So WeWork filed its S-1 yesterday and I've spent way too much of today reading it instead of doing actual work. If you haven't seen it yet, an S-1 is the document a company has to file with the SEC before it goes public, and it's usually dry as toast. This one is not dry. This one has a part where you find out the guy running the company sold it the rights to use the word "We" for $5.9 million.
I'm not joking. Back in January, WeWork rebranded the parent company to "The We Company." Adam Neumann, the CEO, apparently owned the trademark for "We" personally (through some holding company he controls), and when the corporate rebrand happened, he licensed it to his own company for stock plus cash, valued at $5.9 million. The S-1 discloses it because they legally have to, buried in a related-party transactions section, and I only found it because someone on Twitter had already screenshotted it before I even opened the PDF myself.
I used to work out of a WeWork for about four months in 2016, one of the smaller locations, and I remember the free La Croix and the slightly too-loud phone booths where you could hear the guy in the next pod pitching his app idea to what I assume was his mom. It felt fine at the time. Charming, even, in a "everything here is beige and there's kombucha on tap" kind of way. Reading this filing now, none of that free seltzer feels free anymore, if you know what I mean.
The bigger story buried in there isn't even the trademark thing, honestly, it's the numbers. WeWork lost $904 million in the first six months of this year alone, on revenue of $1.54 billion. That's not a rounding error, that's losing almost 60 cents for every dollar that comes in the door. And to make that look less alarming they invented their own metric called "community adjusted EBITDA," which as far as I can tell means "earnings before the expenses that make us look bad." It excludes marketing costs, general overhead, the works. Under that metric they're apparently doing great. Under literally any normal accounting standard they are lighting money on fire at a scale I genuinely can't picture.
Then there's the governance stuff, which is its own separate mess. Neumann's shares come with 20 votes each versus one vote for everyone else, so even after the IPO he'll control the company outright no matter how much stock gets sold to the public. There's a clause that if he dies, his wife Rebekah gets a say in picking his replacement, for up to ten years after his death. I had to reread that sentence three times to make sure I wasn't misreading a satire site.
Look, I get that founders want control, and I get that a lot of companies structure around that (Google's had dual-class shares forever, Facebook too). But there's a difference between "the founder keeps control so short-term investors can't force bad decisions" and whatever this is. This reads like a document written by someone who assumes nobody outside the company will ever actually read it closely. Which, to be fair, has mostly been true for most companies filing S-1s. Not this time though, everyone's reading this one, because it's just too weird not to.
I don't think this thing craters before it IPOs, if I had to bet. There's too much money and too many banks already committed. But I'll be surprised if the valuation holds anywhere near the $47 billion number that's been floating around from the last funding round. Once actual public market investors, the kind who read footnotes for a living, get their hands on this filing, I have a hard time seeing them value a company that loses a billion dollars every six months the same way SoftBank apparently did.
Anyway. I have a call in twenty minutes and I still haven't showered, so that's where I'll leave this one. Go read the S-1 if you have a spare hour and enjoy suffering, it's a genuinely wild document.