'If WeWork didn’t exist, critics of technology unicorns and their sky-high valuations would have had to invent it.'
Photo: Joe Darrow; Filippo Bacci; Michael Kovac/Getty Images; Getty Images/Getty Images If WeWork didn’t exist, critics of technology unicorns and their sky-high valuations would have had to invent it.
WeWork’s last private-funding round pegged its valuation at $47 billion, and the company hoped to go public with a valuation somewhere in the ballpark of $65 billion. When it became clear the company would have trouble hitting even $20 billion, it made some concessions on corporate governance — for example, Neumann’s outsize voting rights, which allow him to control the company even without a majority stake, will now last only until his death, not in perpetuity.
This hope is a reason investors have put up with the deterioration of corporate-governance standards at flashy companies in recent years, including dual-class share structures, where the founders get a degree of control that far outstrips their actual ownership stakes. It’s not just about investors being desperate to get into the next hot company ; it’s also about the investment itself being a bet on the founder’s long-run vision.
Matt Levine of Bloomberg likes to describe WeWork as a company seeking to exploit an arbitrage opportunity: It wants to get debt financing like it’s a real-estate company and equity financing like it’s a technology company . That seems clever, but maybe it’s too clever by half. After all, WeWork isn’t exactly like a real-estate company. Most importantly, it owns very little real estate; it leases space and subleases it on shorter terms to its clients.
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