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Comment by wayoutthere | Hacker News Reader

Because a brand is all about revenue. The entire purpose of VC financing is to build a brand with outsized mindshare before the market is mature enough to have established players and then fix the operations later.

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It is sort of amazing that this is still happening - when your brand is heavily reliant on network based social effects then taking a loss to build up that network is hard to swallow but potentially correct. But, if I were to build a steel mill and take this approach it'd be idiotic - some tech companies do benefit from network effects, but others do not. WeWork simply doesn't - if it'd been an office space renter with an emphasis on style and the social environment that had started in SF and spread organically it totally could have made it, but money was wrecklessly pumped into a business that shouldn't ever be in the red (outside of asset acquisition including software components, that's totally reasonable).

I completely agree with you. But the problem with markets with strong network effects is that those network effects usually aren’t obvious until you’ve struck gold. The markets with obvious network effects tend to be too heavily competitive to actually ever get there.

This is an interesting observation.

Can you share a link/case study?

Kind of makes sense, but curious of how you developed your certainty. thnx

But aren't they still supposed to fix the operations before they IPO, or at least enough to convince investors it's a good buy? We're not talking about companies that hope to stay private for the foreseeable future - these are companies that are trying (and failing) to IPO or very recently had unsuccessful IPOs.

A brand is only so useful if it's attached to a money fire.

Absolutely agree, the whole WeWork IPO has been a dumpster fire. They should have had their house in order long before an S-1.

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