Main article: https://www.pymnts.com/markets/2019/wework-cash-crunch-holds-bankruptcy-threat-next-month/
The article pointed out WeWork’s cash crunch as the catalyst of its impeding bankruptcy, but is this true? A once admired “Golden” company valued at US$$47 billion has fallen from grace, and the culprit is none other than Poor Management. This can be further classified into two branches, internal, and external.
Internal: Management staff (CEO, COO, CTO etc.)
External: Strategic/Financial investors
Golden parachute
Historically, we have witnessed countless golden parachutes that seem to contradict the management’s fiduciary duty towards their investors. The most notorious moments were observed in 2008, where the infamous financial crisis happened. For example, CEO Mack Whittle of South Carolina’s largest bank, South Financial Group, retired with a US$18 million severance package, while the bank was bailed out by the US government for US$347 million. In parallel to this situation, Neumann, CEO of WeWork, walked away with buyout package worth US$1.7 billion in share sales and loans as part of Softbank’s rescue deal, despite the company’s brink of destruction. With such measures in place, one could only wonder if the CEO has already foreseen that such event would happen.
Reactive and “try-hard” management
It is clear that WeWork operates on a reactive management philosophy. They typically only react when something “goes wrong”. For example, just last year, WeWork limited it’s free beer and wine policy (yes it is true, despite WeWork being a “work place”, they offer free beer and wine at certain locations), after realizing that this has backfired on their client’s productivity, as well as their cash flow. This initiative will limit the amount of beer per members to “four 12-ounce pours per beer in a single day”. This initiative was already questionable from the start, considering that alcoholism has been one of the leading factor for several anti-social behavior.
What do you think? Were there other reasons why WeWork’s renowned IPO was catastrophically reduced to a bankruptcy?
References:
Golden parachute – https://hbr.org/2016/10/a-short-history-of-golden-parachutes
Golden parachute – https://www.propublica.org/article/bank-got-bailout-ceo-got-golden-parachute-1119
Money management (Beer) – https://www.vox.com/the-goods/2018/10/31/18049142/wework-beer-wine-policy
Beer anti social behavior – https://alcoholthinkagain.com.au/Alcohol-Your-Community/Alcohol-the-Workplace/Workplace-Resources/Facts-about-Alcohol-and-Workplace-Issues