The WeWork Debacle Is a Symptom of a Much Larger Problem
You can’t treat every company like a software startup darling
When I first arrived in Poland in 1997, it seemed like the entire country was being rebuilt out of the Marriott hotel. Multinational companies looking to set up shop in the formerly communist country would rent temporary offices at the Regus Center there to get operations rolling. Later, they would move into more conventional space.
It was a good model that provided a useful service, but I was surprised to see that 20 years later that same model, in the form of a company called WeWork, was being given a $47 billion valuation for an upcoming IPO. I was somewhat less surprised to see that valuation crash and burn almost as soon as the prospectus came out.
This is becoming a common tale of woe. Theranos, once the darling of Silicon Valley, was exposed as a fraud. Uber, the poster child for the sharing economy, saw its stock price collapse after it once again posted massive losses. It’s time to face facts: These are not isolated incidents but indicative of how Silicon Valley investors misjudge the physical economy.
The WeWork business model
The WeWork business model is essentially the same as I saw in Poland two decades ago. The…
