A weekend topic starting with the Wall Street Journal. "We Co. is a New York company that subleases office space, and Juul Labs Inc. is a San Francisco based-seller of vaping products. But the resignations this week of the CEOs running two of the most valuable U.S. startups share common roots: a Silicon Valley ethos bent on disrupting existing industries and pursuing torrid growth."

"Juul and We are the most visible examples of extreme behavior 'because here are the most zeros involved,' said Steve Blank, adjunct professor at Stanford University and mentor to startups and venture capitalists. 'When capital is flush the people getting the capital get to make the rules.'"

From Quartz. "Adam Neumann almost got away with it. For years, he convinced private investors that WeWork, a company that leases space from landlords, renovates it, slices it up into offices, and rents them out at a premium, was worth more than every other office-rental company."

"He has spoken about WeWork Mars, running for president of the world, and becoming the first trillionaire—that built WeWork into one of the world’s most valuable startups, with operations spanning 111 cities in 29 countries. Then, in August, WeWork filed for an initial public offering, and in doing so exposed a raft of curious and troubling details about the inner workings of the company, which rebranded earlier this year as The We Company, or We."

"WeWork is the logical endpoint of this: Silicon Valley’s great unicorn bubble. Neumann’s wildest ambitions found a fellow traveler at Softbank, whose enigmatic CEO Masayoshi Son showered him with cash and told him to make WeWork 'ten times bigger than your original plan.'"

"(Yes, WeWork is based in New York and not technically part of Silicon Valley—but its rise directly follows a Silicon Valley playbook and involves many of the same principal actors.)"

"In the system set up by Silicon Valley and reinforced by its most powerful investors, Neumann and WeWork were the ultimate synergy, mysteriously increasing each other’s value. Neumann set the vision, collected the checks, preached the gospel. He went to great lengths to arrange things—power, money, connections—in his own favor. And why wouldn’t he? There were no barriers to his behavior, or interest in setting them up. So long as the company grew and its valuation rose, he was winning."

The Sunday Times. "Adam Neumann threw his feet up on his desk, leaned back in his chair and had two words for a chief executive who had come in to pitch for work: 'Impress me.'"

"The visitor was stunned. He had known Neumann for years, but by the time of their meeting in late 2016, the founder of the office-sharing upstart WeWork (aka We Co) had ascended to a new level — at least in his own mind. The company was worth billions."

"The following year, Masayoshi Son’s SoftBank Vision Fund would invest $4.4bn — the first tranche of an astounding $10.6bn the Japanese bank would plough into the New York start-up. We know what has happened since. Public market investors went cold on a proposed $47bn float for a company that last year lost $1.9bn on $1.8bn in sales. Bankers pulled the listing earlier this month amid uproar over excesses revealed in WeWork’s stock market filing."

"What is most instructive about the WeWork fiasco, however, is what it tells us about a certain type of 'tech' company, and the interloper backing them: SoftBank. WeWork tried hard to convince the world that it was something other than it was. WeWork was, according to its prospectus, a 'worldwide platform' that fuelled a productivity revolution for its members."

"Sound familiar? Uber, another SoftBank investee, whose stock is down 30% since its May listing, held an event in San Francisco last week where chief executive Dara Khosrowshahi laid out his vision. It was not a ride-hailing giant, he said, but 'the operating system for your everyday life.'"

"The markets have, in effect, called the bullshit. Software-as-a-service companies typically earn gross margins of 70% because once code is written, it costs virtually nothing to sell and service it. Uber and WeWork are entirely different. Uber has to pay its 2m drivers to keep the platform alive, and insurance costs escalate with each new car that uses the app. In other words, it has huge costs that grow in line with sales — the opposite of what happens with software companies."

"This is an issue for SoftBank. The conceit of its $93bn Vision Fund was not just that it could pick winners, but that it could make them by choosing one company in each sector and arming them with enough cash to spend everyone else into oblivion. Even if this works, the problem is that SoftBank has promised venture capital-like returns, and many of its bets are not on tech companies."

"Instead, it has booked 'disruptors' of sectors such as food (it put $200m into indoor farming company Plenty) or residential property ($400m to start-up Opendoor), where the economics are less sexy."

"Technology may enable those upstarts to do amazing things, but they’re not tech companies, and the latest lesson is that the public markets will not value them that way either. As SoftBank seeks to raise its second mega-fund, this is a problem."