What I’m Thinking… About Jack Ma’s Disappearance, WeWork’s I.P.O., and the Elon Exodus

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Jack Ma’s Disappearance, WeWork’s I.P.O., and the Elon Exodus

Regarding the most pressing questions on Wall Street and in my inbox.

WILLIAM D. COHAN

WeWork hit $228 million in revenue in September, its highest level this year, and occupancy rates are up to 60 percent ahead of its listing on the NYSE (via a SPAC merger with BowX Acquisition Corp). Has Adam Neumann been vindicated?

Vindicated is not the word I would use. Neumann’s legacy is written in the pages of the excellent The Cult of We, the recent book by Eliot Brown and Maureen Farrell. There’s no changing that. He’s a complete self-indulgent narcissist who, despite all the WeWork detritus strewn across the Wall Street landscape, managed to walk out the door with $1.1 billion, or so, in his pocket. A venture-capitalist who read the book told Farrell that WeWork was like Theranos minus the alleged crimes: also, Neumann walked out the door with a lot more money than when he came in.

Will the new, slimmed-down, refocused WeWork merger with the BowX SPAC succeed at a much-reduced $9 billion valuation—down from $47 billion at the time of WeWork’s implosion two years ago? It’s certainly possible. But the market for small-office workers is still incredibly dicey, given the lingering pandemic. If you could continue to work from home, why instead would you pay for a rabbit warren in a WeWork building? Whether Neumann’s vision of communal office space for a variety of small- and medium-sized professional businesses will work profitably must wait until after the pandemic truly subsides, and who knows exactly when that will be.

At the moment, BowX’s shares trade around its I.P.O. price of $10 a share, indicating that investors aren’t all that excited about the prospect of the WeWork merger. All of which is to say, at the moment, there is no vindication for Neumann, and none deserved—yet. But he’s a young guy (42) with a billion dollars in his pocket, so who knows. He might yet get the vindication he no doubt seeks.

Your colleague Dylan Byers wrote on Friday that the media response to the latest Facebook scandal is bordering on hysteria. What’s the view on Wall Street?

In the past month, Facebook’s stock has shed 12 percent of its value, a loss of approximately $100 billion, and is now worth $935 billion. That’s not tin. The company still has more resources than all but a handful of companies in the world. And, to put this in perspective, even with the effect of the “scandal” on the company’s fortunes, the stock is still up 23.3 percent in 2021. So Dylan is correct to try to keep all this in proper perspective. The Facebook mishegas may be dominating the airwaves this week but you can rest assured it will be something else next week and Facebook will go back to being the avaricious and pernicious company we know and love.

The bigger problem facing Facebook—its Achilles’ heel—is the fact that it relies on the willingness of its billions of users to share with it for free the most precious details about their lives, and I’ve never been quite sure what they get in return for giving the gift of endless data to Mark Zuckerberg. Connectivity with family and friends, sure, but Facebook is hardly the only social network or messaging service in that game. As Alex Kantrowitz wrote for Puck last week, Facebook is already facing a demographic crisis as the next generation flocks to rivals like Snapchat and TikTok. No wonder Facebook is so interested in building “Instagram Kids.”

Of course, Facebook’s true existential crisis will come when a shiny new object appears in the digital universe that allows people to share their data with one another and get paid for that exchange, or receive warrants or stock in the company, as some blockchain-based DAOs (decentralized autonomous organizations) are attempting to do. When users can share in the considerable financial upside that obviously exists in the world of data sharing, then they will flock to the upstarts like swallows to Capistrano. Then it will be just a matter of time before Facebook goes down the tubes.

If Zuck were as smart as he purports to be—he can’t be that smart, he went to Exeter—he would be planning for that day now and go out and use his still-plenty valuable Facebook stock to try to transform the company into something very different than the data-hoovering behemoth that it is now. But of course the chance of him doing that is nil, meaning that 10 years or so from now, I, or someone like me, will be writing a best-selling book about the company’s demise.

Jack Ma has not been seen publicly for some time. As Scott Galloway recently noted on Pivot, alarm bells would be going off if Zuckerberg or Jeff Bezos went incognito for a similar period of time. Are executives that you speak to talking about this?

As I wrote earlier this week, China is going through some massive convulsions (as are we, I hasten to add). But the disappearance of corporate chieftains is especially disturbing. As usual, Professor Galloway is right. If any of our exalted tech multi-billionaires simply disappeared for months without a trace, there would certainly be an extended hue and cry, especially from the media, which of course has helped to place these people on pedestals in the first place.

From speaking to Wall Street sources, my sense is that while Ma’s disappearance is concerning to them, it is also something that they can do nothing about. (Ma also seemingly went underground for a number of months earlier this year—a detail that doesn’t make this less alarming, but perhaps less surprising.) And so many would rather focus on developments in China which they can still effect, such as whether it is smart to loan money to Chinese companies, or invest in the equity of Chinese companies, or if their banks can do business in China with minimal interference from the government. I know our democracy seems like it’s coming apart at the seams—and it might yet—but at least we’re not at the point where Elon Musk is taken out back to the woodshed, without a trace, for some official reprogramming.

Speaking of Musk: The blue state exodus continues with Tesla moving to Texas and Ken Griffin (declaring “Chicago is like Afghanistan”) relocating to Miami. At the same time, rental prices in NYC are exploding as people rush to move back into the city. Has the migration narrative been exaggerated?

The import of Tesla moving its headquarters to Austin is certainly overblown. Who knows how many people in Palo Alto, who work at the headquarters, will even want to move to Texas. Elon himself can be anywhere or nowhere. But there is no question that the pandemic has upset the traditional work-life balance. And many, many people have discovered, thanks to the internet, they can work remotely and be just as productive and efficient as ever. There might be a lot less mentoring going on for young, ambitious employees—and that needs to be rectified, as I have written—but more and more American workers are deciding that what’s most important to them is where they live and how they live and what kind of schools and amenities are available for them and their families.

It will be up to businesses and corporations to begin to accommodate their employees who want to work in non-traditional locations. And that is happening, absolutely. Goldman Sachs, for instance, has announced that it is taking office space in a Related office tower in West Palm Beach so that 300 or so bankers and asset managers can live in balmy South Florida and still feel a part of the Goldman community. That phenomenon is occurring across a variety of different companies, especially on Wall Street writ large.

As for Ken Griffin, who knows what he is up to? He has spent hundreds of millions of dollars buying land in Palm Beach and is in the process of building a 50,000 square-foot home for his mother. And that’s in addition to the hundreds of millions he’s spent on Manhattan real estate. But declaring Chicago to be like Afghanistan sounds more than a little tone deaf to me.

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