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  • John Selzer

Emperor's New Clothes

Um, that unicorn is just a horse with a paper mâché horn.




Long before it titled a song (and this post), there was short story by the same name made famous by Hans Christian Andersen. It goes something like this: two “weavers” convinced a prideful and exceptionally vain emperor that they make the world's finest clothes. But, there is a twist. These garments are invisible to those who are incompetent.


No one – not the emperor himself, his court or subjects – utters a word when he suits up in his new wardrobe, then parades confidently through town. Naked as a jaybird. That is, until a young boy defies the crowd to declare the obvious. And then, everyone sees as if for the first time.


Oh, how history repeats itself. These recent weeks have been a heckuva ride for the unicorn* set out of Silicon Valley.


WeWork, the darling coworking company, filed for their initial public offering (IPO) and seemed destined to burst onto the public markets. They had recently raised funds at a $47 billion private valuation, so their offering was expected to price somewhere in the neighborhood of $60 to $90 billion. One of their bankers even thought it could reach $120 million (maybe ease off that bottle, Goldman Sachs).


That is, until they filed their S-1 registration document. And people started to read it. Once you waved aside the fog of fluffy language and hyperbole (community this, change the world that), it become clear that there wasn’t much there actually there.


But, growth! Market dominance! Technology! Disruption! Never mind the slim possibility of profitability and the complete absence of a tenable business model, with an intricate web of self-dealing as the cherry on top.


No thanks; I don't want to eat that sundae.


People were hesitant at first (believing as they had been told that this was the finest of companies), but once the muted voices began to overlap, they gained volume. And credibility. Single voices became a chorus, and the truth was (finally) revealed.


That dude is naked.


Scrambling, the WeWork management team went into damage control mode. Long overdue corporate governance oversight was implemented, self-dealing unwound and executive voting rights slashed. But it was too little too late. The expected valuation began to tumble to the basement and investors lost their appetite (then their stomachs turned sour). The IPO was delayed, and the price slashed. Then delayed again. More slashing.


In a surprise to few, the CEO stepped down under pressure from his board and single-largest investor. While not naked, he was spotted shortly thereafter in the wild walking barefoot down a New York street.


But this time, people noticed.


Not to be outdone, the trendy, market-dominant maker of vaping systems, Juul, ousted their CEO, too. On the same day as WeWork. It seems that someone at the company (finally) realized that vaping may be bad for you. Oh, and that people don't like it when you specifically design flavors and marketing campaigns to appeal to children.


“We’ll fix this,” the board said. Then promptly voted in a new leader from big tobacco. That is like replacing the stark-naked emperor with someone plucked straight from a nudist colony.


The fate of these two crazy tales and their impact on the longstanding venture capital model is unknown. WeWork is no longer going public (and might be teetering on the precipice of bankruptcy). Juul faces a long, regulatory-laden road ahead. Both companies – and those that enabled and perpetuated the hype – will get their due.


At long last.


Like the fable from so long ago, the moral of these stories is you cannot let pride/groupthink/peer pressure/fear prevent you from speaking up when you can see the truth as plain as day.


If you see something, say something.


Don’t buy into the hype. Listen to your own voice. If you know something is amiss, bad or harmful – or just looks like a heaping pile of unicorn shit – then muster up the confidence to speak up. Be that kid in the crowd that calls out the emperor.


Clear your throat. Find your voice, and express your opinion.

Who knows. You might be the only one getting it right.




* A unicorn is a privately held startup valued at a billion dollars or more.


MUSIC BOX

Emperor's New Clothes by Panic at the Disco


Not my favorite song, musically speaking, from this band, but it was far too perfect not to use for this post. While the vocals and tone (most of the time) are what you would expect from Panic, they tried a little too hard to stretch and reach for that rock anthem-level, epic song. In doing so, they tried (and in my opinion, missed) to channel their inner Queen. That is when they lost me on this one. Hmmm; maybe I should have used the song by the same name by Sinéad O’Conner, instead…

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