How Not to Build A Company
Consider this one of our corporate governance articles. Reading about WeWork one can’t help but wonder “Where were the adults in the room? Where was the Board?” Here is a partial list of WeWork’s gaffes.
- WeWork founder and former CEO Adam Neumann and the Board creating and approving a business model predicated upon absorbing long-term leases and sub-letting short-term. Many of those short-term leases were extended to startups. How did WeWork expect to survive a recession?
- WeWork founder and former CEO Adam Neumann selling more than $700 million of stock ahead of planned IPO (which thankfully is not happening).
- Insiders completely selling out of their positions post IPO (see table below).
- Creating a non-investor friendly voting structure that overwhelmingly favors Neumann.
- WeWork founder and former CEO Adam Neumann owning buildings the company leased from (conflict of interest).
- WeWork founder and former CEO Adam Neumann carrying marijuana on his transatlantic flight.
- Fraudulently positioning WeWork as a “technology” company when Commercial Real Estate (“CRE”) is clearly the core business.
- Incredulous claims of WeWork as a demand aggregator and value creator for technology companies (see graphic below).
- Private investors (SoftBank included), putting money into WeWork at a $47 Billion valuation. This for a company that only generated revenue of approximately $1.8 Billion in the year 2018 and $1.5 Billion during the first six months of 2019.
- Not having a logical mission statement, instead verbally spouting about some amorphous thing based on love, peace and co-working.
- WeWork pulled its IPO on September 30th 2019. See our podcast below for our perspective on what will happen next with WeWork.