Governance. If Christmas time is the time of edifying “beautiful stories”, the business world has its own which can be told in another way. For example, that of WeWork.
The company was founded in 2010 by Adam Neumann and Miguel McKelvey who anticipated a radical upheaval in the organization of work: coworking. They offer to rent modular spaces to companies who use them at their convenience and at their own pace. These spaces shared between different companies and start-ups bring employees and individual entrepreneurs from diverse backgrounds and cultures together in a relaxed atmosphere.
Coworking is becoming trendy. Financial analysts and management gurus predict that the organizations of “tomorrow” must externalize workstations (executives) to remain “agile” and permeable to innovations. Academics theorize the benefits of the precious broths of culture and creative ideas emerging from these spaces. The cultural machine to support dreams is in full swing.
The success of WeWork was then prodigious. In less than ten years, its valuation reached 49 billion dollars (44.8 billion euros). At the height of its glory, it employed 8,000 people on more than 500 sites around the world. The occupancy rate of its offices is 75%. Adam Neumann, his charismatic and eccentric boss, is listened to like a magician. Markets and the public love great stories.
The end of illusions?
Alas, the economic reality is less euphoric: in 2019, the company’s losses reached $1.9 billion for a turnover of only…1.8 billion. During the decade, the company only operated through successive fundraising. Nearly 13 billion were injected, the Japanese conglomerate Softbank alone contributed 9 billion in three years.
WeWork’s star is fading. Scheduled for 2019, its IPO must be postponed until 2021. The activity exists, but it is not profitable. Adam Neumann is sacked (with a nice bonus). The value of the stock falls to $2 billion in 2020 and is only $45 million in November 2023, when the company files for bankruptcy.
Nearly $50 billion is dissipated in thirty-six months. By what magic were investors and savers able to absorb such a loss? Precisely through the magic of beautiful stories that fuel speculation. The ultimately sad one of WeWork is just one among others which have, at the same time, enabled spectacular asset valuations thanks to other promises of enormous potential markets. The hopes of gains which swell here (as now with artificial intelligence) make us forget those who are disappointed elsewhere. Unless too many bubbles burst at the same time and that’s the end of the illusions.
You have 20% of this article left to read. The rest is reserved for subscribers.