Let’s start with some WeWork-related slides.
That chart is valid, honest, and correctly color-coded to represent increasingly negative EBITDA, something that WeWork has generated oceans of through time.
Fundamentally WeWork was a low gross-margin business that had high operating costs, leading to sharply negative adjusted profit.
To solve the issues SoftBank intends to boost profit while limiting operating expenses.
The rising gross profit line forms the crux of SoftBank’s argument regarding turning WeWork around.
Later, the company shows the impact of lowering operating expenses against rising gross profit:
For our penultimate chart, an image from the middle of an argument about the future of the value of AI-related companies, using historical Internet trends paired with market cap data to make a point about growth.
The argument in the following chart is easy to grok: Internet traffic (use) and Internet company market cap (resulting value) have risen in tandem.
I don’t want to give SoftBank too much credit for doing what they’re supposed to do (i.e. not lying to their shareholders), but I do appreciate that they don’t mince words, perhaps best illustrated with this slide:
Anyway, I found the slides mentioned above interesting as well, but it was also useful to see what SoftBank had planned for turning WeWork around.
The first point seemingly confirms earlier reporting by the Financial Times that WeWork planned on scaling back in some areas (FT reported that it would be China, India and Latin America, and the company would focus on U.S., European, and Japanese operations).
News reports indicate that it could be up to 4,000 people of WeWork’s approximately 15,000-person company.
The third point makes a lot of sense — WeWork needs to get rid of its unprofitable businesses if it ever wants to turn a profit.