How WeWork's Shocking Mistake Made it Go Bankrupt from $47b
Why Unsustainable Growth Strategists Rewatch This 22-Minute WeWork Bankruptcy Breakdown WeWork "commanded $47 billion valuation without ever making single Dollar in profit" yet "share price dropped from $100 in 2022 to just $1.6, drop of 98.4% in just one year, filed for bankruptcy." Rapid expansion: "went from 23 locations in 2014 to 429 locations in 2019 to 777 locations in 2023"—losses "went from $900 million in 2017 to $1.6 billion in 2018 to $3.3 billion in 2019, since 2016 WeWork's losses piled up to more than $15 billion." Founder exploitation: "Adam Neumann was himself landlord in many properties leased out to WeWork, took personal loans from own company worth over $300 million at very low interest, bought WeWork trademark and company paid them $5.9 million to use it." SoftBank "pumped in $18.5 billion into WeWork equivalent to 1.44 lakh crore rupees, more than GDP of countries like Mongolia and Madagascar." The profit-free $47B valuation at 01:08 reveals investor delusion: "back in 2019 this same company was considered to be revolution in American startup ecosystem valued at mindboggling $47 billion"—"commanded $47 billion valuation without ever making single Dollar in profit, $47 billion to bankrupt in just 4 years, thousands of employees lost their job but you walked away with more than billion dollars." The 2008 recession opportunity at 05:13 explains business model: "landlord bought empty building going to charge $1 per square foot for each 5,000 sqft floor"—"Newman proposed instead of giving 5,000 sqft space to one company at $5,000 he could split into 15 units and sell at $1,000 each, same 5,000 sqft space able to make $15,000, would pay landlord $7,500 instead of previous $5,000." The expansion-loss death spiral at 10:15 quantifies unsustainability: "went from 23 locations in 2014 to 429 locations in 2019 to 777 locations in 2023"—"operating losses went from $900 million in 2017 to $1.6 billion in 2018 to $3.3 billion in 2019, since 2016 WeWork's losses piled up to more than $15 billion, acquired more spaces demand did not shoot up at same pace." The founder self-dealing scandal at 14:25 exposes governance failure: "Adam Neumann was himself landlord in many properties that were leased out to WeWork, even if WeWork didn't make profit founder would still get rent"—"took personal loans from own company worth over $300 million at very low interest, bought WeWork trademark and their own company paid them $5.9 million to use it." The SPAC listing backdoor at 18:54 reveals desperation tactic: "sponsors came together to form SPAC called BowX Acquisition Corp, went through traditional IPO process then got merged with WeWork with valuation of $8 billion"—"WeWork went through less scrutiny because did not go IPO directly, able to go IPO quickly which saved ton of time, able to raise $1.8 billion dollars in 2021." Strategic lesson: $47B valuation without profits plus $18.5B capital enabling 777-location expansion without proportional demand plus founder self-dealing extracting personal wealth creates $15B+ loss trajectory—SoftBank funding delaying inevitable bankruptcy while founder exits with billions. 5 Key Timestamps: [01:08] The Profit-Free $47B Valuation – Back in 2019 considered revolution valued at mindboggling $47 billion—commanded valuation without ever making single Dollar in profit, $47 billion to bankrupt in just 4 years [05:13] The 2008 Recession Arbitrage Model – Instead of giving 5,000 sqft space to one company at $5,000 could split into 15 units sell at $1,000 each—same space make $15,000, pay landlord $7,500 instead of $5,000 [10:15] The Expansion-Loss Death Spiral – Went from 23 locations 2014 to 777 locations 2023—operating losses $900M 2017 to $3.3B 2019, total losses piled up more than $15 billion since 2016, demand didn't match expansion [14:25] The Founder Self-Dealing Extraction – Adam Neumann was landlord in properties leased to WeWork, took personal loans from company worth $300M low interest—bought WeWork trademark company paid them $5.9 million to use it [18:54] The SPAC Listing Backdoor – Formed BowX Acquisition Corp SPAC merged with WeWork at $8B valuation—went through less scrutiny, saved time, able to raise $1.8 billion 2021 despite troubles
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