WeWork is not a company notorious for making tough, mature, long-term decisions.
But -to be fair- that's been its brand: a Millennial dream factory fed entirely by a lack of self-doubt, performatively bullshit accounting standards and streams of nonsensically voluminous private equity money.
Reality has always been WeWork's existential enemy, and that was part of its value up until a few weeks ago. Adam Neumann isn't a terribly relatable or likable dude, and his fall from power is like a triple shot of Schadenfreude, but this isn't really his fault, is it? Adults who claimed to know better threw metric shit-tons of the money at the guy and he never once claimed to be turning a profit as he downed tequila shots, got high on his company jet and sounded progressively more and more tech bro messianic. None of these people even raised a finger to quibble when Neumann and his wife opened a preschool with company money and started talking about "Global Consciousness."
But then WeWork asked everyone else to pony up their money for WeWork stock, and the world looked at the company's numbers and asked with a collective globally conscious cry "Da fuq is this?"
You see, like the true Millennial that WeWork is, it was totally unprepared for real-world challenges. It turns out you really can't go public at a batshit valuation when you're utterly unprepared for the basic rigors of being a public company. So now Neumann has been benched, his private equity sugar daddies are in full panic mode and the commercial real estate market is mulling over the real possibility of upside-down leverage if WeWork goes tits up with 47 million square feet of leases on the books.
And now we come to the twist:
WeWork has announced it will withdraw its S-1 filing as it seeks to postpone its highly-anticipated initial public offering.
Well, we...we have nothing to say here, We. This is was legitimately the only move here. Sure, it's going to deeply fuck WeWork's cost of funding, and the rickety debt structure that Neumann built to hold up the massive weight of WeWork will start to crumble immediately, but this is likely the only way for WeWork's new co-CEOS to pull out of this nosedive...
“We have decided to postpone our IPO to focus on our core business, the fundamentals of which remain strong,” WeWork co-CEOs Artie Minson and Sebastian Gunningham said in a statement. “We are as committed as ever to serving our members, enterprise customers, landlord partners, employees and shareholders. We have every intention to operate WeWork as a public company and look forward to revisiting the public equity markets in the future.”
We get it, WeWork is running out of money really fast and this will make it immensely more difficult to raise money in the short-term, [and - yeah - the whole "our core business, the fundamentals of which remain strong” thing is a bit of an eyebrow-raiser] but what are the other options?
Minson and Gunningham have to try and lean into a radical overhaul of We's gestalt that mostly entails merciless layoffs, selling of bad acquisitions and cost-cutting that will veer into viciousness. There is a company here, but it's definitely been buried underneath a landslide of founder ego/faux Silicon Alley bullshit. These two guys have like 6 months to show that they've turned the boat around and convince a new batch of PE guys to throw way smaller amounts of money at them in anticipation of an IPO that might be in the $5 billion range.
What? That's a big "if?" You're laughing at 2x revenue valuations now?
We've been very hard on We, but it's not a worthless company, it just was not ready to go public [there is a trend here]. If it has a chance at survival, it lies in decisions like these; difficult and not immediately popular or accretive.
It just made the first one so we will reserve the snark for another day.