Making sense of the WeWork S-1 (or trying to)
Hello and welcome back to Equity, TechCrunch's venture capital-focused podcast, where we unpack the numbers behind the headlines.
Today is our promised Equity Shot (a short-form, single-topic episode) on the WeWork S-1. You can read Kate's notes here, or Alex's here as a place to start.
Given that we didn't know when the WeWork S-1 filing was going to make itself known, we put together this episode from TechCrunch's SF HQ, Alex's home office and Kate inside a New York Blue Bottle Coffee. We were not about to let the locational issues stop us from having fun!
Where to begin! WeWork is growing like mad, but it's hard to tell what its gross margins are. This makes its revenue quality hard to parse. (Alex tried to figure that out here, TechCrunch has even more good questions and notes here). What wasn't hard to figure out was that WeWork - also known as The We Company - is tectonically unprofitable on operating and net bases. And that the company's operations consume cash, while its investing activities torch the stuff.
WeWork's eclectic chief executive officer and co-founder Adam Neumann will maintain a majority of voting rights. It's not uncommon for founder-led companies to adopt this sort of voting structure, and, considering how central Neumann is to WeWork's identity, we weren't the least bit surprised by this.
The company's IPO will make a lot of groups a lot of money. Mainly Benchmark, a respected venture capital fund, JP Morgan, and, of course, SoftBank, which has invested billions in WeWork and now owns more than 100 million shares.
And that's all for now. Don't miss our episode with Dan Primack that came out yesterday. A busy week, but a good one. Chat again soon!
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