[pclmulqdq]

Thinking about this from a good faith perspective, I would assume the VC wants to get some exposure to the property market while still pretending to be a "VC" fund. Alternatively, this might be a bailout of sorts after Adam Neumann's crypto-based carbon trading platform went bust (along with $70 million from AH).

It's hard to look at this from a charitable perspective, though. Adam Neumann is basically Elizabeth Holmes, so I don't know why people keep giving him money.

[rzwitserloot]

From time to time you see the entire executive body of a large firm, or sometimes even _all_ executive bodies from all firms in a certain market segment, do something that makes you go: Hmm. Odd. Sure seems like they are oblivious morons from where I'm standing and I don't think I'm judging based on hindsight either.

I usually assume that I must be missing something. But AH is making it real, real hard to figure this one out. What in the fuck has crept into your brain if you think this is a good idea?

SV VCs love saying that it is about the person/team and their experience more than the idea. Okay. It's Adam Neumann, so, swing a dead cat anywhere on the planet and you'll hit someone more capable than that clown.

The idea is also rather basic. So, what happened here? How's this good for AH? Some sort of harebrained scheme where by _them_ giving Adam Neumann money, it means AN can plausibly be called 'a successful businessperson', and thus it makes AH not look like a bunch of fucking idiots who got conned?

Talk about throwing good money after bad.

[mamonster]

I mean you can say all you want but basically a lot of the VCs that interacted with him have no problem publicly stating that he is the best salesman they ever saw.

Money that he lost in WeWork is not coming back, but the sales talent is still there. Taking "a water under the bridge" approach isn't unreasonable if AH is genuinely convinced he is that good at selling shit to people.

[pclmulqdq]

I guess the way to convince a VC that you are a good salesperson is to sell products in a large competitive market (office space, ride sharing) subsidized with their cash. Being able to sell VC-subsidized real-estate isn't exactly a test of your sales skill. That was the value proposition of WeWork over Regis or other competitors: they offered higher quality spaces for less money because they could afford to do it at a loss. You don't need any skill to gain market share by taking a loss in a competitive market.

He is very good at selling VCs on investments, but honestly, it seems like that has more to do with having a big vision that you can promise them and not having the moral scruples to evaluate whether that vision is feasible. We see this with Elon Musk on his series N or O for SpaceX, and it looks like Adam Neumann is next.

[mamonster]

You are misrepresenting what WeWork was and wasn't. The way you put it above makes it seem like WeWork business model had no positive unit economics at any scale and only survived through VC injection. That is absolutely not true.

WeWork's value proposition in the beginning was that Neumann(or the designer he hired) legitimately knew how to redesign/refurbish what was essentially a lackluster, old office building and make it seem like a great office. That part of WeWork was legitimate and Regus did not know how to do that(Regus still doesn't do that, at least in Europe). Now their big problem of having long term obligations with essentially short term cashflows was still a problem, but the unit economics at that stage were positive.

What set everything on fire was the fact that when they were injected with enormous amount of capital they essentially ran out of bad real estate in the markets they were in(this was the case in New York) and started going into the deluxe office buildings, where a WeWork facelift wouldn't do anything.

I can't remember the exact talk, but I saw a talk recently by some VCs that basically made the very interesting point that in certain businesses too much capital that has to be invested will eventually destroy the unit economics, and the 2 examples were Lyft and WeWork.

But yeah, the idea that WeWork didn't at some point have a legitimately differentiated, valuable offer that wasn't due to VC subsidies is not true.

[pclmulqdq]

What I mean to say is that WeWork does have positive unit economics, but that the net present value of the cash flows from their investments in buildings would never be anywhere near the amount of the initial investment (on a risk adjusted basis) used to generate those cash flows.

That doesn't mean WeWork has a bad product (they have a great product due to the capital available to spend) or bad unit economics (most of those investments are probably decently cash flow positive), it just means it's a bad business.

This is a case where "unit economics" doesn't tell the full story.

[rogerkirkness]

VCs I've met feel Adam Neumann is one of the best at pitching of anyone they have ever met or are aware of, like the GOAT of fundraising. That has massive value, and in theory you could insulate them from operational things that need budgets.

[specialist]

I worked at a startup that had a GOAT level sales person. We understood we needed this person to succeed, enterprise sales to a nascent market segment required a lot of persuasion and tenacity.

Unfortunately, sales dominated orgs lead to terrible technical and operational challenges. (Whereas Neumann's efforts are dominated by fund raising.)

Like our sales GOAT, I imagine Neumann is similarly unfamiliar with objective reality. And otherwise unteachable.

I kinda get it. For Neumann's part, he's wildly successful, awash in cash. And has somehow avoided the consequences of his terrible decisions.

Another example of Failing Upwards.

[pclmulqdq]

In theory, theory and practice are the same. In practice, the people making the pitch have never been insulated from operations or technology. Either their egos get too big for a split to work or they actually start to believe their own bull. This is a fantasy that has never happened before, and while it would be nice, it is not real.

[xhevahir]

Yes. "Believing their own bull" is the whole secret of Neumann's or Holmes' salesmanship.

[elp]

> Adam Neumann is basically Elizabeth Holmes.

That made me laugh. The similarities are there down to the strange quirks meant to make them both seem more interesting. Elizabeth has her husky voice and turtlenecks and Neumann has that barefoot in New York thing.

In both cases the early insiders made out that like bandits and I'm assuming that's exactly why they are getting checks now. Everyone is well aware this is nonsense but they are all hoping to offload on greater fools coughretail cough.

I would expect them to also acquire a couple other property companies for massive valuations that will turn out to also be worthless.

Definitely popcorn worthy.

[chadash]

> Adam Neumann is basically Elizabeth Holmes...

With one big difference. I've worked in a WeWork. I know many people who have. The product is real and it did fundamentally change the idea of coworking (you ever heard of Regus before WeWork came along?). And I'd work at a WeWork again. It was a great experience.

[wil421]

When I did catering 15+ years ago I went to a quite a few coworking offices. It was nothing new then. Some were sterile offices and others were like WeWork and had a bartender/helpers doing things. The 2 places I remember are still around while the WeWork signs have been removed and offices closed.

[pwinnski]

> you ever heard of Regus before WeWork came along?

Yes? Maybe I'm just old, but I remember them in the 1990s.

Pre-crash articles[0] suggest that WeWork introduced "community" to coworking spaces, which... okay. I guess time will tell whether that fundamentally changed the idea of coworking.

It's no big new discovery that people by and large prefer new things to old things. If WeWork had lasted long enough to become an old thing before imploding, perhaps we would have seen that the difference was mostly that. Or perhaps something actually new did happen, in which case it might now be lost under the clouds of grift and fraud.

0. https://www.forbes.com/sites/forbestechcouncil/2019/06/14/ho...

[thematrixturtle]

Not sure why you're getting downvoted. WeWork is a real business with a real business model that's been making real money, especially now that many companies are downsizing their office space because of COVID. Yes, Neumann is a clown who blew a lot of VC cash on weird shit and made out like a bandit before the party ended, but unlike Theranos, the customers of WeWork did receive exactly what they paid for: flexible office space.

[pclmulqdq]

If you start a business that spends $22 billion and then starts to bring in a few hundred million a year, that's not a great business. That is a bad business.

[pclmulqdq]

Elizabeth Holmes was not convicted of defrauding patients, only of defrauding investors. Adam Neumann has done much the same to his investors.

I would work at a WeWork too. WeWork spaces are great, especially when you compare them to competitors, who didn't burn massive piles of VC cash to make their spaces nice and rent them to me at a loss. That has nothing to do with Adam Neumann, only the money he extracted from investors under false pretenses.

[andreareina]

Nah Neumann was 100% up-front about WeWork, including the self-dealing.