Wednesday, September 18, 2019

PSA of the day

We have seen a number of ads and memes on the theme of sexual harassment. This one is among the best. A related number of the day: one in sixteen American women say their first experience of sexual intercourse was rape. We wonder what the stats would look like in India.

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The biggest news story today, explained.

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WeWork’s busted  IPO bid

The king of co-working spaces has shelved plans for an initial public offering after receiving a chilly reception from investors. We break down why it happened—and what it means to Indians.

A quick intro to WeWork: The New York-based company was established in 2010 just as the US recession was wreaking havoc in the real estate market. Taking advantage of rock-bottom prices, the company grew by leasing office space and turning them into coworking spaces. As of today, it has 401,000 members spread across 528 locations in 111 cities. In India, it operates via a franchise agreement with the Embassy group which currently owns 80% of WeWork India—which operates 23 co-working centres that offer 39,000 desks. 

Wait, tell me again how an IPO works: It is when a privately held company offers its stock to the public, and is thereafter listed on the stock exchange. It allows the company to raise a lot of money from ordinary investors like you and me. And it confers a big reward to the company’s founders and funders since the value of their equity (shares) shoots up. And it also offers an opportunity for an ‘exit’—i.e they can potentially sell their equity at a huge premium and walk out the door.

Ok, got it! So what happened? WeWork’s parent company, We Company, had big plans for its IPO—fueled primarily by its valuation which hit $47 billion in January. However, when it came time to value the company in time for an IPO, the valuation fell to $10-12 billion. 

Why does valuation matter? Lower the valuation, lower the opening share price when the company goes public. And there’s a real danger that once a stock is being publicly traded on the market, that opening price can dip even further. Now, WeWork decided to do an IPO to raise at least $3 billion. Its main investor, the SoftBank Group, was willing to buy $1 billion of its publicly traded shares. But—given the lower valuation—there was no way that WeWork would be able to raise the rest of the $2 billion. 

Why $3 billion? Last month, We Company raised a $6 billion credit line from banks—the amount that banks agreed to lend to it. But that agreement requires that an IPO has to take place by the end of the year and raise at least $3 billion. So WeWork pulled its IPO bid and now says it will try again later this year. 

Why did its valuation dip? A number of complicated reasons. But here are the basic deets:

  • The company is burning way too much cash and isn’t making enough of it. And it missed most of its targets last year. Projected revenues were $2.8 billion, but it made only $1.8 billion. Where it hoped for a profit of $941.6 million, it instead made a loss of $1.9 billion.

  • And that gets us to the second more dangerous criticism: WeWork is not really a tech company. It is a real estate company which essentially leases and sublets real estate. And real estate is a notoriously expensive business. The worry is that if the US or even the global economy enters a recession, the company will be stuck with office space it cannot lease out.

  • Finally, there are lots of concerns about its founder Adam Neumann who has done a bunch of creative accounting to profit himself. The details are in this Guardian piece on the “question mark” over Neumann. (BTW, he is married to Gwyneth Paltrow’s sister)

So what does it mean for India? We Company had planned to buy a majority 70%  stake in WeWork India. That plan is on hold for now. Embassy says it will independently raise money to double its centres in India. But without an IPO or a stable valuation for We Company, it will be difficult to get even Indian investors to bite. 

But, more importantly: There is increasing anxiety about companies that burn through huge amounts of investor money to grow very fast while racking up massive losses. Earlier this year, the Uber IPO proved to be a total bust—it opened low and the share price has slipped 22% since. As Mint notes, a number of India’s biggest tech companies—be it Ola, Paytm, Oyo, Ola, Byju’s, Swiggy or Zomato—share the same ‘growth-at-all-cost’ strategy. If these so-called unicorns (that have raised more than a $1 billion in investment) can’t go public, it poses a huge risk for investors who are in the game precisely for that cushy exit.

Learn more: BBC offers the best overview on We Company’s woes, including background and history. Mint has the best India coverage on the implications for WeWork India and for other Indian unicorns. Harvard Business Review explains why We isn’t a tech company—and why it matters. Business Insider dives into why the stalled WeWork IPO (along with Uber’s woes) is bad news for its biggest funder, SoftBank. And that Guardian profile of founder Adam Neumann is a fun read.


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having nightmares about a swarm of super-mosquitoes

Israel’s election is too close to call: Exit polls in Israel’s second election in five months indicate a near-tie. The contenders are current PM and rightwing strongman Benjamin Netanyahu versus the liberal Blue and White coalition led by former military chief Benny Gantz. This snap election was called by Netanyahu after he failed to form a majority coalition back in April. (BBC)

Your Kashmir update is here: and it includes the following:

  • The PSA Advisory Board was created to act as a check on the government’s power to misuse the Public Safety Act (we explained it here). Indian Express reports on how the board has become a rubber stamp institution, rejecting only three of the 230 PSA detention orders issued since Article 370 was suspended.

  • CPI(M) leader Mohammed Yusuf Tarigami became the first Kashmiri leader to address a press conference. He had been placed under house arrest but was allowed to fly to Delhi on Supreme Court orders due to his failing health. In a moving appeal to the country, he said: “Hum bhi jeena chahte hai, ek Kashmiri, ek Hindustani bol raha hai yahan. Yeh meri appeal hai, hamari bhi sune, hamme bhi zinda rehne ka mauka dein” (We also want to live, a Kashmiri, a Hindustani is saying this. I appeal, we too should get a chance to live).

  • Meanwhile, External Affairs Minister S Jaishankar told reporters: “Our position on PoK (Pakistan-occupied-Kashmir) is and has always been very clear. PoK is part of India and we expect one day that we will have physical jurisdiction over it.” Observers say this indicates a new more hardline stance on Kashmir vis-a-vis Pakistan.


Apple’s $1 billion India plan: That’s how much Apple plans to pour into making its Made-in-India products. Yes, a bulk of this will be for the domestic market—which will help the company avoid the 20% import tariff. But it also plans to export these Made-in-India iPhones to the rest of the world. Are we feeling special now? (Times of India)

Scientists may have created a super-mosquito nightmare: Scientists released 450,000 genetically modified mosquitoes in Brazil. What they planned: these mosquitoes will breed with the native species to create a new generation of infertile offspring—and over time the population will be reduced by 90%. What actually happened: The mosquitoes are happily breeding as much as ever. And many of the local species now have significant genetic material from their modified parents. What they fear: They may have created a new species that has greater “hybrid vigour” and may be immune to known pesticides. Shabaash! Somebody order a Netflix horror series asap! (Gizmodo)

Amazon’s big plans for the festive season: Its Great Indian Festival—slated for September 29—is targeting Tier 3 and 4 shoppers. Part of this plan is an #AmazonFestiveYatra which will dispatch trucks displaying over 600 products for gawkers to “touch and feel.” (Quartz)

Karma is another word for gender + geography:  A new Bill and Melinda Gates Foundation study confirms that gender has an unconscionably huge impact on your prospects as a baby. The other big factor: “But the second thing is that if you’re a girl born in (one of the poorest parts of Africa), geography is also stacked against you. It’s just not okay that a child in Chad is 55 times more likely to die than a child in Finland.” Nope, it is not. (Reuters)

Downtown Abbey is now an Airbnb: at least for one night. As part of a promo stunt for the movie version that premieres this Friday, Highclere Castle—the location of the series—will throw open its doors to two fans for a single night. The price: £150 ($186.40). Be warned, it is first come, first served. Cue evil cackle from Airbnb. (The Guardian)

Hindi maloom nahin? This thought-provoking op-ed argues that those who seek to impose Hindi on the entire nation “fail to understand that Indians do not need a common language to enable coordination, but an incentive to coordinate.”  We scramble to learn English merely because it promises upward mobility. There is no such upside to struggling to learn Hindi. (Mint)

On a related note: We made an unforgivable mistake—according to some of our readers—by describing Hindi as the “national” language. It is the “official” language of India along with English. And to show how sorry we are, we share this excellent reason why Indians can never, ever have a common national language.

Your quota of sunshine items: include the following:

  • This awesome collection of street style from London Fashion Week

  • Oh look, a zebra with polka dots instead of stripes!

  • Think cats have nine lives because of their nimble agility and grace. Well, you clearly haven’t met this guy.

  • Yeah, there are a lot of daddy and daughter clips. But this one seriously makes us jealous!

  • We usually pay no attention to movie posters, but this one of Vidya Balan as Shakuntala Devi makes us happy—especially as there is no Akshay Kumar in sight.

  • The very funny claim by Anil Kapoor who claims “South Indian food is the reason why I look ageless.” Hindi-hating Southies are speechless!

  • Kamal Hassan just burned Subramaniam Swamy with a pun! File under: sometimes dad jokes are awesome!

  • Before you roll your eyes at Gen Z kids, listen to this super-articulate kid (Sorry, Hindi skills required)

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Everything we don't know about human desire

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Soft porn is having an Indian moment

Online streaming platforms are spawning a wide array of smutty shows that never cross the line into outright porn—and they’re doing insanely well. The reason: “Porn is easily available and people are bored of watching white people and their fantasies.” Fair enough.

Read: Erotica finds its place on online streaming platforms | Mumbai Mirror

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Hell hath no fury as a man scorned...

Women often agonise before they report a man on a dating network. We second-guess ourselves, marshall the evidence, wait until it gets unbearable. So what does it take for some men to report a woman on Tinder? Not very much.

Read: Guys Are Reporting Women On Tinder For Not Being Into Them | Mel Magazine

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