Monthly Archives: September 2021

Flashback: Since the co-working office company’s initial public listing plans flamed out in spectacular fashion, WeWork has become a very different company. 

But here are some of the more memorable moments from its history.

We Grow: The brainchild of co-founder Rebekah Neumann, in 2017 the company announced a grade school to nurture entrepreneurs early. It was cut shortly after the company scrapped its IPO, but Rebekah Neumann Later bought it back.

• “Community-adjusted EBITDA:” The WeWork-devised financial metric first surfaced in an August 2018 bond offering. It was immediately called out as the ultimate manifestation of a useless measurement only created to make a company’s numbers look good.
• Meat ban: Also in 2018, the company announced that to reduce its carbon footprint — and help save the planet — it would no longer serve meat, nor allow employees to expense any meals that include it. Team members then saw co-founder and CEO Adam Neumann eating lamb and other meat at the office. 
• Lifetime control: One shocking detail from WeWork’s (initial) S-1 filing was Neumann’s outsized voting control (20 votes per share). His estate was also given the power to choose his replacement as CEO. The company eventually amended these after pushback. 
• Vibes: When WeWork hit a $20 billion valuation, thanks to an investment from SoftBank, Neumann told Forbes: 

“No one is investing in a co-working company worth $20 billion. That doesn’t exist. Our valuation and size today are much more based on our energy and spirituality than it is on a multiple of revenue.”

• $10 trillion: But that was pocket change compared to the $10 trillion (yes, trillion) that SoftBank CEO Masayoshi Son predicted WeWork could be worth in a decade when he was negotiating a potential purchase of a majority stake in the company in 2018 for $20 billion. 
• “Consulting fees:” Following Neumann’s ouster as CEO, Softbank offered to pay Neumann $1 billion for his shares, a $185 million “consulting fee” and $500 million in credit to repay his loans, for a total package of $1.7 billion. Yep, that’s a $185 million payment just to get him off the board, and nothing else.

Mind boggling.

Nevertheless, most business plans pour far too much ink on the numbers–and far too little on the information that really matters.

Why?

A great business plan is one that focuses on a series of questions.

These questions relate to the four factors critical to the success of every new venture: the people, the opportunity, the context, and the possibilities for both risk and reward.

The questions about people revolve around three issues: What do they know? Whom do they know? and how well are they known?

As for opportunity, the plan should focus on two questions: Is the market for the venture’s product or service large or rapidly growing (or preferably both)?

And is the industry structurally attractive?

Then, in addition to demonstrating an understanding of the context in which their venture will operate, entrepreneurs should make clear how they will respond when that context inevitably changes.

Finally, the plan should look unflinchingly at the risks the new venture faces, giving would-be investors a realistic idea of what magnitude of reward they can expect and when they can expect it.

A great business plan is not easy to compose, largely because most entrepreneurs are wild-eyed optimists.

But one that asks the right questions is a powerful tool.

A better deal, not to mention a better shot at success, awaits entrepreneurs who use it.