How Did WeWork’s Adam Neumann Build a $47B Company?
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Re: How Did WeWork’s Adam Neumann Build a $47B Company?
#2Cynical answer: he convinced VCs that his particular brand of shared office space was better than everyone else's, actual revenue be damned, and they believed him. That's it. Straight from the article: "Neumann declared that WeWork’s “valuation and size today are much more based on our energy and spirituality than it is on a multiple of revenue.”"
Re: How Did WeWork’s Adam Neumann Build a $47B Company?
#3Cynical answer: he convinced VCs that his particular brand of shared office space was better than everyone else's, actual revenue be damned, and they believed him . That's it. Straight from the article: "Neumann declared that WeWork’s “valuation and size today are much more based on our energy and spirituality than it is on a multiple of revenue.”"
Anyone know what revenue for the next largest coworking space is?
Re: How Did WeWork’s Adam Neumann Build a $47B Company?
#4He made investors believe in a non-sensical vision that is not rooted in any sort of financial or commercial reality in the middle of an insane bull market.
Simple.
Re: How Did WeWork’s Adam Neumann Build a $47B Company?
#5He made investors believe in a non-sensical vision that is not rooted in any sort of financial or commercial reality in the middle of an insane bull market. Simple.
You got it slightly wrong: He made investors believe that there will be bigger more stupid investors that will eventually buy out the shares for a higher price than those investors.
(Also, see Uber, Lyft and other ponzy scheme based companies)
Re: How Did WeWork’s Adam Neumann Build a $47B Company?
#6Cynical answer: he convinced VCs that his particular brand of shared office space was better than everyone else's, actual revenue be damned, and they believed him . That's it. Straight from the article: "Neumann declared that WeWork’s “valuation and size today are much more based on our energy and spirituality than it is on a multiple of revenue.”"
Anyone know what revenue for the next largest coworking space is?
You mean "largest" :-)
https://en.wikipedia.org/wiki/IWG_plc
About $3 Billion in revenue, been around since 1989. Not considered hip, no glass partitions, but actually profitable.
Re: How Did WeWork’s Adam Neumann Build a $47B Company?
#7By taking an old stodgy business (commercial real estate) and bringing it in conformance with modern expectations of design, ease of transactions, lease length, and vibe.
The real estate owners couldn’t be bothered to do this because they make too much money by doing nothing to bother with doing something for an extra $47b (a rounding error on the value of global commercial real estate)
The huge fundraising rounds are an important part of this because the hype is important for making it seem like a cool place which is essential to the economics.
Add in some founder god complex which is not really necessary or sufficient for a successful startup but does seem to be often present.
Re: How Did WeWork’s Adam Neumann Build a $47B Company?
#8Cynical answer: he convinced VCs that his particular brand of shared office space was better than everyone else's, actual revenue be damned, and they believed him . That's it. Straight from the article: "Neumann declared that WeWork’s “valuation and size today are much more based on our energy and spirituality than it is on a multiple of revenue.”"
Anyone know what revenue for the next largest coworking space is?
So IWG plc, which has a British stock-market listing and does business mostly as Regus, had 2018 revenue of £2.5 billion and a current market cap of about £3 billion.
It thus trades at about 1.2x annual revenue. WeWork's multiple is way higher.
Re: How Did WeWork’s Adam Neumann Build a $47B Company?
#9Earlier quoted context omitted.
Anyone know what revenue for the next largest coworking space is?
So IWG plc, which has a British stock-market listing and does business mostly as Regus, had 2018 revenue of £2.5 billion and a current market cap of about £3 billion. It thus trades at about 1.2x annual revenue. WeWork's multiple is way higher.
WeWorks multiple is irrelevant when it is losing money every quarter. This current era is redolent of the dying embers of the dot com boom - over leveraged loss makers trying to go public to pay back vast sums of borrowing from investors
Re: How Did WeWork’s Adam Neumann Build a $47B Company?
#10Valuation inflation / delusion only really matters if you’re the last one left holding the bag. So long as there’s someone else willing to buy the game continues for another round.
When the music stops though things get real ugly real quick.