đź”’ The Editor’s Desk: Behind the failures of WeWork, Uber, et al

The failed WeWork IPO has dominated global business headlines in recent weeks, and with good reason. It looks like the “smart money” actually really is in public markets, where investors are rejecting stratospheric private valuations for loss-making “tech” companies that are actually old-fashioned businesses wearing tech face. In this episode, Alec Hogg and I deconstruct the struggles at WeWork, Uber, and other businesses that have found public markets a little too rational. We also look at the strange tale of ousted Sasol chief David Constable. – Felicity Duncan

David Constable came to SA amidst fanfare in 2011 and set about reshaping national petrochemical giant Sasol in his own image. He led the company to some disastrous investments in the volatile US fracking industry, losing billions in the process. He left the company in a cloud on 2016, but has apparently moved seamlessly back to his former employer, Fluor. Perhaps not coincidentally, Fluor was a major beneficiary of Sasol’s multi-billion rand project in the US state of Louisiana. One wonders what the Sasol board makes of all this.
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Another company whose board seems to have been asleep at the wheel is WeWork, the short-term office leasing firm that tried to IPO this month and failed. Extensive, painful, and fast-rising losses coupled with some shocking corporate governance shortcomings combined to make the company unpalatable to cynical public markets. This is good news – it seems that public markets are finally waking up and saying, “Show me the money, or at the very least, the possibility of the money.”

Also read: WeWork: A $47bn master class in how to play investors for a fool. Here’s the idiot’s guide.

Other so-called “tech” companies (which are really just old-fashioned businesses pretending to be tech companies) like Lyft, Uber, and recently listed Peloton have also found public markets to be a more hard-bitten and hostile place than the easy money realm of private equity. From the perspective of those of us who expect our businesses to deliver actual economic value, this is an encouraging development.

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