Oct 10, 2018

WeWork talks with SoftBank have evolved

Dan Primack, author of Pro Rata

WeWork co-founder and CEO Adam Neumann. Photo by Kelly Sullivan/Getty Images.

The Wall Street Journal last night reported that SoftBank Vision Fund is "in discussions to take a majority stake in WeWork," the co-working space giant in which SoftBank last year acquired a 20% stake for $4.4 billion.

The bottom line: Sources say that the two sides remain in negotiations over a new investment, but that control is off the table (at least for now).

WeWork co-founder and CEO Adam Neumann originally was amenable to a deal whereby he'd lose at least short-term control of the company, but with the ability to regain control were WeWork to hit certain revenue milestones (e.g., some sort of clawback). Now, however, the talks involve Neumann retaining control, although the ultimate structure could be pretty convoluted.

But no final agreement is signed or very close to being signed, and there may even be talks with other parties or with SoftBank about alternate structures.

SoftBank basically wants to accelerate its "gain market share at all costs" strategy, which has been talked about inside of WeWork since the day SoftBank first invested.

  • This is similar to what the Japanese giant has employed at other Vision Fund portfolio companies, and a hot topic among VCs has become if it can really work beyond the consumer services sector (particularly in enterprise software, where Vision Fund has been taking a hard look).

WeWork bonds, which recently hit their lowest mark since early June, got a small bump from the report, reapproaching 96 cents on the dollar as of earlier today.

I'm still wondering how the Jamal Khashoggi situationwhich intensified last night — would play into WeWork's willingness to give Saudi-backed Vision Fund an even bigger stake.

  • In that vein, it's worth noting that Sam Altman (Y Combinator), Marc Andreessen (Andreessen Horowitz) and Dan Doctoroff (Google's Sidewalk Labs) reportedly joined an advisory board for the Saudi government's $500 billion mega-city project, called Neom.

Go deeper

Amid racial unrest, a test at the polls

Photo: Stephen Maturen/Getty Images

Eight states plus D.C. are holding primary elections today following a week of intense protests across the country over the brutal police killing of George Floyd.

Why it matters: It's the first major test for voting since the national outcry. Concerns over civil unrest and the police — as well as the coronavirus and expanded absentee voting — could reduce the number of voters showing up in person but heighten tensions for those who do.

Axios-Ipsos poll: America’s big racial divide on police, virus

Data: Ipsos/Axios survey; Note: ±3.2% margin of error; Chart: Andrew Witherspoon/Axios

A new Axios-Ipsos poll finds that America has a massive racial gulf on each of our twin calamities — trust in police, and fear of the coronavirus.

  • 77% of whites say they trust local police, compared with just 36% of African Americans — one of many measures of a throbbing racial divide in Week 11 of the Axios-Ipsos Coronavirus Index, taken the week George Floyd was killed by a white policeman in Minneapolis.
Updated 52 mins ago - Politics & Policy

Updates: George Floyd protests nationwide

Police officers wearing riot gear push back demonstrators outside of the White House on Monday. Photo: Jose Luis Magana/AFP via Getty Images

Protests over the death of George Floyd and other police-related killings of black people continued for a seventh day across the U.S., with President Trump threatening on Monday to deploy the military if the unrest continues.

The latest: Four police officers were struck by gunfire while standing near a line in St Louis on Monday after a peaceful demonstration, Police Chief John Hayden said early Tuesday. They were all taken to hospital with non-life threatening injuries. He said a small group of people had thrown rocks and fireworks at police officers.