economics | September 24, 2019

What Does WeWork’s Spiral Mean for the Future of Consumer Tech? Derek Thompson Explores for The Atlantic.

Though the case of WeWork—a company poised to go public before a sharp, unexpected decline in its valuation—appears as a “one-of-a-kind spectacle,” according to Derek Thompson the underlying narrative is more familiar than we think. 

“If you wake up on a Casper mattress, hail a Lyft to get to your desk at WeWork, use DoorDash to order lunch to the office, hail another Lyft home, and have Uber Eats bring you dinner, you have spent your entire day interacting with companies that will collectively lose nearly $13 billion this year. Most have never announced, and may never achieve, a profit,” writes Derek Thompson in his article “WeWork and the Great Unicorn Delusion.

 

Investors have poured money in companies that have no clear path to profitability. WeWork has lost $1billion in revenue this year and last year, the result of aggressive expansion that burns through funds. As Thompson notes in his appearance on NPR’s Here and Now, “Unicorns are billion dollar companies stuck between two worlds. As private companies they raise all this money with inflated visions of planetary conquests. Then when they turn public, all the money that they’re spending on conquering the planet appears, on profit and loss statements, as losses.”

 

While the delusion of private-sector wunderkinds is just that—a delusion—it doesn’t necessarily mean these companies are doomed. But it does mean that they’ll have to change their stories. “Magic made them,” says Thompson. “Only math with save them.”

 

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innovation | September 23, 2019