Source | www.livemint.com
We really don’t work, do we? Okay, that’s a pretty poor way to sum up the WeWork IPO fiasco, which has culminated in the axing of its co-founder Adam Neumann as CEO. But do forgive my muddled phraseology. After poring over thousands of words across media outlets ranging from ZeroHedge to Wall Street Journal, I’m so psyched by the magnitude of executive misdemeanours and financial shenanigans at what was hailed as the shining star of the new economy that I can barely think straight. In my defence, though, like thousands of others, I had been among the first to maintain that WeWork is just a real estate company masquerading as a tech-enabled gig.
Sample this: The We Company, as it is grandly called, makes no money from the sale of any technology product or service. Yet, its exertions thus far have been fuelled by the $12 billion generosity of SoftBank Vision Fund, the Japanese technology-focused mega-corpus, while for its future it was seeking its $47 billion IPO valuation on the grounds of being a tech company.
I am not even talking about the company’s suspect business model, which seemed like a simple rental play of leasing spaces on a long-term basis, giving them a fancy makeover, and then offering them on short leases mostly to other startups. It’s not a bad business if you can keep pulling it off . Others have done it, possibly much better. Thus, IWG plc posted $0.5 billion in profit on revenue of $3.4 billion in 2018. That reflects rather poorly on We’s $1.9 billion loss for the same period on revenue of $1.8 billion.