and WeGrow, a coding academy and for- profit school that promises “a curriculum that emphasizes socializing and entrepreneurship for three-year-olds on up.” Neumann also believes the company is now in a position to execute some of his previous ambitious ideas, like a “European-style” hotel concept with shared bathrooms called WeSleep (more real estate)... something called WeBank (no details)... and WeSail (Caribbean charters). The Saudis remained unimpressed and still passed on the second round of investments. At $47 billion, WeWork sits just behind Uber when it comes to the biggest U.S. startups. So instead, Masa invested $2 billion of SoftBank’s money into WeWork at a $47 billion valuation. It’s interesting to note that, when investing the Saudis’ money, Masa was willing to put up $16 billion... But on his own dime, he would only pony up $2 billion. Either way, the $47 billion valuation – and related $5 billion in paper profits for the SoftBank Vision Fund – remained intact. At $47 billion, WeWork sits just behind Uber when it comes to the biggest U.S. startups. MASSIVELY UNPROFITABLE Unlike WeWork, the ride-scheduling market leader has a history of innovation... Uber’s phone-powered software that links drivers and riders solved an actual problem and revolutionized the way many Americans get around today.
A ‘STATE OF CONSCIOUSNESS’...
If you’re keeping score at home, a $45 billion valuation means paper profits of roughly $5 billion on the SoftBank Vision Fund’s initial $4.4 billion investment, all without a hint of movement toward profitability for WeWork. It’s the exact same scam you would’ve been running in the hypothetical real estate example we discussed above . To their credit, the Saudis pushed back on Masa. Their main concern wasn’t just that Masa was about to dump another $16 billion of their money into a consistent money loser. Their main issue was that they had intended for Masa to make technology investments ... and not glorified real estate plays. In response, WeWork CEO Adam Neumann began playing up his company’s “techy-ness” in the press... explaining how traditional valuation methodology just doesn’t apply to the company’s innovative mix of exposed wooden beams and free kegs. As Neumann explained to the New York Times in early 2018... To assess WeWork by conventional metrics is to miss the point. WeWork isn’t really a real estate company. It’s a state of consciousness. A “state of consciousness”? In January, as part of an effort to shed the “just a real estate company” image, Neumann announced the rebranding of the business as The We Company. It includes WeWork spin-offs WeLive, a residential incarnation of WeWork (that’s still real estate, Adam)...
American Consequences
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