The “curse of the new headquarters” is legendary in Silicon Valley. Inktomi, Excite@Home, MySpace–they all built new vanity headquarters only to flame out shortly after opening the doors.
Now it seems to take simply announcing you’re building a new headquarters to make the business tank.
Financially troubled Chinese electronics and entertainment conglomerate LeEco (“lee-ko”) is selling the 49-acre parcel in North Santa Clara a year after it purchased the land from Yahoo with great fanfare and said that it planned to hold 12,000 employees in its new U.S. headquarters.
Yahoo bought the land in 2006 to build a huge new corporate headquarters.
This time the buyer is Chinese real estate investment company Genzon Property Group, according to a March 17 Reuters report, although as of this writing no change of ownership has been recorded.
Based in Shenzhen, China, the privately-held Genzon Group made its first Bay Area investment two years ago at Burlingame Point in San Mateo County. Last month, Genzon broke ground on a 763,000 square foot office and retail development on the site.
The sale is the tip of an iceberg of financial disaster facing LeEco (formerly Leshi Internet Information & Technology Corp) founder and highflier Jia Yueting.
At the end of 2016 Jia admitted the company was strapped for cash and over-extended.
In March, China Bridge Capital, a major backer, sold about $92 million worth of LeEco shares, saying that the company was “trying to achieve too many goals at the same time,” according to a report in China Money Network, which also reported that LeEco sold off a half interest in a Shanghai commercial property to raise capital.
LeEco also laid off 85 percent of the staff in its Indian operations in March after entering that market aggressively in 2015. And earlier this year, another LeEco division lost the rights for online broadcast of the Asian Football Confederation’s soccer games following missed payments.
In May, LeEco announced 325 layoffs in its San José operation.
But the biggest cash hemorrhage in the LeEco picture is its U.S.-based electric car division, Faraday Future (FF), an all-electric, all-things-to-all-people self-driving Internet cocoon. FF also competes with LeEco’s China-based electric car division.
Or would compete, if it actually had a product or even a factory to build one in. A year after the State of Nevada gave FF $335 million in tax breaks and incentives, factory construction is stopped and the company faces unpaid bills in the tens of millions, lawsuits from suppliers and the departures of senior staff, according to a report from Jalopnik.com.
But one thing is crystal clear: the parcel on Tasman between Patrick Henry and Old Ironsides isn’t bringing any new jobs to Santa Clara in the foreseeable future.