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CEO Ouster and Looming Layoffs Turn WeWork into a Cautionary Tale
Major layoffs are all but inevitable at high-flying real estate startup WeWork after Adam Neumann succumbed to pressure today to step down as CEO and take the role instead of non-executive chairman of the company he cofounded nine years ago.
Two well-placed sources tell us that the scope is likely to be massive, and includes some of of its newest business divisions, which these same sources anticipate will be jettisoned to get the company’s focus back on its core business. One of these sources speculates that over time, up to half of WeWork’s 15,000 employees — 9,000 of whom have been brought on in the last two years — could be laid off to shore up the unprofitable company’s expenses. The sentiment echoes a new piece in The Information that reports a “group of executives from WeWork’s parent company and bankers” have discussed laying off as many as 5,000 employees—a third of its workforce.
Neumann won’t have as much say in the matter, either. As part of his departure from the role, he has agreed to further reduce the power of his supervoting shares from an original 20 votes for every one vote that a regular investor in WeWork would receive to just three, reports Bloomberg. His wife, Rebekah, a cofounder who is thought by insiders to have played a heavy role in the company’s original — and highly atypical — IPO prospectus, is also leaving the business.
It’s rather breathtaking, the speed with which the couple was just elbowed aside. Still, some others involved in the company look poised to get a far worse deal. The Japanese conglomerate SoftBank currently stands to lose billions of dollars on its investment in the company — if it doesn’t wind up writing down nearly the entire investment. Even an aggressive ratchet clause won’t do much to protect SoftBank if WeWork’s shares eventually sink on the public market.
It would seem an extreme correction to a culture that had become, well, anything but restrained. It’s also far from clear that it would have the intended effect of attracting public shareholders to the company, whose wheels began to come off when SoftBank first plugged $4.4 billion into WeWork roughly two years ago, according to our sources. (Roughly $6 billion more would follow.) As says one of these individuals, who has known Neumann for many years, “Adam already had a healthy ego. What the f_ck do you think is going to happen when he’s given billions of dollars?”
Fundbox, a seven-year-old, San Francisco-based B2B payments and credit network, has raised $176 million in Series C funding from Allianz X, Healthcare of Ontario Pension Plan, HarbourVest, 9Yards Capital, Hamilton Lane, SEB Private Equity, and about nine other firms. Earlier backers Khosla Ventures, General Catalyst, and Spark Capital also joined the round, which brings the company’s total funding to roughly $300 million, says TechCrunch. More on what’s attracting the attention of so many investors here.
Tipalti, a nine-year-old, San Mateo, Ca.-based accounting startup, has raised $76 million in Series D funding led by Zeev Ventures, with participation from Group 11, 01 Advisors, Greenspring Associates, and TrueBridge Capital Partners. TechCrunch has more here.
Everledger, a four-year-old, U.K.-based blockchain company, has raised $20 million in Series A funding from Tencent Holdings, Graphene Ventures, Bloomberg Beta, Rakuten, Fidelity and Vickers Venture Partners. CoinDesk has more here.
Fivetran, a seven-year-old, San Francisco-based startup that helps companies move data from disparate repositories to data warehouses, has raised $44 million in Series B funding led by Andreessen Horowitz, with participation from earlier backers Matrix Partners and CEAS Investments. The company had closed on $15 million in Series A funding less than a year ago. More here.
Manticore Games, a nearly three-year-old, Bay Area-based stealth gaming startup, has raised $30 million in Series B funding from Benchmark, Correlation Ventures, BITKRAFT Esports Ventures, M Ventures, Arrive, Sapphire Sport, Tuesday Capital, and SV Angel. The company has now raised $45 million altogether — and all before it has shipped a product. TechCrunch has more here.
Sentry, a seven-year-old, San Francisco-based startup that provides bug-monitoring software for app developers, has raised $40 million in Series C funding led by Accel, with New Enterprise Associates also participating. More here.
Tulip, a five-year-old, Somerville, Ma.-based manufacturing app platform that requires no coding and that was created in part by Natan Linder, cofounder and chairman of the billion-dollar 3D printing company Formlabs, has raised $39.5 million in Series B funding, including from Vertex Ventures and earlier backers NEA and Pitango Venture Capital. TechCrunch has more here.
Cowbell Cyber, a nine-month-old, Pleasanton, Ca.-based cybersecurity startup, has raised $3.3 million in seed funding from ManchesterStory Group, Holmes Murphy & Associates, Tri-Valley Ventures and the Global Insurance Accelerator. More here.
Cycode, a months-old, Tel Aviv, Israel-based security company that aims to protect enterprises’ source code, has raised a $4.6 million seed led by YL Ventures. TechCrunch has more here.
iVexSol, a newly formed, Boston-based viral vector manufacturing company, has raised $2 million in convertible debt funding led by Casdin Capital and BioLife Solutions. Viral vectors, are molecular tools used to package and deliver genetic material into patients. More here.
Passbase, a 1.5-year-old, San Francisco-based digital identity startup, has raised $3.6 million in seed funding led by Cowboy Ventures and Eniac Ventures, with participation from Seedcamp and other European investors. The startup had raised $600,000 in pre-seed funding earlier this year. TechCrunch has more here.
AirMap, a nearly five-year-old, Santa Monica, Ca.-based airspace intelligence platform for drones, has acquired Hangar Technology, a three-year-old, Austin, Tex.-based drone workflow automation platform for enterprises. Terms of the deal aren’t being disclosed. AirMap has raised roughly $44 million from VCs, according to Crunchbase; Hangar had raised $6.5 million, it says. More here.
BlaBlaCar, a French company that sell a ride-sharing service for long-distance trips across Europe and other places like Russia and Brazil, has offered to buy Eastern European bus-booking platform Busfor for an undisclosed amount, the company said today, calling the deal its “biggest” acquisition to date. Nicolas Brusson tells CNBC it will give BlaBlaCar the opportunity to provide “multimodal” transportation offerings in new regions. More here.
After more than 50 years of chronicling local characters, the biweekly print magazine with five popular online offshoots, New York Magazine, has a new owner in Vox Media. Neither company is disclosing the value of the deal. The New York Times has more here.
Vista Equity Partners, which likes buying undervalued tech companies and turning them around for a profit, has acquired the web content management and digital experience company Acquia in a deal valued at $1 billion. Acquia, which is the commercial arm for the open source Drupal project, had raised $173.5 million from investors, according to Crunchbase. TechCrunch has more here.
Tony Wang has joined the accelerator program and investment firm 500 Startups as a managing partner, says TechCrunch. Wang worked previously at Color Genomics, a venture-backed developer of genetic testing kits where he served as chief operating officer. Before Color, Wang was the vice president of global partnerships and development at Twitter.
Gradient Ventures, the corporate venture arm of Google that’s focused on all things AI, is looking to hire a senior associate. The job is in San Francisco.
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The SEC has charged media measurement firm Comscore and its former CEO Serge Matta for engaging in a fraudulent scheme to overstate revenue by $50 million and by making false and misleading statements about its performance. The company and Matta entered a settlement with the SEC without admitting wrongdoing. The whole thing is especially ridiculous given that the company’s metrics are widely touted in the media world.
Facebook will not fact-check politicians’ speech or block their content if it’s newsworthy, even if it violates the platform’s hate-speech rules or other policies. This cementing of its policy comes from Facebook’s head of global policy and communication, Nick Clegg, who gave a speech today about Facebook’s plans to prevent interference in the 2020 presidential election.
Emerging research may explain why more teenage boys than girls say they spend too much time playing video games.
A bike crash left this 62-year-old unconscious, so his Apple Watch called 911.
Diary of a prehistoric insect.