WeWork IPO

 
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This has been a monster year for tech IPOs. Zoom, Slack, Uber, Pinterest, and Lyft have already gone public. It seems like Postmates, Peloton, Airbnb, and Palantir are well on their way to their own massive IPOs.

While Zoom came out as a profitable, solid B2B Saas solution, consumer-facing platforms like Lyft & Uber were still losing money as they rang the Nasdaq bell.

Their public offerings beg the question, is this the new normal?

This September, WeWork, a workspace and services provider, aims to prove that profitability is not required to raise billions from the public market.


WHAT IS WEWORK?

WeWork provides coworking spaces and services to technology startups, Fortune 500 companies and everything in between.

The basic business model is simple.

Sign long-term commercial leases around the globe and pay *relatively* lower rents (per sq. ft). Parcel out those prime location offices to a collection of companies who will pay *relatively* higher rents (per sq. ft).

Layer on top of that a collection of services (software and marketing) and brand that turns a relative commodity (real estate) into a high margin, scalable platform.

Btw, commercial real estate is a $29 trillion market.


WHY THE BIG FUSS?

WeWork is losing $219,000 per hour.

Yeah. You read that right.

In 2018, the company's losses and revenues both doubled, to $1.9 billion and $1.8 billion, respectively.

In economics, you read about the financial bubbles of history. It’s easy to wonder how in 1637, at the peak of tulip mania, some single tulip bulbs sold for more than 10 times the annual income of a skilled crafts worker.

This makes that seem like child’s play.
WeWork founder Adam Neumann has personally taken more than $700M out of the business for himself.

Bezos and Zuckerburg didn’t sell anything remotely close to that much before Amazon and Facebook went public.


SHOW ME A TAKEDOWN

No one in the game today is better than Scott Galloway at letting the air out of a balloon.

Read his scintillating dismantling of WeWTF here.

Scott is a multi-time successful entrepreneur and a professor at NYU Stern school of business. Well worth a follow.


IS THIS A DONE DEAL?

Not completely.

Our job at Expand Your Mind is to challenge your narratives and offer new points of view. It’s easy to find talking heads attacking this company that makes no sense on paper.

So, we went on the hunt for the counter-argument.

Here is the best articulation we can find on why Neumann and WeWork might actually warrant their $47 billion valuations.

The final verdict?

Is up to you. You can just read Professor Galloway and get a few talking points for when this inevitably comes up before the September IPO.

But, we’d challenge you to consume both links and get ready to challenge your friend that has only read one side of the argument.

Then you can pass the Expand Your Mind vibes to someone else.

😎😎😎


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