Rolling US Economy Into The Shitbin Thread

levine on wework today is very good

https://www.bloomberg.com/opinion/articles/2019-09-09/we-might-not-be-working

did you check fitbit and gopro? although gopro looks to be 2014.

Now I am looking at lists of worst ipos of all time.

― Yerac, Wednesday, September 4, 2019 6:57 PM (five days ago) bookmarkflaglink

Both now well under a billion market cap. Once unicorns, they are now just horses ready to be taken out and shot.

here's that list i mentioned

for the companies that raised the most money, the return was lower https://t.co/8A0puufhVH pic.twitter.com/c7OgFiHaMg

— Eliot Brown (@eliotwb) August 27, 2019

wework may be at the bottom of this list (47bn peak to 20bn public cap) if they go ahead with the IPO

I sort of have the impression that wrt the VC funds that invest in these unicorn companies -- (1) a lot of the money they are "investing" is actually someone else's, and (2) they are often earlier investors themselves so they are basically inflating the value of their own investments.

going from 10x to 5x initial investment is not that much of a loss when it was all on paper anyway.

Besides, the funds will cash out as much as possible at 10x.

Oh they hate it because it’s relatively expensive sure. But it fulfils enterprise IT requirements in a governance sense. And the competitors are not bad so much as in a completely different category. Insanely expensive and users want it and it’s legal for corporate IT and there’s not really another product like it seems like a good business to be in.

― 𝔠𝔞𝔢𝔨 (caek), Wednesday, September 4, 2019 8:06 PM (five days ago) bookmarkflaglink

my company uses an open source slack clone (mattermost) and I honestly can't tell the difference, even the UI looks nearly identical. I have no clue about the security or how we're hosting it but this is a srs ppl fortune 100 company and it's good enough for us.

I would not buy slack stock.

Really it's the pension funds, institutional investors and new money individuals who should be circumspect about investing in these pre-IPO companies through VCs. The VCs themselves have things figured out pretty well.

Meanwhile, I talk smack on Slack, but I wasted a lot of my day trying to organize files in shitty ass microsoft OneDrive. There are some real headsmackingly bad things about it, e.g. if you want to save a file from your web outlook to your onedrive, you can't save it to a specific folder, so even though they're part of the same suite they're integrated really badly.

one thing that sucks about onedrive is how everything you do is in slow motion, all of the time

xxp the pension funds, institutional investors and new money individuals can sell all or some of their stake before an exit. They can benefit from the hype. These investors made out well on funds including WeWork etc.

Yeah it really seems like you don't have to believe in the company, you just have to believe that their story is compelling enough that someone will invest at a higher valuation than you down the road (and even that investor doesn't actually have to believe in the company, etc.). It's turtles all the way down.

you just have to believe that their story is compelling enough that someone will invest at a higher valuation than you down the road

Among brokers this is called the Bigger Fool Theory.

interesting theory, but in order to unlock the full version you must first buy this ship i'm trying to sell you

you just have to believe that their story is compelling enough that someone will invest at a higher valuation than you down the road

https://www.damninteresting.com/the-eponymous-mr-ponzi/

https://s.yimg.com/ny/api/res/1.2/jTBpdHEFJztq67pSEeP5Ag--~A/YXBwaWQ9aGlnaGxhbmRlcjtzbT0xO3c9ODAwO2g9NTI4/https://media-mbst-pub-ue1.s3.amazonaws.com/creatr-uploaded-images/2019-09/846a7520-d4b1-11e9-a073-0c61c3a66417

https://finance.yahoo.com/news/we-work-super-unicorns-snap-spotify-lyft-uber-165510713.html

Beautiful

You love to see it

I mean caek you specifically do not love to see that tan-colored line but otherwise, cheff kiss

as much as there is some ostensible schadenfreude, can't help but feel that the people who actually deserve to feel the pain are probably not the ones feeling it.

Also kind of sad to think about how companies like Uber and Spotify have managed to actually harm the livelihoods of many people by operating at a loss on VC money.

The well-known fact that Uber set pricing so low that they lost money on each ride is a textbook anti-competitive strategy for achieving a monopoly position and it is an indictment of the FTC that they were not prosecuted for doing this. Even though they haven't yet succeeded in becoming a functioning monopoly, they have repeatedly warped markets to the degree that people running legitimate businesses were irreparably harmed.

Ha yes the tan line! We’re #1!

The sample for that plot is weird btw. There have been succesful unicorn ipos recently (mongo and elastic).

Also re losing money to distort the market, a comparison between wework and it’s nearest competitor is instructive:

WeWork vs IWG (Regus)

Basically the same size in terms of rented desks, different valuation. pic.twitter.com/HwgOl0Dr0h

— Eliot Brown (@eliotwb) September 11, 2019

Typically companies like to show declining losses as they IPO

A problem for wework: its losses are growing with its revenue pic.twitter.com/NI2AJF81Z6

— Eliot Brown (@eliotwb) September 11, 2019

One of my past jobs I used to review/approve employee private investments and participation in private investments for conflicts and in order to place conditions on them. It's the get stupid wild west out there.

WeWork has basically invented a new business play: negative real estate arbitrage.

negative real estate arbitrage

Um, since real estate cannot be bought in a market in one place, then sold in another market elsewhere where the valuation is different, that phrase makes no sense.

¯\_(ツ)_/¯

https://www.google.com/search?q=arbitrage+wework&oq=arbitrage+wework

What those sites are calling arbitrage is not arbitrage in any fundamental sense, since the markets they are working within are unitary and inescapable. You may as well call house flipping in a hot housing market "arbitrage" (and I don't think it is). Yes, it is making money from an increase in valuation between the buying and selling price, but if that is arbitrage then so is buying a mutual fund and selling it a few years later, provided the share price went up over time. It empties the term of all its useful technical meaning.

REITS (real estate investment trusts) would probably fit what you are looking for? Although I kind of lost what was being sought.

xp ok but "'real estate arbitrage' makes no sense" is a bit strong/pedantic/demonstrably inconsistent with informed writers use of the term/wrong.

Leasing in one market (long-term office) and leasing out in another market (short-term office).

Well, then, good news for We (from Wikipedia):

When used by academics, an arbitrage is a transaction that involves no negative cash flow at any probabilistic or temporal state and a positive cash flow in at least one state [...] In principle and in academic use, an arbitrage is risk-free

I think we can all agree that the term “arbitrage” is overused these days to describe lots of things that could just be called “making a profit “.

all of academics talking about arbitrage.

So, if the term "arbitrage" has one value in academia and when marketing departments hijack it and turn it into a marketing term where it can be sold to investors at a different, higher value, does that turn the marketing department flaks into arbitrageurs?

Arbitrage arbitrageurs.

i don't think wework call it arbitrage. it's meant as an insult in this context.

in economics arbitrage just means buying something and selling it to someone else at a higher price

i agree w aimless wework aren't really arbitraging since they rent out the spaces then deck them out/renovate etc

like to me arbitrage implies you don't have to do anything in between buying and selling

Sure. That’s fair but saying that the guy selling umbrellas on the street corner is doing arbitrage sounds a little funny.

https://images-na.ssl-images-amazon.com/images/I/61QPyraFfHL._SX258_BO1,204,203,200_.jpg

When I brought up REITs above it was to address the post "Um, since real estate cannot be bought in a market in one place, then sold in another market elsewhere where the valuation is different, that phrase makes no sense." In this example you can go from public to private market valuations for the underlying real estate. But maybe that post was specific to wework and not real estate in general?

"negative arbitrage" was just a joking reference to the fact that they sublet real estate unprofitably.

This is hilarious

Oh my https://t.co/9rENkZOQp3

— Eliot Brown (@eliotwb) September 13, 2019

man alive, I thought your explanation was clear/concise.

In case it’s not clear

reminder that wework has raised over $10 billion of equity!

— Eliot Brown (@eliotwb) September 13, 2019

House of Saud gonna take a bath on this one

it's a $SNAP

like to me arbitrage implies you don't have to do anything in between buying and selling

― flopson, Friday, September 13, 2019 1:47 AM (yesterday) bookmarkflaglink

Sure. That’s fair but saying that the guy selling umbrellas on the street corner is doing arbitrage sounds a little funny.

― o. nate, Friday, September 13, 2019 8:47 AM (yesterday) bookmarkflaglink

umbrella on the street corner in the rain is different from umbrella in cvs six blocks away though