Here is a recent post by Scott Galloway comparing Uber and WeWork. In it, he praises the virtues of asset-light business models:

For most of business history, having assets was good, and having more was even better. However, one of technology’s tectonic unlocks has been elevating information (bits) over objects (atoms). In the information age, owning assets is one business, while operating them is another, and each demands distinct capital structures, management approaches, and operational skills. Businesses offering the greatest return on invested capital don’t have much capital (assets) and can scale up faster, as they don’t bind themselves to cars, apartments, or even inventory.

We know this. Uber doesn't own cars. Airbnb doesn't own rental properties. And most hotels, as Galloway mentions, also don't own their real estate. Generally speaking, hotels are brands that enter into fee-earning management contracts with people who own real estate.

However, WeWork is not this. According to Galloway, WeWork had $47 billion of pre-IPO lease obligations. These ran/run through to 2038. In this regard, WeWork is more bank-like: they have a similar mismatch of short-term assets and long-term liabilities.

Galloway also argues that asset-light businesses offer the greatest ROI because they can scale up faster. And this is certainly one of the virtues of tech businesses. In more asset-heavy businesses like real estate development, each project/asset is largely a discrete effort.

But there are significant advantages to owning real estate; one of them being that, at the end of the day, you own a hard asset.

Venture capitalist Fred Wilson once wrote on his blog that one of his big lessons from the dot-com bubble was that he learned to take his tech wealth and funnel portions of it into hard assets -- namely real estate in New York City.

This, of course, comes with its own set of risks. But clearly there is something to be said about owning real estate.

Oftentimes when I think about Los Angeles, I think about the fact that you generally have to drive everywhere. And since I have a personal preference for dense and walkable cities, this thought helps me feel slightly less envious about their perfect weather.

Los Angeles is probably the original car city. Here is an excerpt from this excellent post by Brian Potter, where he summarizes a 1987 book by Scott Bottles called, "Los Angeles and the Automobile":

Los Angeles was especially quick to adopt the car. By 1920 Los Angeles had the highest per-capita rate of car ownership in the US, four times more automobiles per capita than the US average, and eight times more than the much-denser Chicago. In 1920, 9 times as many people entered downtown LA via streetcar as via automobile. By 1924, that had nearly equaled.

And interestingly enough, people started using them, almost immediately, to create Uber-like services:

A popular early use of the car for public transit was the jitney. Car owners would pick up passengers (often waiting at streetcar stops) and drive them to their destination for the same price as a streetcar ride (5 cents). Car owners would often simply put their destination in their windshields, and pick up anyone along the way who was headed in the same direction. Because jitney travel was much faster than streetcars, and wasn’t limited to the fixed streetcar routes, jitneys often had better service than streetcars.

Jitney travel first appeared in Los Angeles in 1914, and by November of that year was being used for thousands of trips per day. The jitney quickly spread to other cities. By early 1915, an estimated 62,000 jitneys operated around the country in cities such as San Francisco, Seattle, Denver, and Birmingham. As jitney travel became more popular, electric rail companies found that they were losing significant ridership

What this again underscores is just how disruptive the car was -- right from the outset. It was quickly seen as being more convenient, especially in a city like Los Angeles, which wasn't as dense as its counterparts on the east coast.

Sadly, and as Potter suggests in his post, it is not clear that the headwinds facing public transit have changed all that much since the first jitneys started appearing on the streets of Los Angeles a century ago.

Here is a recent post by Scott Galloway comparing Uber and WeWork. In it, he praises the virtues of asset-light business models:

For most of business history, having assets was good, and having more was even better. However, one of technology’s tectonic unlocks has been elevating information (bits) over objects (atoms). In the information age, owning assets is one business, while operating them is another, and each demands distinct capital structures, management approaches, and operational skills. Businesses offering the greatest return on invested capital don’t have much capital (assets) and can scale up faster, as they don’t bind themselves to cars, apartments, or even inventory.

We know this. Uber doesn't own cars. Airbnb doesn't own rental properties. And most hotels, as Galloway mentions, also don't own their real estate. Generally speaking, hotels are brands that enter into fee-earning management contracts with people who own real estate.

However, WeWork is not this. According to Galloway, WeWork had $47 billion of pre-IPO lease obligations. These ran/run through to 2038. In this regard, WeWork is more bank-like: they have a similar mismatch of short-term assets and long-term liabilities.

Galloway also argues that asset-light businesses offer the greatest ROI because they can scale up faster. And this is certainly one of the virtues of tech businesses. In more asset-heavy businesses like real estate development, each project/asset is largely a discrete effort.

But there are significant advantages to owning real estate; one of them being that, at the end of the day, you own a hard asset.

Venture capitalist Fred Wilson once wrote on his blog that one of his big lessons from the dot-com bubble was that he learned to take his tech wealth and funnel portions of it into hard assets -- namely real estate in New York City.

This, of course, comes with its own set of risks. But clearly there is something to be said about owning real estate.

Oftentimes when I think about Los Angeles, I think about the fact that you generally have to drive everywhere. And since I have a personal preference for dense and walkable cities, this thought helps me feel slightly less envious about their perfect weather.

Los Angeles is probably the original car city. Here is an excerpt from this excellent post by Brian Potter, where he summarizes a 1987 book by Scott Bottles called, "Los Angeles and the Automobile":

Los Angeles was especially quick to adopt the car. By 1920 Los Angeles had the highest per-capita rate of car ownership in the US, four times more automobiles per capita than the US average, and eight times more than the much-denser Chicago. In 1920, 9 times as many people entered downtown LA via streetcar as via automobile. By 1924, that had nearly equaled.

And interestingly enough, people started using them, almost immediately, to create Uber-like services:

A popular early use of the car for public transit was the jitney. Car owners would pick up passengers (often waiting at streetcar stops) and drive them to their destination for the same price as a streetcar ride (5 cents). Car owners would often simply put their destination in their windshields, and pick up anyone along the way who was headed in the same direction. Because jitney travel was much faster than streetcars, and wasn’t limited to the fixed streetcar routes, jitneys often had better service than streetcars.

Jitney travel first appeared in Los Angeles in 1914, and by November of that year was being used for thousands of trips per day. The jitney quickly spread to other cities. By early 1915, an estimated 62,000 jitneys operated around the country in cities such as San Francisco, Seattle, Denver, and Birmingham. As jitney travel became more popular, electric rail companies found that they were losing significant ridership

What this again underscores is just how disruptive the car was -- right from the outset. It was quickly seen as being more convenient, especially in a city like Los Angeles, which wasn't as dense as its counterparts on the east coast.

Sadly, and as Potter suggests in his post, it is not clear that the headwinds facing public transit have changed all that much since the first jitneys started appearing on the streets of Los Angeles a century ago.