10/2/19

Communist China At 70 — A Bill of Particulars

China celebrated the 70th anniversary of its iron clad Communist yoke on the neck of its people yesterday. It was a fitting tribute to tyranny, enslavement, murder, and military danger.

China celebrates the horrific nature of its Communist foundation every day. Yesterday was not a unique celebration, except that there was a parade in which the Chinese celebrated their expanding nuclear threat to the world by showcasing a nuclear strike weapon that can make it to the USA in about thirty minutes.

China wants to be seen as a credible leader of the emerging world and a trustworthy nation — nothing says “trustworthy” like a nuclear weapon that can arrive at your backyard BBQ in less than the time to light the grill and throw the various meats on board.

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10/2/19

We Work — What Did We Learn?

I have been a skeptical voice on We Work since the beginning — meaning since I read their S-1, understood their business model, and learned about Adam Neumann, who I accused of being a toxic force on the company as a leader and a manager.

This was long before the guy got fired. Never liked him. Thought he was a poseur. Real estate as a service, my ass.

What I am not skeptical about is the market for co-working spaces as a real estate product. I think they are good.

In my personal real estate career, we had some vacancy in a suburban mid-rise office building and converted it to what was then a co-working space. We used to use the term “office suites.” It turned out very well for us.

 1. We collected (earned) 2X the market rental after expensing all operating costs. Meaning when we added up the individual small office rentals, subtracted all the costs — we got twice the rent we would have gotten had we rented it to an arms length, independent third party.

 2. We sold the business, as an operating entity subject to a lease, to a third party, Regus.

 3. We got a solid tenant in Regus paying a slightly above market rent and did not have to spend a penny in tenant improvements.

This was back in the 1990s.

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09/30/19

Rent The Wrong Way

I have never rented anything from Rent the Runway, the unicorn women’s “unlimited closet in the cloud” fashion site, your secret door to the latest in the rag trade.

You can rent clothing by the one off, on a subscription basis, and buy the clothes at a discounted post-rental price. They send you (gratis) a second size to make sure you can fit into their clothes. It is a first rate business.

Though I have never rented a dress (don’t carry the right size for Big Red Cars), I have always loved the business concept, their financial model, their innovative business development, their founder story, and their web site.

The company was founded by a couple of Harvard MBA women in 2009 — Jenny Fleiss and Jenn Hyman (bit of irony, no? couple of “Jens”). It is a profitable unicorn.

However, if today you go to their website, you will find the following message:

Currently all one-time Reserve rentals must be scheduled for delivery after 10/15.

Thanks for your patience as we upgrade our system!

Imagine the conversations within the company that resulted in that sentence appearing on the website. In addition, the company  is not taking any new “members” for any of their programs.

In essence, the unlimited closet in the cloud is out of business for 2-3 weeks. Closed for tech remodeling! Never saw that happening!

How does a company weather a 2-3 week unannounced cessation of their business when they are an immediate gratification B2C, cutting edge fashion business? 

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09/29/19

We Work Obituary

I suppose it is obligatory to write an obituary for We Work given that we wrote about the company and its Initial Public Offering several times already.

On the final turn around the track to price and issue its Initial Public Offering stock to the public, the company “postponed” its IPO.

At the same time, they pulled the plug on their founder CEO, Adam Neumann for “high crimes and misdemeanors.” Wait, sorry. Got confused for a second.

Neumann “stepped down” and the lead investor, SoftBank through its Vision Fund, took action to right the sinking ship.

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09/27/19

CEO Shoptalk — Confidence: Expecting To Win

The other day I read some screed that attempted to describe confidence in a ham-handed and poorly written manner. Reading it felt like an intellectual barbed wire enema, but it did make me think about the subject.

Tom Brady, quarterback of the National Football League New England Patriots, expects to win every time he steps on the football field.

Not only does HE expect to win, but those who play with him, the coaching staff of the team (led by Head Coach Bill Belichick), the sports punditry, the fans, and maybe the opposition — also expect him to win.

He brings that magic bit of confidence that creates this mojo — expecting to win. He has played in nine Super Bowls and has emerged with a ring from six of them.

Stop for a second: Do YOU expect to win as a CEO? Do you?

Tom Brady doesn’t expect to win only on the football field; he expects to win in life, at everything.

This doesn’t happen by accident.

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09/26/19

Digital Despotism — China

Tech can be a good thing; tech can be a bad thing. China, a vicious Communist country, is using tech to control its people. Soon they will use it to reward and punish their people. It is all about control. Let’s dig into this.

China — the world’s largest country by population — has 1,420,000,000 people. Some (talking to you, Hong Kong) are yearning to be free, free of the Communist leadership that desires to suppress the yearnings for freedom while controlling everybody. The promise of “One China, Two Systems” has evaporated. Hong Kong is going to conform to Beijing’s wishes or disappear.

Look at the picture of Moe and Larry. Two clowns who could cause a lot of trouble, who are big pals. If the Chinese wanted to control North Korea, they could do so in a heartbeat, but they don’t want to.

China is 92% Han Chinese with the balance being “other” minorities like the Uyghurs (Uygurs, Uighurs, Uigurs). The Uyghurs are a Turkic ethnic minority, one of the 55 “ethnic minorities” recognized by Beijing.

Since the 16th century, the Uyghurs have been Muslim which has defined their culture and identity. In China, there are 11,300,000 Uyghurs. More about the Uyghurs later.

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09/26/19

A Few Good Men — Joseph Maguire

Today, you may have seen a few snippets of the Acting Director of National Intelligence, Joseph Maguire, being quizzed by the House Intelligence Committee, chaired by Congressman Adam Schiff (D-Cali) in regard to the l’affaire “blowing of the whistle.”

It was the typical Congressional investigatory shit show, but I discovered an interesting man: Joseph Maguire.

Who is this man Joseph Maguire?

Director Maguire was a 36-year Navy man in a prior life. He wore three stars as a Navy Vice Admiral. He spent his entire career as a special warfare officer and wears the SEAL Trident and the Marine Corps Parachutist insignia.

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