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   Nathan Schneider (ntnsndr@social.coop)'s status on Tuesday, 07-Nov-2023 01:39:45 JST Nathan Schneider

   Thread: WeWork is imploding. This is a case in point about the problems of relying on venture-capital financing for everything...

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     Nathan Schneider (ntnsndr@social.coop)'s status on Tuesday, 07-Nov-2023 01:41:09 JST Nathan Schneider

     in reply to

     The point of WeWork is to facilitate access to reasonably priced, convivial office space. It has sought to apply the logic of a tech startup to the hard-to-scale dynamics of in-person communities. Its problems were exacerbated by the pandemic, but they started long before that.

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     Nathan Schneider (ntnsndr@social.coop)'s status on Tuesday, 07-Nov-2023 01:43:19 JST Nathan Schneider

     in reply to

     This is so fundamentally a category error. Probably nobody familiar with my work will be surprised to hear me say: WeWork would have worked much better as a co-op. It is a shame that we live in an economy that lacks the capacity for co-ops to access capital to do this right.

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     Nathan Schneider (ntnsndr@social.coop)'s status on Tuesday, 07-Nov-2023 01:44:19 JST Nathan Schneider

     in reply to

     If WeWork were a co-op, the point wouldn't be to deliver outsized returns to investors, it would be to meet member needs. The greatest benefits of the company would go outward to the world through its members rather than being organized for investor capture.

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     Nathan Schneider (ntnsndr@social.coop)'s status on Tuesday, 07-Nov-2023 01:45:35 JST Nathan Schneider

     in reply to

     If WeWork were a co-op, the priority could be less on making everything streamlined and uniform, but on building economies of scale where they're needed, plus local control where it is needed.

     Think Ace Hardware (a co-op), not Home Depot (a big-box chain).

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     Josh Davis (guerillaontologist@social.coop)'s status on Tuesday, 07-Nov-2023 01:47:10 JST Josh Davis

     in reply to

     @ntnsndr Yes but...you are assuming there was ever a legit, viable business model at WeWork. I'm not convinced that there was. As with Uber, I think soaking the VCs was the business model.

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     Nathan Schneider (ntnsndr@social.coop)'s status on Tuesday, 07-Nov-2023 01:47:57 JST Nathan Schneider

     in reply to

     • Scott Heiferman

     The tragedy was particularly poignant a few years ago when WeWork was shedding Meetup.com—a company it had acquired and then needed to sell off. A few of us at Zebras Unite, plus Meetup founder @heif, got together to see if we could make Meetup the co-op that it should have been all along: https://medium.com/zebras-unite/meetup-to-the-people-how-a-zebra-could-rise-from-a-unicorns-fall-cfa93d83bcdc

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     Nathan Schneider (ntnsndr@social.coop)'s status on Tuesday, 07-Nov-2023 01:50:41 JST Nathan Schneider

     in reply to

     • Scott Heiferman

     @heif The model made sense. Meetup gets revenue from its users. It is in the business of communities. A co-op model, accountable to fee-paying members, made perfect sense.

     But of course potential investors just didn't know how that would work. It isn't done. There isn't policy infrastructure for that kind of conversion, that kind of #exittocommunity. Meetup got bought by an investment fund.

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     Nathan Schneider (ntnsndr@social.coop)'s status on Tuesday, 07-Nov-2023 01:52:47 JST Nathan Schneider

     in reply to

     • Scott Heiferman

     @heif This stuff shouldn't be rocket science.

     It should be perfectly reasonable to transition a user-funded online platform to user ownership.

     It should be perfectly reasonable to have a co-op franchise of affordable co-working spaces.

     In this economy, however, VCs have to keep trying to bend their model to where it makes no sense, because investor profit maximization is the only language this system knows.

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     Nathan Schneider (ntnsndr@social.coop)'s status on Tuesday, 07-Nov-2023 01:53:23 JST Nathan Schneider

     in reply to

     When things like this happen, take a moment to consider not just what *is* happening but also the negative space of what *is not* on the table but should be.

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     Nathan Schneider (ntnsndr@social.coop)'s status on Tuesday, 07-Nov-2023 01:55:07 JST Nathan Schneider

     in reply to

     • Josh Davis

     @GuerillaOntologist There certainly can be a business model in co-working just as in ride-sharing. But as with any linear-scaled, labor-intensive, hard asset business, the margins are limited. That business model is a perfect fit for a co-op and a terrible fit for VCs.

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     Joseph Andriano (josephandriano@social.coop)'s status on Tuesday, 07-Nov-2023 01:57:41 JST Joseph Andriano

     in reply to

     @ntnsndr Very good thread. Back when I was teaching business ethics we always talked about the hockey stick growth mentality of VCs and the ethics of it.

     I’ve felt for a long time that there are so many good ideas—and so many jobs—that have been killed because investors weren’t seeing their 10x or 100x return. Small, niche products and services are important, not just whatever idea catches fire.

     Problem is access to capital, of course. We need ethical structures but also ethical investing.

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     Josh Davis (guerillaontologist@social.coop)'s status on Tuesday, 07-Nov-2023 02:50:02 JST Josh Davis

     in reply to

     @ntnsndr Have you read Hubert Horan's series on Uber's financials on Naked Capitalism? He doesn't think ridesharing has a business case even without outsized executive salaries. The Driver's Co-op is now shifting focus away from on-demand ride-sharing to paratransit, I imagine for all the reasons Horan details.

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     Nathan Schneider (ntnsndr@social.coop)'s status on Tuesday, 07-Nov-2023 03:00:15 JST Nathan Schneider

     in reply to

     • Truth Sandwich 🥪🇺🇸😷

     @TruthSandwich My complaint is premised on the lack of capital access for co-ops, which they should have more of. The co-op WeWork should absolutely be able to buy its own real estate.

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     Truth Sandwich 🥪🇺🇸😷 (truthsandwich@qoto.org)'s status on Tuesday, 07-Nov-2023 03:00:16 JST Truth Sandwich 🥪🇺🇸😷

     in reply to

     @ntnsndr

     If it were a co-op, how would it have gotten all of the money it needed to buy or least the real estate?

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     Nathan Schneider (ntnsndr@social.coop)'s status on Tuesday, 07-Nov-2023 03:02:11 JST Nathan Schneider

     in reply to

     • 🚲
     • Scott Heiferman

     @dx @heif Same way it does when a rural electric co-op gets millions and millions of dollars in financing through the Department of Agriculture for a new power plant or high-voltage lines

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     🚲 (dx@social.ridetrans.it)'s status on Tuesday, 07-Nov-2023 03:02:12 JST 🚲

     in reply to

     • Scott Heiferman

     @ntnsndr @heif My understanding of traditional funding is that investors expect a return on investment (on average) due to hyper growth building out something that can be highly valued by acquiring companies. The acquiring entities then expect to get a return on *their* investment by wringing every last cent of perceived value out of their acquisition. Such a model seems fundamentally at odds with co-ops… How would investing work with co-ops?

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     Nathan Schneider (ntnsndr@social.coop)'s status on Tuesday, 07-Nov-2023 03:02:35 JST Nathan Schneider

     in reply to

     • Xymon

     @funkaspuck which one?

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     Xymon (funkaspuck@mathstodon.xyz)'s status on Tuesday, 07-Nov-2023 03:02:36 JST Xymon

     in reply to

     @ntnsndr 😂😂😂
     Having worked for a coop that has been laying off staff left and right despite record profits, methinks this take is idealistic at best.

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     Nathan Schneider (ntnsndr@social.coop)'s status on Tuesday, 07-Nov-2023 03:03:03 JST Nathan Schneider

     in reply to

     • Xymon

     @funkaspuck Certainly a co-op structure does not guarantee human-centered outcomes, it just enables the possibility of them.

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     Nathan Schneider (ntnsndr@social.coop)'s status on Tuesday, 07-Nov-2023 03:05:22 JST Nathan Schneider

     in reply to

     • Xymon

     @funkaspuck ah yeah, we really need to democratize that beast big time.

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     Xymon (funkaspuck@mathstodon.xyz)'s status on Tuesday, 07-Nov-2023 03:05:23 JST Xymon

     in reply to

     @ntnsndr REI

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     Nathan Schneider (ntnsndr@social.coop)'s status on Tuesday, 07-Nov-2023 03:06:52 JST Nathan Schneider

     in reply to

     • Truth Sandwich 🥪🇺🇸😷

     @TruthSandwich Generally co-op financing occurs in two ways: loan debt or preferred equity, which has financial rights but not governance rights.

     In the sectors where public policy enables co-op financing in the US (agriculture, rural electrification, and credit unions), co-ops do compete quite well. The problem is that there is not adequate co-op financing capacity in other sectors.

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     Truth Sandwich 🥪🇺🇸😷 (truthsandwich@qoto.org)'s status on Tuesday, 07-Nov-2023 03:06:53 JST Truth Sandwich 🥪🇺🇸😷

     in reply to

     @ntnsndr

     Again, how? A co-op is owned by its employees, so would it need to take out some huge loan? Maybe issue bonds or something? How?

     This is the real-world reason why co-ops generally can’t compete.

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     Nathan Schneider (ntnsndr@social.coop)'s status on Thursday, 09-Nov-2023 04:27:07 JST Nathan Schneider

     in reply to

     • 🚲

     @dx Because the policy arrangements make it an appealing investment—just as the 1974 tax treatment for ESOPs made it an appealing option for many business owners.

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     🚲 (dx@social.ridetrans.it)'s status on Thursday, 09-Nov-2023 04:27:08 JST 🚲

     in reply to

     @ntnsndr How would that model be more attractive than business as usual for investors?