VC world celebrates, real estate industry laughs
SoftBank’s Vision Fund is in discussions to take a majority stake in WeWork. Although talks are still ongoing, the investment could total $15 to $20 billion. Investors are clearly embracing Adam Neumann’s vision of a “physical social network” for millennials, while ignoring the company’s financials.
Sound Smart: In the first six months of this year, the co-working giant posted losses of $723 million, according to WSJ who first reported that such discussions were taking place. Boston Properties owns five times the square footage that WeWork manages and has a market cap of $18.58 billion. It’s truly astounding that WeWork may soon be valued at twice that number.
SoftBank’s Masa found kindred spirits in Neumann… He summed up his investment philosophy by saying, “Feeling is more important than just looking at the numbers. You have to feel the force, like Star Wars.” Neumann said earlier this year, “Our valuation and size today are much more based on our energy and spirituality than it is on a multiple of revenue.” Wishing luck to Saudi Arabia and Abu Dhabi, the main backers of the fund.
Savvy marketing from the company’s recent bond offering:
- WeWork doesn’t design offices — it “programs space”.
- “Space as a service” is mentioned 253 times.
- A recession would make the co-working company cash positive because it forces the company to reduce the costs associated with exponential global growth.