WeWork’s S-1 misses these three key points

No startup is as polarizing as WeWork, and for excellent cause. The business, whose relentless development has observed it open 528 places across 111 cities in just about nine years, has never ever been totally forthcoming on precisely how the unit economics add up at its places. And so we have had a lovely Rorschach test for the economic class these previous couple of years concerning the business: it is either the greatest economic return of all time or a Ponzi scheme (and definitely nothing at all  in amongst dammit).

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That ambiguity is supposed to adjust with the company’s S-1, exactly where it is needed by law to show a reasonably complete set of numbers to investors in order to go public. Sadly, in spite of all the verbiage (“Our mission is to elevate the world’s consciousness.”) and information, we nonetheless do not know the overall health of the core of the company’s organization model or completely have an understanding of the dangers it is undertaking. 

Right here are 3 inquiries that stay unanswered so far by the company’s filing.

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No cohort information on contribution margin

As I pointed out a couple of months ago, the capability for investors to have an understanding of the accurate unit economics of WeWork’s organization is important for cutting via the debate more than its economic future.

It is not as even though WeWork hasn’t attempted to give us some insight in its S-1. 1 of WeWork’s core operating metrics is “contribution margin including non-cash GAAP straight-line lease cost” (or what I will abbreviate just this 1 time as CMINCGAAAPSLLC). By means of this metric, the business presents us a single quantity into the overall health of its organization — basically a way for investors to have an understanding of the functionality of the company’s mature workplace places.