[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.