How WeWork Went From $47B Startup to Bankrupt Penny Stock | WSJ What Went Wrong
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- čas přidán 7. 06. 2024
- WeWork, once a-venture-capital darling, has filed for Chapter 11 bankruptcy. Co-founded in 2010 by Adam Neumann, the filing marks a reversal for the company that specialized in leasing shared workspaces and was once valued at $47 billion.
WSJ breaks down how the desk-rental company went from one of the world’s most valuable startups to a bankrupt penny stock.
Chapters:
0:00 WeWork files for bankruptcy
0:42 WeWork’s background
2:06 A failed IPO and Adam Neumann
3:41 Pandemic’s impact on WeWork
4:09 What’s next?
What Went Wrong explores the challenging conditions and decisions that led to a company's downturn.
#WeWork #Bankruptcy #WSJ
I worked on a contract that was based out of a we work. Hated everything but the coffee in that place. I found out a few months later that they called themselves a tech company. I was like, but they just lease office space. That was in 2020, after the pandemic hit I knew it was just a matter of time, and here we are. I still don’t know what they saw in this to value it so high. Just goes to show that valuations are a whole bunch of bs.
@Anderson :: The people prosecuting Trump would agree with your last sentence. Greed causes blindness. The creator of wework's must have been a smooth operator ; a smooth talker from the Obama school and like Obama, he left office extremely rich. This is a very good example as to why people continue to talk about Marx&Engels !
Maybe it has something to do with the people in the place? I worked in two different ones and visited others. They were all very nice. At the time of the crazy CEO they offered free beer on tap. Can't get much better than that..
Familiar with Modern Art?
How NFTs?
Some "companies" are just like that.
Hollow shells worth nothing.
Wall Street sucks. They have no sensibility in valuing things. When you are a privileged spoiled brat and you’ve never done anything in your life of consequence, you have no way of measuring anything. That applies to just about everyone on Saul Street.
Typical YT scammers. Sam Bankman Fraud types
"Who is the genius? The artist who created the painting or the salesman who sold it for $1 million dollars?" Irving Rosenfeld, American Hustle
Both
My answer is it's the artist because unless they're one of the best of all time there's no one willing to pay that. Plus the "salesman" is usually a collector of old art, someone who happened to find a rare piece in their grandmother's attic, or an auction house. Anyway, valuable art is almost always a solid investment.
Well at least you know whose the idiot that just parted ways with their $1million..
@@RajinderYadav even when the art is a banana with a tape?
I'd say both. The painting who painted beautiful paintings and the salesman selling arts to rich people looking to launder money. Both do their jobs well
I worked for WeWork at the height of its existence. I had nothing but fond memories there. All food was paid for, all beer was paid for, and it was more of a playground than a work place.
Lol
Best office I worked in and most probably won't be beat.
That's why they broke and are bankrupt now lol. Spending more than their income 😂😂😅
Of course it was great with all the VC capital pouring into a company that was "destined for greatness". I doubt you are useful employee anywhere now though.
@Djamonja why so jealous? I worked there and did my job, and was rewarded accordingly. I work for JPMORGAN now.
@@nikkapubess3349 Why would I be jealous of someone who worked for wework? I'm sure you're not working for ALLCAPS COMPANY now YT trollboy.
I was a WeWork client in Colombia and in Costa Rica. The prices were way too high and the workspaces were often filled with snobs.
experienced the same lol. the interior was nice, but the vibe inside was very meh
Attracted basically clones of Neumann lol.
Yeah they are completely out of touch on how much it should cost. Renting an office space from them is higher than a lot of people pay for rent in South America
Here in Shanghai also, at covid times the prices were still very high.
Snobs 🤔🤔🤔🤔🤔
The golden era of scammers. The smart ones got away with billions of dollars to his name while the dumb ones found jail time (SBF).
Thank you!
It wasn't really a scam... granted he did some sketchy things like personally trademark "We" and sell it back to the company... but he mostly did what he said was going to do.. it was more of a terrible business model than a scam and for whatever reason investors ignored the very obvious problems with the business and invested anyway. There were profitable companies within the same space that were valued at a fraction of WeWork and it never made any sense. It doesn't appear Neumann ever actually lied or cooked the books or anything like that...
@@jonathantaylor6926he walked away with $1b leaving the company with huge debt. How isn't that a scam?
Spot on👍🏴
@@jonathantaylor6926 Was it really WeWork's own fault though? Like the video pointed, the main catalyst is Covid and WFH. No one could predict that. You could say the same about airlines if not for airlines being propped up by governments
“We curate and create culture” Adam Neumann
That’s a guy who really did sell a pipe dream
"To elevate the world's consciousness" what a comedy 🤣
Branding...
"To create culture". Even funnier.
If I was a potential investor thats the moment I would have walked out.
I’m actually surprised at how stupid these VC firms are. It’s the Theranos mindset. They aren’t as smart as they’d have you believe, gambling without any consequences.
Investing is a long game, though. You always anticipate losses - it's about gaining in excess of losses over time. Valuations have been waaaay overblown, though, and are now going through corrections as money dries up and companies' revenues aren't coming close to their previous valuations. This WeWork does sound like a disaster, though. What is with that jet purchase??
VC's don't put all their eggs in one basket. They know 9 out of 10 will be duds.
but one winner will pay for all losses. supposedly.
It is the business model that we have today that is contributing to it... I mean... big results on a very short time... I would take the risk to say that most of the VCs are looking for the next Microsoft, Google, Amazon... and when the short term is the goal... this is the direction...bankruptcy or fraud
Looks like my small company is better off than a so called "47 billion company".
@@kkp4297 Yet ARK returns are lower than just holding SPX.
Who knew that taking a long term lease and breaking them up into shorter leases was considered Tech? Also, it's a business that's been done long before and mostly with disastrous results. At least Uber came up with some fancy GPS monitoring.
he got really lucky with stepping down right before the pandemic and getting that severance
This is the last thing the reeling real estate market needs right now, as an Air BnB investor i think due to the similar mode of operation like WeWork, we might soon be run off the market. Essentially why i'm at large for exit measures or where to allocate $1m
investors are extra cautious right now. They want to make sure they’re getting a good deal given how much mortgage payments have gone up, and when they don’t feel like they’re getting a good deal, they’re backing out, so definitely looking elsewhere is a necessity
Just because there are opportunities in the stock market does not mean you should dive in headfirst, if you're unsure if to remain in the housing market i suggest you consult a professional just like i did before making any move, That's how i've been able to stay afloat for almost 5 years with proper portfolio allocation earning about $1m in investment returns
this is definitely considerable! think you could suggest any professional/advisors i can get on the phone with? i'm in dire need of proper portfolio allocation
Yeah....i have 'Monica Selena Park' who oversees my portfolio. She's well established and you'd find her professional bio on the net where you'd be able to connect with her, i'd suggest you go look her up yourself and let me know what you think
Investing in 20 dividend paying stocks will still net you more money on a million dollars over time than an airbnb property with little to no work at all.
I am not surprised about WeWork filing for Bankruptcy, but by how so many investors thought its initial evaluation made any sense, given that an office lease business could never manage to provide such returns. I guess stamping a "tech" label on whatever startup these days is enough to secure crazy evaluations.
lol I'm not into these industry but even I learned I will stamp "tech" to any business I own.
It goes from WeWork to WeSuck to WeBroke 😂😂😂😂😂
😁clever!!
I’ve always heard of WSJ but I never took time to explore their content. This channel is so good! I love mini- docs on businesses rise & fall, stocks, random world events etc.
Do I want to pay for a space and be surrounded by dozens of random noisy strangers instead of working from the privacy and comfort of my own home? That would be a hard 'NO'.
Fine. That’s your opinion, but many people enjoyed working there.
Not sure why you even mentioned it. It’s totally irrelevant and has nothing to do with them. Failing
That is certainly not the reason why they went bankrupt. 🤦♂️
@@AlphaGeekgirlUmm thats exactly what itsvabout..their whole "business model" failed
@@AlphaGeekgirlI worked for WeWork for a short period of time. It was quite a mess and I’ve since sworn off ever working for any company that resembles a start up. One thing that stands out was that I struggled to work in anything but large private offices (completely infeasible for a business to lease this much space for sales) because members would complain about the noise from me making sales calls. I know people at BP who had a Powered by We build out and the employees found the layout to be a hindrance and disruption. The model mostly works within a few niche and smaller sectors but not a great fit for many companies with sales forces that are in the office or that deal with a lot of Pii or proprietary information. Coffee was great though.
What about the free beer?
@@AlphaGeekgirlwhat are you talking about?? That’s exactly what caused it. The pandemic made people think twice about it. Ppl are still working remotely and choosing home. So people rather work from home. It’s simple as that.
If a company can’t hold its valuation for over 15 years minimum… just consider it a volatile investment
I would be more worried about who actually valued it in the first place… and based on what?
"Volatile investment" aka gamble
@@AlphaGeekgirl you can fake and manipulate companies/product valuations for a few years, but it’s really hard to fake average evaluations for a decade and a half. In this case everyone knew wework was destined to crash
Office leasing sounds like a bad idea
Enron called and asked if you'd like to invest.
Trump's going to be the next one.
You can't even trust long standing valuations when there are corrupt accountants out there.
The coworking and gig economy stuff was clearly hyped up. None of those companies make any money. Anybody could see that they would up end just being a fart in the wind
I don't understand how SoftBank didn't see that comming
That is a smart dude, create a company, overvalue it, get fired and collect $1 billion in severance. Company goes bust soon after.
a story of how greedy investors can always be duped by 1 fanatic.
So now wework is wedon'twork?
😮🤣🤣🤣🤣🤣🤣🤭
😮🤣🤣🤣🤣🤣🤣🤭
we wont work is better
He got $1 billion because he was so bad and it made sense to pay him to go away rather than stick with him. It was simply too late.
I'm not sure about how bad he was tbh.
He tried to market a office real estate company (which doesn't really 'produce' or 'revolutionize' anything) like a software company - which also didn't produce or revolutionize anything.
Of course it failed.
It's just 'subleasing' but in an app. Crazy how they didn't actually buy their properties with all that VC money. At least then they'd have some actual assets.
it failed but he succeeded. that's all it mattered to him.
It’ll be interesting to see if there’ll be any attempt to clawback some of that severance pay that Adam so richly un-deserved.
The offices were pretty cool. Loved that you could sit on various open-space floors and work. The phone booths were great for Zoom or other virtual meetings or when you didn’t feel like sitting in an open space or your designated office location. Also loved the all-day beer-on-tap 🍺 😂. Gonna miss that WeWork office a ton!!
They cut the beer soon after the crazy CEO left with the money. I think they'll keep many locations open for a while.
All day beer on tap for free? 😮
@@Oceansta Yes, local craft beer. All day.. well it depended on availability a bit. It opened for lunch and closed at the end of the day. There were times they had no beer but a new delivery was soon to come. And nothing is free, you pay for the office. Nevertheless it was a great idea that differentiated wework at the time.
How do you have a meeting in a phone booth
@@USA-qm2bk there's a bench inside and you use your computer camera for virtual meeting. I've seen two persons in the booth once which looked uncomfortable..
This was absolutely a scam. In fact, we had so many of these companies that were labeled as "tech" companies but were instead the opposite. This was the whole era of "disruption". Sigh!!!
The story is so much more than thus short clip. Watch the documentary...its wild
Wow they had this video edited before they went bankrupt, wow!
They’re probably editing the one for Twitter now 😂
There is nothing to be surprised about. We saw it coming when softbank involved most of them fail.
Facts I thought of ther too whos next
I've watched a number of videos about this company and I still don't understand how this was supposed to be successful. I'm no business expert but it always seemed like a scam to me.
Over expansion.
Maybe if Wework acted as a building rental marketplace, the story would be different. But wework instead takes the risk as a tenant rather than a market of tenants looking for a building to rent.
Adam Nuemanns big break was finding a fellow traveler investor to value his company at 45 million dollars even though it was just an idea (that already existed) and had no assets or revenues.
Hoping to see a similar video about wsj some day soon.
Thank you
Hes so happy about the Recession coming in, like hes super excited to be witnessing it.
I think it stills works very well en Europe since it's target consumers are digital nomads, here they have WeWork in all countries and flying from one country to another costs about 50 euros. What my friends do is they travel from one country to another and they can work from any WeWork office, it's very convenient for them. I only been to the one in Paris, my friend went to work there and took me along, we could see the Eiffel Tower from the rooftop, the place seemed cool and I stole a glass, one of those that says "always half full" I still have it hehe.
Common Desk in Dallas area is great which is a subsidiary of WeWork.
Whats sad about WeWork is their were ways to save it but they didn't adopt innovations. Old leadership and management consultants drove that company into the ground what a shame !
When your expansion exceeds both need and demand you're gonna have a hard time.
100% 👌🏻
Regus seems like a very successful and established player in this space. Id love to know how they compare.
Regus was always valuated as a real estate company, so they didn't have a bubble that could burst.
For a Bankrupt company WeWork had enough dough for a notable product placement in the new Michael Fassbender movie The Killer playing in theatres now and later dropping on Netflix on November 10. It is a great movie Fassbender will likely be nominated for a Best Actor Oscar in a tough awards season category this year.
WeWork Files for Bankruptcy
and I made WeWork's case my project in forensic accounting and got A+
I'm the only winner in term of Wework history
I am more convinced that when you look a certain way, it seems easier to swindle major companies out of money that could be used to invest in their infrastructure….rinse and repeat.
can't imagine the noise
I'm shooketh. More layoffs, though. So sad.
Creating a coworking space is now the easiest business to set up. In my city they are all over the place. The business model is too easy for competitors. Back in the day, we only had Regus. Now every city has dozens of options. Not a fan of Regus, but they did it right. They serve the transient business traveller and have small, modest coworking spaces.
One thing people should know is that a crash and bullish market provides equal high-yield potential, it's all about information and strategy application, I've seen folks make huge 7 figure profit in crashing market and pull it off much easily in bull market. Personally I’ve made over $310k in this year. There are lots of opportunities in the market, unfortunately people are not utilizing them.
What opportunities are there in the market and how do I profit from it?
@@NaomieEvaAddams There are quite a number of undervalued stocks and Defi assets available in the market, get in on them. You can also short the market, there’s a lot that can be done to maximize profit.
I'm very interested in investing and I have good sum of which I'm willing to put in with the right information. Tried investing in stocks myself a few times but I’ve never been in luck picking stocks.
@@adijkhady2840 Having an advisor is essential for making high yields investment, portfolio growth and diversification as well as Capital preservation which is just as important as the stocks you buy.
The mistake most newbies make is rushing into trading without adequate knowledge or guide
I nearly worked for a competitor way back before WeWork had started. They were expanding at a huge clip, but when I raised the question during my interviews about how matched LT liabilities with ST assets ( rent receivable ) they mentioned break clauses. The follow up question about how quickly they could break a lease, and source another office in the same city district got a lot of "eh, um" questions. I wasn't offered the job ( I would have taken it as they were paying well ).
It sounds like they missed out
@@RDCFemmes Your very kind.
The tables turned. For a change the investors loose out. Good for him.well played.
Well… I’m no Warren Buffet but when your CEO has an American Greed Episode…while you’re still in business, that ain’t a great sign. -To the point I thought the plane was headed toward the side of the mountain when I saw that episode. Was shocked when I saw this news😂😂😂 I was like “wait… the American Greed guy??” Wow.
The remote working model kills it. Also I think its enter of barrier is too low might be another reason.
Work from home is absolutely superior and much cheaper than WeWork.
Reminds me of Uber- something that is super useful and makes sense for customers, but not managed well at all.
Still love wework more than 20+ locations in nyc alone, free breakfast and events all the time
saw this coming
is Wework's business really disruptive ? what stops office landlords go directly to the tenants in the same way as Wework?
Super
If you want to know how Neuman could fool so many people he met: He's really tall.
the ftx guy
What a crazy story
At its peak, I looked at Wework and kept thinking… this business doesn’t make sense, why do investors think this is a good idea? I thought maybe I don’t have that executive level forward thinking mindset hence I don’t see opportunities there. but hey here we are, listening to how this business is now bankrupt.
The idea was simple and good, but execution was bad.
Part of a very important coin been talked about in the BCL
I went to a training course in suburban Seattle held in a Regis (same concept as "WeWork"), and I wondered what all the high-tech buzz was about. I was simply attending training in a rented space. Nothing high-tech about that concept. Oh, yes, we were all computerized, and the amenities were nice -- but it was just furniture and haughty men and women strutting around looking "fabulous." 🤣
Adam is SBF of real estate. Surprised he was not tried!
The ipo prospectus was laughable. I ran.
What a moment for Wework to file for bankruptcy 🍎
Still amazes me how they didn't see this.
I don’t think the question should be how it became a penny stock, but how it ever got the valuations that it did. Regus had been doing the exact same thing for years, had more locations and was even profitable, but worth a fraction of WeWork? That should’ve alarmed people long ago
Won’t be missed !
Isn’t this the second time?
there’s a wework here in Long Beach CA
Company is a joke.
The business model is a joke.
Another case of someone tries to change something but the old things stay the same.
Saw this coming from a mile away.
Many companies will follow suit with such business models. It's crazy how people buy into businesses that do not have any real bankable assets. We just assume that people who work in Silicon Valley are smarter than us when they simply just love to take crazy risks that often put lives at risk.
I have my own company (small tech), and we are at WeWork. It was okay-ish initially, especially as I was bringing my dog to the office, but later it just went downhill.
The desks are too small, and now and then, when I come to the office, I come home with knee pain, as I always hit my knee on the edge of the small container, which is located below the desk. Though, it's a cool and affordable approach when you are starting your business.
What puzzles me the most is the capital they raised by selling that "tech company" story. That was funny to me back in 2018 when i signed for the first lease there.
Tech is when you have the infrastructure to facilitate services and create value for the users. Having a website with an application form and sub-leasing property that belongs to someone else is far away from tech.
airbnb?
During pandemic WeWork at home.
After pandemic WeWork still work at home for some people. 😁
Why rent out an office or desk when you can just work from your apartment? Cost of living is already sky high and when you've got your own room, just make the most of it. Why pay for someone else's place?
When you talk about startup doom is frankly apparent for most of them.
Softbank and others should have sued Adam Neuman. But they kept it quiet with a hope that they can salvage the rest of this shipwreck. I bet they are regretting now.
Softbank is greyed out in the video ;D 01:17
In which year we work company fail ?
This is a good move. Now someone else can buy it and the bankruptcy allows them to renegotiate the lease. The landlords have no other option.
isn't wework its own landlord in a lot of cases? :D
@@mipmipmipmipmip I do not think so. they are filing for bankruptcy because rent for most of these buildings are up and they are empty or not having enough occupancy to cover the rent.
@@NewsSeriouslySimilar to gas companies going bankrupt because they offered fix rate contracts at a low price, but were then exposed to pricing fluctuations in the spot rate (like that caused by Ukraine). i.e. A shock causing a large correction in the market
We work= middleman realtor.
I thought they already declared bankruptcy before. This was a long time coming. ⌛️
Sa mailad lang :D
We build culture…… lol, please. Culture of any value is based on years, decades and often centuries of striving with one another.
They wouldn't hire me. LOL. Thank you.
the guy so genious
“I work!”
~Ed Bassmaster
VCs: We invest in founders, not businesses...
Adam Neumann: I know...
Finally 😢
"desk rental giant" is wild
This is satisfying to watch.. Sadly, there not done yet.. Like a bad tooth that needs to be pulled.
Whoever buys WeWork out of bankruptcy is going to get the bargain of the decade! The current shareholders who lost their money should claw it back from Adam Newman.
WeWork is worth $0.00. There is nothing to buy.
@@jonathantaylor6926I don't understand how they ever thought they'd be able to make money long-term by leasing property from a landlord. Why didn't they *purchase* those properties with all that VC money? At least then the company would have some assets.
Mr. Neumann seems to be playing a finite game within an infinite game ☕
Gives me Vietnam flashbacks.
Everyone still missed Steve Jobs. But only 1 Steve Jobs in this world.
What I don't understand is why the stock exchanges let companies with no profits do IPO's with them. In the old days, you not only had to be profitable but had to show a track record of profitability to get on the exchange. And how many times are these supposed brilliant venture capitalists going to fall for these nerdy "tech" personalities like Adam Neumann, Elizabeth Holmes, or Sam Bankman-Fried?
What does bankruptcy even mean anymore if business will just go on? Just steal money from investors and keep operating?
Take out a debtor-in-possession loan, settle your existing debt, change your management, and rebuild.
We Work No More
WOW! What a surprise!😂
How were they ever considered a tech company?
I mean good job Newman, that's the lesson here.
Adam Neumann. Sam Bankman-Fried. Bernie Madoff. What is the running theme here?
It looks like the valuation was more on the charisma of the founder/marketer rather than the soundness of the business model. And the top lenders were all guilty to gamble in and give money to it. That tells you how much you can trust your money with fund managers these days.