Office-sharing start-up WeWork looks to Southeast Asia for expansion

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Office-sharing start-up WeWork looks to Southeast Asia for expansion

Eustance Huang
June 6, 2018

Office-sharing start-up WeWork is looking to expand within Southeast Asia.

The New York-based company, known for spacious buildings consisting of private offices and desks that it rents to freelancers, first entered the regional market last December with a Singapore branch. Since then, it's opened seven more locations in the city-state in addition to three sites in the Indonesian capital of Jakarta.

More buildings are in the pipeline for Singapore, with Bangkok up next, WeWork Managing Director of Southeast Asia Turochas "T" Fuad told CNBC's Dan Murphy on Wednesday. Buildings in Manila and Kuala Lumpur could follow, he said.

The firm already boasts a strong presence elsewhere in Asia, having entered China and South Korea in 2016 followed by India last year.

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Specuvestor: Asset - Business - Structure.
why not "small office, home office"? SOHO? really reduces the overheads! Big Grin
1) Try NOT to LOSE money!
2) Do NOT SELL in BEAR, BUY-BUY-BUY! invest in managements/companies that does the same!
3) CASH in hand is KING in BEAR! 
Just another venue for VBs to criticize the amount of insane PE at work, these days.

The controversy over WeWork’s $47 billion valuation and impending IPO, explained

A critical theme about WeWork is that it’s not “really” a technology company, which is mostly true, but it’s certainly a company whose business is boosted by big technological trends.
Banks rent our money short term to lend long term to others, and earn the differential. WeWork rent spaces long term to lend short term to others, and earn the differential.

How WeWork is trying to justify its tech company valuation

“Space as a service”
Banks actually seldom take outsized duration risk. CDOs and money market funds were also partially hit by this ALM mismatch during GFC when short term borrowing froze, but banks were not directly hit by the spike in short term rates per se. Banks tend to take more credit risk minus credit provision to make a spread over cost. This perception of borrow short lend long is generally due to the very cheap short term retail CASA deposit which in Singapore only full bank license can do. Hence the biggest fear of retail banks is actually second order impact of loss of confidence resulting in bank run. Merchant banks generally does not have such ALM risk; what killed them was the credit implosion.

WeWork I think is more like a wholesaler than taking duration risk. Meaning if there is a choice of renting long term vs short term it would take short term. But most master leases are long term so it’s a structural inevitability and means the business risk of leasing long sub leasing short is very real due to the duration mismatch.
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward

Think Asset-Business-Structure (ABS)
From Goldman Sach's original 67bil valuation proposal to 47bil (last valuation based on Softbank's purchase) to 20bil (1 week ago) to current 10bil, it is a big fall from expectations. Generally, IPOs are biased towards the sellers whom control the information and timing but it seems like it doesn't work for WeWork this time around.

The market is also not as crazy as we thought it is.

WeWork considers dramatic valuation cut in IPO

[NEW YORK] WeWork owner The We Company may seek a valuation in its upcoming initial public offering of between US$10 billion and US$12 billion, a dramatic discount to the US$47 billion valuation it achieved in January, people familiar with the matter said on Friday.

Were the We Company to press on with the IPO at such a low valuation, it would represent a major turning point in the venture capital industry's growth over the last decade, that has led to the rise of start-ups such as Uber Technologies Inc, Snap Inc and Airbnb Inc.
Nothwithstanding the cash burn, I thought the behaviour of the founder may also raise a few eyebrows or even a red flag from investors .....or is it because it's a start-up ?

How WeWork spiraled from a $47 billion valuation to talk of bankruptcy in just 6 weeks
Dakin Campbell, Business Insider US  
September 28, 2019

- Just six weeks ago, co-working giant WeWork was the nation’s most valuable tech start-up.

- Then it filed its S-1 registration for an initial public offering, disclosing a bevy of conflicts of interest and mismanagement by its magnetic and eccentric co-founder, Adam Neumann.

- Investors, reporters, and analysts, chastened after seeing Theranos revealed as a massive fraud and watching Uber fail to live up to the hype, didn’t let another visionary founder pull the wool over their eyes.

- Neumann’s IPO dreams crashed and burned, and now he’s been ousted as CEO and observers are wondering if WeWork can avoid bankruptcy.

- Based on reporting from Business Insider and other news outlets, this is the story of the six weeks that almost ended WeWork.

At 7:12 on a mild late-summer morning in New York City, WeWork’s registration papers hit the Securities and Exchange Commission’s website. The filing, called an S-1, was expected. It was a crucial step in what had been up to that point an exquisitely choreographed march toward an initial public offering for the tech world’s most highly valued start-up..........

It often seemed like a real estate company posing as a higher plane of consciousness. Together with his wife Rebekah, a devout follower of Kabbalah and a cousin of Gwyneth Paltrow, Neumann cultivated a sort of tech-bro mysticism, combining grueling hours and always-on expectations with a free flow of alcohol and hippie wisdom. Rebekah started a private elementary school and played up WeWork’s community of tenant-workers.

Adam walked around the office barefoot. He once decreed that no one should eat meat in the office or purchase it on company expense accounts. He also partied hard: Neumann was known for drinking Don Julio 1942, the $149-a-bottle tequila. And he smoked marijuana in the office, at his various homes, and elsewhere, people who’d seen him smoke it told Business Insider......

Son and Neumann had met for less than 30 minutes back in 2016 before Son decided to invest in WeWork. He would eventually pledge $10.7 billion, either from SoftBank’s coffers or those of a separate vehicle established by Son called the Vision Fund, which raised $100 billion from backers including Saudi Arabia. After those investors balked at putting in any more money (Vanity Fair reported that Neumann arrived late and appeared hungover for an investor meeting), it was SoftBank’s $2 billion investment round in January 2019 that secured the WeWork’s most recent $47 billion valuation.......

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This is probably normal. VCs are loath to offending founders because the circle is not too big - with alot of money chasing just a few (eventual) unicorns. If you cross a founder, you probably spolit your name and burn a few many bridges. Angel investing is about maximizing your coverage.

But Softbank definitely seems to be throwing more good money after bad.

Why WeWork founder Adam Neumann is getting $1.7 billion to leave the company he ran into the ground

This isn’t normal, but nothing about WeWork is normal.
Of all the unicorns, wework probably has the worst business model and unlike GRAB or UBER, it is unlikely to unseat the incumbents.
There is not much tech to improve the efficiency in what they do as well, which is essentially leasing office space. While the future maybe in flexible work spaces, wework probably wont be making too much of a difference, unless they can find trillions of dollars to own the buildings they lease.

A valuation of USD47B that is plucked from the air is now vanished into nothingness.
WeWork skipped April rent payments for some U.S. locations
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