Selling a losing proposition

How one failing company captured the hearts of investors and BILLIONS OF DOLLARS OF INVESTMENT

Recently, the co-working office space company weWork filed for bankruptcy. It's bankruptcy was long overdue. In fact, ever since its conception, weWork was bleeding money all throughout. In other words, WeWork was a money-losing business.

But just some years ago, things were different...very different. WeWork was the darling of the start-up world. It was the next big thing. Everybody saw WeWork the same way people saw Uber or even Facebook. Investors wanted in on WeWork. Founder and former CEO Adam Neumann was charismatic and people believed in him.

They were so hyped to a point that Softbank, the investment company that poured capital to Alibaba and made Jack Ma a billionaire, invested billions in them and Softbank's founder Masayoshi Son saw Adam as his new Jack Ma. This company was celebrated.

The founder himself was seen the way most of us see Bill Gates or Mark Zuckerberg.

So what was WeWork's main business? Its just a shared office space, a real estate business. They would rent offices spaces and redesign in and rent it out to smaller tenants who would share space with each other. That's it. Just a property business.

In fact they were not the first in the market. Lots of companies have been in the coworking space business long before Adam Neumann founded WeWork. In fact, their main competitor, IWG, was already in business for a long time before WeWork came into the picture. Given that their office design was better than others but thats just about it.

Yet at one point, WeWork was worth 47 billion USD. They became the highest valued start-up in history. And the funny thing? They were not profitable. They were losing so much money to a point that Masayoshi Son, the CEO of Softbank, had to inject billions and billions of dollars to save this company.

Their competitors were even dumbfounded. They could not find why WeWork was worth that.

So wait why was WeWork so hyped? Why was WeWork seen as the next big thing when its business model wasn't all that innovative? Heck it was not even a tech start-up. It was basically just a real estate company renting out shared office spaces.

The answer might be found on how Adam Neumann "sold" WeWork....on how he communicated WeWork to investors and to the world. And in it, we get to see a couple of sales lessons that we might be able to pick up.

One of the most powerful ways Adam Neumann was able to “sell” WeWork to investors and to the masses was his usage of the Power of Why. In the speeches that he gave and interviews that he showed up to, he was not trying to sell real estate.

He was trying to sell the concept of “We”- the concept of being part of something bigger than the individual. In speeches, he would always bring the concept of “we” up and present it as an X-factor.

In other words, they were not selling real estate, they were trying to sell something bigger than real estate. They were selling the concept of having a community of like-minded people. There was a bigger “why” than just the office spaces. That “why” was able to attract so many investors and audience alike. This “why” was the difference maker between WeWork and most of its competitors including IWG which was way more profitable than WeWork. WeWork presented itself as a community of like-minded people working hard and partying harder.

And in sales, that “why” is not just an effective selling point, it’s a massive one. Just think of network marketing companies, some of which are good and some of which are bad. If you go their business meetings or seminars, you will see how the power of “why” works.

WeWork is actually just leasing out office spaces but they sell it as if they are changing the world.

Not only that but having a sense of community of likeminded people encouraging each other is also present in these network marketing events. And if you know someone who is part of one (or if you yourself is in one), you know how powerful that is.

The other thing that WeWork and Adam Neumann was able to do whether consciously or unconsciously is they were able to position themselves as the disruptor of the office market, just like what Uber is to taxis or Air BnB is to hotels. It came at a time when disruptors were hot. They were able to leverage these points of references and earn attention. If your company is known to be a disruptor of a certain industry, people would flock and want a piece of it. At that time, being a disruptor equals high potential growth.

In other words, WeWork was able to compare themselves as the Uber or Air BnB or Facebook of the office market. And being able to be compared to these companies made people immediately think of the high potential in investing in companies like this.

You see our brains love shortcuts and being a disruptor of an industry automatically makes us think a company has high potential.

We will be explaining more of these two concepts in the next few weeks but the point here is this: how you sell something can be as important as what you sell. The scary part is many fraudsters know this simple concept and use it to trick people unto doing their bidding. That is also what happened to companies like Enron, Theranos, and the crypto-currency company FTX. Today, WeWork’s stock is only selling at less than one dollar a share. They recently filed for bankruptcy.

If you want to know more about what happened to WeWork, you can watch lost of documentaries of it on Youtube. In fact, there was even a series based on it called WeCrashed starring Anne Hathaway and Jared Leto. In the next few weeks, we will be discussing these two concepts and how we can apply them in our selling.

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