Twilight of the Unicorns -- WeWork ReCap

I don't think I'll have enough time for this one. I've had years to point out the dubious claims and questionable business logic of companies like Uber, Netflix,Tesla/Solar City and whoever's promising a hyperloop this week, but when I find perhaps the purest example of a 21st bullshit and hype company, the damned thing starts to collapse the moment it gets on my radar.

Breaking News: WeWork’s CEO, Adam Neumann, is said to be stepping down, a stunning fall for an entrepreneur who oversaw one of the most valuable start-ups of the last decade https://t.co/WDSkfo6zSq

— The New York Times (@nytimes) September 24, 2019

 
  Couldn't happen to a nicer guy.

After firing hundreds of staff, the WeWork CEO held a somber all-hands meeting explaining why it was a necessary move, but then trays of tequila were handed out and DMC from Run-DMC burst into the room and performed "It's Tricky" https://t.co/t9oGq8ebTb pic.twitter.com/cuq0aM1Tqi

— Tom Gara (@tomgara) September 18, 2019

Come to think about it, Adam Neumann's existence is an insult to all the hard-worker fraudsters who came before him. Back in the good old days con artists genuinely had to think about how to trick rich people. They had to have an angle.

— Matt Stoller (@matthewstoller) September 24, 2019

Tom Braithwaite points out there's plenty of blame to go around.

 Even as he elevates sanctimoniousness to an art form, Mr Neumann has withdrawn massive amounts of cash from his pre-IPO, pre-profit company and embraced huge conflicts of interest.

He has taken out $700m in share sales and loans. He charged the company $5.9m for the trademark “We”. He part-owned four properties that were leased to the company for $8m last year.

It is easy to mock Mr Neumann. But others share responsibility. To lay all the blame at his door is to fall into the old trap of seeing all unicorns through the prism of their founder-gods.

There is a board, which is supposed to provide checks and balances. In descending order of tenure: Bruce Dunlevie, a founding partner at venture capital firm Benchmark, who has been there since July 2012; Steven Langman, co-founder of private equity firm Rhône; Lew Frankfort, former chief executive of luxury goods brand Coach; John Zhao, chief executive of Chinese investment firm Hony Capital; Mark Schwartz, former Goldman Sachs Asia head; and Ron Fisher, a SoftBank director, who joined in November 2017.

The all-male composition of the board is just the most glaring example of its tone deafness. The directors signed off on all of Mr Neumann’s efforts to extract money from the company. Belatedly, the group is reversing some of the cavalier decisions and improving corporate governance as it tries to win over public investors. Mr Neumann is returning some of the payments.

Of course, the suffering won't quite be distributed equally.

The fine print is known as a ratchet, and speaks to the opaque nature of private markets and sky-high valuations. The real estate start-up’s parent company was valued at $47 billion after its last funding round from SoftBank.

In the case of the WeWork’s parent company, it was a “partial ratchet” disclosed on page 115 of its S-1 filing. If the stock price comes in below a certain price in the IPO, investors like SoftBank will receive additional shares as compensation.

If triggered, these protections usually result in only a few million dollars worth of extra shares, according to Matthew Kennedy, senior IPO market strategist at Renaissance Capital. But because SoftBank’s latest round was so large and the possible down-round was looking to be less than half of that, the provision was expected to result in the world’s largest IPO ratchet.

“As a result, the founder and employees would see their own shares diluted,” Kennedy said. “It doesn’t look good for common shareholders to see that extra dilution on top of a down around.”

We'll give Stoller the last word.

If predatory pricing were illegal, which is to say you were not allowed to run companies to intentionally lose money in anti-competitive ways, much of the bullshit counterfeit economy (Lyft, Uber, WeWork, Bird) would disappear. And it should disappear.

— Matt Stoller (@matthewstoller) September 24, 2019

Bright 2's future not 2 Bright

One of my little blogger's quirks is to make make mental notes of promised developments in stories I'm following, and to Google them from time to time to see if anything has come of them. One of these stories that caught my eye was the too-good-to-be-true roof tiles from Elon Musk. It took a while but that one finally took an interesting turn.

Another big story that suddenly got very quiet was the sequel to the Netflix film Bright. The company announced that it had been a tremendous success, bringing in unprecedented numbers. Bright 2 was announced almost immediately.

Say what you will about Netflix, it's a company that can move quickly when it wants to, and it really wanted a blockbuster franchise, so you would expect an aggressive production schedule. Instead, there were various delays and rescheduling, all handled with an uncharacteristic lack of fanfare from a company that spends billions on marketing and publicity.

And then this.

As it turns out, production was actually slated to take place earlier this year, it just had to get to delayed due to Smith's perennially packed schedule. Lucy Fry, who starred in the first Bright as the magical Tikka, spoke to ComicBook.com this week ahead of her new TV series, Godfather of Harlem, and explained why Bright 2 has been on the back burner.

"We were going to do it this year, and then it didn't happen because of Will's schedule," Fry told us. "And I really hope they do another one because I had so much fun making that movie. So, I just hope we get to do it again."

So does that mean it will be rescheduled soon, or is Bright 2 going to be sent to production hell for the foreseeable future? We asked Fry what was in store for Bright 2 going forward and, for now, she's just as in the dark as the rest of us.

"No, I don't know," she said. "I'm sorry! I wish I did know."

When they stop even pretending to want to reschedule, that's a bad sign.

When you look at Netflix's content catalog, things they own rather than merely license for the next 2 to 7 years, you see that it is awfully thin, particularly in the absolutely essential areas of children's programming where their slate of Originals consist almost entirely other people's properties, shows with legs and lots of episodes like friends, and big blockbuster franchises. Of these three, the franchises are probably the least important in terms of bottom line but  arguably the most important in terms of perceived success.

Given this, if Netflix actually believed that the Bright franchise was their chance to fill in that hole in their catalog and to reassure investors that the loss of Star Wars and the Marvel Cinematic Universe wasn't going to be a problem, the company would be doing everything in its power to get this next film out as soon as possible, and when a company is spending 10 to 15 billion dollars annually on content and another billion plus on marketing, they can do a hell of a lot.

It's true that Will Smith is a big and busy star, but he is no more big or busy than he was a few years ago, particularly after dropping out of Suicide Squad. If he and Netflix believed this franchise was really going to be that big, they probably would have gotten it done by now, it certainly wouldn't be hanging in the I-don't-know-we'll-see limbo where it currently resides.

Does that mean that Netflix lied about the viewership numbers for the first installment? Probably not though it's a possibility we should always consider. Far more likely that they were selective in the numbers they presented. Hit is not a concept that can be measured with a scalar, especially not in this context. Did people seek out the show or simply go along with the autoplay? What was the impact on churn? What about repeat viewings?  Did people show a preference for this show over other similar programs on the service?

With a major star, a massive marketing budget, and a pricing system where existing members pay no additional charge to see the movie while new members get the first month free, it is not difficult to rack up huge initial viewership numbers. Other numbers matter much more, and the people who have seen those don't seem all that eager to push ahead with this project.

Why should you care? In terms of the film itself, you probably shouldn't. But when dealing with unicorn companies, it's always good to question the official narratives.

Democracy

This is Joseph

There are two types of democracy that have been tried: direct democracy and representative democracy.  Direct democracy is most famous from Athens, a city state small enough that it was possible for everyone to gather in one place to make decisions. The more advanced representative democracy evolved to allow for geographical distance and to make discussions tractable. The downside is that it insulates specific decisions from direct participation, which creates an opportunity for corruption.  Direct democracy has the disadvantages of "mob rule" where the heat of passion can cause a large group to make poor decisions that are difficult to reverse.

So far, so good.

However, there is a new fad of mixing these two types of government, and it seems to bring the downsides of both. For example, the US has several states (Washington, California) that allow ballot initiatives to bar tax increases. This tends to have distorting economic effects and starves the state of revenue.  The UK had a referendum on leaving the UK, that created an ongoing crisis because it didn't specify how it was going to leave.  In the absence of a specific plan, all sorts of positive assumptions are plausible since you don't have to look at the fine details.

Worst of all, the representatives have to sort this out, creating situations that nobody likes and often causing no end of political headaches. And, unlike a body of representatives, which refreshes every few years, these decisions are often permanent until repealed. Like a lot of "simple" solutions, referendums create a lot of problems, unless the goal is for government to work poorly.

Just a thought for the day.

Though I have to admit it will be cool seeing Hanks driving the crawler

We've previously made the point that many, perhaps most, of the technological breakthroughs that are presented as being just around the corner as we round out the first quarter century of the new millennium are taken often unaltered from the sci-fi tropes, images, and perhaps most notably toys of the post-war era. Willy Ley models, GI Joe Spacemen and the elaborate vehicles of Major Matt Mason.

So perhaps inevitably...

Tom Hanks is headed back to outer space.

The Oscar winner is set to star in a feature film based on a Mattel action figure from the 1960s called Major Matt Mason, numerous insiders familiar with the project tell Variety. The film is set up at Paramount Pictures.

Screenwriter Akiva Goldsman, who previously worked with Hanks on “The Da Vinci Code” and “Angels & Demons,” will adapt the script from a short story about the character from Pulitzer Prize winner Michael Chabon. Mattel Films is co-producing with the studio.

Health Insurance Addiction

This is Joseph

This exchange on twitter was surreal:

So, first of all, let me say for the record that there are a lot of drugs that cost more than $4 out of pocket. This is in a market with very little price transparency. There are going to be a few cases you encounter where an insurance plan charges for a medication than self-pay. But the effort to identify them is likely to be extremely hard.

The other issue is costs in the US are very high, in general. I had to self-pay for a medical appointment in Canada recently and it was $50 CAD. Fifteen years ago when I did this in Seattle it was $275 USD. For precisely the same reason: getting an antibiotic for an infection with about 10 minutes of medical contact. There is a reason people are terrified of having a major exposure to health care costs.

It is also the case that I don't think an open market in health care has ever been tried in the United States in the modern era. Licensing and immigration rules mean that foreign and self trained medical doctors cannot rush into this lucrative market. Prescriptions are held by gate-keepers. Nobody can self-treat an infection, even if they manage to guess correctly what is required. Hospital emergency rooms are closing and there is not an emerging low cost substitute (a sign of a market that is not open). Those that remain are now handing out "surprise bills", even to those with insurance.

This is not to say that single payer is a miracle solution. In a system like this it insures big losers all over the place and I don't think that can be overlooked.  But the idea that the problem with the current system is "insurance" seems like a bad one unless there is a very radical libertarian reform. I would be interested in seeing such an approach, but I suspect that market forces would be crueler to the health care industry profits than any government regulated approach.

Anyway, a tweet strength that brought me back from retirement.

Michael Hiltzik eviscerates WeWork's business model.

Hiltzik has always had a gift for seeing through bullshit narratives of transformation and disruption. Here he takes a hard look at WeWork and finds that it's even worse than we thought. 

The key point to keep in mind about WeWork, when the baroque deal-making and new age blather is backed out, is that its business model seems almost to be begging to blow itself into smithereens. Boiled down, it amounts to WeWork acquiring office space in bulk via leases with an average term of 15 years, and subleasing it out via tenant contracts (excuse me, “memberships”) with average terms of 15 months. WeWork acknowledges that “in many cases, our members may terminate their membership agreements ... upon as little notice as one calendar month.”

Aficionados of economic history will recognize that the mismatch of long-term liabilities and short-term assets underlies pretty much every financial crash ever, including the crash of 2008. In this case, a downturn could result in WeWork’s tenant base evaporating, leaving it on the hook for lease obligations it estimates at $47.2 billion. WeWork tries to put rouge on this ogre by stating that in a downturn, after all, the cost of leases and construction will be lower.

Real estate experts unsnowed by WeWork’s touchy-feelism don’t buy this. One is the Chicago-based entrepreneur Sam Zell, who told CNBC this month that he had invested in a similar subleasing company once and has the scars to prove it. “Every single company in this space has gone broke,” he said. “Why is this any different?” During the period he owned Tribune Co., then the parent of The Times, Zell may have shown himself to be singularly maladroit as a newspaper proprietor, but there’s no point pretending that he doesn’t know real estate.

Nor is WeWork’s model anything new. Back in the 1970s, for example, there was Los Angeles-based Attorneys Office Management, which provided small-time lawyers with offices equipped with receptionists, clerical staff and law libraries they couldn’t afford on their own. The spaces were known as “Fegen Suites” after the firm’s chairman, Paul Fegen (pronounced “fee-jun”), an attorney. But the company went bankrupt in 1983 during a real estate crash. Fegen was later disbarred for mishandling several client accounts and has since resurfaced as a professional magician.

It’s not entirely inconceivable that WeWork has broken a code that remained opaque to Fegen and the real estate types familiar to Zell. Neumann certainly wins plaudits as a salesman. As my colleague Roger Vincent reported in May, some big office space developers have taken a look at WeWork’s business model and done it the ultimate compliment of copying it — offering tenants more flexible leases and occupancy amenities.

That’s not great news for WeWork, because it underscores that in real estate, there’s nothing new under the sun, or at least nothing that can’t be replicated. Indeed, even without competition from old line real estate firms, WeWork faced competition from other venture-funded office rental firms.

Tuesday Tweets

Column: WeWork carries Silicon Valley's 'unicorn' craze to its absurd limits https://t.co/enA9TGpcG5

— Michael Hiltzik (@hiltzikm) September 15, 2019

Some “great” news from Vietnam. pic.twitter.com/s7tGK8aGRc

— Matthew Yglesias (@mattyglesias) September 15, 2019

MIT Built a Theranos for Plants https://t.co/8woiTWSIGX via @gizmodo

— Mark Palko (@MarkPalko1) September 13, 2019

This is telling on so many levels. https://t.co/3zKGullJcD

— Mark Palko (@MarkPalko1) September 12, 2019

 

Some “great” news from Vietnam. pic.twitter.com/s7tGK8aGRc

— Matthew Yglesias (@mattyglesias) September 15, 2019

Back in the pre data scientist days, I used to complain about how difficult it was explaining to people what a statistician did. I had no idea how good I had it.

— Mark Palko (@MarkPalko1) September 15, 2019

 

Without trying to, I've found myself on a lot of right-wing mailing lists. This one, warning that Democrats are trying to turn America into [scary music] California had me doing a bit of research. 1/ pic.twitter.com/A22PFdOvGh

— Paul Krugman (@paulkrugman) September 14, 2019

And finally, there's a metaphor here somewhere.

Self destructing kapla structure with dominos pic.twitter.com/GUn5jULcBJ

— Buitengebieden (@buitengebieden_) September 15, 2019

Four years ago (more or less) -- Fringe candidates

By this point, it has been widely acknowledged that the coverage of the 2016 campaign by the mainstream press was bad. There were certainly exceptions -- The Washington Post did exceptional work and there were other bright spots as well -- But the overall story is one of distractions, triviality, unexplored leads, and disastrous results. This seems like a good time to look back at that coverage and ask ourselves what the press has learned and what it hasn't.

Recently, Marianne Williamson, the very definition of a fringe candidate, was the subject of a slew of puff pieces from The New York Times not to mention an in-depth profile from The New Yorker Radio Hour. Andrew Yang, though not a fringe candidate is certainly a marginal one, yet he too has been receiving a disproportionate amount of coverage lately.

How does this compare to the handling of marginal candidates in the last presidential election?

Friday, June 5, 2015

The internet has made historical revisionism so much easier

[UPDATE: Brad DeLong found an arguably more embarrassing example from the National Journal.]


This may be the best example of New York Times political reporting you will see you all day.

It started as a standard narrative journalism/puff piece. Amy Chozick and Trip Gabriel used a handful of anecdotes and a couple of well-received speeches to build a breathless account of political underdog Carly Fiorina surging toward the lead.

Hack political writers love this narrative. They also gravitate toward positive stories about candidates with whom they are comfortable. When I say "comfortable" I am talking about culture not politics. I will try to back this up in future posts, but I have long argued that left/right biases are far less common than more significant biases involving class, race, religion, region, education, etc. While the New York Times probably disagrees with most of Fiorina's politics, they are more than comfortable with almost everything else about her, from her prominent family to her CEO background to her wealth and extravagant lifestyle.

So far, all of this is just another day at the office for the New York Times election beat. Soon after the piece ran, however, people started to notice that the writers had really buried their lede. Deep in the story, it was revealed that Fiorina's surge was not quite as substantial as the headline suggested.

From paragraph 8 (as pointed out by Duncan Black):

While supporters in Iowa noted that she had doubled her standing in state polls, it was a statistically insignificant change from 1 percent to 2 percent, according to a Quinnipiac University Poll released May 6. (That may seem piddling, but the same poll had Mr. Santorum, who won the Iowa caucuses in 2012, also at 2 percent, while 5 percent supported Mr. Bush.)

It is one thing to have a paragraph in the middle of your story that completely undercuts your premise; it is quite another to have people point out a paragraph in the middle of your story that completely undercuts your premise. A quick rewrite was definitely in order.

The resulting headline doesn't make a lot of sense -- if the polls are a reflection of the state's voters, Iowans appear to be swoon-shrugging over Fiorina -- but it does partially inoculate the story from further mockery.

Of course, the NYT has standards. They don't just rewrite a published story without even acknowledging it. The original headline is right there at the bottom of the page.

In small print and pale gray letters.

Shaw on dirty money

Not saying I agree with GBS on this (never entirely sure that he agrees with himself), but it does seem relevant to some recent debates.

Doesn't read Major Barbara anymore?



From Wikipedia:

An officer of The Salvation Army, Major Barbara Undershaft, becomes disillusioned when her Christian denomination accepts money from an armaments manufacturer (her father) and a whisky distiller. She eventually decides that bringing a message of salvation to people who have plenty will be more fulfilling and genuine than converting the starving in return for bread.

Although Barbara initially regards the Salvation Army's acceptance of Undershaft's money as hypocrisy, Shaw did not intend that it should be thought so by the audience. Shaw wrote a preface for the play's publication, in which he derided the idea that charities should only take money from "morally pure" sources, arguing that using money to benefit the poor will have more practical benefit than ethical niceties. He points out that donations can always be used for good whatever their provenance, and he quotes a Salvation Army officer, "they would take money from the devil himself and be only too glad to get it out of his hands and into God's."

I always used pith helmets in my version, but other than that...

Christopher Ingraham is a Washington Post writer who recently wrote a memoir about moving his family to a small town in Minnesota. He makes a lot of good points but this one actually echoes something I've been complaining about for a couple of years now using basically the same language.

You know, I think a big problem with a lot of coverage of rural and small-town places is we often just send reporters in, and they go on these kind of safari expeditions - right? - and they come back a day or a week later with this, you know, the secret knowledge of these long-lost rural tribes.

And I think that kind of reporting and storytelling, it really enhances these supposed divisions between small-town America and everywhere else. And I hope if this book does anything, it demystifies small towns and rural America.

A lot of commentators have complained about these "diner stories" but the main objection often seems to be that journalists deigned to talk to the hicks. Yes, I realize that rural Americans are a relatively small group, but other, much smaller yet more affluent segments get considerably more attention.

I find these pieces so infuriating because they are shallow, simplistic and patronizing. They will give you no insights into the politics or culture of the regions. They certainly won't help you see where things are going.

Eric Levitz: "On Climate, Sanders and Warren Must Go Nuclear"

At the moment, the debate about the biggest problem facing our planet is centered on a masturbatory exercise over the appropriate tone to use when discussing the crisis, as if finding the right wording was either a necessary or sufficient condition for solving a problem. We do not have time for this.

This, on thee other hand, we should make time for. You don't have to agree with Levitz here, but you need to hear him out.

To honor its commitments under the Paris Agreement, the U.S. will need to slash its carbon emissions by at least 2.6 percent a year, every year, between now and 2025. Our nation has never come close to decarbonizing at that rapid of a pace. What’s more, to keep our promise — without making life worse for ordinary Americans — we will need to achieve such unprecedented emission cuts while sustaining economic growth and political stability. Of the United Nations’ 193 member states, 192 have never pulled off anything like that.

But France has. In fact, it pulled off something better: Between 1979 and 1988, the French cut their carbon emissions by an average annual rate of 2.9 percent. Over that same period, France reduced the carbon intensity of its energy system by 4.5 percent, by far the largest decline any country has achieved in a single decade. And it did all this without abandoning economic growth, or having to found a sixth republic, or even seeing its streets vandalized by anarcho-populists in yellow jackets.

Given the scale of this success — and the dearth of other precedents for rapid decarbonization — you might think that the French model would boast a central place in the Democratic Party’s 2020 climate debate. If so, you would be badly mistaken. France’s energy policy in the 1980s may be an exceptionally encouraging precedent, but it was also a centrally planned energy transition that involved replacing the bulk of that nation’s electricity providers with state-owned nuclear power plants. And that is an ideologically displeasing model for centrists and (some) leftists, alike.

...

Nuclear power plants currently meet about 20 percent of America’s electricity needs, making it by far the largest source of non-carbon electricity in our country. As we’ve seen, nuclear energy was responsible for the most successful decarbonization effort in recorded history. The UN Intergovernmental Panel on Climate Change (IPCC) has identified four model pathways for avoiding more than 1.5-degree warming. Three involve increasing nuclear’s share of primary energy provision by between 150 and 500 percent, while the other envisions keeping its share about where it is now. Sanders and Warren defend the expansiveness of their climate agendas on the grounds that the IPCC’s findings demand nothing less. And yet, their ostensible support for phasing out nuclear is antithetical to that organization’s own recommendations (as is Sanders’s opposition to investing in carbon capture).

It is extremely expensive and time-consuming to build new nuclear power plants. Thus, one can reasonably insist that the necessary funds would be better spent on other green initiatives. But there is no credible argument for decommissioning existing plants. And if the crisis is as severe as Sanders, Warren, and the United Nations suggest, then there isn’t really a credible argument against throwing at least some public capital at “Hail Mary” advanced nuclear technologies like small-scale reactors that could — at least theoretically — deliver safe, affordable nuclear energy at scale. The technology is simply too promising to ignore, especially considering the current limitations of renewables. As science writer (and democratic socialist) Leigh Phillips notes, “Nuclear power has an emissions intensity as low as that of onshore wind … but unlike wind can power hospitals 24/7.”

Tuesday Tweets

The real kicker is that Uber loses $5 billion a year. https://t.co/WI8HW60Ngu

— Bret "Gregor Samsa" Stephens (@agraybee) September 6, 2019

NPR has a unique gift for being both submissive and patronizing at the same time

— Mark Palko (@MarkPalko1) September 4, 2019

As you might guessed, I'm going to push back on the importance of this one.

The low-density bias of the our electoral system gives Rs a mighty structural advantage, which they simply can't lose as long as they dominate low density areas. It makes it easier for them to win, period.

— Will Wilkinson 🌐 (@willwilkinson) July 12, 2019

“Investigating companies for seemingly political reasons makes a mockery of the idea that the US has a government of laws, not thugs.” My column: https://t.co/g2UijWT0aR

— Joe Nocera (@opinion_joe) September 6, 2019

And we'll be coming back to this one as well.

Bernie Sanders and Elizabeth Warren are right that the climate crisis demands a radical break from discredited ideologies -- but that includes the left's anti-nuclear absolutism. https://t.co/s0mDfYOB1t

— Eric Levitz (@EricLevitz) September 5, 2019

This is what makes @ewarren formidable.

Unlike some of her opponents, she doesn't get sidetracked by a straw man. https://t.co/XGa99u4Gpm

— Arindrajit Dube (@arindube) September 6, 2019

Of course, Nissan never bolted wheels to the sides of a Leaf and ran it down a tunnel, so they're still behind on that front

There was from the beginning a tendency to cut Elon Musk considerable slack for the bullshit because it seemed to be in the service of good causes such as space exploration, electric vehicles, and solar energy, but it was recognized as bullshit. When you got past the fanboys, serious, knowledgeable people never bought into the narrative. In emails and private conversations, they’d describe Musk as a “flake,” point out his habit of taking credit for other people’s work, remind you that most of the breakthroughs consisted of incremental improvements on decades-old tech (much of which had been liberated from TRW).

Eventually it became apparent that turning a blind eye to even seemingly benign crap can have consequences, particularly when it enables a charismatic con man with a messiah complex, but by the time the dangers became evident, the myth was too entrenched and (just as importantly) too well constructed. The lies reinforced each other. Dating back to PayPal, every accomplishment of his career had been inflated, so that now each new impossible claim was followed by a list of all the impossible things Musk has done before.

One of the key steps for the building of this myth has been equating electric vehicles with Tesla. The rise of the EV is a good thing in the short term and an inevitability in the long term (barring some big and completely unexpected breakthrough). Musk’s company made some important contributions in terms of technology and, more importantly, brand (all joking aside, opening the midlife crisis market to  EVs was a big deal)

But all too often the press treated Tesla as the EV company. Nissan (in some ways just as major a player) went largely unmentioned. Models from other companies that predated Tesla were ignored, as was ongoing work across the industry. All of this created the impression that Musk and associates had an enormous lead which helped push the stock price into the stratosphere and helped shore up the myth of the “real life Tony Stark.”

From Michael J. Coren:

    Yet Tesla’s ambitions will require more than owning the US market. Overseas, the Nissan Leaf remains the world’s most popular electric car. It has racked up 400,000 in cumulative sales, Nissan announced this March, and is on track to hit half a million next year. Since 2013, the Leaf has averaged about 50,000 in annual global sales, a number that surged to more than 85,000 in 2018.

    Unlike Tesla, Nissan has manufacturing plants around the world. Three of them, in Japan, England, and the US (Tennessee), produce the Leaf, allowing the hatchback to be modified for local markets. To keep costs low, much of the tooling and assembly lines exist in shared facilities. That’s kept the Leaf’s price at $29,990 for a standard 2019 model, and as low as $11,000 for a used model from 2015.

    While Tesla flaunts its style, Nissan owes its success to those low prices and functionality. The dynamic playing out in the global EV market resembles the war over smartphones. Apple has grabbed the high-end of the market with powerful, high-priced iPhones running its iOS operating system, while Google’s Android owns most of the rest. There’s a stark domestic and international split in market share. In the US, Apple has about 40% of US mobile operating systems. Overseas, Android commands 76% thanks to its functional, low-cost appeal (eclipsing Apple’s 22% share).

Of course, being the Apple of EVs would normally be a good thing, but when expectations are this high, any reasonable outcome is a letdown.

Thinking about how times have changed

This isn't a sentiment you associate with Southern Rock these days.





Hand guns are made for killin'
They ain't no good for nothin' else
And if you like to drink your whiskey
You might even shoot yourself
So why don't we dump 'em people
To the bottom of the sea
Before some ol' fool come around here
Wanna shoot either you or me

Mr. Saturday night special
You got a barrel that's blue and cold
You ain't good for nothin'
But put a man six feet in a hole



Songwriters: Edward C. King / Ronnie Van Zant
Saturday Night Special lyrics © Universal Music Publishing Group

We need to talk more about WeWork.

God knows, we've said our share of mean things about Uber and Lyft and Netflix and Tesla, but for all of the confusion and myth-making that drove those valuations to their current sky high values, even I have to admit that there was at least the possibility of the promise of something big behind each of those companies. The rise of the smartphone made new models of personal transportation possible. We can argue whether the dominant business model will be all-you-can-stream or a la carte or heavily tiered or advertiser-driven, but there is little question that more and more video viewing will be done online. The future of cars is both electric and autonomous.

By comparison, you almost have to admire the pure distilled bullshit of WeWork. There is nothing to ground this business model, no recent or even promised technological advance, no big innovation, nothing but the CEO babble and Ted Talk happy speak so in vogue in Silicon Valley these days.

Here via Brad Delong, Ben Thompson spells out the inevitable corruption and self-dealing that goes with this sort of scam.
 

The tech industry generally speaking is hardly a model for good corporate governance, but WeWork takes the absurdity an entirely different level. For example: WeWork paid its own CEO, Adam Neumann, $5.9 million for the 'We' trademark.... WeWork previously gave Neumann loans to buy properties that WeWork then rented. WeWork has hired several of Neumann’s relatives, and Neumann’s wife would be one of three members of a committee tasked to replace Neumann if he were to die or become permanently disabled over the next decade. Neumann has three different types of shares that guarantee him majority voting power.... Neumann has already reportedly cashed out 700 million of his holdings via sales and loans. Everything taken together hints at a completely unaccountable executive looting a company that is running as quickly as it can from massive losses that may very well be fatal whenever the next recession hits.... The WeWork bull case and bear case... both are the logical conclusion of effectively unlimited capital. The bull case is that WeWork has seized the opportunity presented by that capital to make a credible play to be the office of choice for companies all over the world, effectively intermediating and commoditizing traditional landlords. It is utterly audacious, and for that reason free of competition. The bear case, meanwhile, is that unlimited capital has resulted in a complete lack of accountability and a predictable litany of abuses, both in terms of corporate risk-taking and personal rent-seeking...