peter kennedy’s Post

The Big fall of Wework 💺 Few valuable insights to be gained for entrepreneurs, business leaders, and investors alike. Let's break down some key takeaways: 1. Strategic Expansion: WeWork's meteoric rise witnessed exponential global expansion, coupled with a staggering valuation of nearly $47 billion in 2019. Yet, operational costs grew in tandem, presenting a challenge to achieving profitability. 2. Leadership Dynamics: The distinctive leadership style of co-founder Adam Neumann left a lasting impression. It reinforces the significance of leadership alignment with a company's core values and fostering a cohesive organizational culture. 3. Financial Reality Check: WeWork's bid to go public was accompanied by the disclosure of substantial losses, raising concerns for potential investors. This highlights the importance of transparent financial reporting and prudent financial management. 4. Governance Spotlight: Scrutiny shone on WeWork's governance framework, which showcased vulnerabilities due to concentrated decision-making power. This underscores the necessity of robust governance structures to ensure checks and balances. 5. Navigating Unforeseen Challenges: The emergence of the COVID-19 pandemic compelled WeWork to grapple with a paradigm shift in workspace demand as remote work gained prominence. This underscores the importance of organizational adaptability. #BusinessLessons #DataDrivenInsights

👇 Here are 5 critical takeaways from WeWork's downfall that every business leader should listen to: 🌊 Misguided Spending: Imagine investing company money into an artificial wave pool, of all things! This glaring misalignment with WeWork's core business model underscores the necessity of investment discipline and strategic focus. 🚀 Venture Sidetracking: WeGrow and WeLive might have been great ideas, but they were premature and unfocused. WeWork's scattergun approach to side projects is a warning against straying too far from your core business. 🏢 Rapid Overexpansion: A 70% occupancy rate never justified WeWork's rapid international expansion. This classic blunder highlights why measured growth, rooted in real demand, is critical for long-term viability. 🌐 Extravagant Culture: Extravagant perks, including lavish retreats and endless beer, may seem appealing, but they can create an unsustainable business model. Frugality isn't about being stingy—it's about being strategic. 🤝 Executive Overindulgence: A nearly $2 billion exit package for the CEO might seem like nothing in a company which was worth billions, but it was symptomatic of a deep disconnect between the actions of leadership and business health. 🔍 What lessons do you believe the business community should take away from the #WeWork debacle?

WeWork's Downfall: Can it Survive the Leadership Exodus and Valuation Plunge? [172 words, 40-second read] WeWork, once valued at an astonishing USD 47 billion in 2019, is facing a series of setbacks. Top officials, including the Chairman, CEO, & CFO, have departed, while valuations have dipped to USD 260 million – a mere 0.55% of its former peak. The company has openly expressed doubt regarding its ability to stay afloat in a recent regulatory filing. The departure of three board members due to disagreements on governance and strategy further highlights internal turmoil. WeWork's business model is now in question, especially as a hybrid work model (mix of in-office & remote) gains traction. Additionally, The risk of empty office spaces during economic downturns is a significant concern, as noted by Prof. Aswath Damodaran. Even Mr. Masayoshi Son, the CEO of Softbank (which has ~56% stake in the company) called their investment in WeWork "foolish". This situation serves as a reminder of the importance of adaptability in an ever-evolving market. WeWork's challenges emphasize the need for a resilient business strategy. Whether WeWork can navigate this situation and recover remains uncertain. --- Sources: 1. https://lnkd.in/dYHSmVES 2. https://lnkd.in/dX4JQ7PF 3. https://lnkd.in/dbV8Mtfn 4. https://lnkd.in/dtjP4w_j

"I told you! WeWork was doomed to fail from the onset!" So why did so many savvy and affluent investors invest, to begin with? Hindsight Bias in Investing: Our interpretations of events are often influenced by hindsight bias. It's tempting to believe that WeWork was doomed from the start, but the reality is more nuanced. Back in 2019, when the company was valued at $49 billion, many investors might have seen a promising venture with an 80% chance of success, only to find themselves on the less fortunate side of the 20%. Did they make a mistake? Or did they simply experience the reality of risk? With every failure, you learn something new, right? Well, in this case, I'm not sure. Essentially, WeWork failed for several key reasons: - They didn't have a sustainable business model. - They lacked profitability. - They failed to adapt. But you know what other companies failed in the same way in the early days? - Apple - Ford Motor Company - Netflix And we all know how those investments turned out. Ephraim Levenberg shared this line with me: "Successful companies are all alike; every failed company fails in its own way." And it's very applicable here. There are common characteristics or factors that contribute to the success of a company, and when these factors are present, the company is likely to succeed. In contrast, when a company fails, it often fails for a unique set of reasons specific to its situation and decisions. Successful companies tend to share common traits like effective leadership, a strong value proposition, sound financial management, adaptability, and a sustainable business model. These factors create a solid foundation for success, and deviations from them are less standard among successful companies. On the other hand, failed companies may fail for a wide range of reasons, often related to their unique circumstances, choices, or failures in one or more critical areas. The failures of these companies can be diverse and multifaceted, making each failure a distinct story. In essence, there is no single formula for success, but there are recognizable patterns and best practices that successful companies tend to follow. Conversely, failure can result from a multitude of factors, making it a more complex and varied experience. #investing #riskmanagement #venturecapital #wework #chapter11 #bankruptcy #commercialproperty #retailnews

Interesting read. Prior to the pandemic, WeWork had the scandal with Adam Neumann, and a failed IPO leaving investors feeling oversold and under informed. Heading into the pandemic under new leadership, they were locked into long term, expensive leases. IWG also suffered during the pandemic with their stock falling nearly 35% over the past five years. Earlier this year they reported record earnings and continue to slowly increase valuation. It will be interesting to watch how the global serviced office model evolves as some markets are reported to be stabilizing and CRE continues to deal with high interest rates, inventory, and remote/hybrid work practices. https://lnkd.in/gUxkBFRg

They hired the best and grew super fast, but at what cost? From a value of almost $50 billion........ to bankruptcy. After reading the news about We Work filing for bankruptcy, I had to think about the book I read about their controversial CEO, Adam Neumann. Not sure if you have read the book ( "Billion Dollar Loser"). If not, it is actually really good in my opinion. Not only is it a fun read, but it also teaches some important lessons about growing a startup and its ethics: mainly what not to do. These are the key takeaways for me: 1) Visionary Leadership Can Be a Double-Edged Sword: Adam Neumann's compelling vision and charisma were central to WeWork's rapid growth. However, his leadership style also contributed to a lack of focus and unsustainable business practices. 2) The Importance of Sustainable Growth: The book illustrates the risks of prioritising rapid expansion over stable, sustainable growth. WeWork expanded aggressively without a clear path to profitability, leading to financial instability. 3) Corporate Governance Matters: Neumann's control over WeWork led to questionable decision-making and business practices. Effective corporate governance is crucial to ensure accountability and long-term success. 4) Company Culture Is Critical: WeWork's culture was a mix of community-focused branding and an intense, often toxic work environment. The book highlights the importance of a healthy company culture and its impact on employees. 5) Market Perception and Reality: WeWork was initially seen as an innovative tech company when it was essentially an office space leasing company. The book discusses how market perception can differ from the company's actual business model and fundamentals. 👀 Eye opening Conclusion: WeWork's worth went up really fast because people got excited about it and the big dreams that its CEO talked about. The book shows how sometimes the tech world guesses a company's value based on excitement more than real money facts. And the difference between a good story and what's actually going on with the money. #leadership #startupgrowth #companyculture

WeWork Inc in its recent earnings said "Our losses and negative cash flows from operating activities raise substantial doubt about our ability to continue as a going concern.". With a lifetime high of over $13 per share, the stock is worth $0.13 today. Did we at #globaldata see this coming? Indeed there were signals. For one, the company wasn't hiring anymore, signalling there were no growth plans. Here at GlobalData Plc, we carry a complete ecosystem of data points we call Signals that help you make better decisions. #alternativedata #signals #wework

The contrast between WeWork's fiduciary responsibility to admit that there are substantial doubts about its ability to continue as a going concern, and the more bullish quote from its CEO in its earnings press release ("We are confident in our ability to meet the evolving workplace needs of businesses of all sizes", "The company’s transformation continues at pace" and "we have delivered...dramatic profitability") is a painful example of the tightrope that IR and corporate communications teams have to walk. On the one hand, you can't not report the real and obvious risks that a company faces. But at the same time, you have to try to show that there is hope, for fear that disaster becomes a self-fulfilling prophecy. Finding a middle ground in corporate quotes in these circumstances is key. When you know that a going concern issue is being raised, you can't ignore it in your comments. You have to acknowledge the issue, but demonstrate your confidence in the company's ability to navigate a path through. Anything else, and your credibility starts to head in the same direction as your revenue numbers. #corporatecommunications #investorrelations