Saturday, September 28, 2019

September Snowblast 2019: Weather Modification out of control

(Global Intel Hub – 9/28/2019) — Charlotte, NC — While Canadians have nothing better to do than march and protest ‘climate change’ there is an ongoing massive weather modification program that’s creating storms, droughts, floods, and other ‘natural’ events.  Recently we exposed the modifications of major Hurricanes, such as the recent Hurricane Dorian that ruined the Bahamas and amazingly just ‘scraped’ the U.S. coastline.
Now, there’s a record early winter Blizzard heading for Colorado that’s going to wreak havoc on the other side of USA.
Early fall snowstorms are often destructive.  The combination of heavy, wet snow and strong winds this weekend will likely lead to widespread tree damage, power outages and blizzard conditions in parts of Montana, according to the NWS.  Travel in parts of central and western Montana, possibly into northwestern Wyoming, is likely to become dangerous, if not impossible, especially over mountain passes and in open areas where blizzard conditions could quickly reduce visibility. Road closures are likely in some of these areas.  NWS-Great Falls compared the potential of this snowstorm to another storm in late September 1934, which produced over a foot of heavy, wet snow in both Cut Bank and Great Falls, Montana, and over 6 inches of snow in Helena, Montana.  More recently, an early October 2017 snowstorm dumped over a foot of snow, leading to widespread power outages and downed trees in northern Montana, including the city of Havre.  High temperatures are likely to be 10 to 35 degrees below late September averages this weekend from Northern California and northern Nevada to Idaho, Montana and Wyoming.  Daytime temperatures holding in the 30s, 40s or 50s could set daily record-cold highs Saturday through Tuesday in parts of the northern Great Basin and northern Rockies.
Just another storm you say?  It’s because of Trump, right?  It’s because Trump is not participating in the fake climate change program, another hoax perpetrated by Demorats in order to suck idiot voters into another scam fighting fake problems that don’t exist.
For a moment let’s talk about the Why’s and the Politics of weather modification, later we’ll discuss the how’s.
First there is a huge economic benefit, as buildings are mostly not suited for extreme climates whether it be Hurricanes, Earthquakes, extreme cold, snowstorms, rain, etc.  Buildings need to be rebuilt, it’s great for the real estate market.
Second, there is a control mechanism built into weather that we need to discuss.  Pressure can affect human behavior.  UV conditions cause cancer.  90% of the population doesn’t realize how bad Ultraviolet (UV) radiation is, and that it’s natural.  But actually you can get UV reports from most weather services, they will have a measure of the “UV Index.”  But who cares about a few radioactive rays, right?  ‘Specially in the South.
Third, you’ve got to look at the food cycle which is inexplicably intertwined with the weather.  Crops need water and sun to grow, and extreme storms whether they are Hurricanes or freak Blizzards like the one we are experiencing now, are not good for food.  Of course, Monsanto will have a GMO product that will grow in any conditions, for a price.
We’re not going to get into how the combination of 5G, UV rays, dry air for weeks on end, or extreme heat or cold, combined with eating GMO foods, can affect DNA; impact your health – but more importantly – twist your DNA so that you give birth to a mutant hybrid child that’s dependent on the artificial life cycle (Earth, Rain, Food, Water).
When you look at Weather Modification through this lens, it’s very obvious what are the incentives for companies like Raytheon (RTN) to work with Monsanto (MON) and companies like LabCorp (LH).  Interestingly, LabCorp (LH) is involved in a massive fraud involving DNA material from mostly poor people:
The basics of this narrative are that the US Government is being defrauded and is the biggest victim here, as they are not only paying the bill of the fraud but also receiving the liability of claims that they are allowing to happen in US courts.  Ultimately, counties and cities get the power from the states which gets power from the US Federal Government so while it is the local municipalities which are allowing this to happen, as Harry Truman famously said “The Buck Stops Here.”  Also we want to note that while we are exposing the fraud of LabCorp (NYSE:LH), this is a much deeper global fraud which is a black market of the worst kind, involving illegal organ trading, baby ordering, baby snatching and fraudulent adoptions to families that can’t have children, DNA harvesting, and genetic surveillance.
How are all these things connected?  Is there a form of Genetic Terraforming going on here on Planet Earth?
The weather certainly can be a factor here, and remember also that there are only a few organizations on Earth that can defend themselves from the weather, one being the US Government.  Individual families do not have the resources to prepare properly for continued planetary chaos, so this is another tool in the control spectrum, whereby Citizens must rely on big business which is doing business with the US Government.

The Facts (And Evidence)

Everyone asks – isn’t this a ‘conspiracy theory’ ?  Well, here are the facts.  You can start by reading the 400+ page Congressional Report or watch these videos:

In recent years, the US military’s HAARP research programme has sown a blizzard of theories about how this secretive Alaskan facility has manipulated weather patterns with its investigation of the ionosphere. If HAARP really was so successful, it would probably not be closing this year.  The argument that if we grasped how to control the climate then evildoers would already be doing it doesn’t hold water with conspiratorial thought, however. Some believe the weather is already being shaped by “chemtrails” – aeroplane contrails deliberately laced with toxic chemicals – and mysterious weather warmongers are, for reasons unknown, making the eastern US unbearably chilly and California stricken by drought. Climate scientists dismiss such theories and evidence such as the long list of patents for climate-altering tools tends to demonstrate the boundless scope of the human imagination rather than the more limited reach of operational technology.
A pair of major reports on geoengineering, “Climate Intervention: Reflecting Sunlight to Cool Earth” and “Climate Intervention: Carbon Dioxide Removal and Reliable Sequestration,” were published last week by the U.S. National Academy of Sciences, and the CIA was purportedly a major backer.  So, can the weather be used as a weapon? The answer is…it’s been tried!  “Operation Popeye” was a highly classified weather modification program used in Southeast Asia during the Vietnam War. Conducted by the U.S. government from 1967 to 1972, “cloud seeding” was utilized to extend monsoon season by generating rainfall.
Weather modification will become a part of domestic and international security and could be done unilaterally… It could have offensive and defensive applications and even be used for deterrence  purposes. The ability to generate precipitation, fog, and storms on earth or to modify space weather, … and the production of artificial weather all are a part of an integrated set of technologies which can provide substantial increase in US, or degraded capability in an adversary, to achieve global awareness, reach, and power. (US Air Force, emphasis added. Air University of the US Air Force, AF 2025 Final Report, emphasis added, original link removed)
The HAARP facility in Gakona Alaska was closed down in 2014.
Is it time to stock up on supplies or head to the hills?  Certainly, you might want to reconsider that Miami beach property.
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We Work Fraud Exposed

We Work Fraud Exposed

(PreIPOSwap -- 9/26/2019) New York, NY --  We get asked often about fraud in Private Equity as it's an Over the Counter (OTC) market and not exchange traded.  Our answer is the classic answer - the majority of the risk lies in the underlying asset, i.e. the stock you're buying, not the secondary market counterparty.  Fraud exists in Pre IPO as in any industry but is easy to detect especially when transacting with regulated counterparties.  Like the FX market, which is completely unregulated and untamed, the majority of counterparties in Pre IPO are regulated investment banks, broker-dealers, or Venture funds with substantial capital (they may be exempt, but they are highly regulated due to their size).  When dealing in SPVs, the administrators and custodians where they are held are typically large custodians that have insurance which often is superior to SIPC and FDIC.  The fraud risk would be, someone posing as one of these institutions but really wasn't.  This was the scam method used by classic ponzi scammer Trevor Cook, who created US based Dummy Corporations with the exact name of the legitimate Swiss "Crown Forex."  Understanding and learning about past frauds enables us to better detect possible frauds in the future.
So it comes as a great source of consternation that we read and post this damaging information about WeWork, potentially the first Pre IPO Fraud.  Why fraud you say, WeWork is everywhere in NYC?  WeWork is a real company, it's not a ponzi scheme?
Remember that Enron was trading in energy markets and many other markets, and lots of investors made money in Enron.  It was a fraud, but it wasn't a complete MLM Ponzi scheme - Enron had a real business.  They just crossed the line of using their capital and market influence to manipulate markets which is illegal.  What's the definition of Fraud:
In law, fraud is intentional deception to secure unfair or unlawful gain, or to deprive a victim of a legal right. Fraud can violate civil law, a criminal law, or it may cause no loss of money, property or legal right but still be an element of another civil or criminal wrong.
So here, we aren't stating that WeWork is a fake company, clearly not.  Many of us have worked in or visited WeWork offices.  We are stating that based on evidence we are including here below, which summarizes intentionally misleading statements made by WeWork founders and executives; that WeWork is a fraud based on deception, inflated projections while hiding liabilities.  They covered this intentional misleading deception by having an aggressive marketing push, and involving celebrities like Ashton Kutcher who would make soft statements like "It's not about the numbers anymore - it's about how WeWork can impact the world."

The real product

Anecdotally, we are looking at office space in NYC, New Jersey, Charlotte, Boca Raton, and Atlanta, for Crediblock.
Not really knowing about WeWork, we contacted Regus and the usual suspects one would for quick to setup office space without leases (or flexible terms at least).  With all the WeWork in NYC we contacted them as well and did a comparison.  Dollar for dollar, we're not really sure what the allure is to WeWork - is it all branding?  Free beer, stylish furniture?  Really?  Is that what the $47 Billion valuation is based on?  See this simple comparison from Tyler (Zero Hedge) -
WeWork vs IWG
We: loss $1.9BN
IWG: profit $0.5BN
We: 29 countries; 528 locations
IWG: 120 countries; 3000 locations
We: valuation $10BN - $47BN
IWG: $3.7BN valuation
We have to mention that we have used Regus in the past and the cool thing about it is that as you travel you have access to their worldwide network which you may pay for but anyway it's very useful, to have an office in Boca Raton should you need a quick conference room to do a power point presentation at the last moment.  120 countries is really a lot of countries.  One big negative, the smaller the lease term the higher the rate, just like for an apartment.  Perhaps they have a more realistic tenant approach than WeWork?  From the perspective of the renter - we looked at WeWork ONLY because of the discounted no-lease option.  While this is obviously beneficial for small businesses and entrepreneurs, it's not clear how this can be positive for WeWork.
We're not jumping on the We-dumping here just stating our observations as potential customers of WeWork.  And in the process of asking others how they like the WeWork, some of the 'weworkers' told us 'it's all about the networking' where the tenants we knew said they never communicated with any of the co-workers and they were in 'their own world's' - certainly NYC is not in need of more networking events, offices are places to escape from events and get work done.  But the networking fit into the WeWork branding model, just like any great MLM needs great branding, WeWork needed a great story, and it had.
Fortunately, we never bought any WeWork and didn't transact in it.  Strangely, there were ROFR issues surrounding the company and rumors about brokers that were 'cousins' of the founders that could pass ROFR but we didn't see any transactions happen in the secondary market. They did happen, and there was a market for it, we just didn't transact in it.  So for now, we're writing this as a Post Mortem report that we can move on to productive and exciting things we have going on such as Blackwatch DigitalTransparentBusiness, and seeing what Palantir has up their sleeve this fall.

Research & Articles referenced

Here's a collection of the top research articles on the topic, read and come to your own conclusions.

Friday, September 20, 2019

Sustainable Investing as a Strategy

Sustainable Investing as a Strategy - 9/19/2019 -- The world is becoming unstable, volatile, and scary.
Being sustainable isn’t a do-gooder philosophy.  The reason Ponzi schemes blow up is because they aren’t sustainable.  Sustainable means solid, consistent, over the long term.  So when someone uses the phrase, be aware of the connotations and varied interpretations on what sustainability really is.  Environmental sustainability is a term which could be called a sub-term of the overall concept of what is ‘sustainable.’
Why does this matter?  If you are investing, nothing else could be more important.  Being a fund manager and investor for 25 years, this is the one important question to ask a manager when evaluating their track record: Can it continue?  (And subsequently, what are the risks?  What are you doing to prevent them?)
A great example of a system that was not sustainable was the Soviet Union.  A great idea, an egalitarian utopia where all classes are one (but your life is decided by the personality of the Dictator…) – but it was unfortunately unsustainable and collapsed in 1991.
Another thought on sustainability is looking at what’s NOT sustainable, such as the New York City taxi system.  And so we have the Pre IPO Unicorn and now the public company Uber.
Same thing with a trading strategy.  If you are looking at investing in a CTA program, they can provide excellent above Alpha returns, a couple examples are Alpha Z Advisors and Aleph Strategies two options trading strategies we work with.  The question any investor should ask themselves, is can this continue?  Is this model ‘sustainable’ – meaning can it continue to perform after a long time period?  That’s what Venture Capital (VC) firms look for, sustainability.
This concept is probably the most important concept in investing, and it has nothing to do with the environment.  However, the issue with the environment has the same theme – if we abuse the environment we cannot take resources from it anymore.  Uses like pit mining, oil as an energy source, are not sustainable because once it’s gone it’s gone.  Solar energy is sustainable because the sun replenishes the energy every day.
How many sustainable companies are there in the world?  We can say any company that has been in business for more than several hundred years, we can say is sustainable.  Like it or not, the US Government is sustainable.  Other countries have risen and fallen in the short history of the United States.
The Château de Goulaine is the 3rd oldest commercial enterprise in the world, and the oldest winery in the world:
While it is not clear exactly when the estate vineyard started producing wine for commercial use, rather than just family consumption, the millennium during which the estate of Château de Goulaine has been producing wine makes it the oldest known wine business still in existence;[6] It is believed to be the third oldest commercial enterprise in the world.[6][7] It is considered the oldest European family owned business.[8] The castle estate is one of the last Châteaux de la Loire to still be producing wine.[2]  In addition to producing a Muscadet, Château de Goulaine also produces a Sancerre and Vouvray as well as what is believed to be the first commercial Chardonnay in the western Loire Valley. The estate also grows some Folle blanche.[2]
Source: TripAdvisor
1,000 years isn’t a lot, if you consider the cosmos, and the age of the Earth itself, or the Sun.  If you get into Quantum Physics and the multi-verse, our life is but the blink of an eye.  “Sustainable” doesn’t necessarily mean to last for 1,000 years or 1,000,000 years, the concept is inert.
For business, we aren’t necessarily looking for something that will last 1,000 years, times change and so do wants and needs.  What we are looking for is something that isn’t going to be phased out with a new fad, something that isn’t going to be knocked down by wind and water, something that is going to continue to perform year in and year out regardless of the circumstances that test the model.
A great example of something that is not sustainable is Kodak.  They popularized the phrase “Kodak Moment” Which was that moment when you needed a camera to capture special memories and save them; a child’s first birthday party, a friend’s new puppy.  But the “Kodak Moment” has morphed into a new meaning – it’s the moment that your product is no longer needed.  Digital cameras in smartphones led to the demise of Kodak.  Kodak’s real “Kodak Moment” was the moment when no one wanted Kodak anymore – they all had a camera on their phone.
So these examples contrast what Sustainable really is and to understand the Gestalt of the word.

Is WeWork A Fraud?

So in a nutshell, this is what we know about this charade so far:
  1. Its not a technology company in any way, shape or form. No income is derived from the sale of a product or service delivered by a technology. They owe $47 billion in lease commitments. Claiming WeWork is a technology company is one of the many indicators that illustrate how Adam & Miguel intentionally seek to mislead and defraud existing & potential future retail investors. The product is the easiest to replicate and there isn’t one barrier to entry.
  2. When asked what inspired him to create a shared workspace company, Adam said that when he was growing up in Israel he used to live in a Kibbutz and was so mesmorised by the ‘sharing ideology’ that he invented Co-Working. Mark Dixon founded Regus in the 1980’s. LEO, Workspace Group, The Office Group, ServCorp, MWB, HQ and many others were around way before Adam thought up of this ponzi.
  3. WeWork post full year invoices for the year ahead this year to inflate their revenues. They then heavily discount those invoices they’ve already raised and treat them as expenses. They then pay whichever broker secured that lead 100%, yes 100% of the contract value. Note the industry standard commission is 10%. Neither the discounts nor the 100% in commission payments appear in their Financials as they are ‘community adjusted’. They also do the opposite, they turn expenses into revenues so imagine a landlord agrees to discount their rent by £250k to offset a portion of their build costs, standard practice, WeWork treats that £250k as revenue. They also charge members even after they’ve vacated, then credit them later. It’s not difficult to boost revenues on a blank cheque. Revenues are not what you’ve actually cleared through your bank, it’s the total tally of invoices raised in a given period, a big difference.
  4. The expenses as detailed in their accounts & S1 disclosure is not accurate. To hide two crippling cost groups; fit-outs & marketing, they invented a brand new accounting principle which they called ‘community-adjusted EBITA’S’. If they hadn’t they would have had to post actual accumulated losses in the region of $6 billion instead of the $4 billion reported. Why don’t we all do this. This is another strong indicator, they are hiding actual losses to mislead, knowingly. For somebody that can’t go a sentence without throwing in ‘community’ twice it’s interesting he’s never tweeted, his instagram features four landscape google images and he’s non-existent on LinkedIn.
  5. A brief search on any review site should show you the extent to which they couldnt care less about what their customers think. Despite rolling monthly contracts being sold with 3/6 month rent free periods for peanuts, with all the promotional freebies they provide, the free beer & festivals, 100% commission rates to brokers, billions in instagram adverts, 3 PR articles a day, none of their buildings are even near full and they are already experiencing falling occupancy rates. They even sent teams to walk into their competitor’s Centres to take photographs of tenant directory’s. That’s how desperate it’s become. Regus is currently engaged in legal action accusing WeWork of poaching customers and they are not the only ones who have accused them of engaging in this.
  6. Adam & Miguel have already collectively cashed out in excess of $1 billion in loans, royalties, salaries to extended family, private jets and who knows what other instruments (e.g. selling the We trademark he secretly purchased back to WeWork for a cool $6m), they’re chilling, and reportedly less and less involved in the day to day running. Miguel is more involved in a range of other businesses and has already demoted himself from Co-Founder to Head of ‘Global Culture’, quietly positioning himself for a quick exit post-IPO. Adam on the other hand fancies himself as the next Masayoshi, he has his own ‘venture capital’ firm investing in genuine entrepreneurs. Why would either of them care what happens to their remaining holdings, they’ve already cashed out enough to set up their grandchildren for life.
  7. Adam & Miguel then used the funds extracted from WeWork and funnelled it through privately controlled offshore investment vehicles and almost overnight built an asset-rich portfolio of prime commercial real estate (not an asset-light illusionary hustle). It doesn’t end there. Adam & Miguel then lease those buildings they privately acquired. back to their very own ‘spiritually’ valued WeWork at a ridiculously high yield. Even the very founders are bleeding their own ponzi scheme dry. Are these guys something or what. Further buildings were then acquired with loans (from JP Morgan) totalling $500m hedged against their already saddled collateralised. junk obligation WeWork. It’s not enough that they’re making $230m in fees flogging this ponzi.
  8. When they got caught, Adam tries justifying it by claiming he acquired the buildings years ago as a way of proving the concept works. An outright lie, and very insulting. If Adam can do and then conceal all of these things, imagine what else we don’t know.
  9. With pressure mounting, he arranges to appear alongside his actor friend Ashton Kutcher in an ‘Exclusive’ interview on CNBC. Ja Rule, sorry I mean Ashton Kutcher, in his trademark goofy-like character plays his part to perfection…. ‘When I realised it was a technology company I also realised that this company, through its technology, has the greatest capacity than any other company in the entire world to bring people together’. He’s using an actor to convince people his act is for real.
  10. The only reason it was valued at $47 billion is purely because one individual in Japan bafflingly and solely invested a total of $12 billion, in 9 separate funding rounds, each at double the price (and valuation) he (and he alone) paid less than 6/12 months prior. Since Softbank first invested in 2012, nobody else has invested. The only two people who claim WeWork is worth $47 billion are Masayoshi Son and Adam Nuemann. As long as we’re debating, and continue doing so until after the IPO Adam & Miguel are loving it.
  11. Why would Masayoshi, an intelligent individual, invest so many billions into this barefaced fraud, for the life of me I cant figure it out. Maybe Adam & Miguel deceived him too. Or it could actually really be as simple as it looks. It’s impossible for Adam, Miguel and Masayoshi to sell their shares on the secondary market or post-IPO for $100bn+ if Masayoshi didn’t allow Adam & Miguel to parade WeWork in the press as being worth $47 billion, using purely Softbank’s 9 sole investments & revaluations. Once they exchange, media outlets can run headlines that project an aura that they are indeed worth what two people have decided to value it at. Everybody in the loop benefits, from the early investors that hope to offload their investments to later stage mugs, to the media outlets and banks Goldman Sachs’ & JP Morgans who earn hundreds of million in share sale commissions. Everybody wins. No one is accountable.
  12. Even Adam’s wife Rebekah, persuaded Masayoshi to sink $100m into her very own pet-ponzi, WeGrow, ‘the future of education’. Cute no, his and hers.
  13. It was only until the Saudi’s threatened to pull their funds out of the Vision Fund when Masayoshi reconsidered and decided to pull a proposed further investment of a whopping $16bn (which would have brought the total amount invested in/borrowed by WeWork to a laughable $30 billion, 15x what Facebook raised). This is what may have alarmed Adam to quickly initiate the IPO. He may now be afraid that if he agreed to delay the IPO he wouldn’t be able to re-submit later without providing a more scrupulously drafted breakdown of WeWork’s finances. He may also be worried that if a permanent suspension of the IPO happens, the company may not survive.
  14. Adam & Miguel have consistently been way off any of their forecasts made in their original pitch deck to investors (available online). He forecasted profits of $14 million in 2014, $64 million in 2015, $237 million in 2016, $542 million in 2017 and $1 billion in 2018 (on revenues of $3.6bn, a 36% profit margin). Their ‘community-adjusted’ accumulated losses amount to over $4bn, their actual losses are much higher. WeWork sued a whistleblower who raised alarm bells in 2016 when she revealed how WeWork had slashed their profit forecasts by 76%. When Bloomberg revealed this, WeWork claimed that it had ‘over-estimated’ what landlords would be willing to front in build out costs. But according to Adam ‘Because we have 40% margins, we can choose when to become profitable’.
  15. Two profitable serviced office groups, the largest IWG (Regus & Spaces) and the most luxurious LEO, who collectively manage in excess of 3500+ centre’s have been on the market for close to 2 and half years now and they have not been approached by anybody willing to pay a multiple of more than 1.25x revenues, which would make IWG valued at between $3/4 billion. SoftBank could have acquired four Regus’s for their $12 billion and still have enough change to sprinkle some fairy dust on top. Instead they’re losing one Regus a year.
  16. Facebook raised $2.2 billion pre-IPO. Google raised $130m pre-IPO, Ebay $6.9 million. WeWork has raised $14 billion so far, 7x what Facebook required pre-IPO, 140x what Google needed and they’re not even a technology company. Where has that $14 billion gone? They raised $14 billion, have less than $1.5bn cash and have nothing to show other than $47 billion in lease commitments and a portfolio of supersized Starbucks’s which are beginning to look outdated and in need of urgent refits. Airbnb on the other hand is a technology company, has raised $4 billion and posted profits of $93m last year on $2.4 billion in revenues. No money has been swindled out of Airbnb, they’re fiscally responsible and taking their time, waiting for the right moment to IPO. No rush.
  17. Serviced Offices as anybody in the industry will tell you generates almost as much yield as your traditional commercial landlord, typically 2/3%. Serviced Offices used to be very profitable when there were few half decent ones around but today they’re everywhere and desk prices have collapsed whilst conventional leasing rates have held steady. It’s not just been around since the 1980’s but now everybody’s getting into it, even developers British Land & Boston Properties are beginning to include it as part of their offerings. Now its purely a landlord play. Cafe’s and Hotels are jumping in too, even brokers are building their own platforms where they act as operator, Knotel, Instant Managed, CBRE to name a few. Even Google have a platform, ‘Campus’, very cool place. Adam though doesn’t think they’re come close to being a threat, ‘Our biggest competitor is work itself’.
  18. Serviced Offices is like the hotel industry only many times simpler, its just desks, chairs, simple decor in common areas (plants & picture frames), wifi, electricity, daily cleaning, plates and cutlery, and maybe a plug in telephone handset. Or you can just hire one of the many contractors WeWork use (John Robertson Architects, Oktra etc) although most floors are just glass partitioned boxes (they don’t do stud walls). LEO, Spaces and some of TOG’s centres have always been more beautiful with a far higher build quality than any of WeWorks offices. Now that’s it’s a landlord play, you have a avalanche of landlords with far a deeper understanding of interior design and office fit outs than WeWork will ever be able to outsource.
  19. The Co-working side of the Serviced Office industry is not at all profitable. Nobody makes money from co-working. Most operators provide a little co-working alongside a largely 3/6 person partitioned multi-office layout or around dead spaces. WeWork took out entire floors and dedicated it to open-plan co-working.
  20. How did this even begin? The earliest shareholders including a gentleman called Mortimer Zuckerman were not just their landlords AND seed investors. They also happened to own Fast Company and NY Post which were instrumental in propping up WeWork in the press before anybody knew who they were. The headlines they spun about WeWork’s valuation and ‘meteoric’ rise was basically the shareholders advertising their investments. Even Wikipedia’s page (throughout 2015 and 2016) introduced WeWork as the ‘most innovative company of 2015’, citing a Fast Company article.
  21. WeWork even thought about setting up WeCafe’s, they want to be the first ever to disrupt the ‘working-in-a-coffee shop-as a-service-space’. An internal report revealed people are working at spacious, trendy hipster designed coffee shops where they get not just a free table but also a chair (and free wifi) all for the price of a cup of tea. If WeWork charged their members a fraction of the market rate, half will vanish overnight. Or put another way, when they want to start becoming profitable and all the freebies come to an end it will feel like s rug has been pulled from under WeWork’s feet, by which time Adam & Miguel will be long gone.
  22. WeWork doesn’t pay the appropriate property taxes due on their UK based centre’s. If you look at their Business Rates schedules of the respective boroughs in which they operate in (available online) you’ll notice that split their entire space into tiny cubicles. By doing so WeWork avoids paying property taxes and earns tax rebates originally intended for small businesses, $2.4 million to date. So they’re effectively being financed by Her Majesty’s Government & the UK taxpayer too.
  23. WeWork spends more on PR than anything else (mainly directed towards Henry Blodget, a permanent fixture at the famous hedonistic WeRetreats, the all expenses paid festivals courtesy of Softbank). They are carefully written with the subtle intention of building an impression that the company is a roaring success, they pay for many of these articles. Some are even co-written by WeWork’s PR team. Every month they pay these new breed of digital financial news tabloids like Business Insider, Fast Company etc to write sensational headlines like ‘The Rise of WeWork’ & ‘How WeWork become a $47bn company’.
  24. If you are not already acutely aware that Adam Neumann and Miguel McKelvey are fraudsters, count the number of times the word ‘Hustle’ is plastered in neon lights at every one of their tacky ikea-designed offices (or just google the words: wework hustle and click on images).When asked whether how they could come up with a $47 billion dollar valuation, he replied ‘”No one is investing in a co-working company worth $20 billion. That doesn’t exist. Our valuation and size today are much more based on our energy and spirituality than it is on a multiple of revenue.”. When Miguel was asked about their $20 billion valuation (before it was almost tripled to $47bn), Miguel McKelvey answered ‘Who gives a s***?’.
  25. There are many people out there who give discreetly to charity, some give generously but only with the fanfare, some ‘pledge’ to be charitable largely for the PR impact but have no intention of giving, this is something new. Adam, his wife Rebekah & Miguel have ‘pledged’ to give $1 billion they don’t have and yet to swindle out of WeWork (not the last billion, the next billion) so they can acquire more land to help mankind and support environmental causes ‘close to their heart’. Is this the twilight zone? Where did the first billion go? Why do they feel the need to use meaningless philanthropic pledges to make themselves appear to be good wholesome folk, generous not greedy, charitable and tax-free. WeWork’s cleaners have twice protested over wages. Everything is fake.
WeWork will never ever, in its short history, generate a profit, let alone the tens of billions in revenues necessary to generate anywhere near the $3 billion in earnings required to (even then generously) value the company at £47 billion.
A lot of people could have done what Adam Nuemann & Miguel McKelvey did, they don’t because they’re not prepared to engage in a fraud. They can play dumb all they like but when you fiddle with your financials, invent accounting principles, secretly acquire IP and double deal it for millions of dollars back to your own company, market yourselves misleadingly as a ‘technology’ play, cash out close to $1 billion and use that to acquire buildings to lease back to WeWork, employ half your family etc, etc, etc…please for heavens sake don’t try and convince me that they are unaware of what they are doing. They know exactly what they’re doing. Adam and Miguel purposefully choose to hide those costs under ‘Community-Adjusted EBITA’s’. Why are they still parading WeWork as a technology company, does anybody believe as cunningly intelligent as they are, that they genuinely think WeWork is a ‘technology’ company? Why have they cashed out, and not just a few million dollars as a deposit on a big mortgage but hundreds of millions to buy buildings that they used to further bleed their own ponzi scheme with?. They have cashed out $1 billion whilst posting losses of $1.9 billion.
Since their S1 release, Adam & Miguel have slashed their proposed post-IPO valuation by 86% in 4 re-valuations. The price started at $67 billion, then they quickly dropped it to $30/$40bn before again looking down at their calculator and punching buttons quicker than you can blink and coming back with $15/20bn. As you’re about to click, it plunges 40% to $10bn. From $67 billion to $10 billion in 7 days. It’s pathetic seeing this kind of desperation. I don’t want to be in the room when he realises it’s not even close to being worth anywhere near $1 billion. Within the last 10 days or so, his wife Rebekah has also removed from her extraordinarily unnecessary position, they’ve hastily elected their first female to their Board, halved Adam’s voting power, lost a Chief Communications Officer, their bonds are crashing, two landlords have begun legal proceedings, their principle investor Masayoshi has publicly called for Adam to delay the IPO, even Alexandria Ocasio-Cortez weighed in and warned vulnerable investors Goldman Sachs & JP Morgan are now targeting… ‘you’re getting fleeced!’. It’s not all bad news though, Adam agreed to return the $6m he swindled when he secretly sold ‘We’ back to his company The ‘We’ Company. Btw, if you’re wondering why he settled on the name. ‘We’ he pontificated recently ‘The ‘90s and early 2000s were the i decades. iPhone, iPads, the iPod – everything was about me. Look where that got us? In a terrible recession’.
To wrap up, if you were to contrast the key characteristics of what defines a ponzi scheme with what we already know about WeWork, I think we could safely assume beyond a reasonable doubt that WeWork is a fraud, both Miguel McKelvey and Adam Neumann seem to be knowingly engaging in a fraudulent ponzi-like scheme designed to mislead investors and they appear to be nothing more than your average, traditional, run of the mill fraudsters, or in their own words….’Hustler’s’. The magnitude of this fraud and the unprecedented arrogance in which it’s being ruthlessly executed puts it in a league of its own. Now they’re hoping to hustle the big boys on Wall Street, and they will most likely get away with it.
The most discomforting element of this whole deception is that after perpetuating this fraud for so long, media outlets are now inviting these Hustlers to media-sponsored ‘leadership’ events where they’re put on podiums to teach us how to become visionary’s whilst they have now made it unnecessarily more difficult for genuine entrepreneurs & technology companies to raise capital in future. The future is farther because of them.
So to wrap up, if you were to contrast the key characteristics of what defines a ponzi scheme with what we already know about WeWork, I think we could safely assume that it could be somewhat judged beyond a reasonable doubt that WeWork is a fraud, both Miguel McKelvey and Adam Neumann seem to be knowing engaging in a fraudulent ponzi-like scheme designed to mislead investors and appear to be nothing more than your average, traditional run of the mill fraudsters, or in their own words….Hustler’s. The magnitude of this fraud and the unprecedented arrogance in which it’s being ruthlessly executed puts it in a league of its own. Now they’re hoping to hustle the big boys on Wall Street, and they will most likely get away with it.
The most disquieting element of this whole collaborative effort to deceive is that after perpetuating this fraud for so long, media outlets are now inviting these hustlers to media-sponsored ‘leadership’ events where they’re put on podiums to teach us how to become visionary’s whilst they have now made it unnecessarily more difficult for genuine entrepreneurs & technology companies to raise capital in future. The future is farther because of them.

Wednesday, September 18, 2019

Meal Delivery the next disruption in Pre IPO

Meal delivery is a simple service that has been garnering a lot of attention from startups including but not limited to Home Chef, GrubHub, Swiggy, Uber Eats, DoorDash, Sun Basket, HelloFresh, and others.  Uber Eats will actually bring McDonalds to your door.  The world is changing so fast those of us who remember the days before the internet are constantly amazed at how the youth have it so easy and convenient.  Soon we may not need to live our city apartments at all, as the entire Maslow pyramid can be delivered to us on a silver platter (for a fee).

In a ranking of meal delivery services it’s possible to compare them such as is done on this site

When looking for a meal delivery service, there are a few things to consider beyond just the price per meal. Most meal kit delivery services allow you to pick your meals from a selected group of recipes that changes each week. Make sure that the variety of meals is to your liking, and in particular if you have any dietary issues - such as a gluten sensitivity or if you’re a vegetarian - you’ll want to make sure that the company can provide enough options for it to be worth your time - and money. Also, life can be unpredictable, you’ll want to look for a company that will allow you to skip a week if you’d like, or that makes cancelling your membership painless and simple.

But what’s really interesting is the trend in the launching of these services, especially interesting is the amount of interest in the Venture Capital (VC) community.  For example, at the top of the list is Home Chef, which has received $57 Million USD in funding, according to Crunchbase:

This model is so popular, Home Chef was acquired by Kroger (KR), publicly traded supermarket chain for $200 Million:

Kroger Co., the largest supermarket chain in the U.S., is paying $200 million to acquire Chicago-based meal kit company Home Chef in a deal the companies say will bring the kits to more customers and help redefine shopping habits.  The deal, which is expected to close in about a month, includes future "earn-out" payments of up to $500 million over five years, contingent on achieveing milestones such as meal kit sales growth.

Paying $200 Million for a company that had only $57 Million in investment, plus an earn-out agreement was a great deal, but Kroger (KR) is not stupid, they are obviously betting that they are going to make much more than that on the deal.  This is also a note for Pre IPO Investors, an IPO is not the only exit.  Companies like AirBNB, Palantir, and others are acquisition targets.  Typically publicly traded large companies are not innovative like startups, so instead of being innovators themselves they look to acquire innovators at an early stage.

Food delivery has more than 1,417 names listed on Crunchbase, with a total funding amount of more than $28 Billion USD ($28 B is the funding amount of the top 1,000 names):