WeWork: Or the Making and Breaking of a $47 Billion Unicorn" (Category Economics)
While flying eight hours from the Maldives, I read a few chapters of the book.Hands-On Large Language ModelsI also watched this WeWork movie, which came to me like many other documentaries. (see. list). But it's a remarkable failure story, kind of like the Theranos I'm talking about. beforehand. Even at the dawn of WeWork, the scheme seemed too ambitious, and when I watched it, I felt that the whole internal culture was like a sect that had gone through different stages.
The beginning of a dream: coworking under the guise of a tech unicorn The history of WeWork began in 2010 Adam Neumann and Miguel McKelvey opened the first WeWork coworking site in New York. Neumann, a charismatic Israeli kibbutz, from the beginning sold not just office meters, but the dream of a global community of like-minded people – a kind of “first physical social network”. The goal was for investors to believe that this is not a banal table rental, but a technology start-up changing the world. It worked and the private valuation soared to $47 SoftBank, led by Masayoshi Son, generously invested billions in Neumann’s visionary promises, and employees believed they were “changing the world” with the founder. However, even then, the business model raised questions: in fact, WeWork leased real estate under long-term contracts and resold to small customers for a short time.
Peak of value and collapse K 2019 WeWork was preparing for a triumphant IPO with a valuation of all the same $47 billion However, the public got a prospectus of emission, which sobered even the most believers. The document surfaced giant losses, questionable corporate governance and eccentric antics of Neumann. Investors and the media began to ask uncomfortable questions about what this valuation is based on and where the profit margins ... the valuation collapsed from $.47 billion to ~$10 Neumann was forced to leave the post of CEO and give up control - SoftBank paid a golden parachute to Adam (~$1,7 billion)Employee options have turned into bagel holes.
After: What WeWork became After the dramatic 2019 WeWork tried to reanimate under new leadership. In 2021The startup still crawled onto the stock exchange through a merger with SPAC (capitalization9 billion)But the business model remained vulnerable. COVID pandemic--19 It hit the coworkers: customers were moving out, offices were empty, and WeWork had multibillion-dollar lease obligations on its balance sheet. The company closed locations, reduced employees, tried to redraw debts. But in November 2023 Four years after its failed IPO, WeWork has filed for bankruptcy for restructuring.
What is the founder doing now? Adam, having received his money, briefly disappeared from the news, but after a couple of years again reminded himself. In 2022 Neumann announced a new startup called Flow, which will manage the rental of residential real estate - a large fund Andreessen Horowitz invested in Flow about $350 million, valuing the company at more than $1 billion before launch
Lesson: Not everything that calls itself tech is tech. The fairy tale of WeWork clearly showed that not every company that considers itself “technological” is really one. WeWork from the beginning was essentially a development business, pretending to be IT, but the presence of a beautiful app or cool parties for residents does not change the good old laws of economics. If a company does not have a sustainable profit model, sooner or later the bubble will deflate – as it did. We’ve seen similar cases in the dot-com era, when Internet companies also received astronomical valuations with no real income. For example, the famous online pet store Pets.com 2000 A year went on the stock exchange for $11 per share, but just a few months later the stock fell below $1Soon the company closed down, laying off hundreds of employees. (At the time of liquidation, the share price was $0,22). WeWork became the “pets.com” of its time – a symbol of how dangerous it is to believe in hype alone.
#Economics #Software #Startup #Management #Leadership