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The Rise and Fall of WeWork

The Rise and Fall of WeWork

The Innovative Beginning

Once upon a time, in the bustling city of New York, a company named WeWork was born. Founded in 2010, it had a unique business model that aimed to revolutionize the traditional office space. Instead of renting out entire floors or buildings to single companies, WeWork created shared workspaces, complete with lounges, desks, and meeting rooms. These spaces could be rented by anyone, from freelancers needing a single desk to companies unable to afford a full-fledged office.

The Rise and Fall of WeWork

The Golden Era

The Rise and Fall of WeWork

For a while, it seemed like WeWork had hit the jackpot. By 2019, the company was valued at a staggering $47 billion, becoming a beacon of success in the startup world. In January 2021, WeWork’s shares were soaring at more than $400 per share.The Rise and Fall of WeWork

The Downfall Begins

However, within just two years, the company’s fortunes took a dramatic turn. The share price plummeted to a mere $1, and rumors began to circulate that the company was on the brink of bankruptcy.

The Rise and Fall of WeWork

The Pandemic Impact

The COVID-19 pandemic played a significant role in WeWork’s downfall, as the concept of shared workspaces became less appealing with the shift towards remote work. WeWork found itself stuck in long-term leases with building owners, while their customers, who had much shorter leases, started to dwindle.The Rise and Fall of WeWork

The Overexpansion

WeWork made some questionable business decisions, such as Overexpansion. The company had 777 work locations in 139 countries, all while hemorrhaging money.

The Rise and Fall of WeWork

WeWork had to keep paying for 15 years but their revenue stopped after 2 years.

The Rise and Fall of WeWork

They assumed that their business model, which had worked in some US cities, would work everywhere. Unfortunately, they overlooked the fact that shared workspaces are not just about economics, but also about work culture and employee preferences.

The Diversification Misstep

WeWork also diversified into unrelated services like WeLive, a residential utopia, and Rise by We, a wellness network. These ventures had nothing to do with workspaces, yet the company invested heavily in them, resulting in a significant amount of debt.The Rise and Fall of WeWork

The Aftermath

The leadership, especially the first CEO, Adam Newman, must take the blame for these missteps. Despite his charismatic persona and ability to attract investors, his lack of foresight and sustainable business strategies led to the company’s downfall.The Rise and Fall of WeWork

Japan’s Soft Bank was one of the investors, they’ve pumped tens of billions of dollars into this company.  It wasn’t enough though in 2019.

Today, WeWork is worth around $140 million, a far cry from its peak valuation of $47 billion.

The Rise and Fall of WeWork

The Lessons Learned

This tale serves as a cautionary tale for startups worldwide. Rapid expansion and disregard for sustainability can lead to a company’s downfall. It’s not just about mindless expansion plans. Companies have a responsibility to their investors, workers, and society at large. They must remember the basic rule of life – you sit first and then stretch your legs. If you get that order wrong, you end up on the floor.

The Rise and Fall of WeWork

 

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