28 Feb Quick overview on WeWork’s global coworking success and then its subsequent downfall
For most professionals who got a chance to work at the coworking space, WeWork, the idea of working there was just as exciting and intoxicating as it was vague and ‘too good to be true’.
Many people bought into it – a vision of “the office of the future” – however, little did they know that by late 2019, things would take a seriously “bad” turn for the business.
Here’s a brief overview of WeWork’s startling rise to success and its subsequent downfall:
WeWork’s epic rise to success
WeWork was officially launched soon after Adam Neumann settled in New York to pursue higher education. After test-driving ideas for a few businesses, he had an epiphany that subdividing an office space and renting it out would grant him the success and sense of accomplishment he had keenly been pursuing.
This is when Neumann co-founded a company called Greendesk in 2008 with Miguel McKelvey, a trained architect by profession. This ‘first iteration’ of WeWork came to being, but was sold in 2010 to Neumann’s and McKelvey’s landlord.
The same year, WeWork was officially born – initially offering landlords managing empty office buildings with a smart and savvy solution. The business took off in a big way and the two co-founders received early investment from Benchmark, a venture capital firm. They used the money to take on new leases and further grow the business.
By the year 2015, WeWork’s valuation had soared to a cool $10B with more than 23,000 customers paying for its services in 32 locations. The startup was renting out desks for just $45 a month, rather than marketing themselves as a full-fledged co-working space. Investors were now interested in the thriving company, very interested.
SoftBank invested nearly $8B in WeWork, bringing the company’s valuation to a mind-boggling $20B. The startup wasted little time in expanding its presence around the world – in 2019, SoftBank pooled in another investment of $16B, which offered them a controlling stake in WeWork.
All was not well, however.
WeWork’s equally epic downfall
In August 2019, the coworking giant was considered American’s ‘most valuable startup’. But then, a sudden turn of events took place.
By September 2019, WeWork filed its S-1 registration to garner a public offering, while also involuntarily disclosing a myriad of conflicts of interest and mismanagement woes.
Investors and analysts were quick to chasten, especially after witnessing the massive fraud which caused Uber’s failure to deliver – they were now more vigilant than ever and refused to let another ‘visionary founder’ delude them into the notion of success clothed in nothing more than hype.
Neumann’s IPO dreams went down the gutter, and he was soon ousted as CEO. What went wrong?
Don’t be like WeWork
Part of the problem, many experts believe, is the fact that WeWork projected itself as a tech company, whereas it was nothing more than a business renting out office space. And, the evident lack of a real business model, made up valuations and pointless rebranding, also played a pivotal role.
Even though WeWork still exists as a business today, it doesn’t appear to be going anywhere.