WeWork was founded in 2010, principally by CEO Adam Neumann, who was then a 30-yearold with little business experience. The company intended to disrupt the commercial office industry by acquiring real estate and converting it into “co-working” space, initially for entrepreneurs when the Great Recession was finally coming to an end. Large common areas with a concierge and food-infused water, lounges with music set just loud enough to allow private conversations, and individual workspaces were provided, all with Wi-Fi and printers, not to mention the opportunity to purchase health insurance and to take coding lessons. Sales doubled annually year after year, leading to a $47 billion valuation in January 2019 the highest of any U.S. startup. Neumann, encouraged by venture capitalists, prioritized revenue growth over all things, including profit. Through the end of 2019, WeWork only had positive net income once $1.7 million in 2012. Despite Neumann’s repeated public statements that the company was, or was about to become, profitable, losses occurred virtually every quarter. 

Questions 

1. How did WeWork’s dual-class common stock structure impair good corporate governance and significantly increase the company’s financial problems at the end of Neumann’s tenure as CEO and board member? 

2. Consider WeWork’s loss history. What would your response have been had you been a director? At what point in time would you have intervened? 

3. How could a company that, essentially, never made any money be worth $47 billion? 

4. What should the board’s role be? Explain. Consider the following two opinions: Boards are supposed to monitor risks, provide judgment and supervise managers on behalf of shareholders.