Submitted by Bill Blain from Blain's Morning Porridge

"I laughed and shook her hand before going home …"

I wonder if we work (or the company We, as it's called now), is it likely to cause the car crash that causes the all-powerful stacking on the Unicorn / Technology market to which we we had been waiting for so long? The spark that ignites the conflagration to restore the common sense of evaluation?

What is the EBITDA of WeWork? Whatever you want it to be pic.twitter.com/qOtttcgRBA

– zerohedge (@zerohedge) May 1, 2018

Yesterday morning, I did not have time to get into an analysis of the farago Softbank / We Work, but a number of readers came back with similar concerns.

In case you missed it: we were expecting a $ 16 billion capital injection from Softbank's Visionfund, but after funds from the Middle East Sovereign Wealth Funds (which finance Visionfund) pointed out that there was nothing technician in the financing of a real estate rental company, Softbank had to reduce his investment to 2 billion, resulting in a considerable internal face loss, and a scrabbling around presenting a story by claiming that it does not matter or change anything. Part of the answer has been the change of name from We Work to We Company in order to clarify what is really a modern tech company, We Work (sorry about We Company) …. You can put lipstick on a pig.

WeWork To Rebrand as "The We Company", the CEO says Fast Company

"We have to make sure people forget that we just lost our biggest investor." Any suggestions?

"I have it: change your name"

– zerohedge (@zerohedge) January 8, 2019

Softbank must be very disappointed. The convoluted millennial wisdom of today: the more a business loses, the more it must be worth it! On this basis, we work should and must be a screaming purchase! $ 16 billion to buy back other shareholders, finance the company to lose even more money and give a valuation of $ 50 billion.

There is a logic to the madness of the evaluations of Licorne.

Stocks that accumulate huge losses while posting zero earnings growth can be extremely helpful – especially if they create new markets and a variation of a monopoly position for themselves. That's pretty much the only reason I'm staying with Tesla – even though every one of my neurons screams something like: it's a crappy car, it can not do enough, Musk is a shell-holder … . But the reality is maybe Tesla has probably cracked the electric car. Or even Amazon – one of the most profitable companies in the world because it has recognized and seized e-commerce. I could go on … Facebook …

Other people, I'm not so sure of that. Netflix is ​​a good example: it has transferred streaming video rentals and created a whole new way of watching TV. But it's extremely vulnerable to completion – and Disney is the one I'm watching. Admittedly, Netflix makes great content … but earns a lot of money to attract subscribers and get them to watch their programs, while Disney stands out for its great content that attracts subscribers. Simple …

But We work, it's something else. This is not new. It's not innovative. But, he is very good at what he does – renting office space. I've been to the offices of We Work – and all is well. She-who-is-Madame-Blain loves them. A buddy who is a CFO in a technology company swears by them – she puts all her staff there. But she is also happy to use a Regus office for board meetings. In fact, she prefers. Everyone is aware that We Work has broken the old paradigm of short-term office renting – a market of 3 to 4 companies. It leases long-term assets and makes them attractive for the type of workforce that can be used – millennia, start-ups, makeshift workers, consultants, and so on.

The rest of the We Company troupe is purely bunkum – schools and residential life may be ambitious, but it's a total distraction. I can not imagine a meaningless life – from your home to your friends, to holidays and children, to your work space. How did we manage before We Work thought that you could have a pint with colleagues .. (Maybe I get SoftBank to finance me $ 20 bin for my new social-dynamic inter-feedback experiment center: My pub.com?)

Our goal is that We Work rent a long-term property and rent it in the short term. End of. And very dangerous.

Renting offices is nothing remarkable, innovative or fundamental. If the world goes into recession, the first components of the economy likely to be shaken are … consultants, start-up companies and SMEs. It reminds me of a German bank that I covered in the 90s. They said they were borrowing long and long term and that they were happy to take the risk because the Bundesbank was next door and so they could predict the interest rates to perfection. They collapsed and sank.

The question is: how did Adam Neumann, CEO of We Work, get everything together? Marketing is a talent. Tell people what they want to believe and they will believe it. Find the right partner even more.

The founder of Softbank, Masayoshi Son, was the perfect brand. He and Neumann prepared the assessments among themselves. He bought in the We Work pamphlet, a whiteboard, a Venn diagram in concentric circles encompassing workspace, health, sports, friends, etc. … He might have forgotten something that he would have done with anyway … and the heart of We Work was the property, Property, Property.

Nothing technical about it.

How did he fall for that? I'm sure he was very impressed by the fact that Neumann was wearing a broken finger earlier this week, broken when he surfered to 15 feet in Hawaii with a high-level surfer. Sensational. Aspiration lifestyle, and you can have it all, with free beer on Friday at We Work. I bet that Son would like to do the same thing.

How important it is to keep in mind how we work is also vulnerable to changing fashion. For the moment millennia like the shabby post industrial-chic. The advantage is that it seems anxious today and will be there again in 10 years, as We Work's leases take shape. However, if the bosses of the Millennials rent a conference room in Regus, it's because they have to impress the baby boomers who still control the purse strings. (And keep in mind, the Regus IWG working group makes money.) Toscafund gradually increased its stake in IWC, even as Regus started doing things we do, like allowing yoga pants in the office. But they do it profitably.

Who knows if we work will be another time to "wake up and smell the coffee" … In this strange, curious and difficult to understand the modern world, everything is not what it seems. There is indeed a value in the losses to build the position. There is an evolution of the company and "the Art of War" is still topical. But you can not put lipstick on a real estate bet and call it a technological paradigm shift …