My office is in a WeWork. I love coworking. I do NOT love bad business decisions. And I think WeWork just took the cake for bad business decisions.
We’re all familiar with the story by now. Juggernaut WeWork was set to take over the coworking world, maintaining space for the small, the solo, the transient, the international. They have free coffee! Free BEER! Comfy seating, secure spaces, fun events, flavored water, someone cleaning your office, and more. I rather enjoy it, to be honest. Especially the coffee.
Then came WeWork’s S-1 filing, which was the business equivalent of juicy gossip. Between the $5.9 million to WeWork’s founder for the licensing of the “We” trademark (which seems, I don’t know, rather excessive), to the refusal to loosen the reins of control by ensuring that voting power remained with the founder and his family, to a new valuation method seemingly designed to obfuscate the numbers, it raised red flags. And that doesn’t count the conflicts of interest. Or the massive, massive, MASSIVE losses, with no plan to get profitable.
In addition, there’s the business model itself: WeWork has significant long-term liabilities, but not long-term assurance of income. After all, we WeWorkers are shorter term – we can rent space month-to-month – but WeWork is on the hook for years to come. Again, does that show profitability? Nope.
I don’t practice securities law. But even I knew that WeWork was not in shape for a public filing. Which leaves two logical conclusions: either nobody told WeWork that the S-1 was a horrible idea, or WeWork’s C-suite didn’t care. And either way, they should have known better.
Oh, WeWork. May it survive in spite of itself.