While it seems that Adam Neumann is the root of WeWork’s issues, it goes much deeper than that. The company’s path to an IPO will not automatically be smooth sailing just because it’s ludicrous leader has stepped down. Simply put, WeWork has an unsustainable model.
[bctt tweet=”WeWork has been burning through cash due to its rapid expansion model. One would think this alone would be enough to wane investor interest, but somehow the firm has consistently raked in cash.” username=”allwork_space”]
Neumann has no doubt been at the head of scrutiny for years now thanks to his questionable leadership practices.
In the company’s prospectus, it was revealed that Neumann had made millions by leasing buildings he owned back to his company, as well as registering the “We” trademark and selling it back to his own firm. This is just a few of the many nerve-wracking details that is causing investor interest to dwindle.
Additionally, a recent Wall Street Journal article revealed more personal concerns about Neumann’s ability to run the company, including details of a booze-filled party that was thrown after a meeting led the company to lay off 7% of its staff.
While removing Neumann may bring comfort to some concerned lenders and investors, WeWork must rethink its business model in order to thrive in the future.
This means recognizing that the company is in the real estate business, rather than the technology industry. It needs to focus on the operational and lease expenses rather than tech-centric growth.