WeWork’s $47 Billion Worth Of Learnings That Entrepreneurs Can Absorb For Free!

WeWork , a business that pioneered a groundbreaking concept in the corporate world with flexible office solutions, has fallen beyond the predicted numbers. The Unicorn, which stood at a gigantic valuation of $47 Billion in 2019, did not realize it was witnessing its last peak and a sharp downfall was brewing in the shadows.?

Today, the company has lost 99% of its market value and is worth $0.4 Billion trying to survive the last blow of the share market, which, in my opinion, it cannot. The more interesting question that raises my eyebrows is: Could it have been saved? If so, how? Let's dig a little deeper.

The basic concept on which WeWork stood and grew globally was a highly flexible working environment that attracted new-age startups, entrepreneurs, and enterprises looking to align the new workforce temporarily. This worked like a charm for nearly a decade under the leadership of its passionate Founder and CEO, Adam Neumann, who balanced the supply-demand ratios while buying properties to customize and rent out. As a result, its valuation surpassed $1 Billion by 2014.?

The first wrong decision was made in 2017 when the rapid growth of WeWork was hit by what I call ‘The VC Virus’. It simply means that an investor focused purely on monetary gains gets a high percentage of shareholdings and decision-making authority, which shakes up the core fundamentals.?

SoftBank Group Corp. made an $18.5 Billion investment and became the leading investor. Two years later, it acquired 80% of the company, quickly followed by a mass layoff of 2,400 employees next month due to strategic restructuring. Unlike Neumann, who ran the ship with a solution-based vision and realistic expectations, the investors shortightedly looked only at tapping the maximum revenue potential at minimum costs. Miraculously, the company reached a valuation of $47 Billion with Softbank’s continued investments.

I cannot accept this as my organization’s vision, and that’s why we kept a stringent zero-layoff policy in place even during the global recession in 2023.

Employee welfare is the strongest row to sail through the toughest tides!

The second mistake that could have been prevented was the failure to retain Neumann, who stepped down in 2019 as the CEO due to conflicts of interest. He then created a hard public banter with them through trials and tribulations for the next two years. Along with this, the company started expanding on a ‘renting long and subleasing short’ model, which exposed them to high market volatility and risk.

Igniting the spark on an already vulnerable pile of wealth came the COVID-19 pandemic, resulting in one of the biggest market collapses in the history of mankind after WW2. But the brand somehow sustained itself through the pandemic. The third mistake stems from the senior management’s lack of forecasting economic uncertainties and reshaping the business model on time. By the time WeWork’s core business model revised itself to the post-pandemic remote culture, it had already lost the investors' trust as a product with growth potential.?

The company then committed its last mistake of going public with a false overvaluation.?

The market knows how to catch a false expectation, and it did.?

With over 18 million sq. ft. of rentable office space, a softening market demand, and growing competition, WeWork faced a sharp decline in revenue. Today, WeWork’s IPO value is less than half a million dollars, and it has filed for bankruptcy with a debt of $19 billion. It’s pretty much impossible to resurrect yourself from this.

In summary, I deduced three crucial lessons worth $47 Billion that I would strongly suggest to new-age entrepreneurs to keep handy.

> Stay bootstrapped as much as possible. Your vision works better, unified!

> Always run on a predictive analytics and forecast mode. It keeps the upcoming uncertainties visible at a safe distance.

> Be open enough to inculcate adaptability to change whenever required. Opportunities require an open eye!

This opinion piece is backed by my entrepreneurial experience of over a decade and a real-time observation of the brand’s rise and fall timeline. If you have any thoughts after reading this, let me know in the comments section, or feel free to connect and engage in further discussions.