Stay calm and focus on fundamentals

Wow, it’s been quite a week. WeWork’s CEO Adam Neumann resigned and it seems like the company will be going through quite a transformation as it seeks to not only be relevant for an IPO but also, and more importantly, to stay alive. While there are likely many reasons for this difficult situation, the reality is pretty simple — by struggling to float the company on the NASDAQ, WeWork is in jeopardy of running out of cash. As one of my early investors at Kano once told me, the number one priority of a company CEO is to ensure the company is not running out of cash. I believe that ultimately, this simple fundamental, is at the core of the change at WeWork — with the challenging reality at WeWork also came the risk of not being able to do the most basic act of not running out of cash. Softbank, as its largest shareholder, had to force a change of leadership to ensure the company can keep going.

Then, there’s the IPO of Peloton and the reaction from the markets to its quite “creative” way of describing what the company does, as well as how and when it’s going to be a profitable business. Don’t get me wrong, I’m a big fan of the product and there’s so much to love about the brand, the vision and the business model. But in between the dozen of ways the company describes what it does, they basically lost some of the excitement and impression from the core of what they do which is giving people an exceptional way to stay fit in an enjoyable way.

In my opinion, the common denominator of WeWork, Peloton, Slack, Uber, Lyft and maybe others, is that while they all provide an inherently brilliant product, with excellent functionality, beautiful user experience, and a clear value proposition, they haven’t (at least until this very moment), convinced public investors that their business fundamentals are attractive enough or at least that their rational is attractive enough to put money on their stock.

For me, as an entrepreneur, these stories and events lay strong foundations to go back to basics and always focus on business fundamentals — creating a product that people love and want to use, delivered with a business model that makes money in a profitable way, and encapsulated in a vision and company story that is unapologetically ambitious, yet believable.