WeWork's Quarterly Loss Doubled to $1.3 Billion, huge layoffs; Uber's bankruptcy will take longer; Narcissistic CEOs Weaken Collaboration and Integrity; Report from the World's Toughest Mudder
1) No wonder the "Whee" Company was so desperate to go public... WeWork's Quarterly Loss Doubled to $1.3 Billion as IPO Faltered. Excerpt:
WeWork reported a net loss of $1.25 billion in the third quarter, eclipsing its sales and more than doubling its loss from the same period last year. The quarter coincided with a spending spree in anticipation of an initial public offering that veered off the rails, a combination of events that nearly brought the company down...
In an email to staff Wednesday that was seen by Bloomberg, WeWork's co-chief executive officers, Artie Minson and Sebastian Gunningham, described the quarter as a "difficult chapter" for the company and said they're developing a plan to "provide a clear path to profitability." That will include selling assets and cutting jobs, they wrote. Dismissals have already begun and are expected to number in the thousands.
WeWork had always prized growth above profit, but it took the approach to another level on the eve of its expected IPO. The deal was set to raise at least $9 billion for the business in a combination of equity and debt. So WeWork spent the summer filling up office space with about 115,000 new desks in the quarter, a record for the company. That brought total desks to 719,000. Partly thanks to that push, the occupancy rate in its offices declined to 79%, from 84% a year before...
The money evaporated fast. WeWork was on track to run out of funds by November and needed an emergency financing from its largest investor, SoftBank Group Corp., to stay alive.
"A clear path to profitability..." What a joke!
The company is laying off up to half of its workforce in a desperate attempt to stave off bankruptcy... WeWork May Lay Off Thousands. Excerpt:
WeWork is preparing to cut at least 4,000 people from its work force as it tries to stabilize itself after the company's breakneck growth racked up heavy losses and led it to the brink of collapse, two people with knowledge of the matter said.
The company is doing the right thing, but it's too late – fiddling with the deck chairs on the Titanic...
I've said it before, and I'll say it again: Whee will be bankrupt within a year.
2) Uber's (UBER) bankruptcy will take longer... in part because it's not quite as bad of a business as Whee, but mainly because it managed to go public earlier this year, raising $8.5 billion. Look who's been selling ever since – the company's lowlife, narcissistic founder and former CEO: Kalanick Has Now Sold $711 Million of Uber Since Lockup Expired. Excerpt:
Travis Kalanick sold 6.1 million shares of Uber Technologies Inc. just days after disposing of a fifth of his stake, bringing the total offloaded to $711 million this month...
The sale underlines Kalanick's focus on other investments, including CloudKitchens, which he funded with $300 million. A $400 million injection from Saudi Arabia's Public Investment Fund valued the food startup at $5 billion, the Wall Street Journal reported last week.
You know, I thought SoftBank was the world's dumbest money, but I think the Saudis are giving it a run for its money, as this funny tweet illustrates:
More bad news for Uber, as another state (in addition to California) is seeking to force it to pay its drivers as employees: Uber slapped with $650 million tax bill by New Jersey. Excerpt:
The Garden State is looking to harvest nearly $650 million in back taxes and penalties from Uber Technologies, making New Jersey the latest front in a nationwide battle over whether drivers who work for ridesharing companies are considered employees or independent contractors.
Uber and subsidiary Rasier were assessed $523 million in past-due taxes during the past four years for misclassifying drivers, the New Jersey Department of Labor said in letters to the companies, according to Bloomberg Law. The rideshare businesses also are on the hook for as much as $119 million in interest and penalties on the unpaid amounts, internal department documents obtained by the news service show.
3) Speaking of narcissistic CEOs like Whee's Adam Neumann and Uber's Travis Kalanick – and let's not forget the biggest of them all, Tesla's (TSLA) Elon Musk – here's an interesting Stanford Graduate School of Business study on them: Narcissistic CEOs Weaken Collaboration and Integrity. Excerpt:
Ignoring the harm that narcissistic leaders can cause is perilous, argues Charles A. O'Reilly III, the Frank E. Buck Professor of Management at Stanford Graduate School of Business. "We see the 10% of narcissists that succeeded and call them visionaries," he says. "We're not looking at the 90% who flamed out and caused irreparable damage. By talking about narcissism as though it might be positive, we're not paying attention to how dangerous these people can be."
In a new paper called "When 'Me' Trumps 'We,'" O'Reilly and two researchers from the University of California, Berkeley, Haas School of Business, Jennifer Chatman and Bernadette Doerr, examine the kind of company culture that narcissists inspire. Through a series of field tests and surveys, they show that narcissistic managers tend to prefer and create organizational cultures with less collaboration and lower integrity, and that their subordinates are more likely to act accordingly. Past research has shown that narcissists are more likely to seek out leadership positions in the first place — and that they are more likely to lie, cheat, and steal.
"If you deal with a narcissist, it can be unpleasant. If you're married to one, it can be damaging. But fundamentally, individuals can choose to walk away," O'Reilly says. "When narcissists assume positions of power, their effects become hugely magnified."...
O'Reilly urges boards to distinguish carefully between true visionaries and harmful personality types when hiring executives. "Because the prototypic visionary leader profile is so similar to that of a narcissist, if boards aren't careful, they're going to end up choosing people who are narcissistic as CEOs," he says.
That doesn't mean boards need to start administering personality tests: "A more direct way is not to hire anyone unless you have lots of data from previous subordinates about how they were treated. If the person stole people's ideas, abused people, or was impulsive, those are all earmarks of narcissists."
4) I had a blast over the weekend at the World's Toughest Mudder, a 24-hour obstacle course race on a horse farm outside of Atlanta. I completed 70 miles and nearly 300 obstacles, finishing in 4th place in the 50-plus age group.
The weather was beautiful – nearly 60 degrees during the daytime and it didn't drop much below 40 degrees overnight – so it wasn't nearly the suffer-fest that it was last year... when temperatures plunged to 26 degrees and knocked out 40% of the competitors due to hypothermia. That said, I can barely walk today. Let's hope I recover quickly, as I'm climbing in the Alps this coming Monday and Tuesday!
Here are some before and after pictures of the guys I ran with, our pit crews, a nighttime shot of the course, and my buddy Tim and me doing Arctic Enema (the freezing-water obstacle.) Tim and I ran every step together of three Tough Mudder races this year: 16, 40, and 70 miles!
Best regards,
Whitney