WeWork, a coworking space giant that used to provide flexible workspaces by revamping and furnishing premises, is now facing the stark reality of its financial and operational missteps.
The once $47 billion valuation giant was serving businesses of all sizes, from freelancers to Fortune 500 giants. In fact, It had operations in 39 countries at over 700 sites.
However, the giant had already started falling when COVID hit the world. With its valuation crashing to nearly $48 million, WeWork is now preparing to file bankruptcy after its stock went 98% down since it went public in 2020.
No doubt excessive debt is one of the major reasons for the failure of the company. Likewise, WeWork struggled to find solid ground due to mounting debt.
The co-working space giant was valued at $47 billion in 2019, but due to a disastrous attempt to go public led to the founder quitting and subsequently the value vanished to almost nothing in just four years.
WeWork neglected its core operations while trying to manage over 100 businesses, which contributed to its downfall this eventually led to the company's collapse.
The company also missed out on capitalizing on niche co-working spaces tailored for specific industries such as designers or artists, which could have helped the company stay afloat.
As the stock of WeWork took a nosedive, the faith of the employees in the founder Adam Neumann started to dwindle.
SoftBank, the largest shareholder of WeWork, was severely affected by the company's decline. Also, venture capitalists, like Benchmark who held more than 20 million shares nearly 3% of the company, and Insight Partners held 13 million shares that is 2% of the company, faced substantial losses.
Well, there are multiple reasons for WeWork's failure. The lesson to be learned from this giant's story is to prioritize stability over-diversification. Building trust is a valuable currency in business as it helps companies avoid the pitfalls that led to WeWork's demise.