WeWork: Founder pushed out amid bailout
Floundering office rental company WeWork accepted a bailout from its biggest investor this week, said Gillian Tan and Michelle Davis in Bloomberg.com. That caps “a remarkable fall from grace” for founder Adam Neumann, who nonetheless will be paid $1.7 billion to walk away despite “lavish spending and self-dealing.” The rescue package, which includes $5 billion in loans and the acceleration of an existing $1.5 billion planned investment commitment, pins WeWork’s value at $8 billion—one-sixth of the figure widely publicized in January. The aid arrives in the nick of time: Hemorrhaging cash, WeWork could not even cover the severance costs of the thousands of workers it intended to lay off.
WeWork’s stunning evaporation of value “is the sort of spectacle not seen since the financial crisis,” said Lauren Silva Laughlin in The Wall Street Journal. However, it’s “more of a cautionary tale than a seminal event for Wall Street.” Confidence in unprofitable “unicorn” startups has been shaken, but there’s been no “contagion that spread quickly from one financial institution to the next.” WeWork’s failure to get to a public offering “shows that public investors aren’t in the grip of a dot-com–style mania.” As for Neumann, the collapse of his promises to remake the workplace leave him with a legacy that is “more titillating than historic.” ■