Zero-interest policy spawned a wave of startup fraud and overvaluation

Evidence

The era of zero-interest-rate policy—which fueled a VC-backed gold rush—had ended, leaving start-ups scrambling for capital. While Elizabeth Holmes of Theranos was serving an eleven-year prison sentence, her downfall hardly deterred other magical-thinking fraudsters. The authorities came for Frank’s Charlie Javice (who was on the Forbes 30 Under 30 list), Outcome Health’s Rishi Shah, Ozy Media’s Carlos Watson, Slync’s Christopher Kirchner, and Nikola’s Trevor Milton. WeWork emerged as the Fyre Festival of start-ups. Its founder Adam Neumann was a “tall, long-haired, barefoot, meat-banning, weed-smoking, tequila-drinking, Kabbalah-studying, experimental school-opening [Gwyneth] Paltrow-cousin-in-law.” With backing from Japanese megafund SoftBank and Saudi money, Neumann raised WeWork’s valuation to a staggering 47 billion—only for it to drop to 9 billion after going public, then collapse to $270 million before declaring bankruptcy. — W. David Marx, Blank Space, 712

Categorization

• SHARE: The WeWork valuation collapse trajectory (47B to 270M) is a sharp, self-contained fact for anyone into startup history.