Business StrategyExamples: WeWork Doesn’t Work
In an apparent example of breathing his own exhaust, the founder of WeWork — now rebranded We Companies (We) — recently invested in another company tied to his hobby, surfing. When your current business model loses a dollar for each dollar it earns in revenue, wouldn’t you want to fix that first?
We is private, not public, so we don’t know much. But most sources report that We is still losing as much money as it’s taking in. Despite that, it was recently valued at about $45 billion — something like 20 times revenue! (SoftBank has invested approximately $10 billion.)
I’m as interested in big thinkers as the next guy, but would you buy into a company that invests in real estate, wave-making machines, superfoods, search engine optimization and education while losing as much money as it takes in? We’s mission is “to elevate the world’s consciousness.” Cosmic, dude! Steve Jobs thought big, but so did Elizabeth Holmes. Jeff Bezos is a big thinker, but so was Jeffrey Skilling.
Will We be the next Apple or Theranos? A sexy voice, black turtlenecks (a la Steve Jobs) and coolness got Elizabeth Holmes to the starting line, but the business model must produce income eventually. Being cool isn’t a business strategy.
Diversifying your holdings as an individual investor makes sense to reduce risk. You’ll probably match the market, but you’ll also avoid losing everything (and evade getting lucky on one investment and getting rich — good luck with that!). Running multiple business lines as a conglomerate, however, rarely pays off. Just because you can make up words to bind them together (e.g., elevate consciousness) doesn’t mean you should.
Many adjacent business opportunities can leverage coworking office space. Making wave pools isn’t one of them. If you’re a private investor and want to throw your money in different directions, have at it. But as a business leader, don’t confuse your interest in cool stuff with business management. Find a way to profitably satisfy customers in a defined market. Bouncing from one business to another like a pinball makes for fun reading, but don’t internalize it if you want to profitably lead a company.
Todd coaches CEOs to higher levels of success. He is a former CEO and has led teams as large as 7,000 people. Todd is the author of, Never Kick a Cow Chip On A Hot Day: Real Lessons for Real CEOs and Those Who Want To Be (Morgan James Publishing).