It's not a tech company, it's a property company with the valuation of a tech company.

It's a property company that's planning tracking everything people do in their buildings.

>WeWork's latest acquisition is a small software company with 24 employees. Euclid is a spatial analytics platform...Euclid's website says the company is "focused on redefining the workplace experience of the future." Translation: optimizing every aspect of the physical workplace so workers are their most productive. Euclid does this by tracking how people move around physical spaces. Its technology can track how many people showed up to a meeting or to that after-work happy hour. The company can see where employees tend to congregate and for how long. It's all done over Wi-Fi.

Edit - forgot to link the article - https://www.inc.com/betsy-mikel/wework-is-trying-a-creepy-ne...

Yeah, I don't see that providing the outsized gains they're hoping for. I've talked to a number of entrepreneurs who business plan is basically

    1. Collect data
    2. ???
    3. Profit

And every time I quiz them on point 2, they get squirrely. They can never explain exactly how it works; at best I get hazy references to Google making lots from data, which is at best a partial truth.

In this case, I doubt having that data will do much; humans are already natural optimizers. Really, the things workplaces should be optimized for are unlikely to be easily measurable, so at best these systems will optimize for the wrong thing.

And really, the reason workplaces aren't particularly optimal now is that most decisions are made not for maximizing business value, but for maximizing the power and comfort of those high up. As an example, when businesses relocate their headquarters, it is generally to move closer to the CEO's home. Or we can look at all the decisions made to optimize a visible metric, like cost, to the harm of invisible ones. E.g., the open office plan, which is cheap and lets managers supervise by looking out their office window, but significantly harms productivity and employee happiness.

> And every time I quiz them on point 2, they get squirrely.

Well, sure, but all they're being told is that data is the new gold. [0] And gold is valuable, so data must also be valuable. They tend to forget that not all data is gold, because 'some data is gold' isn't what they were told and also isn't fun.

0: https://www2.deloitte.com/nl/nl/pages/data-analytics/article...

> humans are already natural optimizers

This right here. Most humans will do whatever they can to achieve minimal work. However, they aren't great at gathering all the necessary data and often find local maxima, so there is still some value in "AI augmentation".

Yeah, I don't think tracking this type of data would improve worker productivity, and I think it could actually have the opposite effect of demoralizing employees.

However, I can definitely see some unethical companies being interested in this type of tracking, so I'm guessing there's a market for it.

I'm sitting in a very similar situation.The company I work for provides relatively basic service, however the operational( we are brokers) model is challenging. We have tons of reports and dashboards measuring things from A to Z, sometimes it feels like we are some sort of analytics company. While some metrics are useful and help steer the ship either way,the rest simply becomes noise. Also a lot of data is not being interpreted correctly because of lack of statistics/math skills within the company.

Always great to run into your comment on HN

Did Euclid / WeWork realise that many people prefer to work from home? My past 14 years of professional experience would net WeWork 0 rental income.

I'm part of an almost entirely remote company, where the headquarters is stationed in a coworking space. If the company offered a WeWork membership for us remote-workers, I'd occasionally like to visit the space for the atmosphere of working around other working people and the conveient coffee, booze, and views.

But as it stands WeWork is far too expensive for me to justify paying out of pocket for considering how noisy the shared areas are compared to any of the cafes down the block from my home, where I can get the same work done in a similar environment for a fraction of the daily cost.

Don't rent in some hipster corner,where you'd have 9/10 doing anything but work.Find a slightly run down office space and get a desk or a tiny room there. I've been to so many non A+ office buildings and most of them are dead quiet because most tenants in such buildings have to work their asses off to make living because they don't operate in high margin,low competition markets.

Sure- and if they report which employees attend meetings and who spend more time at the water cooler, their rent and valuation will go up. That is some serious stretching of possible ways to make money

They're trying to sell it as tech

> We have approximately 1,000 engineers, product designers and machine learning scientists that are dedicated to building, integrating and automating the complex systems we use to operate our business

To do what? I'm not too familiar with them but what more do they have other than a website to look at potential spaces with some photos and a description and sign up for one? Maybe process payments as well?

The biggest tech challenge they have is figuring out how many conferences rooms to build out per X number of offices.

Not enough, and you have a huge queue to use them, too many and you have lost office space rental.

Outside of that there isn't much tech to go around.

We used them before they were WeWork, when they were still GreenDesk in Dumbo.

Overall it was great, and it's a great product given the flexibility and move in ready amenities that it provides and if you ever step foot inside of Regus you will immediately notice the difference.

Though now there is a lot of competition from smaller companies and of course I'm sure Regus has stepped up their game in response.

Their growth is amazing, but ultimately it's still a real estate holding company. The same is true for E-commerce. Though their volume is immense, they trade no where near their multiples for revenue as other tech companies given the different margins they have, cyclical sales cycles, and many other factors that make that sector much less attractive than a pure software play in the B2B space.

But looks like we will see how this all plays out.

Really the exposure that Softbank has here is the real worrying issue. It's a massive stake, at a massive valuation, and if this IPO doesn't perform well (and most people think it won't), this maybe a real red blot on their performance.

> The biggest tech challenge they have is figuring out how many conferences rooms to build out per X number of offices.

How is that a tech challenge?

The only actual tech they have is their swipe card access and room/desk booking systems

They might use some tech internally to optimise certain aspects of their business, but that would be like calling a coffee shop that does their finances in Excel a tech company

> calling a coffee shop that does their finances in Excel a tech company

Techbucks S-1 coming soon!

>The biggest tech challenge they have is figuring out how many conferences rooms to build out per X number of offices.

Saving the world!

>Overall it was great, and it's a great product

Yes, much like Uber, Lyft, Tesla, Blue Apron and on and on, consumers love products priced far below their actual costs.

I'll see if I can dig up the article, but I think they're planning on tracking everything that workers do in their buildings and giving that data to employers.

Edit - found this - https://www.inc.com/betsy-mikel/wework-is-trying-a-creepy-ne...

>WeWork's latest acquisition is a small software company with 24 employees. Euclid is a spatial analytics platform...Euclid's website says the company is "focused on redefining the workplace experience of the future." Translation: optimizing every aspect of the physical workplace so workers are their most productive. Euclid does this by tracking how people move around physical spaces. Its technology can track how many people showed up to a meeting or to that after-work happy hour. The company can see where employees tend to congregate and for how long. It's all done over Wi-Fi.

There are a couple of issues with this. It's a well-known effect in management theory that workers behave differently when they know they're being observed. Also, presumably most of their tenants employ knowledge workers not factory floor workers, and so data about how often they go to the bathroom or how many steps they take in an hour is probably a lot less relevant than tracking what they're doing on their computers.

I can just imagine a bunch of managers attempting to "optimize" their employees once given the power to do so!

"Jane, I noticed you don't stay late after work, why is that?" "Mike, I see you sometimes go off company's wifi, why is that?"

Yeah, I don't think this is an effective way to improve worker productivity, and I think it would also be pretty demoralizing.

With that said, there's already companies that track workers like this, so I definitely think there's a market for it.

Measuring every single second of how it gets spent- That's idiotic. Knowing that everything you do can be easily checked and measured- sometimes it works miracles.

Helpdesk software and room booking. But yeah _1000_ people in product development sounds absurd for "We".

Especially at their scale. A team of 20 could run a Facebook-like experience for 1 million people. Things get much harder after that, but Wework isn't close to the scale where you need more people because things are harder.

One would think that if you have that much invested in engineering business operations that, ya know, your business operations would be profitable. This is the gamble and is based on a volume play, since technology that enables business operations can have tailwind effects.

Its a property management company. They own some leases, but not actual buildings.

Is it? I was under the impression it does not own land for the most part.

It's a mix. Some locations they own, some they lease--including some that the CEO owns and they lease from him, which is an interesting arrangement.

> including some that the CEO owns and they lease from him

Did you see the part of the filing where, in case of death or incapacitation in the next ten years where the CEO is unable to fulfill his duties, a group of two board members _and_ his wife will select the next CEO, and if those named board members are also not available anymore then his wife will solely pick the two board members who will pick the next CEO with her, and if _she_ is unavailable then the estate of the CEO and his wife will pick the next CEO?

Page 198

I've never seen a company like this transfer to successive control via the private estate of the CEO in case of a vacancy. There's a lot of WTFs in here.

A school I attended once had a similar arrangement with one of its board members. I also vaguely recall that board member defrauding the school of several million dollars and being federally charged...

It's different for a school though because there are regulations on related party transactions for nonprofits.

Under "Properties Leased to The We Company," this is very interesting:

"As of June 30, 2019, future undiscounted minimum lease payments under these leases were approximately $236.6 million, which represents 0.5% of the Company’s total lease commitments as of June 30, 2019."

How is that going to fly with a public company?

Page 28 discusses it. They have an interesting approach to managing the conflict:

> Pursuant to our related party transactions policy, all additional material related party transactions that we enter into require either (i) the unanimous consent of our audit committee or (ii) the approval of a majority of the members of our board of directors.

I was pretty impressed when I read "unanimous consent of our audit committee" but then it all went out the window when I saw or the majority of the Board. The company CEO/landlord is the person with the major conflict of interest. He also has the majority voting power of the company stock and will control the board. WeWork's attempt to mitigate this conflict of interest is nothing but smoke and mirrors.

That board position is the key problem. The conflict of interest isn't addressed at all.

As long as the lease rates are inline with the market rates, shouldn't be an issue.

For actually useful comparisons, look at Regus/IWG which is larger and more profitable: https://en.m.wikipedia.org/wiki/IWG_plc

I have used Regus on and off in the US for a decade. I also have a free WeWork subscription through my AMEX platinum (boosting numbers pre-IPO?).

Regus is actually better run and more comfortable...just doesn't have the millenial loft vibe. I think that vibe is costing them too much for a real estate play!

See I always thought WeWork's issues were location related, that the real estate costs were just so massive. Just look at their NYC locations, they have the entirety of the top floor of the Fulton st station, it's gorgeous but seemingly very expensive to rent, I'm sure the crazy busy small Shake Shack downstairs makes a month's worth of the (Upstairs) WeWork's payments every week. But you're right, the other more enclosed locations (like 85 broad) are more comfortable too.

I would also agree with you. They seem to have a focus on some top tier locations for their brand. IWG/Regus is not nearly so fancy...but they do have more locations, more suburban coverage, and usually in typical office parks. Which, FWIW, probably benefits a more money-ready segment of the population...middle class, middle aged, professional class.

Woah, didn't realize Amex had that benefit. Looks like I'm signing up!

Looks to be business Amex Plat only for 1 year of free WeWork.

“You know... like Amazon. We’re basically the next amazon. Want to miss out on that?”

I wonder how that compares to what they tell new hires who are likely taking a haircut for equity in the company

They probably tell the new hires the same thing they tell themselves:

* It's always a gamble, but if you'd received $x0,000 of options 3 years ago, they'd be worth $x00,000 now.

* You'll own 0.00x% of the company, and if you owned that much of Facebook you'd be a multimillionaire.

* Companies like Amazon don't make a profit, and the stock market is fine with it. They know Bezos could turn a profit if he wanted to, but he's putting all the money to work growing the business.

* A company's IPO price isn't its all-time peak price; Google's stock increased 9x from their IPO price.

You'll note that, if you look carefully, nowhere in those points did I promise WeWork options would ever be worth anything.

Doesn’t deter from your point at all. But Google’s stock has increased over 27x since IPO 15 years ago.

"We have free lunch, a ping-pong table and a VR room with monthly fitness days"

Actually they don't have free lunch, which is quite strange for Silicon Valley companies

They (We) does have mandatory enforced veganism, however.

https://www.bloomberg.com/news/articles/2018-07-13/wework-te...

Actually it's pescatarianism, for whatever reason seafood doesn't count as meat.

Maybe it's because fish don't scream when you stab them, but idk.

Yeah, that's just horrible. We're emptying the oceans at an alarming rate. If they want to do it right, they shouldn't allow fish either.

Fish can't scream.

The Bloomberg article preview describes enforced vegetarianism, not veganism.

They are an NYC (does anyone still call it Silicon Alley?) company.

Mostly we're trying to get SF to rebrand as New New York.

Old Silicon Valley (companies primarily engaged in the design and production of silicon) doesn't do free lunch.

Neither does Apple.

We all know there is no such thing as a free lunch.

(In seriousness, it is neither a Silicon Valley company nor a tech company. All it has in common is that it is using VC funding and SV-style brand marketing to grow to spectacular proportions relative to its underlying revenues)

Profitability and the value of the equity aren't necessarily related, though. Amazon was unprofitable for many years, but its stock still increased in value.

Thats because Amazon was only unprofitable due to Capex and R&D. Their operating margin is fantastic, it was this promise that enticed investors! WeWork on the other hand is very ugly.

This is what seems to not be understood by a lot of investors and people commenting on investments. Amazon could have turned a profit years earlier if they wanted to. Instead it made more sense to continue spending all of their money on expansion and R&D.

It's the same with Tesla. They are selling a shit ton of cars at good markup. If they wanted a profit, they could have one. They just don't want one right now.

Tesla can't achieve profit even after extreme cuts across the board, including capex. Their capex minus D&A has been declining for a while and is negative.

https://twitter.com/TESLAcharts/status/1123186053811032064?s...

Is a tweet tagged with `$TSLAQ` really a good source?

>It's the same with Tesla.

Can you show you get this from? I see it repeated on these boards, ad nauseum, that Tesla is spending their "profits" on R&D and building infrastructure.

But in reality, you can see from their financial statements that Tesla's CAPEX spending is embarrassingly small for an auto company, and shrinking. They spent $2BB in 2018 and are on pace to spend half that in 2019. As a sibling comments states, their spending doesn't even cover depreciation of assets. For comparison, Ford spent almost $10BB on CAPEX last year, GM spent $10.8BB, VW spent over $12BB.

>If they wanted a profit, they could have one. They just don't want one right now.

You can't honestly believe this, can you? What are they waiting for? Why do they keep raising funds? Where is the money going?

Exactly. This was true of Tesla back when they made only the S & X and blew their R&D dollars on Model 3/AP/Batteries but the Model 3's margins are incredibly bad with sky-high ops costs while they are digging a hole like a car stuck in mud. They are promising FSD (to paid customers), Semi & Roadster (To reserved customers), and a Model Y that will surely eat into Model X sales, meanwhile they are clearly reducing spend in these departments. Without a Model S/X Refresh (That Elon is repeatedly saying will never ever happen) or dramatic reduction in BOM / assembly (which, maybe the Model Y is supposed to bring? maybe? Pigs can fly?) There is no route to profitability.

I agree, but want to emphasize that it's not necessarily sinister: they simply have no money to do the things they've promised. That's best case. Worst case is sinister.

I agree, for the most part, FSD seems simply outlandish and by this point they already had promised coast-to-coast. There really wasn't any real path to their promises.

It’s B not BB.

Thanks. Bad habit to hammer that key twice.

Yeah, no. There's a fundamental difference between Tesla and Amazon in terms of their profit potential. Super misleading to say that Tesla 'just doesn't want to profit rn'

Not understanding is one option; not trusting is another.

It is presumably quite easy to shuffle operating expenses into the earnings report as capital expenses if a company really wants to, and the 'development' in R&D can hide a bunch of things.

I'm happy to be wrong, but 'Oh, they can make money the minute they choose to, but at the moment they are choosing not to' is a concerning argument. Apple might have gone from "give the money back to shareholders" -> most profitable company in the world -> broke by the time Amazon turns a serious profit for its shareholders. It is yet to be disproven beyond all doubt that Amazon is competitive by virtue of having abysmal profit margins.

Huh? Clearly you are clueless about Tesla's financials.

Tesla's gross margin is a piddly 18%. They also need money to build and maintain service centers, super charger networks (all needed because Tesla doesn't have a dealer network or a gas network).

Then there is debt servicing, working capital, maintaining their plants, inflationary effects of labor wage (as their labor pool gain experience). All these are not discretionary R&D.

Tesla is fundamentally unprofitable and Musk suddenly has realized this and hence the major pivot to FSD (which is about 15 years away)

No, it's not. Not at all. Cash flow for each of the companies is VERY different.

TESLA:

https://www.marketwatch.com/investing/stock/tsla/financials/...

Amazon:

https://www.marketwatch.com/investing/stock/amzn/financials/...

Tesla differs because they no-longer make reasonable profits on the Model 3 and the better build and more cohesive design of the 3 has eaten the S & X sales.

The retail margins are about the same as walmart. They don't have some magic sauce in selling things.

AWS is their real money maker.

It's a bit harder to see from the present, but the magic sauce they added 25 years ago was selling things on the Internet. Obvious today, and obvious in hindsight, but the road to here is littered with companies that tried the same but didn't make it.

Aws was a blip on the rader for years when amazon was still one of the richest companies.

Look at their retained earnings on the balance sheet. It really only started going up when aws started getting more popular. Amazon always had an insane valuation.

Walmart is a good comparison. Amazon is in the volume game just like them.

Very true which is why they focused on free cashflow as a measure of profitability which could be immediately realized if they stopped investing their profits in to growth and market domination.

Though, certainly AWS has been a massive benefit for them. Allowing them to truly be disruptive and industry leading while generating massive revenues, growth, and most importantly profitability, however small compared to their overall revenue, to continue to justify their pitch.

Note that capex is capitalized and amortized over time (it doesn’t affect profitability when the investment is made).

It's almost as if the IPO market has become a ponzi scheme.

Maybe so, but please don't post unsubstantive comments to HN.