They say truth is stranger than fiction. The events surrounding WeWork are so strange it should be made into an Oliver Stone movie. In a few week's time, the once rockstar-like CEO, Adam Neumann (who owned and controlled a majority of the company) went from hero to zero in the court of public opinion. A company that was valued as the most valuable real estate company of all time suddenly had only one month of cash in the bank to stay in business.
Post failed IPO attempt, WeWork's future has yet to be determined, but many people believe the outcome to be a game-changer for privately-held businesses in the way they are managed and valued. Aside from the economic impact and the drama, there are some priceless lessons for founders in any industry that can be learned from the way Adam Neumann operated WeWork.
Stop trying to be a rockstar.
Many people chasing "success" want to be famous or want to build a sustainable business. Pick one. If you want fame, pick up a guitar or take acting lessons. If you want to build a viable business, leave your dreams of screeching fans behind and figure out how to build something people actually want to pay for.
I see way too many founders that want to see their faces plastered on the news. This will take your focus away from creating value for your clients, team, investors, and partners. Adam Neuman's company meetings were reportedly fueled with tequila shots. He also reportedly purchased a seemingly unnecessary $60 million jet and coordinated mandatory retreats filled with the kind of debauchery you'd see at a Mötley Crüe show in the 80s.
It seems that Adam should have spent his time looking for ways to make WeWork profitable rather than living the lifestyle of a rockstar.
Greed is not good.
The recession of 2008 gave us front-row seats to how greed can ruin an economy along with its systemic effects on normal, everyday taxpayers and workers. WeWork is a perfect case study of why we need to change the way we think about -- and pursue -- value creation.
Just a short time ago, WeWork had a valuation north of $45 billion dollars, making Adam Neumann a rich man in the process. But the impact of bad decision making (i.e. his rock star-like activities and the shady, greedy real estate deals) created instability which contributed to their failed IPO attempt. This led to thousands of layoffs (with more on the horizon), investors losing millions and WeWork members wondering what is to become of their workspace.
High valuations are not the key.
A valuation is a subjective measure of the value of your company based on factors such as revenue, growth and market share. Too many founders get stuck on valuation alone when they should be focused on what comes afterward: profits, value, and a flourishing business. A high valuation will follow if you stay focused on the fundamentals of your business while keeping its impact on your stakeholders at the front of your mind.
I define value as the positive impact my product or service has on my clients and partners. I see profits as a way to make a business sustainable. In the end, WeWork -- a company that thrived off of their valuation -- was a company that briefly stood on top of the world before toppling like a house of cards.
If you want to create something sustainable, focus on building a solid foundation first. Let WeWork's high valuation be a lesson on what not to focus on. Your "valuation" has to add up; 2+2 will always equal four, no matter how good of a run you're having -- someone will eventually check your math. The latest reports say WeWork's valuation has plummeted to as low as $10 billion.
Raising money is not success.
In 2014, WeWork closed the year with a $355 million funding round. The funding was touted in the media as a huge success.
Raising money is a tool for you to build your business. You take on more liability, more partners, and sometimes even lose control of your company. If you close a round of funding, you may have scored a touchdown, but you haven't won the game. Work on structuring your business, making it profitable, and taking it to the next level.
I often say it took me a decade to look like an overnight success. We grind, we pull all-nighters, we pound coffee, and we focus on profits, value, and hard work. It took us almost ten years, but we've created a sustainable business model that creates value for everyone involved. All this without our faces plastered on billboards, tequila shots or jumbo jet.
WeWork is just the tip of the iceberg in a world-wide mindset shift pertaining to how we all do business while satisfying the investors who believe in us. If you follow these lessons, work your ass off, and view every failure as a learning moment, you will have a higher probability of winning, with your dignity intact.