Question

1. describe as many as possible the rise and fall of WeWork?
2. what could be the major reasons for the failure of WeWork?

Answer 1

1) In United States, WeWork was the most valuable start-up with a goal to revolutionize how and where people around the globe worked. The man behind the story of rise and fall of WeWork is associated with a man named Adam Neumann. He co-founded WeWork in 2010, and become an international juggernaut for symbol of the office cool. The approach of Adam Neumann was really best in convincing people and communicating his vision; and change the way we work and live. His vision along withn Masa Son invested nearly $4 billion in WeWork. The company expanded massively abroad. As it had expanded rapidly into markets there were few which weren’t necessarily friendly to WeWork. Consequently there were few questionable financial dealings between Adam and the companies which were started. The bad moves and bad press caused the expected valuation of the company to decline from $47 billion down to just nearly $8 billion

2) The reasons for collapse of Wework are:

-- WeWork failed to response to its recent fall in valuation and causing the cancellation of IPO.

-- WeWork is a real estate business of modern-day, but started primarily attracting the people working in the technology sector. The discrepancy caused wide distortions in valuation because WeWork can never fulfil the profit margin which pure tech company could attain

-- The rebranding was not required and caused losing billions of dollars

-- WeWork has gambled on the monopolization strategy for the entire co-working industry with the higher-quality service at a lower price, then afterwards increasing the prices however the policy failed to perform

-- The critical flaws of WeWork’s are that there is no entry barrier for any commercial real estate player in creation of their own co-working space.

-- The fixed cost of WeWork’s were high compared to the unit costs as there was no economies of scale