*Beavis & Butt-Head style snickering* https://twitter.com/jason_koebler/status/1247896938181087237

In case you don't enjoy buzzard-circling around hyper-capitalist disasters: WeWork was/is a bullshit con. Another tech "unicorn" with no game plan and endless capital. It's been crumbling like a Skeksis emperor for months.

The WeWork founder/posterboy Adam Neumann will land softly, and well away form this mess, with a billion-dollar parachute payout.

Because of course he will.

But everyone else is probably fucked. As they should be, because WeWork was conceptually ridiculous from the word go.

There's nothing "tech" about being a landlord, but that was how WeWork was sold. It was conceived of as a launchpad for and entire suite of start-ups, from private schools to business incubators.

It initially worked, because interest rates were low and office space was cheap.

But like another tech company I've tweeted about, they've taken a MEGAFORTUNE from investors, who typically expect exponentially massive returns on their money.

Real estate prices are rising, but not nearly fast enough for that.

If you've ever watched Dragon's Den/Shark Tank, you know applicants are expected to present a "valuation" on their business idea. "Here's what I think my company is worth."

FUN FACT: Those valuations are only remotely valid in a company exists, and is producing goods/services.

There are formulas for calculating a valuation, but they only work if you have REAL FIGURES to plug in. Inventory, for example. IP. Physical property.

We Work didn't have that. But it did have LOANS.

It's like if I told a man "My company is worth one mil, you should invest."

And he replies, "Oh, sounds good! I'll invest a mil."

Then, the next day, I went to a woman and said, "My company is worth two mil, you should invest."

That's not great. But it's what's done. A LOT.

And chances are that's how, at least in part, WeWork came up with that hideously absurd original valuation of $47 billion. To put that in perspective, it's:

Hershey's global revenue, times six.
133% of Coca-Cola's global revenue.
Over 2.5 times Paypal's global revenue.

All this for a company that still hadn't done much more than rented some co-working spaces and opened some daycares.

But as long as they were a privately-owned company, they didn't have to show anyone their financial data.

That's why their IPO destroyed them.

IPOs (initial public offerings; taking a private company public) aren't allowed without significant financial disclosure. And the paperwork for WeWork was a fucking disaster.

For starters, they signed 15-YEAR LEASES for office space in some of the most expensive cities on Earth.

Those payments were locked in, and to meet the obligations, WeWork offices had to stay full. But instead, they were losing ~$5,000 per customer. Some calculations had them losing ~$219,000 a HOUR.

And word on the street was, Neumann spent every waking moment on the deck of his own personal Titanic too busy huffing his own farts, buying into the image of himself as a DISRUPTIVE TECH VISIONARY, to function effectively.

Eesh.