![]() ![]() WeWork, which has yet to turn a profit, recently announced it will have to restate financial results for the sponsor of the special purpose acquisition company that took it public. It's currently worth less than $7 billion. ![]() The lofty $47 billion valuation, driven largely by SoftBank's investments, plunged to far more earthly levels. SoftBank took majority control of WeWork in what amounted to a bailout, and remained the company's largest shareholder at the time of its public market debut in October. Ultimately, Son soured on Neumann and engineered his ouster as CEO. "The valuation was just another way where people sort of told us that we were right," Neumann told CNBC " Squawk Box" co-anchor Andrew Ross Sorkin at the New York Times DealBook Online Summit in November. Neumann later admitted that the investments went to his head. SoftBank would ultimately plunge some $18.5 billion into the company. The extravagance really took off in 2017 after a $4 billion investment from Japanese conglomerate SoftBank and its billionaire founder, Masayoshi Son. "His hairdresser would fly around with him," said journalist Maureen Farrell, co-author of "The Cult of We: WeWork, Adam Neumann, and the Great Startup Delusion," in an interview with "American Greed." "It was just a level of extravagance that's kind of unimaginable, even for a paper billionaire." ![]() Though there was no indication WeWork paid for those expenses, the publicity alone was devastating. While Neumann has never been charged with wrongdoing, revelations about his outrageously lavish lifestyle, which reportedly included ownership of six homes and use of a $60 million Gulfstream jet to take his family on surfing vacations, nearly sunk the company. "If you're a company that everyone wants to invest in, one of many ways that you can get leverage over investors is by saying, 'Let's make the due diligence requests a little more modest here,'" Wansley said.įew start-ups have taken that to more of an extreme than WeWork. The dynamic becomes even more challenging when a start-up reaches "unicorn" status, with a private market valuation of $1 billion or more, and starts attracting the attention of a wider swath of thirsty investors. Ask too many tough questions and they risk losing money on their investments or getting shut out of a current or future funding round. Wansley, an expert on venture capital who previously worked as general counsel at a start-up, said there's often a reverse incentive for investors to do too much digging before writing a check. "There isn't a lot of investigation into private companies," said Matthew Wansley, an assistant professor at Yeshiva University's Cardozo School of Law in New York, in an interview with CNBC's " American Greed." "And there's not a lot of transparency." How did their investor bases, which included sophisticated venture capital firms, hedge funds and money managers for some of America's most prominent families, get the stories so wrong? Personal Loans for 670 Credit Score or Lower Personal Loans for 580 Credit Score or Lower Best Debt Consolidation Loans for Bad Credit ![]()
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