Ed Trashes Co-Working Spaces



Posted by Ed 3 mths ago
Following an enormous expansion into Hong Kong (fueled by the gargantuan-esque surge of cash that is bubbling around the world and being invested into 'exciting' businesses without any chance of ever being profitable)..... co-working spaces are massively oversupplied in Hong Kong and are unable to fill their desks.

After all there are only so many 'entrepreneurs' who do not have the cash to rent a proper office and who live to hang about drinking low fat lattes and playing ping pong all day long ....

And now the chickens are coming home to roost.

Chinachem has launched a lawsuit against KR Space for HKD500,000+, a co-working outfit that walked away on a lease for 5 floors in a Chinachem building in Wanchai...

KR Space raised USD92M in funding just over a year ago ---- in what is likely to be their last round of financing .... before they bite the dust....

And here we have a most ridiculous statement from the CEO TheDesk :

“It is a bit more difficult to make money from this business model than investors and operators thought, and now we see funders showing less interest in the sector. Although, they are not backing off totally,” said Lau.“[Co-working’s] money-burning model needs at least another few years for it to be profitable in Hong Kong.

Interpretation --- this business model is one of burning more money --- leasing more space --- then raising more money --- burning through that... then leasing more space (that sits half empty).....

There is nothing new here (Regus Servcorp etc... have been doing this for years...) --- these companies only exist as the beneficiaries of a massive Ponze ..... invented in DelusiSTAN and funded by DelusiSTANIs....

However the Ponze is colliding hard against reality --- no Dorothy investors from DelusiSTAN will not pour money down the gaping black hole forever even if there is a near limitless supply of money .... Nope ... they will cut their losses and like good DelusiSTANIs go in search of another mythical unicorn that spews hype and bullshit from its back end....



Ed 3 mths ago
And here we have the Holy Grail....

Identify the wave early ... (or just be a true believer in the hype).... jump in ... pray for an IPO.... cash out and leave the DelusiSTANIs holding the bag of soft dung.... and scooping their entrails into a plastic bag before the dog gets wind of the free meal laying on the floor.....

I give you ... the LYFT IPO:


Ed 3 mths ago
Alas.... this is true genius....

When your demographic is a groups of very hip 'entrepreneurs' (with nothing in common except that they want to be rich and they think a co-working space is the magic elixir) gathered together in really fun high-school lunch-table-like environment .......

.......that serves up organic lattes gently massaged and stroked.....then violently ground.... from exclusive coffee beans (grown and flavoured using a special mixture of composted dung supplied by Kim Kardashian, Paris Hilton and Justin Bieber and touched by fairy farts) flown in on a private jet from a remote corner of the earth...

You inevitable run into problems aka --- the people who show up at noon (after a big night out at Dragon-I with the other hip and very awesome 'entrepreneurs' they met at the co-working space)..... clash with those very few individuals who are actually trying to make something happen...(or at least pretending to)

The late risers inevitably want to chat about the delectable models who prostituted themselves for the free canapes deployed to entice them to attend the disco house of dancing.... this chatting inevitable is interspersed with comments such as 'I am the coolest... I was voted most awesome in high school' then followed by a massive food fight....


As you can imagine.... that pisses off the wanna be Steve Jobs (or on a much lower and somewhat pathetic level .. the aspiring Eds...) who are prepraring to shake the world...

This.... friction ... can lead to the half empty co-working spaces losing paying customers leaving behind what essentially becomes a frat house ... filled with rambunctious maniacs who rush to the toilets every twenty minutes to amp themselves up on .... illegal substances???

Hence we have a grand idea that kills many birds with TWO stones.... I give you .... HOOTERS CO-WORKING SPACES......

This keeps the 'hip' people who are 'all about having fun' entertained... keeping them off the backs of those who are trying to work.... And this leads to .....Ohhhhhmmmmm ... shanti (where's my energy crystals????) we have peace and serenity.....

This is not a joke.... this is real:


Ed 3 mths ago
Welcome to your new co-working space fellas! (clearly this is unlikely to appeal to anyone but lads...)


Ed 3 mths ago
While on the topic of sure to fail businesses.... let's revisit this take-down of 'businesses' that are valued at billions of dollars... but have never earned a dollar of profit.... and almost certainly never will.....

Welcome to the new paradigm ... where he who loses the most money .... gets the highest valuation!


Ed 3 mths ago
WeWork Unveils Plans For 'Community-Adjusted' Public Offering As Revenues, Losses Double

In an announcement that will no doubt be interpreted as broadly bullish for the unstoppable US equity rally, WeWork (or rather, "the We Company", as its CEO has promised to rebrand it) said Monday that it is planning a public offering in the near future, and that it had already filed its registration paperwork with the SEC back in December.

It's the clearest indication yet that Lyft's post-IPO troubles (the stock is trading more than 30% below its IPO price, and has inspired a flurry of lawsuits) haven't deterred other companies that boast both growing revenues and growing losses.

In a stunning acknowledgement of just how parlous WeWork's business model is, a person close to the company reportedly told Axios that it could become the second most-shorted stock, behind Tesla.

Critics of the company have pointed out several overarching flaws in its business model: For one, it's heavily indebted, and Moody's last year suspended its rating due to a 'lack of information', with its bonds frequently trading at a double-digit spread to Treasuries.

With this heavy debt load, the company would be poised to toppled into bankruptcy during an economic downturn due to the fundamental dislocation between its long-term debt obligations and its short-term leases (though the company insists that it's working to sign up more long-term clients like IBM).

And let's not forget the allegations of self-dealing by the company's CEO that have been raised in the business press.

Even Soft Bank, the global marginal buyer when it comes to investing in overhyped Silicon Valley startups, cut back on plans for an investment in WeWork, eventually committing just $2 billion to the company, well short of the $16 billion it had initially been eyeing.

As we've pointed out time and time again, WeWork has relied on accounting gimmicks to try and win over bond investors. As we have reportedly pointed out, thanks to its reliance on "community-adjusted EBITDA", WeWork's EBITDA is, basically, whatever you want it to be.


Let's check in on a couple of other billion dollar burners.... that have no path to profitability either...

Uber’s IPO is even more dangerous for investors than Lyft’s has been

Uber isn’t growing revenue as fast as management would like you to believe and is burning through cash like a trust fund baby on a shopping spree

We’re not surprised, and we won’t be surprised if Uber’s UBER, +0.00% valuation falls even further. Anything above a valuation of around $20 billion is a rip-off and makes no sense. Whether before or after the initial offering, the valuation of this stock will likely fall hard and fast.

As soon as markets wise up to the fact that this deal is nothing more than a mechanism to dump a terribly overpriced private company onto unsuspecting pubic investors, look out below.

Frankly, we’re surprised the jig isn’t up for Lyft LYFT, +5.85% and Uber given that neither, in their public filings, even attempt to explain how they will ever make money.


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