Without SoftBank expanding its investment in WeWork, Adam Neumann, as portrayed by Jared Leto in the new Apple+ limited series "WeCrashed," must face a sobering question brought up by Google executives he's attempting to pitch and later by the dramatized version of JPMorgan Chase Chairman and CEO Jamie Dimon: "Why not just IPO?"
Before we get to Neumann's answer, if you haven't seen the seventh episode of the series yet, stop reading now.
I watched this week's episode with my viewing buddy, Vari co-founder and CEO Jason McCann, an entrepreneur himself, at his Dallas-area headquarters. McCann knows a little bit about success — who hasn't used a VariDesk sit-stand setup? — and failure — he was bitten by the dot-com bust. He could only cringe at times watching the drama unfold in the "WeCrashed" episode.
To the question: "Why not just IPO?" Neumann has various responses. To Google executives, he says WeWork is a family business. (With his wife, Rebekah, on the team, I guess one could consider it a family business.) To Dimon, Neumann says he doesn't want anyone telling him what to do with his company.
But with a burn rate of $52 million a week, Neumann seems to have run out of options, with the conversation quickly turning to what WeWork could be potentially worth in an initial public offering. The actor playing Dimon in the series tells Neumann that WeWork would be a unicorn if it went public, a term used to describe a startup with a value of more than $1 billion.
It doesn't take long for Neumann to cave to the pressure to launch WeWork's IPO. Within minutes of the announcement, Dimon and executives at other top financial firms are in a race to propose a valuation and win the business — and fees — in helping WeWork file its S-1, a form required by the Securities and Exchange Commission from U.S. public companies seeking to list on a national exchange.
Neumann enlists Rebekah, as portrayed by Anne Hathaway, to help write an S-1 with soul. The result is an S-1 unlike any other seen by the bankers backing WeWork. Instead of outlining the company's risk factors, like most documents of this kind do, as one banker angrily put it, "You turned the S-1 into a children's book" with pictures and a story that lays out a vision that makes it appear the company isn't necessarily interested in turning a profit but changing the world.
During our watch party, Vari's McCann could only shake his head and say "ego" when Rebekah tells the bankers she's the soul of the company. Meanwhile, employees who had been with WeWork from the get-go begin making lavish purchases after seeing what a $47 billion valuation could do to their company stock options.
"These members of the team were trying to do the right thing, but you see them get lulled into the carnage that's about to happen. It hurts my soul," McCann told CoStar News in an interview. "I always think about the lives I'm personally responsible for, and to see people making these kinds of decisions pains me. The couple at the tip of the spear is making horrible decisions and Wall Street is going along with it."
McCann, who has been shaking up the office furniture industry with his company's flexible office furniture and accessories — possibly best known for the easy-to-use sit-stand desk — said true leadership is putting a company together that is sustainable and profitable for all involved, from investors to employees. In the case of WeWork, some of those stakeholders weren't being considered, he said.
Vari's business has changed a lot in the past two years, with the beginning of the pandemic causing a rise of orders for sit-stand desks, ergonomic chairs and other accessories for a home office, with about 90% of the company's business going to residential addresses. Now, McCann said he's seen a return of corporate orders, with most headed to a commercial office address. But this time around, companies are offering a stipend for employees to outfit their at-home offices in response to a reliance on a hybrid work model.
"Literally for us, it's doubled our addressable market," McCann said, adding Vari has designed nearly 1,000 offices in the past 12 months, with about 150 of those offices being completed in the past month as the company has seen a ramp up of orders throughout the country.
Here are some of our key takeaways from the latest episode of "WeCrashed":
- Don't believe you are the smartest person in the room. McCann said he saw some red flags start to fly in this episode with the words "me" and "I" being used throughout. "Mistakes happen when you think you are smarter than you are," he added. "When you see people talking like that, it usually leads to failure or a tough learning lesson. I tend not to do business with people like that."
- Furnishings can reflect hierarchy. At WeWork, there was a hierarchy with the Neumann duo at the top, with their offices literally being at the top of the WeWork office and having a certain finish-out those in common areas wouldn't be able to access. For McCann, there were the "haves and have-nots of the space," and it was clear — by their furniture choices — where the two camps resided.
- One needs a team. There's still a need to share space, McCann said, likening the corporate world to that of a sports team. "If you work out by yourself, you get to a certain level, and if you work with a coach, you get to another level," he added. "If you work with a team, performance increases even further. People need to be together."