A remarkable leak from an internal meeting shows the company is gearing up to fight government intervention.
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Each week, we review the week’s news, offering analysis about the most important developments in the tech industry.
Hello, everyone! Mike Isaac reporting in from the slightly chilly San Francisco Bay Area. (For Californians, anything below 70 degrees is chilly.) Let’s take a look at this week’s tech news:
Early in the week, the technology news site The Verge dropped a bit of a bombshell. Casey Newton, a Verge reporter, obtained two hours of audio recordings from some of Mark Zuckerberg’s internal question-and-answer sessions with Facebook employees.
Though much of the content itself is fairly anodyne — Mr. Zuckerberg is careful enough not to say excessively inflammatory things to his staff of more than 40,000 employees, even in private — it is a rare look into the dynamic between the chief executive of Facebook and the types of questions his work force is concerned with. Topics varied from competition with apps like TikTok, the viral Chinese video app, to fighting the sea of toxic content that flows through the company’s network every day.
The key moment, however, was when the discussion turned to antitrust enforcement. Senator Elizabeth Warren, a Democrat who is running for president, has frequently called for the breakup of large tech companies like Facebook. Were she to win the presidency, Mr. Zuckerberg said, he would anticipate a legal battle between Facebook and the federal government.
“At the end of the day, if someone’s going to try to threaten something that existential, you go to the mat and you fight,” he said.
On Thursday, Mr. Zuckerberg held another question-and-answer session with employees. Leaking it to reporters was a moot point, because it was live-streamed on Facebook.
Here’s looking to November 2020.
Airbnb’s I.P.O. possibilities
A few weeks ago, my colleague Erin Griffith wrote a fantastic feature on how some employees at Airbnb had grown weary of sitting on their stock options. They have been agitating for the company to go public so they can cash out.
The griping seems to have worked. Airbnb has announced it intends to go public in 2020, alleviating some of the tension inside the home-sharing start-up. The company is exploring a different way of going public by directly listing its shares on an exchange — a stark departure from the tradition of large tech companies using investment bankers like Goldman Sachs and JPMorgan Chase to underwrite their shares and sell them to the public.
A direct listing, though less common, isn’t unheard-of. Spotify directly listed its shares for sale on the stock market last year, and Slack, the workplace communication company, followed suit in 2019. A direct listing allows Airbnb to bypass some of the hundreds of millions of dollars in fees it is forced to pay investment bankers who underwrite shares in a traditional I.P.O.
Among venture capitalists and others in Silicon Valley, the idea is beginning to gain more traction. On Wednesday, V.C.s met in San Francisco, extolling the virtues of direct listings to companies considering going public.
It comes with another potential bonus: Instead of the bankers setting an initial price for the company’s shares before trading, Airbnb would essentially allow the market to set the price and determine the stock’s value. That could potentially help the company avoid some of the pitfalls that other unicorns encountered this year during the I.P.O. process; on Day 1 of Uber’s trading, the stock sank below its set price. Lyft has fared poorly as well, along with Peloton, another hyped unicorn.
Can Airbnb avoid the fate of other flashy tech I.P.O. disappointments by carrying out a direct listing? We’ll find out next year.
WeWork gives up the ghost
What can be said about WeWork that hasn’t already been splashed out in excruciating detail across newspapers’ front pages?
The company’s finances are a shambles. Adam Neumann, the company’s founder, was forced to step down as chief executive after article after article detailed his history of, um, unconventional behavior at the company.
Now, WeWork has finally given up any pretense of going public. The company pulled its S-1 financial paperwork from the Securities and Exchange Commission, a sign that it has no intention of listing on a stock exchange anytime soon. The company said it had decided to “postpone” its I.P.O. despite the “fundamentals” of its finances remaining “strong,” according to the two new co-C.E.O.s.
But that’s tough to believe, considering its valuation was reportedly slashed into a fifth of its original number — $50 billion — and it is now trying to sell or spin off multiple parts of the business. Most of those parts were acquisitions made hastily through the actions of Mr. Neumann. (One of those purchases was an experimental preschool. Do with that what you will.)
Regardless of when WeWork tries to get back on the horse, it’s clear that it is an awful time for tech companies to go public. The unicorns were once lauded for their enormous growth trajectories and rapid ability to scale, but now public market investors are looking for something different: profitability. What a concept!