Everyone's favorite real estate arbitrage play trussed up as an auto-fellating tech unicorn has some news!
Today, we’re taking a step toward truly realizing our vision by beginning our next chapter. WeWork is announcing The We Company, bringing all of our business ambitions together to operate in service of how we work, how we live, and how we grow.
WeWork’s mission is to create a world where people work to make a life, not just a living. WeLive’s mission is to build a world where no one feels alone. WeGrow’s mission is to unleash every human’s superpowers.
Oh...wow. Cool? But also, what the fuck are you even talking about?
We understand that you've evolved beyond leveraging long-term commercial leasing to attract a litany of obscene equity funding rounds and that you're now doing schools and short-term residential stuff, and we've heard the rumors that you want to get into banking [pardon our turgid schadenfreude on that one] but what does "build[ing] a world where no one feels alone" even mean? You rent out big cubicles to people that hate offices and now you want to be a bank? Desperation borne from loneliness is your financial lifeblood, stupid.
Can we get one quick clarification on what this bullshit actually means?
The We Company’s guiding mission will be to elevate the world’s consciousness. Living a conscious life means choosing to live proactively and with purpose. It means being a student of life, for life, where we accept that we are always growing and in a constant state of self-discovery, self-growth, and change.
You could have just said "No."
We've mentioned before that no company has its own head farther up its own ass than WeWork, but based on what we're reading here it appears that the co-working giant is about to swallow itself whole...through its own ass. Can we just sit back and enjoy that an actual company valued at 47 billion actual dollars is releasing a statement that includes the phrase "a student of life, for life, where we accept that we are always growing and in a constant state of self-discovery, self-growth, and change"? If WeWork was a public company, the market would have an instinctual urge to knock its Kombucha out of its hand and give it a wedgie.
Changing your name is hip right now, we get it, but this ain't it, WeWork.
Is The We Company going to own its space? Because that would make at least a notional better business model than to " elevate the world’s consciousness" which is an objectively stupid business model, especially when you're a startup that burns about $1 billion a year and subsists entirely on batshit private valuations to rasie money. Much like joy and happiness, consciousness is not your friend, The We Company.
That actually brings us to our next point; Is The We Company also going to account for itself using "Community Adjusted Ebitda?" Because that was awesome.
But why do this now? Why change a name that was worth so much into something that sounds vaguely like a dating app for kinky group stuff?
Given the opportunities ahead, we are pleased to announce that WeWork has closed on a $6 billion investment from SoftBank: $5 billion is in the form of primary growth capital and the remaining $1 billion in secondary capital, which will be used to fund share purchases from investors and employees.
Wait, only $6 billion? We were under the impression that Masa Son was going to back up his money truck and pour like $20 billion into WeWork, ensuring that it garnered a valuation that only SoftBank seemed to believe was realistic. What happened?
Shortly before Christmas, Adam Neumann, CEO of WeWork, was about to sign a deal that would have changed everything for him and his company. His largest financial backer, SoftBank’s Masayoshi Son, was prepared to give him enough money to fuel not only WeWork’s ongoing and massive growth plans, but also to buy out all his other existing investors. The numbers on the table ranged as high as $20 billion, at a valuation that hovered close to $50 billion. With one signature, Neumann would have unprecedented freedom as an entrepreneur to build out his most ambitious plans for his company.
Then Son called with bad news.
That bad news being that - as you might have noticed - the market took something of a massive dump in December and wiped out enough of SoftBank's stock price that even an avowed logic-hater like Masa Son had to scale back on his pledge to give Neumann a ludicrous amount of money at a batshit valuation. According to FastCo, the cold horror of market reality forced these two dreamers into a 'smaller' deal:
Working around the clock, through the holidays into early January, WeWork and SoftBank hammered out a revised deal, announced this week, for $2 billion of new capital at a $47 billion valuation. Additionally, SoftBank has committed to fund another $1.5 billion in 2020. WeWork now has more than $10 billion of funding from SoftBank and close to $7 billion on its balance sheet.
While the numbers are still eye-popping, for WeWork the reduced deal terms raise questions for a company that has fueled much of its growth from its ability to raise and spend billions. For the first three quarters of 2018, it generated $1.25 billion in revenues but lost $1.22 billion.
So Neumann has spent the last few weeks confronting a shortfall of about $14 billion going into 2019 which must be something akin to panic. Which really ties everything together for us.
Put yourself in Neumann's shoes. Your whole unwieldy company feeds on the lifeblood of venture capital and you just got a quarter of the infusion you were planning on from the wacky Japanese billionaire who thinks you've uncovered the future. So what do you do? Maybe you tweak the name of your company and push the same esoteric nonsense that you've been peddling but in a new font. You give your partner the new pitch deck, put him on a private jet that you shouldn't be using and send him off to Tokyo where he puts on a familiar show, points out an improved market reality, says some new bullshit about "The Singularity" and voila: $10 billion from SoftBank to The We Company.
Or as the We Team would prefer to put it:
As we move forward, we will practice inclusivity, compassion, and open our hearts and our minds. In doing so, we can elevate ourselves and then the world.
But first, ELEVATE THAT CHECK!