Hi friends,
Here are 3 ideas, 2 quotes, and 1 question from the story of WeWork.
I.
In January 2019, WeWork was privately valued at $47 billion. In November 2023 it filed for bankruptcy with a market cap of $44 million.
Nothing exotic destroyed it. No fraud conviction, no technology shift, no pandemic alone. The mechanism of death was visible in the accounts the whole time, and almost everyone chose the story instead.
II.
WeWork signed leases running fifteen years and sold memberships running month to month. Long-term liabilities, short-term revenues. In good times the spread between them is profit. In bad times the members leave in weeks — and the leases stay for a decade.
At its peak: 779 locations across 39 countries. In 2018 it booked $1.8 billion of revenue and $1.6 billion of losses — while growth was still easy. At the bankruptcy filing, total liabilities were $18.65 billion.
Every business is a stack of promises made and promises received. Match their durations, or the mismatch is the business — and you are simply waiting to find out which side of it you're on.
This is Principle 2 of 10 in the full WeWork playbook →
III.
Adam Neumann controlled 65% of the voting stock, at ten votes per share. When the board finally moved against him in September 2019, days after the IPO collapsed, removal had to be purchased.
His exit package: a $185 million consulting fee, $500 million in stock sales, a $500 million loan repayment — approximately $1.7 billion all in.
The company he left behind employed 12,500 people at its peak. The governance that made him unremovable was disclosed to every investor who ever wired money. They funded it anyway.
"WeWork's valuation and size is much more based on our energy and spirituality than it is on a multiple of revenue."
— Adam Neumann, 2017
"In a fight, who wins — the smart guy or the crazy guy? The crazy guy."
— Masayoshi Son, reportedly to Adam Neumann, 2016
One question: Where in your business does the duration of what you owe exceed the duration of what you're owed?
Cheers,
Alex
P.S. Every issue distills one playbook from the Research Library — 810 of history's greatest people and companies, sourced.
