Honestly, WeWork is the biggest fraud in start-up history.

Once a gloried $47Bn unicorn darling, WeWork almost became bankrupt after a botched IPO and has just received a $6.5Bn lifeline of its biggest shareholder SoftBank for a total controlling stake of 80%. It’s still losing $1 for each $1 generated in revenue and its business model is still risky and flawed, while its dubious, spiritual ex-CEO Adam Neumann walks away with a total exit package of $1.7B(!) from SoftBank. Ironically, WeWork’s employees on the other hand couldn’t be laid off last week, because the company was too broke to pay severance packages.

Can we pause here for a second…What is going on in the world? One question that no one seems to answer really is - how could it get so bad in the first place? We must assume that WeWork’s board of directors, Softbank and banks like JP Morgen and Goldman all had access to Wework’s financial situation way ahead. Then their inaction of not steering the company into more profitable waters is not only plainly negligent, but also not living up to their responsibilities towards shareholders and the public. Why for god’s sake was Wework’s valuation doubled each financing round since 2016 to a dreamy $47B with no hard financial evidence backing it? What made JP Morgen or Goldman believe that they could trick their clients into buying WeWork shares for a total value of up to $100B(!) ? This is plainly irresponsible.

Shifting to the ex-CEO himself for a moment, what was he thinking the whole time? He, of all people, must have known about the real standing of his company. He must have known about the big gaping hole of $900M losses in H1 2019 way before it was announced, he must have known that the IPO had a solid likelihood of not working out due to Wework’s value destroying business practices. Why else would a CEO sell off almost $1B in his shares three weeks before the most anticipated IPO of the year, that could have meant a much bigger return?

It seems like people’s business ethics compasses are off, broken or simply non-existent and people seem to have been dominated by greed, power or disillusionment. Despite poor financials, investment banks went ahead with underwriting WeWork, receiving a total of $114M in fees. It seems people desperately wanted to get onto this bandwagon – while perhaps they knew that Wework’s economics really don’t work out, what if… what if the market chooses not to notice the losses and WeWork’s IPO will, for whatever irrational reason, still become one of history biggest?

It seems that this FOMO (normally only thought as a disease Millennials would contract) is more powerful than good old business rationale. Take 62-year-old Masayoshi Son, the head of Softbank’s $100B Vision Fund, he wanted to play along with the big VC kids, invested heavily into shiny companies such as Uber or WeWork which are all big money-losing black holes. He is a gambler! Son made one successful (lucky) investment back in 1999 when he decided after six minutes of meeting Jack Ma, that he wanted to invest into Alibaba. The $20M invested is now worth $109B or a 55x return. Pure luck. Jack Ma is a good guy.

Where is people’s business ethics?

There is still quite a whirlwind around WeWork. One aspect that has not received a lot of attention are the employees of WeWork. While a shiny founder helps to attract dumb money, it takes an army of really good and solid employees to build that vision and they will walk away (or get laid off) with no upside whatsoever, while their founder will have reaped all upsides with one of history biggest severance package (remember: $1.7Bn)…

I believe the right thing for WeWork is to fail, pay everyone out and build it anew with more business ethics - because I think even if it was bailed out for now, the environment to work there is toxic, people feel cheated and there is really little market confidence in the brand and its leaders (board members, investors or bankers). I also hope that this case will leave an irreversible reputational mark on Softbank’s Vision Fund to act with more business acumen and that the entire unicorn bullshit club will get readjusted to reflect true business value. Amen.