Lessons from WeWork's Crisis

Ever watched a rocket launch with anticipation, only to see it veer off course?

That's WeWork in a nutshell.

At the center of it all was none other than its charismatic CEO, Adam Neumann.

His grand vision for the company initially captivated many, but the fa?ade began to crumble when investors took a closer look at the company's financial health.

Plagued by massive losses, questionable management choices, and a fundamentally flawed business model, WeWork spiraled into a crisis. This eventually led to Neumann's resignation in September 2019.

All these factors contributed to a seismic shift in investor sentiment, resulting in a botched IPO, the disgrace of a once-celebrated CEO, and ultimately, the company's journey towards bankruptcy.

Now, I’m not going to delve much into the details...

But I've pieced together 3 questions to give you the full picture and insights from a crisis communication perspective.

1. Could this crisis have been prevented?

I don’t think it was the content of the communication before the crisis that caused the disruption; rather, it was the way WeWork communicated that led to displeasure.

WeWork boasted big about rapid expansion and redefining workspaces, which sounded great initially. However, their approach was all talk and no solid plan, leading to skepticism, especially after financial troubles and a failed IPO. Essentially, their initial hype couldn't mask the lack of a concrete strategy. Remember, a good story needs substance to back it up.

2. What to actually do when a crisis hits the fan?

Alright, let's break this down.

We're looking at WeWork's crisis response, and honestly, it's a textbook case of what not to do.

If you're in a similar boat, here's some advice:

First up, never ignore financial warning signs. WeWork's strategy of snapping up expensive real estate without securing enough tenants was risky. That right there created a false image of success and left them scrambling when things didn't go as planned.

Second, irrational decisions are a big no-no. Take WeWork's IPO fiasco. Their financial struggles were hidden behind inflated numbers and big investments. When WeWork lost $900 million in the first half of 2019 and still denied problems, its stock price tanked and its reputation took a hit.

Third, Poor communication during the crisis. WeWork's lack of clear communication left thousands of employees in the dark about their future. When trust in their CEO faltered and the IPO fell through, they weren't upfront about the issues, leading to layoffs and a loss of trust. Don’t do that. Please keep your team and stakeholders informed.

And lastly, a quick and strategic response can save the day. Crisis communication isn't just about damage control; it's about integrity, strategic planning, and being decisive. An effective response could have lessened the impact on WeWork and maintained some level of trust.

In short, in crisis situations, stay vigilant with your finances, make rational decisions, communicate clearly and honestly, and respond quickly and strategically. That's how you handle a crisis without making it worse.

3. How To Regain Investors' Confidence?

I'm in the business of crisis management, and I've always found that the historical lessons from those who've walked the path before us are invaluable.

So, in the spirit of learning from the best, let's dive into some timeless advice from three titans of the business world about nurturing investor relationships.

It might sound a bit cliché, but sometimes clichés are grounded in truth, right? ??

• Honesty isn't just a policy, it's the bedrock of trust. Legendary investor Warren Buffett puts it best: “Honesty is a very expensive gift, don't expect it from cheap people.” Show your investors that they're in the loop, not just an afterthought when trouble brews.
• Your brand is what other people say about you when you’re not in the room: Jeff Bezos said it best. It’s a dance between staying true to your roots and exploring new horizons - a balance that keeps the business dynamic yet reliable.
• Setting achievable goals and then smashing them is a surefire way to build credibility. Steve Jobs once highlighted the importance of teamwork and collective effort, saying, “Great things in business are never done by one person. They’re done by a team of people.” Alignment avoids friction and paves the way for a mutually beneficial relationship built on shared goals and understanding.

Closing

In the end, it's about combining honesty, brand integrity, and effective teamwork to create a solid, trust-filled relationship with your investors. These principles might sound simple, but they are time-tested and effective, and they resonate deeply in the world of business.