Real talk at WeWork, equity for handymen, and the insane Hyperloop One lawsuit


Here is the promotion that Lyft is running in New York City this week: “Ride to Catch ’Em All—20% off an evening ride to any PokeStop.” No further comment.

Real talk at WeWork. 

“WeWork Cut Forecasts as CEO Asked Employees to Change ‘Spending Culture’” is the headline on this Ellen Huet story, and even that hardly does it justice. Huet reports that WeWork, a co-working and co-living startup last valued at $16 billion, in late April slashed its 2016 profit forecast by 78%, cut its revenue estimate by 14%, and disclosed a 63% increase in projected negative cash flow. Around that same time, WeWork CEO Adam Neumann reportedly decided to share some stern words with his staff on their financial practices.

Neumann told employees they needed to find ways to cut costs, even small ones, a process he called “managing the nickel.” He said he canceled a breakfast of salmon, eggs, bagels and yogurt provided at Monday morning executive meetings, which he estimated cost $350 a week. Staffers should check whether lights are on in WeWork buildings at 2 a.m., he suggested in the video.

He described feedback he wanted from employees: “I want to start receiving notes: ‘Lights are on at 2 o’clock. This is wasting money. This is wasting money. This is not smart. I don’t accept this. This is my company. I have equity here. I don’t want to be wasteful.’”

I can think of absolutely zero ways in which this new dictate might go awry at a startup whose business is built on leasing out lavish offices with spa water and beer on tap, whose aesthetic is “reformed bro meets upscale Ikea,” whose founders have long said that the space its users rent can’t be priced on square footage alone; I can’t imagine how such a startup could have imparted any values other than frugality and cost-consciousness to its employees. Oh, and there might also be some bigger problems with the business:

The document said $90 million of lost revenue came from “desk slippage,” which refers to desks becoming available later than expected due to building opening delays. For WeWork, which charges customers fees to rent shared office space that it leases, delays are costly. The company told Bloomberg this week that delays are often related to when WeWork takes possession of a building, rather than construction issues once it begins remodeling.

In these trying times, it’s good to know WeWork’s leaders are focusing on the important things first: saving money at headquarters, one rogue 2am light bulb at a time.

Equitable employment.

Managed by Q co-founder Dan Teran had an exciting announcement last week: “it’s official—proud to have 124 @ManagedbyQ field operators on the cap table” he tweeted. Managed by Q is a cleaning, handyman, and office management company that has made a name for itself as the gig economy good guy. It hires all of its field workers, which it calls “operators,” as employees with benefits at above-market rates, betting that the higher labor costs will pay off in the form of lower turnover. It also promised in March to give 5% of the company’s equity to those operators. 

The “Operator Stock Option Program” officially kicked in this month, and it will be interesting to see how it goes. Managed by Q is one of several companies toying with the idea of giving equity to its non-HQ workers as both a perk and a retention measure. Another good example is Juno, the new “nice guy” Uber competitor in New York. When Juno set up here a few months ago, its founder Talmon Marco said the company would award 1 billion shares to drivers over the next 10 years—the same number held by all of Juno’s cofounders. The plan was to distribute 25 million restricted stock units a quarter, and per an update from BuzzFeed, Juno is on track to begin that process this week.

Airbnb and the FTC.

Airbnb’s regulatory struggles continue, this time with US senator Brian Schatz calling on the Federal Trade Commission in a letter to investigate “the rapidly expanding short-term lodging rental market.” The letter was also signed by Dianne Feinstein and Elizabeth Warren, who worry that while “these firms have sparked innovation, increased competition, and have provided new means by which our constituents can earn extra income,” they also may be “exacerbating housing shortages and driving up the cost of housing in our communities.” The senators’ main request seems to be for the FTC to, via an investigation, acquire city-level data on Airbnb and other short-term rental companies (HomeAway, VRO) that the companies themselves have been reluctant to give out. Indeed, the best data to-date on Airbnb in any market came from an October 2014 report by the New York attorney general, and it was obtained through a subpoena. “In order to assess the use and impact of the short-term rental market, we need reliable data on the commercial use of online platforms,” the letter states. “We believe the FTC is best positioned to address this data gap in an unbiased manner.”

Elsewhere: This is the Woman Behind the Man Who Runs Airbnb.

Brogan BamBrogan.

If you’re looking for some good afternoon reading, consider this totally insane lawsuit against Hyperloop One, which seems destined to become the plot of one if not several episodes of HBO’s “Silicon Valley.” The suit is being brought by several former Hyperloop One employees, including the absurdly named Brogan Bambrogan. Allegations include that Hyperloop’s cofounder paid his girlfriend $40,000 a month to do PR, then fired her once they broke up; that the same co-founder pressured would-be Hyperloop One investors to first put money into his own fund; and that BamBrogan was threatened in the workplace with a hangman’s noose. Hyperloop One “is being strangled by the venture capitalists who control the company,” the suit states, and don’t you wonder whether the word “strangled” there is a deliberate allusion to the hangman’s noose? I think probably yes. Anyway, the full complaint is here. Enjoy.

Other stuff.

CIA Memo: Great Work on Pokémon Go. Unicorn Valuations Are Nearing a Reckoning. Uber, Didi, Airbnb carry Q2 on-demand startup funding. It’s Time for Hotels to Really, Truly Worry About Airbnb. Uber, Lyft get hurried green light in Philly. Uber suspends operations in Hungary. Seattle wants to toss lawsuit against legislation that lets Uber, Lyft drivers unionize. Uber accuses 13 irate drivers in Hong Kong of harassment. Should Uber have raised billions from Saudi Arabia? Lyft fined $6,000 for failing to report lobbying activity in California. Investigators hired by Uber “dissembled and used false pretenses.” Freshly raises $21 million. Amazon eyes food delivery in London. Ford Invests in Startup That Makes 3-D Maps for Self-Driving Cars. The crushing loneliness of Silicon Valley. Uber for escorts. Possible Reasons I Don’t Have a Perfect Uber Passenger Rating.