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Lessons from WeWork’s Epic Faceplant: The Market Don’t Like Ugly

October 8, 2019
BY:
Maria Robinson

America’s hottest new corporate meltdown has it all. Management-enforced vegetarianism. Mass layoffs with a tequila and 80’s hip hop chaser. Being fired because someone didn’t like your “energy”. A CEO that describes the company as a “state of consciousness”. Employee summer camp featuring Deepak Chopra. 

Anyone who has been paying attention to business news recently has witnessed the flaming dumpster fire that is WeWork’s aborted IPO. The rise and fall of former CEO Adam Neumann was absurd and poetic, like a dudebro Icarus flying on the wax wings of hype and investor capital. Although the end of Neumann’s tyranny does generate some schadenfreude, it isn’t so tragically elegant for the WeWork employees along for the ride. 

There are plenty of high-profile corporations with egoistical and eccentric management figures. What else went wrong with this humbled behemoth? 

Not All Growth is Good

One of the major “strategies” employed by WeWork’s management (and other trendy unicorns) was using investor capital to grow the corporation exponentially at the expense of everything, and everyone, else. This vigorous expansion made WeWork the largest private tenant in New York and London, but resulted in $47 billion in lease debts without the assets to match. 

What’s worse, WeWork’s expansion purported to create a “community company” of all its members, but its vision was generic and solely based on proximity. In spite of claiming to foster an inclusive atmosphere, the leadership was almost all white and male and company culture was widely criticized for its frat-like vibe. One of the few women in leadership, Neumann’s wife Rebekah, told employees at an event that “A big part of being a woman is to help men manifest their calling in life.”

In contrast, other coworking spaces like Knack Collective have embraced a sustainable and organic approach to growth by facilitating the development of actual relationships, and offering programs that benefit members of diverse backgrounds. Companies like Knack who actually walk the talk when it comes to inclusivity know that only by taking into account the needs of the people you serve and providing resources to help them thrive can you build a truly diverse community.

Branding is Powerful. Use it Wisely.

The establishment of a brand is hugely important to a company’s development. But WeWork didn’t just use branding to enhance consumer understanding of its services, it falsely portrayed itself as a purely tech-oriented company to get more investor cash. The fact that they were able to do this for so long is a testament to the power of brand messaging, but their eventual downfall also shows that branding has to reflect something intrinsic about the company to have long-term sway. Hype without substance is never a good look.

Unfortunately for Neumann and his former employees, WeWork’s unsustainable undertaking looks more Weekend at Bernie’s than Jerry Maguire at this point. And no matter how you dress it up, this shaky approach to business will eventually start to stink.

https://markets.businessinsider.com/news/stocks/wework-slows-growth-after-ipo-flop-landlords-rents-could-suffer-2019-10-1028580464

https://www.cbinsights.com/research/report/wework-strategy-teardown/

http://nymag.com/intelligencer/2019/06/wework-adam-neumann.html