Back in the day, nearly 20 years ago, I worked for an Internet Services Provider named Genuity. I was there when we had our IPO which, at the time, was considered one of the all-time champeen failed IPO’s in history.
It didn’t even go out the door at the initial offering price, and it was all downhill from there.
This was in the heady early Internet days, and fortunes were being made. Or, in the case of Genuity, lost.
I had gambled a bit and purchased 1,000 shares in advance, for a total of $11K.
I had decided going in that $11K was an amount I was willing to lose. Good thing. By the time six months rolled around, and I could now sell those shares, the price was approaching zero. At least I got the capital losses…
But I was one of the lucky ones. I had plenty of colleagues who’d invested quite a bit, not wanted to miss out on a golden opportunity. In the days leading up to the insider purchase date, I saw people faxing info to their banks taking out second mortgages. I knew people who were taking their kids’ colleges funds and investing them in Genuity shares. Colleagues were inviting friends and family to get in on the friends and family deal.
One couple I knew – both husband and wife worked for Genuity – put in the max allowed. (It might have been the equivalent of your salary – something like that.) They’d missed out earlier on the opportunity to get in on AOL’s friends and family offering. They weren’t going to lose out again.
On IPO day, the halls were full of stricken faces.
The folks who had refused to put any money in tried not to gloat. Those who’d lost big tried (sometimes unsuccessfully) not to weep.
One of my friends just shrugged. “My father-in-law didn’t like me to begin with…”
The company had planned a celebration in our courtyard – pricey appetizers and champagne, plus goody boxes that contained a polo shirt, a fleece, a camera to take pictures of the great event, noisemakers, and – oddly enough – a nylon foolscap.
There was, of course, precious little to celebrate, but everyone wanted to make sure that at least they walked away with a goody box.
Unfortunately, there weren’t enough to go around, and people who may have just lost $100K or more got a bit out of control. They charged the barricades – tables behind which the goody boxes were stacked – and started hurling goody boxes out to their friends while the young women of marketing tried in vain to defend.
It got pretty ugly, and reminded me a bit of the last copter taking off from the roof of the US Embassy the day Saigon fell.
My comment was that there weren’t enough office supplies in the place to make good on the losses that people had taken. There’s only so many staplers and post-it notes you can walk off with…
I can’t remember when the layoffs began. I actually think we may have lasted a year before the company really began teetering. But teeter it did, and eventually topple. I spent my last year there making out quarterly layoff lists for my group until I couldn’t stand it anymore and asked to be put on a list myself.
WeWork didn’t even manage to pull their IPO off.
Last winter they were a high-flyer, valued by Pitchbook at a cool $47B. Then the company went into a self-inflicted cum market reality catching up with them swoon, only to be bailed out by Softbank for a not-quite-so-cool $9.5B.
And now the company – which was primarily involved in shared office space for startups and individuals – is laying employees off.
Starting this week, and moving on in through the holidays, WeWork will be shedding 4,000 employees – about one-third of their workforce – “through a combination of layoffs, divestitures of the company’s ancillary businesses or through transfers to a contractor.”
WeWork Executive Chairman Marcelo Claure told employees that layoffs would begin this week, according to an email obtained by The Washington Post. Claure said the layoffs would be “difficult” but necessary to create a “more efficient, more focused and even more customer-centric organization.” (Source: Washington Post)
In other words, even with the cash infusion from Softbank, we’re running out of money and have to let a ton of folks go.
The company had, of course, gotten a little ahead of its skis by hiring so many people to begin with. They focused on go-go growth, rather than figuring out the boring stuff. Like how to turn a profit.
So the pink slips will be flying.
Double whammy for those who’ll be losing their jobs.
First, they’re losing their jobs, and even if this turns out to be for the best – which most of the time it does – it’s still tough to be shown the door. Loss of pay, loss of purpose, loss of routine, loss of the social aspects of work. Never easy.
But the fact that it’s coming on the heels of the loss of fantasy money makes matters worse. Because I can guarantee you that an awful lot of employees had the money they were going to make on that IPO already spent. It was going to buy a car. Or a down payment on a condo. Pay off tuition loans. Pay for a wedding. It was going to be socked away for a rainy day, or to build up the new baby’s college fund.
For more senior employees, the IPO would have been worth a lot more. Vacation home. Start a business. Trip around the world. Twice. Early retirement…
It’s never easy to lose your job, but this time of year – it’s dark, it’s cold, there’s all this holiday cheer going on – it’s especially bad.
Good luck to the WeWorkers. Better luck next job.
-------------------------------------------------Here’s an earlier Pink Slip take on WeWork.
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