Woah. When did they start charging for parking at the casinos on the strip?
I lived in Vegas from 2009-2012, and I used to always park at the Bellagio whenever I took tourist friends to the strip. My mom used to always tell me "Yeah, parking is free because the casinos pay for it!" Sad times now that that's no longer the case :(
At least the casinos' tax revenue still makes up for a lack of a state income tax...right?
I used v4 back in 2012-2013 (when I was in college). They switched to nYNAB a year or so after, and I hated that everything was "in the cloud" and there was an option to "automatically import transactions from my bank account." I was like, what? I thought YNAB was about manually tracking my balances so I always knew what was going on.
But I got back into budgeting in mid 2018, and I actually love all of those features. imo the $7/mo I pay is well worth the auto-transactions, auto-syncing across all devices without dropbox, ability to link several different accounts (my checking acct is with a small local credit union, I have a brokerage account, a personal loan I'm paying down, etc.).
I love strongtowns. Such an interesting blog rich with data and thought-provoking ideas.
He brings up a few ways to measure "Infrastructure Obesity," but really it boils down to over-investment but under-utilization, aka malinvestment.
Some might argue that "well eventually this infrastructure would be used" but he makes a good point that bloated infrastructure "impede(s) social connections" so people will move away or not move into these areas, and entrepreneurs take notice when foot traffic declines. Then these entrepreneurs decide not to expand to areas with increasing infrastructure obesity. Like a positive feedback loop.
The wannabe social psychologist/economist in me would've loved if he included some stuff related to game theory/tragedy of the commons, e.g. Braess' Paradox. It's probably not as impactful in cities where populations are declining, but Braess' paradox posits that adding capacity to a system (like an extra road) actually impedes (traffic) flow, rather than facilitating it.
In theory, this is because the aggregated "normal route" across all drivers in a system (i.e. a morning commute) eventually reaches a Nash Equilibrium. Adding capacity changes the "normal route," so drivers will have to re-adjust and discover new optimal routes, which has cascading effects to other drivers, etc. etc.
This is fascinating to me because conventionally, you'd think "Extra capacity = more people on the road = better throughput" but we're seeing evidence that maybe this isn't the case. Would love to hear yc's thoughts on that, though.
This is actually quite interesting, because the timeline for the massive inflation in the US during 1980s (which was solved by Volcker, RIP) roughly lines up with the upswing in labor participation rate among women: https://i0.wp.com/www.brookings.edu/wp-content/uploads/2017/...
Of course correlation =/= causation, but perhaps it was one of the contributing factors to the 10+% inflation rates of the late 70s early 80s.
Yup, precisely right. They marketed the business as a tech company, hoping that future investors would overlook years of unprofitability to get in on the next rapidly-growing tech company.
Oh don't worry about those losses, we're the next Amazon. Except bigger than Amazon, because we're not just a company, but a "state of consciousness." btw did I tell you our CEO is going to become the world's first trillionaire? It's all amazing news and I hope you join our family
> How does anyone justify WeWork as a tech company?
Straight from the horse's mouth (We Co's S-1 Filing, pg.2):
"Technology is at the foundation of our global platform. Our purpose-built technology and operational expertise has allowed us to scale our core WeWork space-as-a-service offering quickly, while improving the quality of our solutions and decreasing the cost to find, build, fill and run our spaces. 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. As a result, we are able to deliver a premium experience to our members at a lower price relative to traditional alternatives."
Yeah, I'm definitely a strange person but I want to say that me and my coworkers are largely insulated from the negative effects of the WeWork debacle. We always knew working in a WeWork was a temporary thing, maybe a max of 2 years in this space before we have our own office space to work from.
I don't revel about the 2.5k employees that lose their jobs at all. (Not that I befriended many of the WeWork employees, but they're very nice people and I would hate to be in their situation, especially this close to the holidays.)
I revel about the irrational exuberance from the upper echelons of management/banking. I revel that Neuman, Softbank, JPM, Goldman Sachs, etc. are now getting called out for trying to dress up a pig in lipstick and sell it to the public at 10x its current (perhaps, "real"?) valuation.
Your last paragraph though - it's hard to make the determination that "WeWork's meltdown is leading to corrections in earnings growth/investment from tech companies." Not necessarily true imo, earnings growth was bound to correct sometime soon, especially with economic data pointing that demand is starting to slow (which is why central banks across the world are easing rates).
You're right about "technically possible but probably not gonna happen." The part you're missing is - although the market might have access (and be able to) parse data in an "informed" way, that doesn't mean all market participants will react to that data in the same, rational manner.
You're right. But man, they tried really hard to sell it as a tech startup. From their S-1 filing (emphasis mine):
"We pioneered a “space-as-a-service” membership model that offers the benefits of a collaborative culture, the flexibility to scale workspace up and down as needed and the power of a worldwide community, all for a lower cost. Through iterative product development at scale and significant investment in technology infrastructure, we have demonstrated that we can build better solutions for less money. We are changing the way people work globally and, in the process, we have disrupted the largest asset class in the world—real estate."
Edit: I just noticed that it continues with a MUCH better statement on the next page:
"Technology is at the foundation of our global platform. Our purpose-built technology and operational expertise has allowed us to scale our core WeWork space-as-a-service offering quickly, while improving the quality of our solutions and decreasing the cost to find, build, fill and run our spaces. 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. As a result, we are able to deliver a premium experience to our members at a lower price relative to traditional alternatives."
So uhh, honest question. What were they trying to build with those 1,000 engineers/designers/ML scientists? The company literally leases (not buys) office space to then lease out to their customers. I never understood why this business model needs "significant investment into Tech infrastructure"
WeWork was way overvalued because they sold themselves to the public as a "tech company" that dabbled in real estate, not a real estate company that dabbled in tech. I mean, they had a lot of the same characteristics (such as crazy revenue growth while operating at a loss), but let's be clear: WeWork isn't a tech company, they're a real estate company in "tech clothes."
To circle this back to the parent comment - I still don't think they'll be profitable after drastically cutting spending. They might be able to keep the company afloat for a little bit. But their spending cuts target parts of the business that aren't under their "core competency" which is leasing office space on a short-term basis. So for example, they ax'd plans for WeLive or WeSchool (or whatever their kindergarten plans were called) as part of their turnaround plan.
WeWork has something like $17B in long-term lease liabilities across major cities in the US (and UK, I believe). They signed these long-term (10+ years I believe) leases with hopes of turning around and leasing them back to freelancers/businesses on a short-term (3-6mo) basis. If the economy slows down and demand for this variable-term space dries up, WeWork will still be on the hook for those $17B leases.
I might be revealing too much here, but I work for a company that leases space from WeWork, so I go to a WeWork every day and in the evenings I read about its eventual demise. (Might explain why I'm so morbidly curious about this company)
The running joke in my dept is they're going to start cutting back on amenities (watered down mouthwash, less cut up fruit in the fruitwater, etc.) and we won't see as many maintenance people as we did six months ago.
The private phone booths are still boarded up because of the formaldehyde issue (our booths weren't "affected" but they're still closed off). There was a meeting room with a couch that had bedbugs in it, so that was closed off for a couple weeks. We refuse to use that meeting room now.
WeWork has just had its problem after problem in my time working here. We're not exactly scared (because we're a larger company and could probably just telecommute while our office is moved to another building). But we have noticed that the WeWork associates have become less chipper over time.
>In the end this will stop future cases of investors trying to jam garbage companies into the public markets, essentially stealing money from retail investors who don’t know better
History doesn't repeat itself, but it rhymes. I wish I could have hope that this wouldn't happen again in the future (banks selling an overvalued business to the public markets via IPO) But really, this has happened before and it will happen again. Human irrationality knows no bounds.
I don't have the sources for this atm, but I heard last night that SoftBank doesn't actually have the $9.5B it needs in funding to secure its controlling stake in WeWork. Which means the guy hasn't gotten his $1.7B yet.
So Softbank needs funding to buy out the controlling stake in WeWork. They're reaching out to Japan's largest bank, Mitsubishi UFJ, for that $9.5B. As of last night, MUFJ refused to lend money to Softbank if they intend on using it as a rescue package for WeWork.
Now Softbank is in a conundrum. This morning, I read that they're trying to figure out a way to slash Neuman's golden parachute from that $1.7B figure.
So true. I've heard for years that the size of our cereal boxes/chip bags/candy bars are decreasing, ever so slightly, while the price remains the same.
Reminds me of that whole frog-in-a-pot thought experiment. If you toss a frog into a pot of boiling water, it jumps back out immediately. But if you put it in a pot of room-temperature water, and slowly raise the temperature, the frog gets acclimated slowly and doesn't notice that sooner or later, he's being boiled alive.
