I spent more time Wednesday than I should have going through the paperwork that WeWork filed with the Securities and Exchange Commission in advance of going public.
I just couldn't look away.
I've been a fan of WeWork as a customer. But it's so different to read about the company this way -- the way it portrays itself, when it wants us all to see it, pre-IPO.
Each page of the S-1 filing revealed yet another turn of phrase -- another leap -- more fascinating than the last.
If you're an entrepreneur who dreams of building a ridiculously massive business, I have to say: This thing is required reading.
The story and the questions.
My affinity for WeWork is basically about nostalgia. It stems from the fact that my last company started in one. There's also a sentimental story that involves my wife's late grandmother and a WeWork T-shirt I wore to visit her once.
At the same time: I'm working now on a new startup, and we meet at a WeWork because it's basically free -- a perk from signing up for an American Express Platinum Business Card.
It's a great deal for us, but it's made me skeptical. Still, let's focus on the prospectus itself, and how the story you'll find within should lead you to ask questions about your own business. Questions like:
What exactly are you selling?
The prospectus starts with an epigraph, which is something you don't see every day:
"We dedicate this to the energy of we -- greater than any of us, but inside each of us."
It only gets better, as the first two sentences of the actual prospectus itself read like a parody:
"We are a community company committed to maximum global impact. Our mission is to elevate the world's consciousness."
Yeah, OK. WeWork insists it's selling something called "space as a service."
But practically speaking, it renovates and subdivides office space that it leases to freelancers, startups, and bigger enterprise clients. Which one sounds like a business to you?
How essential are you?
The We Company sure thinks its co-founder and CEO, Adam Neumann, is essential. To quote:
"Our future success depends in large part on the continued service of Adam Neumann, our co-founder and chief executive officer, which cannot be ensured or guaranteed.
Adam ... is critical to our operations. Adam has been key to setting our vision, strategic direction, and execution priorities. We have no employment agreement in place with Adam, and there can be no assurance that Adam will continue to work for us or serve our interests in any capacity.
If Adam does not continue to serve as our chief executive officer, it could have a material adverse effect on our business.
Neumann also keeps majority voting shares once the deal is done, and if he dies, his wife (Rebekah, who works for the We Company as chief brand officer) gets a say in who replaces him.
As the Financial Times suggested -- I assume tongue-in-cheek, but my capacity for irony is off after reading this thing -- part of Neumann's critical contribution might be that he's the only executive who could possibly recite things like "the energy of we" and "space as a service" and not burst into laughter.
How entangled are you?
There's an entire section of this prospectus that goes on, page after page, explaining all
the myriad deals that Neumann has with WeWork -- everything from his equity share, to the promises he's made to donate $1 billion with his wife to charity, to his habit of buying office space and then signing deals to lease the space back to WeWork, sometimes on the exact same day.
Neither Adam nor Rebekah takes a salary, either. I understand why -- they're certainly being compensated and then some. But with every other entanglement added in here, it just feels odd. It all adds up to an atypical arrangement, to put it lightly.
How are the numbers?
Oh, the numbers. They are off the charts in so many respects.
Let's start with the fact that the company lost $689.7 million in the first half of this year, on $1.54 billion in revenue. Somehow, it's even crazier to realize that means that for every customer the We Company gained, it actually lost about $5,200. (CBS did the math.)
Against that, the We Company was valued at $47 billion during its last capital raise, thanks to SoftBank. And they've doubled membership over the past year.
5. What's your ambition?
I guess this goes back to the whole thing about insisting that you're not a real estate company; you're instead trying to "elevate the world's consciousness."
I'm all for selling a lifestyle, and setting yourself apart as something other than a commodity. It's the battle I see (and write about) the airlines fighting constantly.
But at the end of the day, there has to be some kind of "there" there. There has to be a real, fundamental business to justify everything.
That's the question for WeWork. And if you're building a business with real ambition, it's the question you should probably be asking yourself too.