> "Point is the media is making this out to be an indictment on some SV tech bubble"

Its not the media, I think its just true. Had WeWork IPO'ed under the same conditions a year ago, I think it would have been 'fine'. but the glut of SV unicorns losing money, hating investors, and slowing growth has got people highly concerned.

This list of companies (slack, lyft, Uber, Pinterest, beyond meat, crowdstrike, tesla, spotify, Pinduoduo, Dropbox, Snap, Domo, Blue Apron, Box, Shopify, Zillow) has 310 billion in market cap and -18.67 billion $ in revenue (back of the envelope calculation).

If I missed anyone or made a typeo/mistake, let me know how I came up with the numbers: https://docs.google.com/spreadsheets/d/1L2ElCY853kgWACC3Q48Q...

EDIT: I am not saying all these companies are bad; I am invested in some of them! Just that the sheer size of these companies and their total losses are unnerving lots of people to such a point that the market had no appetite for WeWork.

> -18.67 billion $ in revenue

You’re confusing revenue and earnings/net income. Revenue is the sum of the sales. Net income, or earnings, is how much money is left after accounting for expenses. Uber alone has tens of billions of dollars in revenue.

You're not wrong about OP's confusion, but a quick note that uber recently reported quarterly revenue of ~3.1bn which means "tens of billions" annually is exaggerating a little.

Does uber count it's fees as revenue or does it count fees and the fares (which get passed back to the drivers) as revenue?

My opinionated take is that if uber wants to pretend that drivers are not employees and it's just a marketplace then they shouldn't be booking the fare as revenue, just their cut but I'm not an accountant and I don't make the rules.

> My opinionated take is that if uber wants to pretend that drivers are not employees and it's just a marketplace then they shouldn't be booking the fare as revenue, just their cut but I'm not an accountant and I don't make the rules.

Good point, but Uber literally takes the money through its app, so I don't suppose that would be possible.

Yea, classic case of low vs. high margin businesses. Travel is a great example. You would think sites like Expedia would make a healthy margin on airline tickets. Due to the way it's set up (booking systems, airlines, competition) the actual net per ticket is something like $5 for domestic flights. Last I checked Expedia specifically, most of their revenue was on hotels.

Contrast that with a high margin business like consulting services or a proprietary technology/product and there's a huge difference in net profit between the two at $10m annual revenue.

Revenue is King, margin is Queen.

Does PayPal count money paid through its app as revenue?

Good point. I believe it (and similarly Amazon marketplace sales) uses nominee accounts.

I don't use Uber so I don't know if the payments are always to the same 'Uber Ltd' or not, but you're right that would seem to be a good option.

No. Neither does a bank. That’s, for lack of a better term, escrow.

They only count their share, not the full fare (agent revenue recognition). I was referring to annual numbers.

You're missing Zoom, Pagerduty, and Cloudflare which are all doing phenomenally well.

A cynic might note that they're essentially selling pickaxes in the gold rush, so would be expected to do well in a tech bubble, even when their customers aren't :)

Thanks, didnt have earnings per share on cloudfare so skipped it

Pagerduty's stock is in the toilet. Almost anyone who has bought in the past 5 months has lost money.

Some of those (e.g. Slack) are growing phenomenally fast though, and could become profitable quite easily. Others (e.g. Uber and Lyft) have a questionable business model.

Edit: wow I didn't realize Slack had such a large market cap. That is a LOT of growth priced in, probably more than is justified.

While this is true, I seem to miss what makes Slack special. We use it at work, and it is decent at what it provides, but we could probably just as well switch to Discord, Microsoft Teams or ICQ.

Microsoft Teams especially seems like a deliberate attempt to dethrone Slack, and while it is slightly more annoying to use, it just makes sense for companies to bundle their services and subsciptions.

I do not really see a bright future for slack.

You could switch, sure. But would you ? You would be losing :

- Message history

- Files that have been shared

- Integrations / bots / ...

- Plus you would need to setup everyone again, create channels, ...

Slack goal is to be cheap enough that it does not represent a major cost for the company and integrated enough that moving would be a pain.

Would you, though? My company was a very early user of Slack, and imported our history from Skype group chat, IRC and HipChat over various periods in history. You can get the data out of Slack easily enough, so I don’t see that as a major aspect of lock-in if there is a competitive product.

The integration story is more interesting, but to _be_ a competitive product many of these must already exist.

The job of competing with Slack is harder than it once was (just look at MS Teams) but not impossible (just look at Slack...) - there’s lots of room for improvement.

My company switched from Slack to Mattermost, and then back to Slack. We either did all these things, twice, or lived without them. Switching is not something you'd do on a whim, but it's not really difficult either.

Why back?

The IT department moves in mysterious ways, its wonders to perform.

I think we moved from Slack to Mattermost because our infosec people weren't happy about Slack's handling of our data; there's a line in an email about "discussions with Slack over the past year regarding their data security and AI initiatives". But then Slack sorted that out to infosec's satisfaction, so we moved back, because running your own Mattermost installation is more of a hassle than paying Slack to do the equivalent.

As someone contemplating the move from Slack, I'm also very interested in this response

For the same reasons (good and bad) companies periodically switch other software platforms despite switching costs. History is exportable, and I suspect that for every company that's built clever and essential integrations and comprehensive channel structures there's another one where it's an under-used message board...

I don't think you can post syntax highlighted code snippets, or do automations with ICQ.

This is something they (ICQ team) are working on right now (actually they are launching ICQ-based Slack-alike collaboration solution, Myteam)

Well, probably rpa could help here.. If it makes sense is another story :)

> and could become profitable quite easily

That's easy to say and hard to do, especially when u have to justify a very public valuation

> are growing phenomenally fast though, and could become profitable quite easily.

Exactly. Cut their S&M budgets overnight and you'll see a ton of very profitable companies. Just look at their Gross Margins.

You're missing Eventbrite, which IPOed September 2018 and has lost around half its peak value.

https://finance.yahoo.com/quote/EB/

Maybe you need to flip that envelope around because I don't know how you get that much negative revenue.

Not to be flip, but pretty sure the gp is referring to losses, I.e. burning vc money and not earning enough revenue to break even.

added link above

Revenue and earnings are not the same thing.

>negative revenue

How is that even possible?

WeWork is such a mess that i wouldn't be surprised if their revenue was negative and their profit was a quaternion.

Obviously that happens when your product is so bad that you have to pay people to use it.

That’s called negative profits or earnings before taxes/depreciation/etc.

By definition revenue can’t be negative.

Sorry, my comment was tongue-in-cheek. If revenue is defined as income from operations, having to pay people to use your product could be considered negative income, aka negative revenue (even if that's not how that actually works). I guess it was a bad joke if I have to explain it.

"hating investors"

They don't hate investors, just the likes of you or I, and who can blame them? Softbank gives them money on a $47bn valuation, don't have to deal with reporting requirements, don't have short sellers (which SV types seem to be really annoyed by?!).

Twilio has been non-GAAP profitable for a year now with a positive EPS for the last four quarters (possibly five, but my brain is failing me and Yahoo Finance only lists the last four), but you list it as negative. So that leads me to wonder if many of the other figures you cite have similar issues.

(Disclosure: I work at Twilio.)

> non-GAAP profitable

Like how on my Tinder profile i'm a non-GAAP 10.

Has that been seasonally-adjusted?

it has been community-adjusted

On the merits, yes, We is not a tech company. But bear in mind that the company has gone to extraordinary lengths to cloak itself in the unicorn-tech narrative. It masquerades as a platform for other services; it ascribes its losses to a work-setting variant of the Uber fast-growth strategy; it draws parallels to Airbnb's disruption of the hotel business, etc.

Yes, Silicon Valley's smartest minds may see through it all. But in routine media coverage, the company's own version of its story (OVOIS) gets much of the ink. It takes a while for more investigative reporters to call BS and defy the company's OVOIS.

The general public's impression of WeWork isn't really relevant here, though. It's mainly the opinion of institutional investors that matters. And if they've had the wool pulled over their eyes and believe We to be a tech company, then... well, I'm even more worried than I thought for our financial system.

Actually, my feeling here is that institutional investors have realized that We isn't a tech company. That's why the IPO would probably only have fetched them at most a $20B valuation, rather than the higher valuation they've been awarded from the private markets as a supposed tech company.

So this may not be an indictment of "Silicon Valley IPOs" in particular, just investors saying "no" to a clearly overvalued non-tech company, and that company then deciding that it won't accept a likely more-reasonable valuation.

(Not saying there aren't plenty of overvalued tech companies! But this might not really have anything to do with that.)

All good points. At the same time, there's a bit of "No True Scotsman" going on. https://en.wikipedia.org/wiki/No_true_Scotsman

Not every time when someone says "X is not an example of Y" is the "No True Scotsman fallacy".

Now you may accuse me of the "No true 'No True Scotsman fallacy' fallacy".

The fact that WeWork has received multiple billions in VC money is a pretty damning indictment of the financial sector

I have a friend who joined there last year. He said that the interview process wasn't very hard and they focused on communication. He also said that the engineers there aren't impressive but he likes his coworkers and the job is okay, but the tech definitely isn't impressive at all.

> Point is the media is making this out to be an indictment on some SV tech bubble

It is (too some degree) an indictment on the Softbank and/or blitzscaling strategy that a lot of SV startups follow.

It's not "Silicon Valley", it's Silicon Valley. As in the show.

My wife just started a contract at a new WeWork office in London. The lobby features a giant but non-functional as skateboard ramp, and two DJ booths, both manned (at 9am on a Monday). The bathrooms feature the very latest in digital toilets, but they aren't flushing, and nobody can figure out how to reboot them.

At an aesthetic level, this couldn't be more Silicon Valley if Mike Judge were in charge of the service design.

In this context, the media pile-on may be annoying -- but it's inevitable, and basically deserved.

My WeWork in Gurgaon, India has a biweekly bhangra dance class at 4pm on a weekday

After the third such class, I decided to get the hell out of my lease.

It's like their entire corporate culture is built around finding creative ways to not work. It's awful environment to build a startup in.

Snort!

I am imagining a bunch of microdosing firangi sitting in their gravity pods, asking each other what Indians do to be, like, all cool and stuff. "Build a successful business" is, like, way too square an answer, daddy-o. Anybody can be a dull old business man. Our customers want to be cooool. So what's cool and Indian?

Yoga?

Sure, man, but everyone does yoga. They probably do Yoga in Kansas these days, so how's that gonna build our brand? Yoga goes without saying. We need something way cooler than that. What is it?

(Long awkward silence.)

Ah, I've got it! Bollywood dancing! Yeah, they eat that shit up over there. Let's do that.

This might be 90% accurate.

Panchakarma would also have been an acceptable answer. ;-)

I take it this was just one example of something that didn't agree with you about the location. I've had a good experience at mine with better productivity vs working from home.

Keep in mind, this is an office that aims to keep individual workers paying it, not the other way around, so the environment is going to be different than a lot of employer-owned offices.

Personally, I don't like the chirpiness and faux motivation plastered everywhere. I don't need to be told by posters that my work matters or that "Thank God it's Friday!". I never wanted to be a part of that corporate culture which is why I pursued my own freelance career.

I guess some people don't mind that, but to me, it got too nauseating too quickly.

At my location, it also seems that outside of the dedicated desk area (which is where I sit), a lot of people are there just to get laid. Nothing wrong with that, but that's something I've only found at WeWork of all the coworking places I've been to.

The spaces where you're actually supposed to work are so hostile to productive work anyway - loud, public, and if you're not by a window or at least only one tier in from one, dark.

You nailed it, it's absolute parody.

The graffiti in the Broad St. NYC location is cringe inducing.

On more than one occasion I've witnessed people omit that their office is based out of a we work location. Just too embarrassing to be associated with them.

Never been there but always thought the copy for the Harlem location was special.

https://www.wework.com/buildings/8-w-126th-st--new-york-city...

>If you’re looking for workspace that revels in uptown funk but gets business done with downtown panache, choose WeWork Harlem.

>Our open and airy shared office at WeWork Harlem embodies the future of workspace while embracing Harlem’s rich cultural history. Inspired by the Harlem Renaissance and how Harlem culture continues to express itself today, we looked to jazz legends like Louis Armstrong, Dizzy Gillespie, and Duke Ellington, and teams like the Harlem Globetrotters for design inspiration. “The Stoop,” for example, a wooden elevated seating area with attached nooks, feels as much like a stage or basketball court as it does a common space—it’s an arena for connection. That’s not to mention the generous natural light, warm wood finishes, and vintage art and furniture. Book a tour today to see what WeWork Harlem can do to help your business sing while staying true to its roots.

I work at this location and I can tell you that although I've never read the description that you posted above (sounds very.. cringey) people are putting the common areas to good use, and this applies extra to the stoop. You've always got people sitting around it, getting comfortable and working on their laptops, I think it's something that WeWork has done done well at this location.

Wow. This seems like a very, very lazy interpretation of the jazz age by a particularly unmotivated high school student. Like they took the idea that required absolutely no thinking whatsoever and went with it.

Seems like a perfect place for people who like to pretend to work.

Lifestyle branding for the IT crowd

WeWork's new motto: "No, really, we do work!"

I work at a WeWork in London, which one is your wife going to, that sounds insane...

Ours just has bathrooms & coffee machines that are offline for weeks at a time.

The new one near Waterloo. The DJs are possibly a new-location promotional feature, but they've been around for the past few weeks at least. To be fair, the ones I've been to around town (mostly Moorgate) are generally much more reasonable.

I think that one is London Bridge area...

This sounds a lot more Nathan Barley than Silicon Valley.

I remember watching Nathan Barley and cringing, one of the Easter eggs referring to people on the scene back than worked at the same company I did.

We work does sound like the place The registers Steve Bong! would be hanging out

You just gave me a whole new thing to look at here. Thank you for this.

I can't believe I've never seen it.

The TV show is good, but not as good as the original TVGoHome listings:

http://www.tvgohome.com/0206-2000.html

its more like entertainment 720 or whatever it was called in parks and recreation

They're fluUush with caAash #TheWoOorst

Do they oversell hot desks? Can you usually and easily find a spot to work? A price of $430/mo for a hot desk is a lot more than I was expecting.

What kind of music do djs play in a shared office at 9AM on a Monday morning? My imagination is failing me. You’d think it’d have to be brilliant to avoid an angry crowd.

I think I've heard about that skateboard ramp - they put desks in the middle of it or something?

Desks would be too work-y. They've got half-sofa, half-bed thingies, which nobody can figure out how to use in a dignified fashion in public.

Company with an identity crisis by any chance?

Honestly, who cares about facebook or google employees? They don't actually represent the bulk of software engineers -- instead, a vanishingly small minority.

>Point is the media is making this out to be an indictment on some SV tech bubble but people in SV are looking at this from the outside like everyone else.

Question: How do you think this company got a $40B+ valuation?

Answer: By renting office space to "Silicon Valley" companies with equally silly ideas and terrible financials. It epitomizes SV.

Why would it matter if it's "tech" or not? Being "tech" somehow makes companies magically better than being "not tech"? If so, that's a bubble right there - your valuation depends on whether or not you're considered "tech", rather than what the financial performance data says.

Here's a news headline: "Tech company" brand value damaged by WeWork; WeWork not in the club key investors say

People work with prejudice, if they are aware of it or not. A bunch of companies from the tech sector have managed to earn absurdly high valuations in a short timespan by successfully monopolizing a winner-takes-all market for a service with high initial cost but very low additional cost per customer. This situation is pretty uniquely found only for a certain subset of digital services, but people have already generalized this kind of approach into the word "tech company" - even though far from all tech companies operate in such kind of markets.

What we see now is the second stage of this: companies which have a marginal involvement of technology in their core business (which is true for basically all companies today) try to paint themselves as "tech companies", with the goal being that investors put them in the same box as Amazon, Microsoft, Netflix, Salesforce et cetera.

And since investors are just as stupid as anyone else and just as susceptible to fall for herd-like behavior as anybody, this strategy works to a certain degree.

Precisely my point. Buy high because "OMG look at those past returns". Perfectly fits George Soros' concepts of fallibility ("tech" as a good label) and reflexivity (past returns drive shit ton of new money).

I reckon I should play this like Soros would: first add fuel to the fire, and then short the shit out of the dumpster fire once it becomes clear that it really is a dumpster. And the end is nigh, so keep within reach shortlists of things to short.

Too bad our salaries will suffer too. Nothing one can do about that.

Yeah, I'm not in the valley but I'm worried about a coming bubble-burst. The worst thing is it'll probably affect even those of us who don't work for vapid startups; "tech" will become a bad word instead of a good word, new initiatives even by established companies may dry up, etc. Trying to figure out if there's anything that can be done to prepare.

Diversify investments :)

It's hard for a qualified specialist to diversify his income revenue, though.

Also, with all the bubble-busts it's never total destruction. We may get a haircut to the salary, but I doubt jobs will outright disappear, or even slide into average salary levels.

"And since investors are just as stupid as anyone else and just as susceptible to fall for herd-like behavior as anybody"

Well, you're commenting in a thread about how they didn't. This is one of those instances where I read something and instantly invert it in my mind and think "that makes a lot more sense".

I already think that Uber and Slack are not really Silicon Valley: those are businessy companies but not really tech companies.

WeWork is even taking it one level further. They still have close to thousands software engineers to build... Things though.

Is that true? Then why does it repeatedly end up in the frontpage here?

>I don’t think anyone in SF or SV would ever consider WeWork to be a “Silicon Valley” company

Well it is based in New York, so it really isn't a Silicon Valley company. It's a NYC one.

The only people I know who work at WeWork are NYC people who think WeWork is a tech company

I mean, the company is based in NYC, so it's literally not a SV company.

> how many ex-FB or ex-Google engineers work there?

This sounds like an awful metric.

It really isn’t. FB/Goog compensation is still the benchmark as far as industry comp goes, so a private co really needs to be convincingly successful to attract smart, high paid engineers at top tech companies. If they can’t then it’s a completely valid signal that something is up - either comp is well below market, growth story is fishy, management is weak, or something else.

Assumption: smart engineers only care about money.

His assumption is actually that smart engineers would chase good tech, high stock price increase potential. They already have good compensation being Facebook/Google engineers.

Would you work for less if you only had to work Monday through Thursday?

Or if you could take sabbaticals at will?

Work environment makes a huge difference. My current job is pretty harmonious among the coworkers, the bosses and team-leaders are all engineers themselves or at least tech-literate. They are also very preoccupied with the welfare of employees and even kept a completely unproductive (bad fit) employee on for half a year to help him score a new job first.

The customers are almost always happy with what we produce, and while it is certainly not fast growing, the company is steadily progressing in a good direction.

This environment is worth a lot of money to me.

Stay as long as it remains like this, these places are few and far between!

Probably true for most people, people often Lie about motivations on surveys.

Assumption #2: Google/FB development practices will fit in.

It's a useful proxy metric, but not a metric to optimize for. I wouldn't want to work for a startup that focused on hiring ex-FB or ex-Google engineers, but given that a large fraction of talented engineers have worked at FB or Google, you'd expect to find plenty of them at any reputable large startup.

> large fraction of talented engineers have worked at FB or Google

I'd actually dispute that. The tech world is really, really big. There are a great many extremely talented engineers that have never worked at FB or Google, but they're also the kind of engineers that don't write blog posts or attend conferences, so they're less visible.

Your point is quite reasonable in general but the discussion was for Silicon Valley and San Francisco. My GF has worked for Microsoft, Amazon, FB and now Google (and some startups over the years). How? Well they all have big tech offices close to Palo Alto. When she worked for various startups she was an ex-MS, ex-FB etc person.

If she'd stayed in Chicago (Northwestern grad), that's unlikely. Of course those companies have outposts there, but fewer tech roles by an order of magnitude or two.

I would still maintain that the parent is correct and there is a large quantity of talented developers in SV who have never worked at FB/Google/MS/etc.

I know quite a few of them (and would like to believe I'm talented, too).

A large fraction doesn't not mean "most". 1/4 is a large fraction. 1/10 is still a large fraction. Due to the large amount of people companies like fb, goog, apple etc employ, statistically you should expect that a SV startup on the verge of not being a startup anymore employs some ex-ers. Not having any, will raise questions. This doesn't mean the startup is bad, the answer to said questions might...

My perception is that even 1/10 is vastly overstating the number of engineers in SV who work for those companies. 1/20 might even be on the high side.

Not just "work for" but "have ever worked for" which is, at this point, a much larger number.

What percentage of developers that is I haven't the faintest clue. But definitely significantly more than 10% of my friends have worked for at least one of FAAMNG. And I have a lot of non-nerd friends too.

The propinquity is insane. When my GF decided to leave MS she walked from her MS building on her lunch break to her interviews at Google and LinkedIn (LI has subsequently moved). Of course the inverse is true too: there aren't many startups in that area, except in the Landings complex (where Cygnus used to be!).

You’re missing the point, not working at FB/Google/Microsoft/Yahoo!/Amazon/Apple doesn’t mean you aren’t a talented engineer, but the fact remains, having worked at one of those companies for several years or longer is a sure fire way to get recruiters to chase you. So not having any of those folks (which recruiters lust for) and yet being a “tech unicorn” is generally not a good sign.

No, I'm not missing anything. I agree with the point that you just made, but that wasn't the point that I was replying to.

I understood what you were replying too, just feel you focused to much on being literal with the “large majority”, hence my reply. Glad we agree on the other part, so cheers!

>a large fraction of talented engineers have worked at FB or Google

citation needed

It is a great metric if you are trying to measure software innovation happening at a company. San Francisco/SV is still a relatively tight-knit community, and engineers move around a lot. A company has to pay top dollar AND have enough interesting work going on to retain top talent, or they will move on.