> Lots of businesses, particularly real estate businesses, feature self-dealing and family control galore. American corporate law goes out of its way to avoid criminalising stupidity.

Self-dealing, as in how the founder leases his building to his firm, or how he owned and sold the We trademark to his own firm? I wouldn't call that 'stupidity'. In fact, it sounds very smart, for the founder. And unethical bordering on criminal.

I've heard it's not uncommon to separate low-multiple assets and high-multiple assets into different structures.

In this case, the builds are the low-multiple assets and they're being separated out from the high-multiple asset which is the management company.

Imagine a huge conglomerate who has the ability to take revenues in more than one division - you claim the revenues in whatever the market treats as having a higher multiple, thus inflating your “growth” story and your stock price. To financial folks it looks like you’re shedding old businesses and making a new hit, but in reality it’s a finance trick.

Wouldn't the buildings usually be owned by, like, a subsidiary of WeWork, or a holding company that also owned WeWork, or something?

WeWork is the junk company that only exists to funnel investor money to the founder via his other company.

This company is completely unlike the early days of Amazon or others who lost money, WeWork seems to have zero plan to ever make money or be profitable. It's just a ponzi scheme that is trying to push scam up and out to the IPO market.

It's a despicable fraud and would be completely illegal if we had a functional SEC. They are just amping up the Uber-style con game to the next level.

There will be dozens more scam companies like this until someone finally cracks the whip, so get used to it.

> WeWork seems to have zero plan to ever make money or be profitable

Last I checked, being up shit creek without a paddle isn’t illegal.

The problem with criminalising stupidity is differentiating genius and idiocy is often only possible ex post facto. We let investors take informed risks with their own capital. The SEC’s main job is making sure companies selling securities truthfully represent themselves.

There are many business models I never thought would work but which, due to scale, clicked. I’m sceptical about WeWork. But the way for them to die is for them to starve to death. If the Saudis (and Kazakhs?!) want to give them money, so long as they aren’t creating negative externalities, I don’t see the problem.

My god, this isn't rocket science bruh.

The SEC used to prevent companies from listing that were obvious scams. They simply need to start doing their jobs again, it's not a tricky differentiation problem or moral quandry that we need to bust out latin to explain.

Right, but who exactly is being forced to invest?

The VCs went into this with their eyes open and probably information rights.

The public has been told this stock features a CEO who scammed his own company out of licensing fees for the name, and features abundant self-dealing for leases of buildings he owns. Anyone who invests has been warned.

If it's that sure of a thing, then let's all work to solve the problem by shorting the price all the way to zero.

None of what you said challenges the idea that it's a fraud, rather just paints a picture of what's considered to be fraud in this case being widespread.

> None of what you said challenges the idea that it's a fraud

I’m not saying WeWork isn’t a fraud. I’m saying we have no evidence it is one.

People can reasonably disagree about whether a business model is sustainable. A bunch of people have bet one way. A bunch will bet the other. I don’t like WeWork, but I don’t like this idea that if outsiders disagree with the sustainability of a business model the government should shut it down.

If WeWork can realise cross-selling opportunities or unique leverage, through scale, over its lessors, it could work. It’s one thing to say something is stupid. It’s another to shut down the debate.

Fraud involves deception, what is wework lying to people about?

That's what gets me about it. They don't seem to be lying. I've always thought WeWork was more some kind of odd way for VCs to get exposure to Real Estate and have it look like a tech investment.

What I said is accurate. See the rest of the thread for arguments that they're a fraud and what is meant by the term in this case.