A piece in the WSJ states that WeWork investors were turned off by ‘sloppy’ IPO filings.

Consistency and accuracy are the #1 requirement for any investment document. As soon as a potential investor needs to stop looking at the content of the business and start worrying about whether the numbers are correct and add up, you probably lost the deal. Trust is paramount. Investment is a leap of faith, and it is impossible to check 100% of all the data before writing the check. If you find some things that look incorrect, there might be more.

The WSJ article does not mention that there were actual errors in the report, just things missing. Details of private jets are not the most important I think, it is the data that allows you to construct how the business actually works: new location, mature location, and that multiplied by the roll out. Every investor presentation boils down to a story that ultimately gets translated into a spreadsheet by someone. You need to spoon feed the right information, without explicitly providing a finished financial model. The latter would enable investors to start “salami slicing”, turning all assumptions down and explaining you why the valuation of your business is too high using your own Excel model.

In the case of WeWork, there was clearly an “elephant in the room” question, and investors needed an answer to it, which they did not get.

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