Adam Neumann is the most brilliant, but perhaps somewhat repulsive, [not short] seller of the unicorn bubble.

People sometimes incorrectly assume that the proper way to benefit from overpriced assets is to sell them short. Truth is that any selling will suffice! Housing bubble? Build more houses, sell. Corporate credit bubble? Start a corporation, get credit. Tech unicorn valuation bubble? You got it, create a stupid startup, pay yourself huge salary and sell your stock on private markets.

Bottom line is that supply follows demand - if there is demand then supply will materialize. This is the "magic" of capitalism. It's no different with WeWork, which is a consequence of investors chasing outsized returns in a low return environment.

Matt Levine's column on the topic (scroll to "We We We"):

https://www.bloomberg.com/opinion/articles/2019-10-02/the-tr...

And if you don't believe that this is caused by chasing crazy returns see this interview with Masayoshi Son about how he secured $45B in 45 minutes from the Saudi prince (1:05). He said he wants to give him a $1T gift:

https://youtu.be/Sa2_VBu0d7k

Congratulations, this is a Michael Burry level of play. But not as "pure".

My theory about what is going on, and why it's not totally insane that Softbank is throwing bad money after bad: By throwing in $3 billion more (after already having throwing $11 Billion into WeWork) this gives Masayoshi Son the following three things:

(1) WeWork is able to secure the $6 billion loan commitment.

(2) Softbank gains 51% voting control over WeWork, getting Adam Neumann totally out of the picture.

(3) It avoids WeWork going bankrupt (and setting its value to zero), while Masayoshi Son is in the middle of raising money for Vision Fund 2.

If it goes bankrupt a year from now, Softbank will have already raised money for their next VC fund, and like startup founders of failed companies, Masayoshi Son is probably hoping that people will forget about his prior mistakes / trash fires, and if Vision Fund 2 is at least halfway successful, he'll be able to continue to play his VC games. Being able to play the part of the visionary VC is probably well worth pouring another $3B into the WeWork firepit.

Details including the exact amount of SoftBank’s potential investment couldn’t be learned, but executives at SoftBank figure We needs at least $3 billion to get through the next year

This is insane.

Some of SoftBank’s cash could also be used by Mr. Neumann to repay hundreds of millions of dollars of personal bank loans

Neumann’s real genius is his ability to turn investor’s cash into his own, it’s astonishing that he gets away with it even now.

How is this anything but the sunk-cost fallacy, throwing bad money after bad?

Seriously looking for someone to explain why the WeWork glass is half-full.

>Some of SoftBank’s cash could also be used by Mr. Neumann to repay hundreds of millions of dollars of personal bank loans, one of the people said.

Why would they save his hide when the money could be used to cover more of We’s enormous unending losses?

It's very interesting to me whether this behaviour is because SoftBank still believe significant value can be wrung from the corpse of WeWork or whether this is simply an exercise in hiding losses in order to pave the way for the other funds SoftBank are work on.

So let's examine the first condition - SoftBank needs to put around $3Bn into the company to get through the year. Let's say that's right, it's going to cost them that amount, and over the next year they completely stop the burn rate. That essentially means you end up with a IWG sized company, with more debt, arguably a huge hangover of extra over-head, and broken processes. IWG has a market cap of $3.5Bn. So let's assume neutrally WeWork can get back into a normal situation for an office rental company- that is a bad investment, you're better off letting the company go bankrupt..

So the second situation seems more likely. WeWork is trying to hide the scale of its problems until the next fund has been completed. I can't help but think that people are going to catch on to that - they caught on to WeWork and now SoftBank are really going to be subject to way more scrutiny.

Will the Vision fund still look like a smart investment if WeWork goes bust?

As a reminder, WW has gone from a $47bn valuation - higher according to some interested parties - to skirting bankruptcy in less than two months.

The WGS law firm mentioned are better known for Chapter 11 "restructurings."

The Saudis who were persuaded to put money into Softbank are better known for this kind of thing:

https://en.wikipedia.org/wiki/2017%E2%80%9319_Saudi_Arabian_...

Interesting times for Vision Fund 1/2 and SB.

It seems like SoftBank has money in so many places and I was surprised when I read [1] how many 1+ billion dollar investments they have and have made.

1 - https://www.businessinsider.com/running-list-softbank-invest...

Is there any way that the numbers could work out? Let’s say SoftBank is able to trim the company to the bare bones; Does the We Company still make money at high gross margins? I wonder if it makes more sense to cut losses, as opposed to pumping more money in? I guess that’s why they pay SoftBank the big bucks…

Is Softbank leveraged enough that a few investments going south at the same time could trigger a global recession?

not-paywalled article reporting about the submitted one: https://www.cnbc.com/2019/10/13/softbank-is-seeking-to-take-...