WeWork’s 13-year journey from a startup to a $47 billion valuation four years ago and its recent bankruptcy serve as a cautionary tale for entrepreneurs. Entrepreneurship involves pursuing unrealistic ambitions against the odds, often leading to failure. WeWork’s bankruptcy is a result of presentism, which overestimates the uniqueness of current circumstances and disregards lessons from the past in terms of markets, strategy, capital, governance, and sustainability.
While it may be tempting to revel in WeWork’s downfall, it’s important to remember that most startups fail, but they contribute to societal progress through innovation. Postmortems offer valuable insights, and learning from experiences is crucial. WeWork’s rise and fall highlight the dangers of presentism in various areas that entrepreneurs should be cautious of.
WeWork’s confusion between a large market and a large addressable market, the flawed strategy of blitzscaling, disrespect for capital despite massive fundraising, governance issues within the company, and lack of sustainability due to unrealistic goals all played a role in its demise. The company’s culture stifled dissent and failed to achieve a balance between short-term gains and long-term success.
The hype surrounding WeWork’s success was fueled by investors willing to overlook the company’s flaws, which in part was a result of central bank policies after the 2008 financial crisis. For India, the implications are less severe, as the country has a positive economic outlook attracting investors despite potential failures in the venture capital space. The crisis will accelerate changes in Indian business in terms of financing, management, and governance.
Ultimately, WeWork’s founder’s ambition to become the world’s first trillionaire was unrealistic, and the company’s downfall reinforces the importance of learning from past experiences. Taking advice from historical figures and acknowledging the slow build-up to bankruptcy can help prevent similar fates in the future.
