WeWork Could Do Worse Than Follow Pandora’s Footsteps

Bloomberg
October 24, 2019
By- Coner Sen

The meteoric rise and spectacular fall of WeWork is one for the ages.To sum up: The real-estate leasing startup, which incinerates money, was planning just two months ago to go public at a valuation that some thought would be as high as $47 billion. Once investors got a good look at its finances they couldn't stop laughing. The company instead needed a bailout from its biggest investor and now is valued, perhaps optimistically, at $8 billion.Maybe this episode marks the beginning of a sobering up of cash-burning growth companies with dismal unit economic. If that's the case, what will that process look like? Maybe the transformation of music-streaming service Pandora helps show how busted unicorns — closely held startups valued at $1 billion or more — can find new life.

When Pandora had its initial public offering in 2011, it was a tortoise-beats-the-hare success story, after it launched during the dot-com boom in 2000. It survived several near-death experiences, putting a damper on the cockiness and growth-at-all-costs mentality often seen in fast-growing startups. Rather than grant its chief executive officer super-voting shares and complete control, the CEO owned less than 3% of its stock after several rounds of capital injection that diluted his stake.


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