WeWork

[weijian]

How many legs does a dog has? Even if all the auditors and bankers are willing to certify that it has 5? (including its tail)

How Venture Capitalists Are Deforming Capitalism

As summer ended in 2019, the S-1 was approved by the company’s board of directors and by the underwriting committees at JPMorgan Chase, Goldman Sachs, Bank of America, Citigroup, and Barclays. “We had the biggest leaders in finance telling us this was the most amazing S-1 they had ever seen,” Miguel McKelvey, the WeWork co-founder, told me. The S-1 was blessed by hundreds of lawyers, accountants, consultants, communications professionals, and other people advising WeWork, all of whom stood to earn millions of dollars when the I.P.O. went through.

https://www.newyorker.com/magazine/2020/...capitalism

[weijian]

350mil is probably not expensive chips to bet on the gambling table. Instead it is cheap advertising to all founders of future unicorns?

Can a Zebra Change Its Stripes?

As I’m sure you’ve heard by now Andreessen Horowitz announced Monday that it’s cutting its largest individual check ever — $350 million — in WeWork founder Adam Neumann’s new real estate company Flow.

This whole saga has been great strategic positioning for the firm. What Andreessen Horowitz has always understood better than anyone else is that the main audience for their marketing is founders. So even if the masses find investing in Neumann distasteful, this sends a clear message to prospective founders that a16z wants to back the bold. And founders are the ones who can generate the billions in returns for Andreessen Horowitz that the firm needs to be successful.

This is the contrarianism that is so often talked about.

https://www.newcomer.co/p/can-a-zebra-ch...ts-stripes

[specuvestor]

Wework and Cathie Wood for PE craze is synonymous and iconic to Webvan and Merry Meeker of dot com days

(MarketWatch) -- In August, WeWork said that 'substantial doubt' existed about the company's ability to continue as a going concern
WeWork Inc.'s high negative debt-to-equity ratio suggests that the troubled co-working-space provider's bankruptcy is looming, according to credit-monitoring and risk-management company Creditsafe.
WeWork (WE) has a total shareholder equity of negative $3.56 billion and the company's total debt is $2.9 billion, bringing its debt-to-equity ratio to -81.7%, Creditsafe said. "When a company's debt-to-equity ratio is in the negative, this means the company's liabilities exceed its assets," Ragini Bhalla, head of brand and spokesperson for Creditsafe, told MarketWatch. "This would be considered a sign of high risk, and is likely to be an incentive to file for bankruptcy sooner than later."
On Tuesday, the Wall Street Journal reported that WeWork plans to file for bankruptcy as early as next week. WeWork's stock plunged 46.5% on Wednesday.

In August, WeWork said that "substantial doubt" existed about the company's ability to continue as a going concern, citing its losses and projected cash needs, as well as increased member churn and current liquidity levels.
Set against this backdrop, Creditsafe's Bhalla noted that WeWork's cash flow is in the negative. In the first six months of 2023, WeWork reported negative cash flow from operating activities of $530 million and a net loss of $696 million.
Creditsafe also weighed the potential impact of a WeWork bankruptcy on the company's suppliers. WeWork's Days Beyond Terms (DBT), which is how many days past payment terms it typically takes to pay invoices, has increased from 67 in August to 68 currently, said Bhalla, citing Creditsafe data. "The fact that it takes WeWork over two months to resolve late payments is a major cause for concern," she added. "It indicates there's a larger cash flow problem behind the scenes."

Exacerbating this problem is that WeWork's delinquent payments, those 91-plus days late, increased by 631.82% over the past 12 months, according to Creditsafe. "For any suppliers and vendors who might be relying on those payments, this could have a domino effect on their own cash flow," said Bhalla.
WeWork, however, has pushed back against the data, which it says is not an accurate portrayal of its invoice payments. "Vendors are an important part of our business," a WeWork spokesperson told MarketWatch. "Our invoice processing has continued according to our agreements and in a timely manner."
Shares of WeWork have fallen 97.9% in 2023, compared with the S&P 500 index's SPX gain of 10.4%.

[specuvestor]

I forgot this IPO saga... many audacious people during the PE craze... including Three Arrow founder say will buy up Singapore's Landed property

(Business Insider)
WeWork is reportedly close to filing for bankruptcy. 
A filing would mark the culmination of one of the most stunning startup failures of all time.
WeWork's demise started years ago, with a pivotal six week period in 2019
Editor's note: Insider first published this story in September 2019, describing the disastrous period after WeWork filed for its first attempt at an IPO. The IPO documents disclosed a bevy of conflicts of interest and mismanagement by its magnetic and eccentric cofounder, Adam Neumann. In the weeks following, Neumann's IPO dreams crashed and burned, and he was ousted as CEO. The company downsized and went public via a SPAC just two years later in 2021. But WeWork continued to hemorrhage cash, putting it in severe financial distress. Ahead of a potential bankruptcy filing, Insider is republishing this story on the first signs of WeWork's troubles.
At 7:12 on a mild late-summer morning in New York City, WeWork's registration papers hit the Securities and Exchange Commission's website. The filing, called an S-1, was expected. It was a crucial step in what up to that point had been an exquisitely choreographed march toward an initial public offering for the tech world's most highly valued startup.
With its stratospheric $47 billion valuation and preposterously ambitious cofounder and CEO, Adam Neumann — his goal wasn't merely to make money or rent office space, he claimed, but to "change the world" — WeWork had become a glaring symbol of Silicon Valley's boundless audacity and self-professed exemption from the laws of economics.
In the early-morning light, thousands of investors and journalists would get their first real peek at the company's financial condition and be able to judge for themselves whether WeWork was really, as its founder claimed, on a path toward galactic dominance and unimaginable profit.
Almost immediately, all hell broke loose. A steady stream of rapid-fire headlines detailed Neumann's self-dealing, mismanagement, and bizarre behavior. Within 33 days the offering was scuttled, WeWork's valuation plummeted 70% or more, and Neumann, who believed he would become the world's first trillionaire, was ousted as CEO. What was supposed to be Neumann's coronation as a visionary became one of the most catastrophically bungled attempted debuts in business history.

[Big Toe]

Adam Neumann as a CEO had failed completely. However his personal wealth grew immensely when he sold his shares and when softbank got rid of him in 2019 and paid 1B USD(Exact figure varies but ard 1B, maybe more) compensation. Many capable and successful CEOs/founders would not have earned a fraction of what he received. Wework failed, Adam neumann succeeded extracting maximum riches from it.

[weijian]

I read the WeWork book and it didn't try to put the blame solely on Adam Neumann. Mayoshi Son was probably an equally guilty accomplice in the amazing blow-up, by cajoling (and probably pushing) Adam to have more ambition than the latter had ever dreamt of.

Of course, from monetary perspective, Mayoshi Son was a victim and Adam looked like the predator.

[Big Toe]

Except for charities,non profit organization, all other companies exist for profit. We too, work for a profit. From his actions, Adam probably knew exactly what he was doing and that his stint at we work wouldnt last/is inflated by hot air. He sold his shares when it was hyper inflated.

The same can be said of another start up peloton. Founder and insiders sold out when stock was >$100 during covid when connected indoor cycling was all the rage. Currently it is trading a little over $5. Such companies are doomed from the start, but the founder and insiders made it anyway. They have achieved what they set out to do. Whatever happens to the company they set up did not really matter.

[EnSabahNur]

I read the WeWork book and it didn't try to put the blame solely on Adam Neumann. Mayoshi Son was probably an equally guilty accomplice in the amazing blow-up, by cajoling (and probably pushing) Adam to have more ambition than the latter had ever dreamt of.

Which book was it?

[weijian]

@BigToe,
I think all of us would give ourselves a big pat on the back for selling at the top. And after selling our stock as OPMI, we seldom care much about what happens because we would have moved onto the next companies we spent time analyzing (and hoping to profit from). That's the beauty of capitalism, isn't it?

@EnSabahNur,
The WeWork book is below:
https://www.amazon.com/Cult-We-Neumann-S...0593237110

[specuvestor]

Reminds me of Ofo Bike Dai Wei lost and Mobike Hu Weiwei won because she know when to quit and sold out. Sometimes it's important to know oneself... is it fundamental, opportunistic or just a puff.

Arguably Neumann was forced to quit like Uber Kalanick with too much hubris, rather than foresight. Mayoshi Son is overrated in my view but the legacy still there as long it doesn't implode.

Hero and Zero is a fine line that is often timeline dependent. We overestimate the number of possible history makers when progress is often "progressive" stepping on the shoulders of giants

Adam Neumann as a CEO had failed completely. However his personal wealth grew immensely when he sold his shares and when softbank got rid of him in 2019 and paid 1B USD(Exact figure varies but ard 1B, maybe more) compensation. Many capable and successful CEOs/founders would not have earned a fraction of what he received. Wework failed, Adam neumann succeeded extracting maximum riches from it.

I read the WeWork book and it didn't try to put the blame solely on Adam Neumann. Mayoshi Son was probably an equally guilty accomplice in the amazing blow-up, by cajoling (and probably pushing) Adam to have more ambition than the latter had ever dreamt of.

Of course, from monetary perspective, Mayoshi Son was a victim and Adam looked like the predator.