Thread by @bopinion

🙆🏻‍♂️WhatDidWeDo?

In July, WeWork had a $47 billion valuation.

Now it's putting an official pause on its IPO to focus on improving its core business. Here's a look inside the brief but chaotic history of the real estate company ⬇️

From the start, Softbank's investments in WeWork were designed to maximize cash and headline valuation while protecting SoftBank from a possible WeWork implosion
bloom.bg/2n8Z16g

WeWork's business model goes something like this:

You start a real estate company
You buy fancy buildings
You rent offices to tenants
You offer them free beer
You charge high rents
You realize this is expensive
You raise a kajillion dollars from investors bloom.bg/2nYBC7u

In 2017, WeWork posted a pretax loss of $939 million after a $430 million loss in 2016.

Even then, things weren't looking good for the real estate company disguised as a tech company bloom.bg/2mZWag3

In October of 2018, WeWork was valued at $20 billion.

🔰Members: 220K
🔰Locations: 234
🔰Total revenue: $886 million in 2017
🔰YOY revenue growth: 103%
🔰Operating lease liabilities: $18.2 million
🔴Free cash flow: -$778 million in 2017 bloom.bg/2na8oCB

🔔By 2019, the alarm bells were ringing at full force🔔

SoftBank committed $2 billion more toward WeWork, scaled back from what was discussed as a $16 billion investment bloom.bg/2CXUFns

🥴Then things started to get weird: WeWork turned into "The We Company.”

The company rebranded its main business units: WeWork, WeLive, WeGrow. (@matt_levine proposed WeDie -- free beer at the wake! -- but that has yet to happen) bloom.bg/2mjmfpO

@matt_levine We's new goal was “to encompass all aspects of people’s lives, in both physical and digital worlds.”

Looking back at it, it's an absolutely terrifying idea bloom.bg/2mjmfpO

@matt_levine Sky-high valuation numbers were being tossed around before its IPO: $45 billion, $20 billion.

Even then, @ShiraOvide knew that WeWork’s "value" was science fiction, determined solely by whatever WeWork and Softbank wanted it to be bloom.bg/2n8Z16g

@matt_levine @ShiraOvide To top it all off, Adam Neumann (the coworking company's chief executive at the time) was a landlord who owns multiple properties that WeWork leases.

"It really does seem like a conflict of interest!" @matt_levine wrote bloom.bg/2nSHWh4

@matt_levine @ShiraOvide In May, WeWork’s debt traded below its pre-IPO announcement level for the first time.

@BChappatta wrote: "It’s hard to shake the feeling that investing in WeWork is like walking on thin ice." bloom.bg/2HJDl78

@matt_levine @ShiraOvide @BChappatta On August 14, WeWork released the financial paperwork for its planned IPO. It was, to quote @ShiraOvide, "THE MOST BANANAS THING."

📃The company's intricate relationship with Adam Neumann required 10 (!) pages of disclosures bloom.bg/2nRfsUN

@matt_levine @ShiraOvide @BChappatta Neumann used his position to enrich himself, to the tune of hundreds of millions of dollars in stock sales, personal loans tied to his shares, and agreements for WeWork to lease buildings he owned.

That's partly why he stepped down from his post as CEO bloom.bg/2mllXyK

@matt_levine @ShiraOvide @BChappatta SoftBank turned against Neumann when it was obvious that WeWork would have trouble going public.

If the $47 billion WeWork valuation turned into $15 billion, then SoftBank and the Vision Fund may have lost as much as $9.28 billion right out of the gate💸 bloom.bg/2mZdfqt

@matt_levine @ShiraOvide @BChappatta But Neumann stepping down as CEO didn't solve WeWork's cash problem. WeWork has been on pace to burn through roughly $3 billion this year.

IPO or not, WeWork now owes nearly $50 billion in lease commitments in the coming years bloom.bg/2mllXyK

@matt_levine @ShiraOvide @BChappatta About two weeks ago, the fast-shrinking money-hoarding startup pushed back it's IPO.

Its co-CEOs frantically tried to change everything about WeWork that potential shareholders didn't like bloom.bg/2nTe6sG

@matt_levine @ShiraOvide @BChappatta Today, WeWork is officially giving up on plans for an initial public offering.

In less than two months, one of the most highly anticipated IPOs of the year turned into a cautionary tale for young startups with unproven business models bloom.bg/2oGi2NR