Sounds like another Elizabeth Holmes to me.
What's surprising is that these snake oil sellers have made it so far? Are investors so stupid? Are they so detached from reality? Whatever happened to due financial diligence?
On the other hand, no could ever actually buy an "Edison" blood test machine from Theranos. They were purely a fraud.
I guess its sort of an interesting question about wheter it looks worse to lose money investing in a billion dollar product that would legitimately be worth billions but doesn't exist, or one that does exist but isn't worth billions.
Well, sort of. The fact that this IPO has apparently attracted so little interest that it's getting pushed back or canned entirely tells me investors aren't OK with it. It's more like "SoftBank seems weirdly OK with it", and this fiasco is going to cost them so much money that I have a feeling they won't be so lenient with the next set of founders.
The We Company has raised a total of $12.8B in funding over 14 rounds. Their latest funding was raised on Jan 9, 2019 from a Secondary Market round.
source: https://techcrunch.com/2019/01/07/for-softbank-no-majority-s...
Short of the CEO being accused of sexual harassment or assault by an employee or being caught red-handed stealing from the company, they will keep the job -- especially if the company is growing revenue and continuing to raise money at ever high valuations that VCs/board members can use to mark-up their stock, take back to LPs and raise new funds to grow their assets under management that they can collect 2-3% on every year.
I would hope being merely accused of sexual harassment would have zero impact until it can be proved.
Yes.
> Are they so detached from reality?
Yes.
> Whatever happened to due financial diligence?
Too much excess and concentrated capital.
A maniac surrounded by yes-men can be a terrifying thing. As leader of We Work he can only get up to so much mischief. Definitely wouldn't want him as 'President of the World'.
Imagine how much more valuable it is to see which startups are starting to gain traction. Deep pocketed competitors can swoop in and compete with their business at a vulnerable time. Or VC’s who are wooing a company can see if they are the only bidders or if other funds are emailing them (they probably only see metadata of internet traffic but still valuable). Or recruitment consultants can pay to see who is hiring using general visitor reports Etc.
I think the outrageous shenanigans of the CEO are essential deflections that make the magic show work.
I know a few people who managed money with him in Nassau at this time. He wasn't senile. So what was he doing? He was willing to test his beliefs...about everything. He could put aside everything he thought he knew even after five decades of success and ask one simple question: what works?
Now ask the 30-year old BSD "crushing it bro" dude with the CFA and name brand fund manager on his CV about horoscopes. He will tell you it doesn't work but he won't be able to tell you how he know this (in most cases, he won't even understand the distinction between his thoughts and reality).
Most people in the industry know all the facts. They act very professionally at all times when talking seriously with the peers about their many opinions (none of them tested). They don't look at history, they don't look at what works, they don't look at their own decisions (usually, some good funds impose this on managers), they can't think creatively about risk, and they don't know the one or two facts that are important in a big woodpile of information.
One answer that history suggests, in addition to the above, is that this always occurs. This has been happening for hundreds of years. But no-one cares. This time it is different, I am special, I am unique, I have been chosen, etc. (if anything, changes in attitudes have made this thinking even more pervasive...young people are even more individualistic and education institutions generally encourage an indulgent self-image).
Btw: I have (unfortunately) read most books about investment. I am aware of only one book aimed at investors that actually looks at this effect at large (i.e. what is the relationship between technology and markets? why actually works? what has happened in these situations before? etc.): Engines that Move Markets. One book. A million books about speculation and bubbles...but how many books about actual markets, actual technology, and actual investment...one.
The closest is possibly Capital Returns and Capital Account from Marathon...but this is really just a narrative account of two decades. In terms of a "big theory" historical view, there is only one book. That fact alone should demonstrate how utterly disinterested the industry is in anything approaching knowledge (so none of the questions that you pose really matter...no-one cares).