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The Path Forward for WeWork

San Francisco / September 9, 2019
If I could whisper into the ear of WeWork's Co-Founder and CEO Adam Neumann, I would have a lot to say.
First, keep your head up. You and your team created a company that meaningfully changed your industry. In 2018, WeWork generated $1.8 billion in revenues. Your company has nourished entrepreneurship in the United States and around the world. Countless entrepreneurs have run their companies out of a WeWork. I ran a startup from a WeWork in San Francisco. The experience was transformative. I was surrounded by bold and ambitious people who wanted to change the world. The optimism was infectious. Many startups would not exist today if not for WeWork.
Second, the market reaction to your IPO prospectus has been harsh. This happens in business. Many of the best entrepreneurs went through down periods. Watch YouTube footage of Elon Musk during his hard times. Mark Zuckerberg's IPO did not go well. They recovered. And they are better entrepreneurs because of that experience.
Third, you must adapt to market dynamics. Investors in public markets do not believe the story in your S-1. So withdraw this IPO. Find a way to finance operations for the next 1-2 years via private markets. The investors with significant positions on your cap table all want a successful IPO. You can work out a deal to finance this company privately and give yourself time to adjust the business model.
Fourth, find operators with significant experience who can help you adapt. The core service that WeWork provides is still a valuable service. WeWork must cut costs and make this experience simpler. That is fine. People who start companies appreciate spare and austere environments.
Fifth, many thoughtful people question the governance structure at WeWork. The $700 million transaction (link) and  more raise red flags. The company must install systems to challenge the CEO's thinking. This is essential to the company's long-term survival.
Sixth, I have a private thesis -- it's not validated by rigorous research -- that we are in the middle of a downward swell in the public markets' appetite for tech IPOs. Investors are  negative because of the under-performance of Uber and Lyft's IPOs. The weaknesses of those businesses influence how investors view your business. Also, the US-China trade war is pushing down the stock prices of Google, Facebook, Apple, and other tech companies. Raise enough private financing to ride out this downward swell. Re-visit going public when you see signs that tech valuations are rising. Don't try to be a leading indicator of the next upswing. Be conservative. Wait until it is clear that public markets will be receptive to your business model. Good luck!

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