their locations worldwide. That's a real differentiator from most coworking spaces around (I'm thinking Hanahaus and the likes) that only have in the single digits locations.
[+] [-] djpr|5 years ago|reply
Regus is huge (wikipedia says over 3000 spaces as of 2019), but it is no surprise that most people - outside of traditional, multinationals corporations- have heard of it. Regus started as a serviced-office, which serves a very different market than coworking spaces - though now the two have blurred.
If you're a small business or start-up, Regus isn't the place. It's incredibly expensive and very conservative looking. My company's Regus space (for 4 people, as it was a new country office) in Malaysia costed us as much our eventual +20 person office space.
I've worked from numerous Regus spaces via multinational consultancy I used to work with. They were always in prime, high-end locations and incredibly stuffy. Regus offices (felt like, pre-WeWork) a place to impress bankers and and Fortune500 clients. Regus has remade themselves because of WeWork, which is an improvement.
[+] [-] s3r3nity|5 years ago|reply
Is it "product-market fit" if the company is literally buying that growth? Or does it become true "fit" once you can monetize those users reliably?
Ex: I buy a butt-ton of Airpods, put them in glass cases, and give them out on a nice table outside my house - for free. If I go out of stock on my first day outside, does that indicate "product-market fit" for my glass cases? (Answer: not really)
[+] [-] ncn|5 years ago|reply
[+] [-] ramphastidae|5 years ago|reply
[+] [-] lacker|5 years ago|reply
https://www.nytimes.com/2021/03/26/business/WeWork-Spac-ipo....
Yeah, their valuation is down a lot from what they were going for with the initial IPO, but it is still providing a very valuable service. This isn’t like Enron or Theranos where the company is fraudulent, it’s a real, valuable business that was overvalued for a while.
Overall, WeWork is a success, not a failure. If it were in Europe, it would be one of the most successful European startups in years.
[+] [-] ebiester|5 years ago|reply
Source: https://www.crunchbase.com/organization/wework/investor_fina...
[+] [-] CalChris|5 years ago|reply
[1] https://www.crunchbase.com/organization/wework
[+] [-] skeeter2020|5 years ago|reply
They turned 20+ billion into < 8 billion. That's a success similar to the joke about how the easiest way to make a small fortune is to start with a a large one.
[+] [-] elliekelly|5 years ago|reply
SPACs have a long and well-earned reputation of being associated with fraud so perhaps it's too soon to conclude that WeWork is unlike Enron and Theranos.
[+] [-] unknown|5 years ago|reply
[deleted]
[+] [-] fshbbdssbbgdd|5 years ago|reply
[+] [-] AlexandrB|5 years ago|reply
I think the use of past tense here is unwarranted. I'm sure there are many WeWorks and Theranoses still out there right now.
[+] [-] jankyxenon|5 years ago|reply
If we don't have examples of WeWorks, it's not built into the process to sus them out.
Something built on sand will ultimately collapse - and smart money shouldn't build on that particular patch of sand again (it'll find other ones).
[+] [-] mrkramer|5 years ago|reply
Many of whom are SaaS companies and who receive hundreds of millions of dollars of investment on what merit? Good story? Sexy products? Expensive growth? Look at us we are next Oracle or Salesforce.
[+] [-] burnte|5 years ago|reply
[+] [-] VBprogrammer|5 years ago|reply
[+] [-] paxys|5 years ago|reply
A quiet working space in a fancy office building in the most upscale commercial area of the city with tech company amenities included is going to realistically cost a lot more than $200/month. There is a reason WeWork set billions of dollars on fire.
[+] [-] bilbo0s|5 years ago|reply
[+] [-] duxup|5 years ago|reply
One company tried to open a space like that for individual office rentals out in suburbia where I am.
Monthly price was more than half my monthly mortgage payment, I'm not going to do that for a tiny bit of office space.
I suspect that unless employers are happy pay for it the price I'm willing to pay wouldn't float these companies...
[+] [-] andrewfromx|5 years ago|reply
[+] [-] polygotdomain|5 years ago|reply
Fundamentally though, WeWork was a middle man, and one that shifted as much liability towards the landlords as possible. While you can debate how much value they added, I don't think it's a stretch to say that their valuation far exceeded the actual value they brought to the table. Fundamentally though, space is far more of a commodity than WeWork would have you believe, and in an economy situation where people aren't co-working or that there's a lot of unleased space on the market, WeWork's proposition is certainly depleted.
Combine the inflated view of their value with feel-good marketing about changing the world, unrealistic valuations and shadiness from the founders and ownership, and you get a company that went far beyond where they should have and duped a number of investors along the way.
[+] [-] raunak|5 years ago|reply
[+] [-] Aea|5 years ago|reply
They had a desirable product for a reasonable price, and I enjoyed working out of WeWork spaces.
It seems like the only truly delusional party was well-capitalized investors throwing money at an (poorly executed) old-school business model with a thin veneer of innovation.
[+] [-] TheMagicHorsey|5 years ago|reply
Over the next 30 minutes or so this guy explained to us non-scientists why he thought Theranos might very likely be a fraud. People nodded their heads and said "interesting" but I don't think anyone really took the guy very seriously. It's easy to dismiss such concerns from people in parallel startups as jealousy or misguided.
But the thing that has stuck with me since is that if a relatively junior guy working as in a startup lab had this insight about Theranos, why didn't all these major investors with world class experts know any better?
It seems to me the more interesting story in regards to WeWork and Theranos is why are the incentives in these investment funds not aligned with the purpose of rooting out such fraudulent or overblown claims.
I honestly could care less about the flamboyant personalities involved. The system failures are more interesting to me.
[+] [-] eweise|5 years ago|reply
[+] [-] mimixco|5 years ago|reply
Regus, as pointed out, sold co-working space before WeWork and still does. They don't, however, sell religion and it's likely that any future co-working brand will forego that aspect, too. Of course, cult-like attraction does work for some companies... if you can get enough believers.
[+] [-] xyzzy21|5 years ago|reply
But that was the lie told - "We will have double-digit tech growth rates and market domination!"
Nope!
[+] [-] jelling|5 years ago|reply
If you are a young founder or startup employee,I recommend learning every type of business moat there is and using that as a key criteria for evaluating opportunities. It won't guarantee success but it will filter out so much garbage.
[+] [-] kgin|5 years ago|reply
Meetup
Flatiron School
Wavegarden (Surfing Wave Pools)
[+] [-] rainyMammoth|5 years ago|reply
[+] [-] s3r3nity|5 years ago|reply
Rather than doing the fundamental analysis, investing without emotions, etc. - the market will keep rewarding "charismatic" and well-connected individuals with shitty-ideas and/or no business sense.
It's easy to scapegoat Adam Neumann or Elizabeth Holmes, and say they were sociopathic liars or the like - but these cases read like a market inefficiency in venture capital, rather than one-offs.
[+] [-] yowlingcat|5 years ago|reply
Having said that, the idea that the solution is fundamental analysis, investing without emotions, or what have you -- that all strikes me as a bit naive and without much evidence. The market is a Keynesian beauty contest first which serves the needs of humans, hence the existence of Veblen goods et al. It also strikes me as a bit naive that there's anything wrong with "charismatic" and "well-connected individuals" being in positions of leadership. Recruiting is the most highly leveraged thing early stage company leaders can do and is the flip side of fundraising -- so it only makes sense to have firm's leader excel at that.
I think we can critique Neumann and Holmes for being unethical fraudsters who deliberately misled their stakeholders without making a categorical error about corporate executives. I won't say that they're the exception and not the rule, but I will say they're not really the goal to aspire to.
[+] [-] bhupy|5 years ago|reply
Considering that venture returns have historically out-performed public markets[1], they're probably just that: one-offs. I think there's an argument to be made that Fed QE policies and junk bond bailouts have perhaps over-incentivized risky investments, but in aggregate venture capital has been "efficient" in the economical sense. Consider that the total investment into Theranos and WeWork are a rounding error as far as the total pie is concerned.
[1] https://cdn2.hubspot.net/hubfs/3925488/_Source%20of%20Truth%...
[+] [-] EGreg|5 years ago|reply
The VC and to some extent the Private Equity industry can subsidize money hemmoraging business models and fuel massive growth of bad unit economics until they dump them on the public. Uber and WeWork are just two high profile examples.
In fact, then openly admit they stay away from sustainable and profitable businesses in favor of massive subsidized “traction”.
That’s the loophole - same as colleges can jack up prices on liberal arts degrees and then student loans get bought by Freddie and Fannie.
[+] [-] ryanSrich|5 years ago|reply
VCs need to make money first and foremost. I doubt they care about one Theranos out of every 1000 or even 100 companies they invest in (I refuse to compare Theranos and WeWork).
The idea that you invest in the team appears to be a winning strategy considering historical returns. So the question is, why would they change this?
[+] [-] indymike|5 years ago|reply
[+] [-] mdoms|5 years ago|reply
[+] [-] unknown|5 years ago|reply
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[+] [-] goatinaboat|5 years ago|reply
You misunderstood the business model here. The plan was to dump it on retail investors, cashing out and leaving them holding the bag. It was just a longer “pump” phase than usual. The sociopaths here are SoftBank.
[+] [-] fireeyed|5 years ago|reply
[+] [-] silent_cal|5 years ago|reply
[+] [-] BlueTemplar|5 years ago|reply