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Softbank top guy and start-up godfather Masayoshi Son had a message to founders: Your dreams had better be profitable.
Masa-san addressed company leaders at the five-star Langham resort and said that they need to become profitable soon and stressed the importance of good governance. He added that companies should “get in shape” before they go public as public investors will not tolerate gimmicks like share structures that favour founders over other stakeholders.
The Softbank’s chief executive has been known as godfather of many start-ups such as Didi Chuxing, Grab, Uber, and Oyo injecting funds from the company’s USD 100 billion Vision Fund.
Surprisingly, this is not the first time that Softbank meddled with the companies it has taken under its wing. Its investment in Uber Technologies Inc. included a deal to block controversial co-founder Travis Kalanick from taking a CEO or chairman position.
Why WeWork didn’t work
If you have been living under a rock and is oblivious to what happened to WeWork’s controversial IPO, let us jog the timeline of events.
WeWork publicly filed its highly-anticipated IPO on 14 August. “The We Company” was described as an umbrella with three major arms: WeWork, WeLive, and WeGrow. However, the lacklustre filing faced scrutiny for the company’s profitability as if learning the lessons from Lyft and Uber’s public offering hitting an all-time low.
Moreover, WeWork CEO Adam Neumann’s antics, , like reports of his smoking weed on a private jet, serving employees tequila shots after discussing layoffs, and trademarking the term “We” and then forcing WeWork to buy it for $5.9 million, became a controversy overshadowing the IPO.
As a result, investor interest was weak, and the company considered cutting its valuation by more than 50% – from USD 47 billion to USD 10 billion. Ultimately, WeWork delayed its IPO indefinitely.
Neumann stepped down from his role as CEO on 24 September. More WeWork executives with close ties to Neumann quickly followed him out the door. Artie Minson and Sebastian Gunningham have stepped into the role of co-CEOs of WeWork as it attempts to navigate its future. Currently, the company is contemplating on selling three side businesses and Neumann’s private jet.
Neumann decided to back the management changes because he became convinced they were in the best interest of the company, according to a person close to him. Neumann owns about a quarter of WeWork, sources have previously said, tying much of his wealth to the company. WeWork has not disclosed what percentage of the company he owns.
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