My new column is out in The Drum:
In recent weeks, the news has grown steadily worse for WeWork. The company postponed its planned IPO amid concerns from the investment community over its financials. Revenue doubled to $1.5bn in the first half of this year, but net losses increased 25% to -$904m over the same period of time. Its valuation dropped from $47bn to $8bn.
Last week, WeWork laid off 2,400 workers and will outsource 1,000 more. The contracts for the newly outsourced employees will reportedly remove a year of pension contributions, refuse severance pay if they do not agree to the status change and perhaps even freeze wage levels until 2021.
Meanwhile, Adam Neumann, the chief executive and founder, left the company in exchange for a nearly $1.7bn payout. Quite the contrast.
In the coming years, WeWork will be taught in business schools as the primary example of the irrational exuberance that underpinned today’s inane high-tech startup philosophy that fictitious ‘growth’ matters more than actual profit.
That mentality benefits only startup founders and the venture capitalists who invest in them – in other words, the one percent of the one percent. Everyone else gets a lot less – if anything at all.
Welcome to the new Guilded Age. It all starts with predatory pricing.