This video is sponsored by Dashlane. Conveniently store your passwords and get
10% off for the first 200 people to use the link in the description. It’s now 2019 and everything is getting
old. Ellen Degeneres is now sixty, Comments on
why I’m wrong about Florida’s flag are getting ancient, not that I read those, or
anything, and millennials are now officially full-grown adults. The youngest are graduating college and entering
the job market. The oldest, are well into their careers. And while some companies are busy complaining
about millennials killing their business, others are realizing Hey, this generation
might not be exactly the same as their parents, and are adapting. Imagine that. Hence: Lots of bright colors, artsy fonts,
emojis, and manufactured authenticity. Prolly not a great time to announce the new
PolyMatter branding… One of the most successful of these companies
is called WeWork. In case you’re not a 20-35 year-old who
lives here and likes to work from a beanbag, (no judgement), here’s the idea: Instead of leasing an office for a whole year,
or trying to write a script about this hot new startup called WeWork in a Starbucks while
the barista yells “Karen!” for the 7th time in 2 minutes, You can
rent a space in one of WeWork’s 500 buildings in 97 cities. For somewhere between two and eight hundred
dollars a month, you get a private office, a desk, or the opportunity of a desk. They provide the Wifi, furniture, printers,
and cleaning. It’s got all the ingredients of a fun, exciting,
young startup – craft beer, pictures of people doing yoga, and chairs that don’t look like
chairs. It may not sound revolutionary but it’s
perfectly timed with the rise of independent, remote, and freelance workers, who there are
now 68 million of in the U.S. alone. There just one problem, or a few billion,
actually. WeWork is the 4th highest valued startup in
the world, just behind Uber and its Chinese competitor. Many have called it massively overvalued,
even the most overvalued. Meanwhile, it’s starting a school, called
WeGrow, a gym called “Rise By We”, and renting apartments called WeLive, Which all
sounds a we bit… scattershot. So, what’s the deal? The answer is just as interesting as what
it says about… our whole economy. The way WeWork makes money, or tries to, is
actually pretty simple. It is starting to buy a few of its own buildings,
but for the most part, here’s how it works: First, it finds big, centrally-located buildings
in young, densely populated areas and signs a five, ten, even fifteen-year lease. Which makes the landlord really happy, at
least, for now. And then, they turn around and sublease to
you and I, on a monthly basis. Pretty simple, right? A little too simple, you might be thinking. If WeWork can make money appear out of thin
air by splitting a big lease into a bunch of tiny ones, why doesn’t the building just
do that itself? Isn’t WeWork just an inefficient middleman? Instead of paying one landlord, now we’re
essentially paying two. And that’s true – nothing stops the owner
of a building from creating its own shared offices. Some do. But it’s not so simple. For two reasons. First, WeWork and the owner are really playing
two, very different games. At its core, WeWork is one, giant, $47 billion
bet that its real estate will increase in value. Because if you and I pay more every month
for a desk, WeWork still pays the same 10, 15, whatever-year lease, and they pocket the
difference. On the other hand, if can I say, when? property
values fall, they have to pay the difference. Now, each lease is under a different subsidiary,
so if it can’t afford to make payments, the company, as a whole, is somewhat protected. But if a bunch of them fail at the same time,
like during a recession, it could be really, really bad. And remember that most of WeWork’s customers
are small startups and freelancers, ya know, the businesses most likely to fail during
a recession. Oops. The owner, on the other hand, gets a consistent,
arguably lower-risk paycheck and makes its building more valuable in the meantime. The second reason is that WeWork has an unfair
advantage. Unlike the property owner, it can set prices
unreasonably low, attracting far more customers. The secret is that WeWork is always on sale
– you just don’t know it. How can it sell a service for less than what
it costs? The answer is a little, actually, remarkably
not-so-little, company called SoftBank. You’ve never heard of it because it’s
a multinational holding conglomerate. In English, a company that owns companies. A big pile of money. Softbank’s Vision Fund is nearly $100 billion,
provided by Saudi Arabia, the United Arab Emirates, and companies like Apple and Qualcomm. Best friends, I hear. To put that in perspective, because, frankly,
anything after like 6 zeros(?) tends to look the same, These are the other biggest venture capital
firms. The Vision Fund makes even Goldman Sachs look
more… bronze than gold. So what does it do with all that money? Mostly, invest in tech companies. And, when those run out, anything that remotely
looks like one. Basically, add “big data” or “blockchain”
to your name and then buy a bigger wallet, because Softbank wants all of it. Just a few weeks ago, it poured another $2
billion into WeWork. And if you think that’s a lot, which, it
is, it was originally going to be sixteen billion. So, Softbank, in a round-a-bout way, is paying
for part of your office, in hopes that the company will grow and one day make a profit. Which is all too common – Enjoy those $1 scooters,
and cheap Uber rides because some venture capitalist somewhere is paying for them. It won’t last forever, just ask anyone with
Moviepass how that turned out. But hang on. Why does Softbank, who likes tech companies
like Uber and Bytedance, invest in WeWork, who leases real estate? Well, that’s the question – is WeWork a
tech company, or does it just really want to be? Because, if it’s just a middleman between
property owners and renters, and Uber just a platform connecting drivers
and riders, both of which use technology but suffer the
economics of a non-tech company, then they’re a lot less exciting. If that’s true, a lot of investors are spending
a lot more than they should, and when they realize this, things are going to get ugly. Think about it this way: A tech company can
potentially have seven billion users instantly. A thousand downloads don’t cost any more
than one. Scale is (nearly) unlimited. And therefore, so are valuations. WeWork, however, will always have to buy or
lease more space as more people join. It scales, but not in the same way. To put it in perspective, there’s this other,
less exciting, co-working company called Regus. This is its total square feet, and this is
WeWork’s, again, with a valuation of $47 billion. So what’s Regus valued at? 4 Billion – That’s not with a zero. Hmmm… Oh yeah and, fun fact: Regus actually makes
a profit. I know right? Who does that? So old fashioned! The question is: What makes WeWork worth that
extra 43 billion? Why is it valued like a tech company? And Regus, based on, ya know, how much money
it can make? Now, it’s tempting to stop here. To say WeWork is just a real estate company
and yes, it’s overvalued. But, that’s not totally fair. There’s a reason WeWork is so much more
successful and it’s not just that Softbank thinks its money is a hot potato, It’s because WeWork has mastered the art
of telling a story. Regus has nice, professional photos and advertises
with generic phrases like “Stay productive”, But WeWork understands The Millennial. Big art pieces, craft beer, and so many mentions
of the word “community” that I’m afraid to Control-F their website for fear of crashing
my browser. “WeWork… (is) a state of consciousness,
a generation of interconnected emotionally intelligent entrepreneurs.” Roll your eyes all you want, and trust me,
I have, but it works. And it does have useful data, on where people
work, when they’re most productive, and so on, which they can use to redesign and
optimize buildings. That’s valuable information. It has to decide, for example, how many conference
rooms to build based on how much they’ll be used. That’s worth thousands of dollars a month,
because if it builds even one too many rooms, its wasting space that could’ve been a desk,
and made more money. So, is it real estate or tech company? Yes. But, make no mistake: its core business fundamentally
relies on property values. That’s true no matter how hard it tries
to distract us, “Hey look over here, we’re not just a real estate company”, We’re opening a high-end gym in New York,
we bought a wave-pool company, Seriously though, why?! and we’re starting an elementary school! Which, by the way, costs up to $42,000 a year,
a total of $388,000 from age 2 to 11. Although, to be fair, it’s no ordinary school
– “A field of super-elliptic objects forms a learning landscape that’s dense and rational
– yet free and fluid.” Whatever that means, it’s not enough to
save the company from the fate of Regus, who after the dot-com crash, filed for bankruptcy. To survive its first recession, WeWork will
have to change its strategy or significantly diversify its income. Economic downturns are inevitable, you have
to protect yourself by spreading your eggs across multiple baskets. Likewise, it’s only a matter of time before
the next big hack – and when it happens, you don’t wanna be the guy with the same or
similar passwords across all your accounts. Dashlane can conveniently store and fill those
passwords, so you don’t have to. And since you’re not remembering them, you
can make them ridiculously long and hard to guess. There’s even a built-in VPN. Whether you use Windows, Android, iOS, or
Mac, you can easily download their app, and start using it for free. If you’re like me, you’ll be glad you
have it every time you have to login or create an account or buy something online. You can sign up completely free with the link
in the description and the first 200 people will also get 10% off premium.

The Most Overvalued Startup in the World?
Tagged on:                                                                                                         

100 thoughts on “The Most Overvalued Startup in the World?

  • February 1, 2019 at 4:07 pm
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    Next video will come a little earlier due to some travel. Enjoy!

    Reply
  • May 23, 2019 at 9:16 am
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    Google after 10 years (2009): 23.7 bn revenue, 6.5 bn net income.
    Facebook after 10 years (2014): 12.4 bn revenue, 2.9 bn net income.
    WeWork after 10 years (2018): 1,8 bn revenue, 1.9 bn net loss.

    Surely a great investment.

    Reply
  • May 23, 2019 at 5:25 pm
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    The Most Overvalued Startup in the World?

    You're talking about dashlane right.

    Reply
  • May 25, 2019 at 9:15 am
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    Just biy regus

    Reply
  • May 25, 2019 at 9:31 am
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    i hate parents liking candy crush.

    Reply
  • May 25, 2019 at 10:13 am
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    That transition made me cum

    Reply
  • May 26, 2019 at 11:49 am
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    1:21 Hey i called Karen 7 times too but she still didnt gave me back my kids

    Reply
  • June 1, 2019 at 11:32 am
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    The moment you realise that our whole economic system relies on a few companys investing into others and hoping that they don't crash. Scary

    Reply
  • June 1, 2019 at 5:16 pm
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    I know I’m 4 months late , but Jesus, that Segue was epic

    Reply
  • June 2, 2019 at 2:50 am
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    WeBroke

    Reply
  • June 2, 2019 at 9:37 pm
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    I’m operating a start up from an incubator. I get more perks than WeWork, and I pay only $75/month.

    Reply
  • June 3, 2019 at 12:33 am
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    wow, you've grown a lot since i first subbed at around 1.5k subs.

    Reply
  • June 3, 2019 at 12:35 am
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    No it doesn't work, because it doesn't make money. Its bleeding several times its revenue in long term leases, such horrible cashflow makes it WeBroke.

    Reply
  • June 3, 2019 at 12:35 am
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    "independent workers" aka unemployed

    Reply
  • June 3, 2019 at 12:45 am
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    scaling up a product to handle millions of users actually takes a lot of money, you need to buy servers and change the code to be able to handle the requests quickly and ensure no downtime.

    Reply
  • June 8, 2019 at 4:07 am
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    i think we are in a tech bubble. billion dollar valutations for businesses who are not making profit. if a crisis insues all the venture funds are pulled out and those businesses fail

    Reply
  • June 8, 2019 at 6:06 pm
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    Wework, is not only in the US.

    Reply
  • June 9, 2019 at 5:48 pm
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    no

    Reply
  • June 12, 2019 at 10:48 pm
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    "Isn't WeWork just an inefficient middleman?" I agree and would make the same argument towards Uber.

    Reply
  • June 13, 2019 at 5:21 am
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    that was not a smooth transition to the sponsor at the end 😂nice try though

    Reply
  • June 14, 2019 at 4:58 am
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    Dumb millenials

    Reply
  • June 15, 2019 at 11:42 am
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    If anything it looks like SoftBank needs to be broken up🧐💯

    Reply
  • June 17, 2019 at 1:26 am
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    DO $BYND

    Reply
  • June 19, 2019 at 2:41 pm
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    Still less overrated than all the idiotic scooter companies

    Reply
  • June 20, 2019 at 5:35 am
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    I shaked SoftBank owner’s hand many years ago….

    Reply
  • June 20, 2019 at 3:48 pm
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    Abolish private property

    Reply
  • June 21, 2019 at 5:58 am
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    Me: rolls eyes
    PolyMatter: "Don't roll your eyes"
    Me: surprised pikachu meme

    Reply
  • June 22, 2019 at 6:21 am
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    But, but, the stock market is efficient, right?

    Reply
  • June 22, 2019 at 8:39 am
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    I mean or you could just buy a desk for your house or apartment

    Reply
  • June 22, 2019 at 6:39 pm
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    Humanity is at a strange point. The wealth divide has become SO fast that the top top top wealthiest entities (SoftBank) can actually blow money for YEARS with 1 end goal in mind: Build a brand.

    I'm sure somewhere they've done the math that it takes X years for a human being to develop brand loyalty. Right now, they're nurturing that brand loyalty in companies like Uber, and WeWork.

    Reply
  • June 23, 2019 at 2:59 pm
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    My new startup will be renting cardboard boxes and shopping carts just in time for the next recession.

    Reply
  • June 23, 2019 at 4:47 pm
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    The most overvalued company is Theranos

    Reply
  • June 23, 2019 at 7:32 pm
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    I know this sounds stupid, but… If you're a freelancer, why would you go to office full of randos? Isn't ability to work from home one of the advantages of freelance?

    Reply
  • June 26, 2019 at 4:21 am
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    Do you have Portland but not the twin cities ! We have more Fortune 500s per capita then any city in the US . You meany

    Reply
  • June 26, 2019 at 5:28 am
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    I am currently working in Regus and next month would be shifting into Wework! But i'll definitely sign up for Dashlane no matter what, just for that smooth transition.

    Reply
  • June 26, 2019 at 6:59 pm
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    Of course landlords could do the same for themselves but companies like 'we' do all the maintainance, technical infrastructure, furniture, air conditioning and even catering. I am not arguing wether prices are fair or not but this is a lot off your mind as a landlord and as a small start-up.

    Reply
  • June 26, 2019 at 9:50 pm
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    2025: WeBroke

    Reply
  • June 26, 2019 at 11:49 pm
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    Great video. You should have maybe illustrated the proportion of Softbak that is funds by the Saudis and Bahrainis. THAT’s the crux of what is going on, and it’s not innocent:

    Reply
  • June 27, 2019 at 12:06 pm
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    So, you use Windows… 🙂

    Reply
  • June 28, 2019 at 3:25 am
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    That transition was https://youtu.be/8lAKfUD169U?t=57

    Reply
  • June 28, 2019 at 4:43 am
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    Awesome video, thank you

    Reply
  • June 29, 2019 at 6:04 am
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    The truth is, no tech company is just a tech company, or else it is going to fail. Successful tech companies use tech advantage to leverage on social and economic opportunities to profit.

    Reply
  • June 29, 2019 at 2:35 pm
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    You made me check WeWork in my country, Vietnam by the way.
    Their price is unbeliveble, I don't think anybody rent his offices

    Reply
  • July 1, 2019 at 2:38 am
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    I'm rewatching this again for more research towards going full-time becoming a creator, and maybe using wework as a part of this plan. =)

    Reply
  • July 2, 2019 at 10:47 pm
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    More you outsource work, more you pay.

    Reply
  • July 5, 2019 at 3:36 am
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    You can't just AirBnB your office space and value yourself higher than AirBnB

    Reply
  • July 5, 2019 at 4:41 pm
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    Is it a real estate company or a tech company?

    It’s more a marketing company.

    Reply
  • July 5, 2019 at 11:28 pm
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    Making a company is not about how to make a product, but it's about how to make a system. That's why wework has high valuation.

    Reply
  • July 6, 2019 at 1:41 am
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    Florida's flag isn't ugly. You are. Jk! good video. But Florida's flag isn't ugly.

    PS. That was my comment. 🇺🇸

    Reply
  • July 6, 2019 at 3:14 pm
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    I've never heard of softbank? I ain't stupid.

    Reply
  • July 6, 2019 at 3:20 pm
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    "The next big hack" shows equifax BURNN

    Reply
  • July 7, 2019 at 3:01 am
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    Very entertaining and insightful, thank you for the content

    Reply
  • July 7, 2019 at 4:13 am
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    Acquire collect pool sufficient Practical knowledge on Start up .

    Reply
  • July 7, 2019 at 5:16 pm
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    5:40 "anything over 6 0's…" highlights 9

    Reply
  • July 7, 2019 at 5:21 pm
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    9:45
    Polymatter: " Is [Wework] a tech company or a real estate leaser?
    also Polymatter: Yes

    Reply
  • July 8, 2019 at 12:59 am
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    Some people are praising the "smooth" transition to an ad. The moment I realize he's trying to trick me into listening to an ad instead of just announcing the sponsor, I'm at the pause or back button in a nanosecond. This is where the pure hatred of ads and advertising companies comes from. Well, in addition to being blasted the same ad over and over and over and over in a 22 minute tv show. If I wanted to lie, cheat, and deceive people, I certainly would have chosen a career in advertising…. or news.

    Reply
  • July 8, 2019 at 12:22 pm
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    That Ctrl-F joke was comedy gold

    Reply
  • July 8, 2019 at 4:36 pm
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    Resistant pedant her
    "A we bit" should be spelt as "a wee bit"

    Reply
  • July 9, 2019 at 12:32 am
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    3:30 tfw mao was right

    Reply
  • July 9, 2019 at 6:19 pm
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    WeWork understands the Millennial i.e. WeWork understands how gullible they are

    Reply
  • July 10, 2019 at 8:29 pm
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    Do wework engineers work at wework? 😂

    Reply
  • July 11, 2019 at 7:51 pm
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    Basically office as a service.

    Reply
  • July 12, 2019 at 2:55 am
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    I have heard of SoftBank!

    Reply
  • July 12, 2019 at 4:51 am
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    2:24 – The company also offers to contact your dead relatives through WeJaboard

    Reply
  • July 17, 2019 at 10:38 am
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    Softbank is basically owned by a so called "Japanese Genius" who hasn't made any profitable investment since Alibaba.

    Reply
  • July 20, 2019 at 2:43 am
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    don't touch your wewe…silly

    Reply
  • July 21, 2019 at 12:34 pm
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    Destined to fail, everyone knows millennials don't work

    Reply
  • July 23, 2019 at 1:12 am
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    I will hack dashlane and rip yalls bums apart…

    Reply
  • July 24, 2019 at 1:01 am
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    Can you explain why Sweden has no bail ? Would help us understand ASAP.

    Reply
  • July 29, 2019 at 7:30 pm
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    Saudi Arabia, UAE, Apple and Qualcomm just hit the jackpot.

    Reply
  • July 31, 2019 at 1:48 am
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    https://www.instagram.com/dhandesigns/

    Reply
  • August 3, 2019 at 3:59 pm
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    Great info but the narrator should cool it on the perceived witty comments.

    Reply
  • August 3, 2019 at 6:41 pm
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    The free market is a natural, rational system full of maximising efficiency for the cheapest resource cost.

    ALSO THE FREE MARKET – ''How about we put £47,000,000,000 into glorified love hotel for Starbucks-drinking interns''

    Reply
  • August 4, 2019 at 3:23 pm
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    Why do millennials need a yoga space and all that weird stuff, compared to just getting a cheap little office in a not so great part of town and building it up yourself and getting a way better value for your money.

    Reply
  • August 5, 2019 at 10:00 pm
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    Weworks CEO just dumped all of his stock in the company before the anticipated IPO, this company is a hype train and a half im shorting their stock as soon I can w

    Reply
  • August 7, 2019 at 8:08 pm
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    When the recession hits wework will be gone in 1 year

    Reply
  • August 8, 2019 at 12:21 am
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    https://youtu.be/DwAyUV6hTf8?t=12 including me. i turn 43 in a week ;(

    Reply
  • August 8, 2019 at 12:24 am
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    https://youtu.be/DwAyUV6hTf8?t=29
    millenials 1980-1996
    what comes after that?
    those are the most insufferable, annoying generation

    Reply
  • August 8, 2019 at 1:57 am
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    Is this company going to have an IPO anytime soon? Not that I want to buy any…

    Reply
  • August 8, 2019 at 3:15 am
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    7:24 And servers?
    Oh yea thet are in the "cloud" I forgot

    Reply
  • August 8, 2019 at 9:33 am
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    its more like soviet version of iphones from I to WE
    "soviet union anthem plays"

    Reply
  • August 9, 2019 at 3:21 am
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    Regus now runs a coworking chain called Spaces, and you could easily mistake it for a WeWork. Maybe they want that extra $43bn 😂

    Reply
  • August 9, 2019 at 2:50 pm
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    For a good half of this video, i thought you were talking about you and your business partners and how you work. After i realised we work and we grow are the name of the companies, i still listening it wrong.

    Reply
  • August 11, 2019 at 7:09 pm
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    Just another overvalued tech company.

    Reply
  • August 12, 2019 at 3:19 am
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    we need a new generation name
    thus it should be millenials part 2

    Reply
  • August 12, 2019 at 12:34 pm
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    Come on please do not feel bad for the rich investors whose money also comes from thin air. They are like match made in……… haha

    Reply
  • August 13, 2019 at 4:48 pm
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    Unless it's a standalone app that does not require an internet connection to function, every download costs money cause each new user will add to the total load of the servers. If an app is to gain 7.7 billion users instantly, the company would have to ramp up their server at an astronomical rate all of which translates to a lot of money to acquire new customers. Though it is much cheaper to scale with an app than with the model that WeWork uses.

    Reply
  • August 14, 2019 at 9:10 am
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    Investors:how much money would you like.

    WeWork:how much money do you have .

    Reply
  • August 14, 2019 at 9:40 am
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    It's not my office, It's OUR office (USSR anthem in the background)

    Reply
  • August 17, 2019 at 4:45 pm
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    1:20 well that got personal

    Reply
  • August 19, 2019 at 9:34 am
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    Sodi gadivi ra nuvvu.. Nuvvu nee sodi thu

    Reply
  • August 21, 2019 at 5:52 pm
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    galactic headquarters ^^
    love it.

    Reply
  • August 23, 2019 at 12:18 am
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    SoftBank was also my cellphone provider in Japan. I thought that’s all they were. Interesting

    Reply
  • August 25, 2019 at 5:01 pm
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    Great video man subscribed, thank you.

    Reply
  • August 26, 2019 at 10:14 am
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    When your 18-19 and are suddenly told ur not a millennial LOL

    Reply
  • August 28, 2019 at 2:33 pm
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    10:50 When you are sponsored and you must sell the product no matter what, you end up mixing a real state subject with passwords managment products. Yay!!

    Reply
  • August 29, 2019 at 3:03 am
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    You are pretty arrogant

    Reply
  • August 31, 2019 at 3:34 am
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    thar dashlane transition was smoother than the top of baikal lake in the siberian winter

    Reply
  • August 31, 2019 at 11:04 am
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    Their gym should be called wefit

    Reply

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