Is WeWork a Fraud?

https://medium.com/@henry.hawksberry/is-we-work-a-fraud-5b78987d3e61

by AndrewBissell • 7 years ago

48 11 7 years ago

deogeo2• 7 years ago

The earliest shareholders including a gentleman called Mortimer Zuckerman were not just their landlords AND seed investors. They also happened to own Fast Company and NY Post which were instrumental in propping up WeWork in the press before anybody knew who they were. The headlines they spun about WeWork’s valuation and ‘meteoric’ rise was basically the shareholders advertising their investments. Even Wikipedia’s page (throughout 2015 and 2016) introduced WeWork as the ‘most innovative company of 2015’, citing a Fast Company article.

Wow. It pays to own the press.

moltensodium• 7 years ago

It's quite amusing how in a week the valuation dropped from $47B to $10B (-79%) and now it appears it may in fact be worth nothing.

Time to put an end to the ponzi schemes. We all know We is not the only company that just moves purely on bullshit.

CyanLite4• 7 years ago

Don’t hate the player, hate the game.

Adam swindled billions from SoftBank because SoftBank was running around with hundreds of billions of dollars (of oil money) burning a hole in their pockets. And this isn’t the only SV company that’s a Ponzi scheme with no path to profitability. Just one of the first and largest to get exposed. Couldn’t have happened to a nicer group of people...

AndrewBissell2• 7 years ago

If he had been able to jam the IPO through, Neumann would happily have helped SoftBank pass the flaming bag of poo to the investing public. So yeah, I'm going to go ahead and keep hating this player.

streetcat12• 7 years ago

Not more than any other startup.

Startup are valued based on future growth. I.e. most of the value is coming from long term projections (e.g. 10 years into the future).

So any startup, including wework , is basically selling a growth story. Now, its up to the investor to decide if the story is correct.

AndrewBissell2• 7 years ago

Some startups are profitable from day one. Others have a feasible plan to reach profitability, even if they never quite make it there.

Still others have no hope of ever becoming profitable, and their creators and backers know this, but hope to cash out by selling equity in their fundamentally worthless business at an inflated value through a promotion scheme. It's this variety that can accurately be termed frauds.

perl4ever• 7 years ago

As quoted in the article, Adam says they can choose to become profitable at any time. If that's so, then obviously they should do so before trying again at an IPO.

If they instead try again in three months, then it would be logical to ask why they are in such a hurry to sell at a cut-rate price?

streetcat12• 7 years ago

So, I would not call softbank an uninformed investor. Also, its all a bet.

(It would be a fraud if I present false statements to the investor, but as long as I show correct statement (even if I am not profitable), then it is up to the investor to decide)

The fact that a startup is profitable does not affect its value.

Look at Amazon. For a long time it has 0 profitability, and yet, it is one of the most valuable companies in the world.

Remember that startup or any assets should be valued using cashflow from the future (DCF). As long as I can show that I will have positive cash flow even in 10-20 years from now, I can state a value.

deogeo2• 7 years ago

Not more than any other startup.

That entire post is devoted to explaining that yes, much more than any other startup.

nunchuckninja• 7 years ago

All I got from the article was that the term pressi-tutes wasn't carved from thin air and people really are like that (blodget, ny post)

weare138• 7 years ago

Good write up. I always suspected as much but only knew the story behind WeWork in broad strokes. Needless to say I don't suspect WeWork is a fraud anymore, now I know it is.

Is WeWork a Fraud?

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