In the annals of corporate history, few stories are as perplexing and absurd as the meteoric rise and fall of WeWork, a company that somehow turned the concept of renting office space into a billion-dollar fever dream. From its charismatic founder’s grand visions to the baffling missteps of its deep-pocketed investors, WeWork’s journey from founding to its IPO debacle and subsequent bankruptcy is a tale that reads like a tragicomedy. The only thing more remarkable than its stunning collapse is the founder’s uncanny ability to keep the venture capital flowing into his latest “visionary” escapades.
In the not-so-distant past, a charming entrepreneur named Adam Neumann teamed up with an equally charismatic partner to create the co-working utopia known as WeWork. These two gents managed to turn the mundane act of renting office space into something you’d expect to see in a sci-fi film. We’re talking kombucha on tap, communal workspaces that resembled hipster playgrounds, and more quirky slogans than a juice shop could try to describe a kale smoothie with.
WeWork’s business model was simple: rent office space, add a dash of community, and voilà, watch the money flow in. But it’s not what you do, it’s how you do it. Slap branding on everything, make it posh, make people want it. You could find an inviting “We” on everything, from WeLive (for housing) to WeGrow (for schools). It was like they were trying to start a cult, but with yoga classes and MacBooks instead of brainwashing. Google campus designer meets your landlord.
Enter SoftBank, the financial wizard behind the rise and fall of WeWork, notorious in the world of investment for their erratic investment calls, to put it euphemistically. SoftBank, led by the enigmatic Masayoshi Son, poured billions into WeWork with all the dire restraint of a kid in a candy store. Together they saw vision where others might have seen a nothing more than a hyped-up office space provider … a WeWork on every corner of the globe.
Sometimes, the quality of your idea is not worth so much as much as the charisma you’re selling with it to the money-men. And charisma the two founders have.
But it turns out that pouring billions into a company that loses billions isn’t the wisest move. WeWork’s financials were about as stable as a Jenga tower in an earthquake. As the hype and towering valuations grew (valued at almost $50 billion in early 2019), so did the company’s losses, showing that what the Street thinks something is worth isn’t necessarily married to reality.
The climax of this corporate circus was the much-anticipated IPO debacle in late 2019. WeWork had plans to go public and let investors bask in the glory of their office-sharing empire. But, as it turned out, investors weren’t quite as blind as bats … at least not anymore.
The stock plummeted to Earth like a meteor faster than you could say ‘hot-desking’ … and even before that, WeWork’s valuation had crumbled like a soggy cardboard box.
Beanbag chairs for everyone.
Business never went well for the lofty idea, but the declining corporate real estate market in 2022/2023 gave WeWork its coup de grâce – it filed for bankruptcy a few days ago.
The whole debacle left Softbank’s Son with a burning $11.5 billion hole in his pocket, and worse, another big dent in his reputation.
Of course, just because your idiotic castles in the sky collapse does not mean you can’t get rich anyway. Neumann’s net worth post the whole debacle is somewhere north of $2 billion, with a sizable mound of cash stemming from a legal settlement with Softbank. Earned wealth, unearned wealth, potato, potatooo – we’re talking visions here.
After the spectacular IPO failure, Neumann walked away with a golden parachute that could have bought him his own island. He left WeWork in a state of chaos and confusion, like a ship without a captain in the middle of a storm.
But he isn’t done. He decided to take his charisma, charm, ability to sell fluff to deep-pocketed investors, and deep business acumen to new horizons, starting with an investment in a wave-pool company Wavegarden. Yes, the man who couldn’t make office-sharing profitable decided to take on the ocean, to sell gigantic pools simulating ocean waves.
As their website states, a “rapidly emerging sector.” Maybe he thought he could turn the waves into a WeSurf community, complete with surfboards and surf-themed office spaces. Who knows?
WeWork hype was a rollercoaster of epic proportions. SoftBank’s investment was as blind as a mole in a dark cave. The collapse of the company valuation and of course of the stock that was listed for only a short time were a spectacular display of the dangers of overhyping a business with shaky financials … or so at least the business argument would go.
But who cares about such trivialities? Again – we’re talking visions here. Neumann is off to new adventures with more world-changing ideas and, undoubtedly, more investors who believe he can turn water into co-working gold.
Here’s to a cold kombucha sipped in the fake waves of an artificial beach.
