Airbnb CEO: These are 2 things that caused WeWork’s fall

Airbnb co-founder and CEO Brian Chesky says he has made it clear to his employees and investors that he plans to take the company public in 2020, despite the varying levels of success with tech IPOs this year…

But Chesky says he won’t make the same mistakes that co-working company WeWork and its co-founder Adam Neumann made with the company’s ill-fated IPO. After WeWork withdrew its IPO filing in September, SoftBank agreed to take a majority stake in the company, resulting in Neumann’s exit, layoffs and the unicorn start-up once valued at $47 billion, is now worth less than $5 billion, reports Markets InsiderWeWork also said Friday there will be changes to the business, including the company divesting “non-core businesses” (including its investment in The Wing) and reducing its head count.

Speaking at The New York Times DealBook conference in New

City on Wednesday, Chesky said he believes two main things contributed to WeWork’s fall.

 

Not all tech companies are created equal

Shortly after WeWork filed its IPO in August, the company faced intense scrutiny about its finances and its inflated valuation of $47 billion. For instance, The Financial Times reported July that despite WeWork’s high valuation and growth, the 9-year-old start-up was losing cash fast — roughly $219,000 an hour to be exact. What’s more, in 2018, the company disclosed that its losses and revenues both doubled from the year before to $1.9 billion and $1.8 billion, respectively. According to FT, while WeWork projected $3 billion in revenue in March, it lost $700 million in the first quarter of 2019.

According to Chesky, the first lesson here is that not all tech companies are the same. Some are good businesses, and some are not.

He says historically, investors would value companies at a one or a zero — meaning its either a tech company or its not a tech company

“I think that people used to believe that every company was a tech company,” Chesky said at the DealBook conference. “We now realize that is not that they aren’t a tech company, it is that tech companies live on a…

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