WeWork’s S-1 misses these three key points
After much discussion, WeWork finally dropped its S-1 filing with the SEC today as it makes preparations for its IPO. While the company has been producing sizable revenues the past few years, the company didn’t disclose everything I think it needed to in order for investors to make a judgment about its financial future.
It’s not as though WeWork hasn’t tried to give us some insight in its S-1. One of WeWork’s core operating metrics is “contribution margin including non-cash GAAP straight-line lease cost” (or what I will abbreviate just this one time as CMINCGAAAPSLLC). Through this metric, the company offers us a single number into the health of its business — essentially a way for investors to understand the performance of the company’s mature office locations.
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What’s missing here though is that WeWork has aggregated its finances for hundreds of locations down to a summary statistic, complemented with a huge amount of text devoted to describing the evolution of a property from lease signing to mature profit-making office. At no time does the company describe the contribution margin and how it changes throughout the course of a single lease. Instead, it provides the following completely numbers-free chart showing that … it makes more money as time goes on.
How even the best marketplace startups get paralyzed
Marketplaces are hard to build. You have to generate both supply and demand, and if that isn’t bad enough, you then have to work to match both sides of the marketplace to get a transaction to clear (and therefore generate revenue).
Josh Breinlinger, an MD at Jackson Square Ventures, describes how marketplace startups can get stuck in their growth, and how to extricate from that quagmire to move forward.
There is often a very vocal minority of users that drive discussion and sometimes, policy. It’s easy to make the assumption that the vocal minority is representative of the whole. Do not fall victim to this fallacy. Many times the most vocal users are not the ones you should be giving the most attention.
When asked about this, my friend Sebastian Jacob, CEO of the construction labor marketplace, Faber, mentioned the best defense for this is being data-driven. At Faber, trends in user data and behavior are looked at as the greatest source of truth, more so than vocal feedback from what’s probably a minority.
After looking into the real data on a certain topic Faber received minimal but vocal negative feedback on, the vast majority of the time 90%+ of users experience no issue with that specific feature — they just aren’t vocal about their contentment. Sebastian reminded me that there’s another force at play here — human nature — that drives people to be vocal when they feel negative about something, but less so when they’re pleased. Go figure.
The secret of content marketing: Avoid high bounce rates
Speaking about growth, one of the most important channels today is content marketing. Yet, the efficiency of content marketing spend can vary considerably across startups. Our growth columnist Julian Shapiro of BellCurve.com talks about how to avoid high bounce rates which can drive efficiency into the gutter.
Sometimes, when I write a post on Julian.com, I find few people actually finish reading it. They get halfway through then bounce.
I discover this by looking at my scroll-depth maps using Hotjar.com. These show me how far down a page an average reader gets. Then I pair that data with the average time spent on the page, which I get from Google Analytics.
Whenever I notice poor read completion rates, I spend ten minutes optimizing my content:
- I refer to the heatmaps to see which sections caused people to stop reading.
- Then I rewrite those offending sections to be more enticing.
This routinely achieves 1.5-2x boosts in read-through rates, which can lead to a similar boost in conversion.
Huawei’s new OS isn’t an Android replacement…yet
Our hardware editor Brian Heater explores the launch of Harmony OS, Huawei‘s backup plan in case U.S. export restrictions prevents it from getting access to Google‘s Android operating system.
Many have tried and failed to build a successful mobile operating system. Developer support has been a major sticking point, and catching up to a decade-long head start for app store support seems like an insurmountable task. But if any company possesses the resources to do it, it just may be Huawei. And while Chinese smartphone sales have slowed along with the rest of the world, it’s still the No. 1 market in the world.
How lawyers help bring your acquisition deal to fruition
Mergers and acquisitions are big deals for startup founders, employees, and investors, but just how are these deals structured? Ron Miller explores what lawyers do in an M&A transaction, interviewing several leading partners about deals they have worked on and the considerations they take account of as a deal gets underway.
Once they determine an offer is legitimate, the target company has a different set of responsibilities, says Alan Smith, an attorney at Fenwick and West. “An offer triggers an obligation, usually a CEO, a chief business officer or someone who’s had that communication [with the buyer]. They’re going to want to know, how quickly do I need to tell my board? How do I tell my board? And they need to immediately start thinking carefully about doing the right thing, and making sure they’re making a record that they’re doing the right thing in terms of being responsive in a way that’s designed to maximize value for shareholders,” Smith explained.
Automattic’s bargain-bin Tumblr deal plugs right into the WordPress business model
Finally this week, our parent company Verizon Media offloaded Tumblr after much angst the past few years, selling the company for pocket change to WordPress.com parent company Automattic. Devin Coldewey explores the history and business of Tumblr, and how the one-time unicorn ended up in such a deleterious state.
In the years since Tumblr was bought, its rivals have taken its best parts and run with them.
Tumblr was a community of communities — Pinterest and Reddit took this over with savvy partnerships and sticky user recruitment.
Tumblr was a simple, visual blog — Instagram completely took over a large part of this space, simplifying and streamlining, while hosts like Imgur appeared like remorae on the social networks, sucking up viral traffic.
Tumblr was a free, customizable home for artists — artists who later left for simple storefronts combined with one of the above platforms, or one more suited to them, like DeviantArt (!).
There are plenty of other ways that Tumblr helped nudge the internet economy forward, but it never evolved itself, an evolutionary dead end that found itself outcompeted in every niche.
Thanks
To every member of Extra Crunch: thank you. You allow us to get off the ad-laden media churn conveyor belt and spend quality time on amazing ideas, people, and companies. If I can ever be of assistance, hit reply, or send an email to danny@techcrunch.com.