WeWork Bonds Drop Below Par for First Time Since IPO Filing
It's <i>remarkably easy</i> to make fun of WeWork, given the company's high-as-a-kite ambitions, its largely conjectural business model, its dependence on fresh capital for survival, its charismatic CEO’s new-age antics, and its disregard for conventional norms of ethical corporate behavior.[a]<p>But if the IPO of a company as prominent as WeWork fails and the company is unable to raise the fresh capital it needs to stay afloat, we should view that as a <i>warning sign</i> that capital markets are shifting from "grow at all costs" to "show me the profits."<p>The last time we had such a shift, in 2000, it was sudden and cruel. Many fast-growing companies found themselves unable to raise capital. Down-rounds became common. There was a wave of failures. The startup ecosystem went through a long, cold winter.[b]<p>If you are at a money-burning startup, please make sure your company has a viable plan for survival in the event that access to fresh capital is suddenly cut off.[c]<p>--<p>[a] <a href="https://twitter.com/shiraovide/status/1161601877517246464" rel="nofollow">https://twitter.com/shiraovide/status/1161601877517246464</a><p>[b] <a href="https://en.wikipedia.org/wiki/Dot-com_bubble#Aftermath" rel="nofollow">https://en.wikipedia.org/wiki/Dot-com_bubble#Aftermath</a><p>[c] Here's a good first-hand account of a fast-growing, money-burning company that managed to survive the post-2000 environment, while most of its competitors went bankrupt: <a href="https://a16z.com/2010/03/17/the-case-for-the-fat-startup/" rel="nofollow">https://a16z.com/2010/03/17/the-case-for-the-fat-startup/</a>