"Boil things down and WeWork is a leveraged real estate company[a] propped up by a leveraged pool of late-stage venture capital (the Vision Fund)[b], which is in turn controlled by a leveraged telecoms and technology company (SoftBank).[c]"
It's like Peter borrowing a large amount of money to invest with Paul, who then, unusually, borrows on top of Peter's investment to invest with Mary, who then borrows another large amount of money on top of Peter's investment to invest in her own scheme. What happens if Mary can't pay back?
[a] WeWork has borrowed and wants to borrow more to finance operations, both in the form of corporate debt and in the form of long-term lease commitments: https://www.sec.gov/Archives/edgar/data/1533523/000119312519...
[b] The Vision Fund has borrowed money on top of Softbank's investment:
[c] Softbank has borrowed money to invest in the Vision Fund: https://archive.is/o/9I97g/https://www.bloomberg.com/news/ar...
I'm sure you'll find some leverage if you look at Softbanks debt holders also.
There was an extreme amount of pointless and doomed enterprises, but given just how much "national capital" was invested, and how much credibility economic planners had at stake for their imagined economic theories, an absolutely ridiculous amount of self-deception was made.
And from that on, lies and economic data falsification went into a downward spiral. The amount of "funny money" being going around state institutes in a convoluted scheme of mutual bailouts, reciprocal investment deals, capital parking arrangements, "kickback backed credits," and LBOs (Yes! The Union had LBOs, at least on paper) began to outnumber the amount of cash going exchanged in the tiny real economy by triple digits.
Its just human nature, no political or economic system is immune.
I wonder if some of these companies have painted themselves into a corner by accepting such high valuations. Each round of financing is coming from greater and greater fools...except the public markets are not as foolish as SoftBank and sovereign wealth funds. This isn't going to be good for the employees who want some liquidity.
I'm looking at them and I'm completely at loss.
It certainly feels like the decisions are driven by finance and not value creation.
Still, I'm trying to keep an open mind.
Or maybe there's so _much_ VC money that it's someone's job to invest _all_ of it. And you can't do that $250k at a time.
Someone surely is incentivized to make these investments outside of any long-term payback. Perhaps they fear investors will take their millions back if it stays fallow too long?
Why is it that all Frankenstein metaphors are poor? This one at least doesn't confuse the monster and the creator. In the story it's Frankenstein trying to destroy the monster, not the other way around.
In the spirit of productive discourse I'd suggest the sorcerers apprentice as a better comparison.
I'm not sure I've ever seen it adequately used as a metaphor that rose above the "Oooh, it's a monster!" level.
> He [the creature] traveled to Victor's [Frankenstein ] family estate using details from Victor's journal, murdered William, and framed Justine.
>Should Victor [Frankenstein] refuse his request, The Creature also threatens to kill Victor's remaining friends and loved ones and not stop until he completely ruins him.
> The Creature demands that Victor [Frankenstein] create a female companion....Fearing for his family, Victor reluctantly agrees.
> the Creature had strangled Clerval to death and left the corpse to be found where his creator had arrived
> The night following their [Victor [Frankenstein], Elizabeth] wedding, ... the Creature strangles Elizabeth to death
When the reanimated corpse of Wework starts murdering Softbanks friends and relatives, I will of course stand corrected.
Son's creation (Softbank) is doing plenty harm by investing vast amounts of money in businesses which "have no discernible path to profitability"
Does anyone know where the money to buy properties came from? Was this his own money? VC money?
This makes a fantastic amount of money for everyone involved, as long as WeWork stock is valued > the price of toilet paper, and as long as demand for shot-term office real estate continues to be high. If either of these assumptions fail to hold, there are going to be very serious problems.
There's no conflict of interest in this sort of self-dealing, none whatsoever...
It's no different then any other corporate loan.