Failure 14 · Business failures
The office company that called itself a tech company
WeWork was valued at $47 billion in early 2019, but when it published its accounts for a share listing investors balked, and the listing was pulled within weeks.
- WeWork
- New York, United States
- 2019
- 3 min read
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Before you readWhat would you do?
A supplier pitches your company an "AI-powered" delivery platform. When you look closer, it is a regular courier service with an app, priced well above other couriers. What is the sensible next step?
Pick an answer now. The file tells you whether you were right.
01The file in one minute
1The story
WeWork sublet desks and offices on flexible terms and sold itself as a technology company, valued at about $47 billion.
2The numbers
Its 2019 listing papers showed a 2018 net loss of about $1.9 billion and huge future lease payments.
3The result
Investors balked, the founder stepped down and the listing was pulled. WeWork went bankrupt in November 2023.
4The lesson for AI
A tech or AI label does not change what a business does. Judge it on what it delivers and costs.
02Timeline
January 2019
SoftBank invests at a valuation of about $47 billion.
August 2019
WeWork publishes its accounts in papers for a share listing.
September 2019
Adam Neumann steps down as CEO and the listing is withdrawn.
October 2021
WeWork lists its shares through a merger with a shell company.
November 2023
WeWork files for bankruptcy.
03What happened
WeWork rented office space on long leases, fitted it out with coffee, design and community events, and sublet desks and rooms to freelancers and companies on short, flexible terms. Its co-founder Adam Neumann described it as a technology company that would change how people work and live. In January 2019 the Japanese investor SoftBank put in more money at a valuation of about $47 billion.
In August 2019 WeWork filed papers to list its shares on the stock market. The documents showed a net loss of about $1.9 billion in 2018, tens of billions of dollars in future lease payments, and unusual arrangements: Neumann had leased buildings he partly owned to the company, and the company paid about $5.9 million for the rights to the name "We", which he later gave back.
Investors pushed back hard. Neumann stepped down as chief executive on 24 September 2019 and the listing was withdrawn at the end of that month. SoftBank later rescued the company at a far lower value. WeWork did list in 2021 through a merger with a listed shell company, but it filed for bankruptcy in November 2023.
04Why it failed
Underneath the branding, WeWork's business was property: long-term rent in, short-term rent out. When tenants can leave quickly but your leases cannot, a downturn hurts badly. A huge private valuation, built on a story about technology and growth, met the public test of hard numbers and did not survive it.
The AI angle: putting "AI" or "tech" in a pitch does not change what a business actually does. Ask what the product is, who pays, and what it costs to deliver, before believing the label.
The idea behind this caseLesson: Review AI like a manager →
05Lessons for anyone deploying AI
- Describe the business in one plain sentence without buzzwords, and judge it on that.
- Look for the long-term costs you are locked into, such as leases or contracts, and compare them with how quickly customers can leave.
- Check for deals between the company and its founders, and whether the board is independent.
- Treat a high valuation as an opinion, not proof the business works.
07 — Sources
- WeWork · Wikipedia · 2024
- Form S-1 Registration Statement, The We Company · US Securities and Exchange Commission (EDGAR) · 2019-08-14