We Kept Almost Making Money

There is a standard story of WeWork, one that I frequently tell around here, that goes like this: Certain investors, particularly nontraditional venture investors like SoftBank Group Corp.’s Vision Fund, love to invest in fast-growing money-losing companies. Rapid customer growth is the main thing they want, and if that growth comes by losing money on every sale, well, that’s something to figure out later. The growth is the important thing; once you’ve achieved world domination by selling the product at a loss, you can find ways to make money from your large and locked-in customer base. Some big investors in private companies believe something like this, and they set the price in private markets, but the big investors in public companies don’t especially believe it, and they set the price in public markets. And when the fast-growing money bonfires try to go public, either it’s a disappointment (Uber), or it’s a disaster (WeWork). WeWork reached a $47 billion valuation on private-investor optimism, and then crashed into public-investor skepticism.

This weekend the Wall Street Journal had a big story on WeWork that suggests an alternate view of the company, one that goes something like this: