WeWork has been discussed on the forum a couple times, notably HERE where the discussion is around the concept and if people like it, and HERE where discussing if a lack of professionalism may have been the straw that broke the camels back.
For those not following along, there has been a lot going on lately. The tl;dr is that the company was scheduled to IPO this month, at an estimated $47b valuation, making it one of the most valuable startups of the decade.
Further due diligence showed increasing losses every quarter and year. As revenue increased, losses increased. It was a good test of the markets appetite for another high growth-high loss IPO. The company wanted to be valued as a tech company vs a real estate company. Ultimately, the much hyped IPO was delayed, then shelved indefinitely.
Now, SoftBank is expected to announce a package to take control of the company it has already invested billions into, at a valuation that is 20% of what it was a month ago.
Now, we must give credit where credit is due. Adam Neumann, the founder and former CEO saw a need and came up with a valuable solution. He is receiving an exit package worth up to $1.7b for his role.
Also, SoftBank’s team are no dummies, you don’t develop two $100b investment funds by being lucky or by buying Apple at the right time.
With the new deal, SoftBank will have a company, valued at $8b that they have already and/or committed to investing $15b into.
I would love to hear some takes on a path to profitability for WeWork. Is this a massive example of sunk cost fallacy for SoftBank? Or did they just acquire a $45b company for $15b?
For those not following along, there has been a lot going on lately. The tl;dr is that the company was scheduled to IPO this month, at an estimated $47b valuation, making it one of the most valuable startups of the decade.
Further due diligence showed increasing losses every quarter and year. As revenue increased, losses increased. It was a good test of the markets appetite for another high growth-high loss IPO. The company wanted to be valued as a tech company vs a real estate company. Ultimately, the much hyped IPO was delayed, then shelved indefinitely.
Now, SoftBank is expected to announce a package to take control of the company it has already invested billions into, at a valuation that is 20% of what it was a month ago.
Now, we must give credit where credit is due. Adam Neumann, the founder and former CEO saw a need and came up with a valuable solution. He is receiving an exit package worth up to $1.7b for his role.
Also, SoftBank’s team are no dummies, you don’t develop two $100b investment funds by being lucky or by buying Apple at the right time.
With the new deal, SoftBank will have a company, valued at $8b that they have already and/or committed to investing $15b into.
I would love to hear some takes on a path to profitability for WeWork. Is this a massive example of sunk cost fallacy for SoftBank? Or did they just acquire a $45b company for $15b?
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