WeWork

Have you ever heard about a company that was considered revolutionary, that was worth $47 billion without earning a single penny in profit? A scam, A hoax what is this legend of this company The “revolutionary” WeWork.

It all started at the 2008 recession, the stock market plummeting and businesses were struggling and job creation was in negative during this time. Maintaining business primarily owning and maintaining a business are one of them most expensive variables in the finances of this company. Due to recession in expensive places such as NYC the cost of owning of a house proved to be a bad decision and their value decreased but renting on the other the rental income either remains stable or in some cases increases, this was as due to cash crunch business owners often used to sell their offices to save cost and moved to a rental space.

Adam Neumann, Miguel McKelvey, and Rebekah Neumann identified the problem and set to find a solution to this issue. Initially they rent out several parts of only one floor to several workspaces for example the three founders rented a 8,000sq.ft floor for $5000, they further divide this space into 4 parts of 2000sq.ft each for each workspace charging $3000 for each of these places.like this WeWork offered flexible office spaces with amenities, targeting freelancers, startups, and small businesses.The unique selling proposition was to create a collaborative and community-driven work environment.

This trend of co-working space turned into a trendy business model,and as this trend catched on WeWork experienced explosive growth, rapidly expanding its locations globally. In its early years, in 2010-2011 the company secured several rounds of funding, including a $17 million Series A in 2011 and a $150 million Series C in 2014. 2015-2017. WeWork rapidly expanded globally. By 2015, it had locations in multiple U.S. cities. Funding rounds during this period included a $430 million Series E in 2015 and a $1.4 billion Series F in 2016, propelling WeWork to unicorn status with a valuation over $10 billion In 2018 WeWork continued its global expansion, entering new markets. Notable funding included a $4.4 billion investment from SoftBank's Vision Fund, pushing its valuation to $20 billion by 2019 WeWork reached its peak valuation of $47 billion. The company diversified its offerings, venturing into co-living (WeLive) and education (WeGrow).

SoftBank invested an additional $2 billion in WeWork. However, this was a prelude to the challenges that followed.WeWork formed partnerships with major corporations like Microsoft and continued expanding its presence in various countries, reaching over 100 cities globally. In 2019 WeWork's attempt to go public failed due to revelations about its financial health and governance issues. Adam Neumann faced criticism for his leadership style, conflicts of interest, and questionable decisions.

WeWork's valuation collapsed. SoftBank, a major investor, intervened with a bailout package and took control of the company. The bailout included a $5 billion debt package and a $3 billion tender offer for existing shareholders. Adam Neumann stepped down as CEO, and the company underwent significant restructuring. Thousands of employees were laid off, non-core businesses were divested, and the focus shifted to core co-working operations.

The COVID-19 pandemic exacerbated WeWork's challenges as remote work became widespread, reducing demand for physical office spaces. Now WeWorks business threats transformed from increased rent prices to work from the comfort of your homes with the help of other companies like zoom where the prices of the rental variable would not come into picture at all

Reports emerged of potential fraudulent activities by Adam Neumann, including self-dealing, conflicts of interest, and exaggeration of the company's financial health. Legal challenges and investigations ensued. WeWork faced significant asset write-downs as the value of its real estate holdings diminished. The company continued restructuring efforts, selling off non-core assets and consolidating its operations.

The company operated under new leadership, with Sandeep Mathrani appointed as CEO in 2020. WeWork aimed to rebuild trust, but the damage from past issues lingered. WeWork's rise was marked by innovative concepts, rapid global expansion, and substantial funding. However, its downfall was triggered by leadership issues, a failed IPO, financial mismanagement, the impact of COVID-19, and allegations of fraud by its founder.What do you think can the revolutionary company that was worth $47 billion without earning a penny in profit resurrect itself after the declaration of bankruptcy due to a change in the leadership.