What entrepreneurs can learn from the rise-and-fall of WeWork

WeWork started with a great idea. Expectations of office culture have evolved over time, especially with the growth of technology. As more people started to work remotely or juggle side gigs, the expectations of what they wanted out of an office changed. This made room for WeWork's product. Their hip office spaces feature shared workbenches, comfortable furniture, fast Wi-Fi, and luxurious coffee machines. It wasn't just the young crowd of employees that WeWork catered to, but also corporate clients like Microsoft, says USA Today.

Founder Adam Neumann, who declared he wanted to become the world's first trillionaire, faced a significant drop in WeWork's ostensible value. Here are some lessons learned from some of WeWork's mistakes:

Creating is different than managing
Neumann had a good, inventive idea. But the creation of the product or business is different than running it. It's important that those responsible for leading a company are aware of how their image reflects on their company and there were negative outlooks on Neumann's behavior. The money that was funneled into WeWork from investors fostered a lot of growth in rapid succession, however as put by Forbes, it played out more like a curse than a blessing. The funding and growth allow a CEO to have such confidence in his vision that he may lack the ability to work collaboratively when others don't agree.

Branding is only a step
In WeWork documents filed for its IPO, it was revealed that Neumann sold the "We" brand/trademark to his business for $5.9 million, after trademarking it for himself. As cool as "We" brand seems, that alone is not going to create a successful business. Appearing as a hip, cool start-up only goes so far. To succeed in the long-term, you need a business plan beyond excitement and vision. You need to be able to hire, fire, do successful marketing and advertising and determine contracts plus finances.

The growth that occurred at WeWork was so fast that the internal structures struggled to keep up. When growing a company organically, there's a benefit of pacing that allows more control over the revenue and capabilities of the business on a manageable scale. As stated in Real Estate Weekly, growth for growth's sake is not a business model.

To succeed in the long-term, you need a business plan beyond excitement and vision.

Understand your biases
Neumann was inventive, which allowed him to create creative, functional office spaces. However, he allowed his focus to be more on personal gain than his business. Neumann purchased properties only to lease them back to WeWork. In documents filed with the Securities and Exchange Commission, it was revealed that Neumann had ownership interest in four buildings that WeWork had leases with, says the Atlantic. The company will not benefit if the leader is more concerned about his individual success.

While WeWork's rise-and-fall is massive and based on the scale of a billion-dollar company, the lessons learned can be applied across the board. Small or large, businesses need to focus on the fundamentals first — and that requires strong leadership, solid business models, and taking your time as you go. Hudspeth Law Firm specializes in organizational engineering that will help establish a concrete operational plan for your company, taking an individual approach for your needs.

Categorised in: Business Law

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