by Wolf Richter, Wolf Street:
WeWork was just late to the defenestration party.Everyone – including infamously me – has been trying to pinpoint the exact moment when the magnificent startup-unicorn-bubble broke, and I mean not just broke but imploded spectacularly. All of the biggest upcoming IPOs were cancelled. All the biggest ones that got out the IPO window this year crashed and burned. And the $47-billion WeWork unicorn is now awaiting dismemberment or a bailout from Softbank after its IPO hopes were annihilated by a catastrophic event, called “market conditions,” when some sort of rationality starts to reinsert itself in tiny baby steps into the market.
WeWork is the current favorite for pinpointing when, who, and what blew up the IPO market that is so crucial for the startup-unicorn scheme to function and to come to its completion. Former Nasdaq CEO Robert Greifeld explained in an article published on CNBC this morning:
WeWork’s aborted IPO may come to mark the end of the current “unicorn” bubble the way the scuttled merger between Yahoo and eBay signaled the start of the dotcom crash in 2000.
Having become CEO of Nasdaq in 2003, I saw up close the damage caused by the growth-over-profits philosophy in that earlier era, and WeWork’s spectacular fall – from the year’s most anticipated IPO to a company with a speculative-level credit rating that may run out of funds within a year – rings many bells.
He lays out some of the similarities of the period leading up to the dotcom crash and the period leading up to now, in sections titled aptly:
- “Funding feeding frenzy.”
- “Messianic founders.”
- “Governance is for saps
- “The ho-hum in sexy packaging” – what I called, in WeWork’s case, making “little ones out of big ones.”
- “Unsustainable business mode.”
Yes, I’m totally with you, Mr. Greifeld. You nailed it. It’s obvious now to everyone. Everyone can see today what we’ve lambasted for years. And now everyone is trying to figure out the moment it started to implode.
But I don’t think WeWork did it. It crapped out on us because the bubble was already imploding, and WeWork had simply failed to get out the IPO window in time while it was still open earlier this year.