A look inside WeWork's controversial IPO. Today, we dive deep into WeWork’s IPO (and the backlash since), give you a sneak peek at tomorrow’s segment called Name Your Price, and go "behind the book" with Tien Tzuo’s Subscribed during our ProfitWell Book Club.
Today's Top Subscription News
Care by Volvo Expands
Volvo announced on Monday it's expanding its controversial subscription program, Care By Volvo.
Care by Volvo, launched in 2017, is a two-year subscription service where the use of a vehicle, insurance, and maintenance costs are bundled together in monthly payments.
According to AutoNews, the revamped Care By Volvo program has shortened the time it takes dealers to qualify, approve, and get subscription customers into vehicles. Previously, future subscribers had to order their car, but now Volvo retailers can offer cars on the lot. Care By Volvo is also expanding its product offerings.
Good News for BlueJeans
In the podcast, Kadakia dips into leaving the security of employment to pursue her self-made business concept.
Click here to listen.
WeWork, We IPO
We the people - are apparently very enthralled by WeWork. WeWork, now officially known as the We Company, filed for their S-1 on August 14th in a film noir-esque documentation. Many Internet goers claim they spent more time than they’d care to admit reading through the paperwork that WeWork submitted to the SEC last week, in part due to the outrageous nature of the language - as WeWork began the filing with a quote: “We dedicate this to the energy of we - greater than any one of us but inside each of us” - and then proceeded to claim they offer something called “space as a service.”
But readers were less than convinced.
And as of today, the debate-worthy commentary keeps rolling in. Headlines asking “Is WeWork a Good Business?” and others stating “WeWork will be ‘the most ridiculous IPO of 2019’” have flushed the news since the preliminary IPO announcement.
So why are we so enthralled by the WeWork saga? Well, it seems to be a case of business model, economics, and downright ethics. An article from Forbes Senior Contributor Stephanie Denning claims, “WeWork has an arguably strong value proposition, but the business case and economics are much less clear. And from a business perspective, there is reason for concern.” And she’s “afraid that isn’t the end of the story. Arguably, the most worrying data-points are those that dip into the question of ethics.”
The filing divulged that the company has been leasing (rather than buying) real estate from WeWork CEO Adam Neumann, making him a pretty penny. After scrutiny, the company ultimately purchased those buildings to avoid further conflict, from which Neumann cashed out more than $700 million in a mix of stock sales and debt.
ProfitWell Pricing Strategist Devin Bhatia admitted he too reacted strongly to the filing.
"At some point the market is going to wise up and realize that this should not happen, and their stock is going to plummet."
And in their IPO filing, the company defended its $47 billion valuation, claiming their tech company status makes them worth more than their main competitor IWG in the real estate realm - calling into question what it means to be a tech company. They argued their innovation and flexibility rival that of real estate counterparts. But WeWork’s filing fails to explain a valuation that’s more than 10x higher than IWG’s, especially since they’re operating at a huge loss, losing nearly $900 million in the first half of this year.
August 14th’s filing states Neumann’s last stock sale was in twenty seventeen, which doesn’t present a convincing argument for us to jump on board with. And we remain unconvinced that offering “space as a service” is a good enough reason to consider yourself a tech company.
The ProfitWell Book Club: Subscribed
Subscription software, subscription media, subscription pickles. You name it, and out there somewhere there’s a recurring revenue business for it. The subscription model is no doubt dominating the world and turning the traditional business model on its head. On today’s ProfitWell Book Club, I dive deep into Subscribed, written by Zuora’s CEO Tien Tzuo — who argues the subscription model is revolutionizing our future, and how to start implementing it the right way.
And that’s a wrap for your August 28th subscription news. We’ll catch ya back here tomorrow, where we do it all again. To recruit your friends into the subscription know, send them to recurnow.com to sign up for episodes on the daily.