In 2017, the Wall Street Journal’s indefatigable Neumann correspondent Eliot Brown described “A $20 Billion Startup Fueled by Silicon Valley Pixie Dust”. The more sceptical sections of the financial press have always had WeWork’s number, even when the company’s footprint and valuation were soaring. But Neumann’s propensity to sell stock and lease buildings he partially owned back to WeWork wasn’t news either – it was exposed by the Wall Street Journal earlier this year, before the trouble started. What seemed to make this year’s WeWork stories different, and more damaging, was the addition of alleged self-dealing and self-enrichment by Neumann to the core model of leasing office buildings, transforming them into “shared” workspaces, providing free beer to tenants, and then counting on a rotating cast of freelancers, venture-funded startups and some larger corporations to pay rents that could be as short as a month at a time. Neumann’s weird behaviour, meanwhile, had been part of the sales pitch from the very beginning. The company’s business model had been known to be expensive and have little path to profitability since at least 2015, when BuzzFeed first published documents WeWork had used to solicit investors. The failed IPO and the company’s subsequent takeover by SoftBank, its largest investor, were both facilitated by the public exposure of long-known information: WeWork was losing a ton of money its projections of the size of the market for shared office space (up to $3tn) were wildly optimistic (it counted anyone who worked at a desk in an American city where there was a WeWork as a potential “member” in non-US cities with WeWorks, the estimate applied to anyone with an office job) and its corporate culture and strategy were completely in hock to Neumann and his family’s bizarre ideas and whims. The company’s proposed valuation had fallen by more than half, and the IPO had been called off entirely. Six weeks later, Neumann had voted to remove himself from the CEO job and given up his majority control of WeWork’s stock. Everything went wrong for WeWork soon after it publicly filed documents for an initial public offering of shares, on 14 August.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |