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Why not “didn’t”? Because for that to be true, lessons would have to be learned. But unfortunately, they have not.

The short response is due to some egregious character flaws among the two main protagonists, Adam Neumann, the WeWork co-founder and former CEO, and his main enabler and investor, Masayoshi Son, the SoftBank boss. Particularly, rapacious greed in the former and willful blindness in the latter, ironic for the head of a multi-billion dollar tech investment company called “Vision Fund”.

Now for the details.

In January, 2019, WeWork was valued at a whopping $47 billion, and according to SEC filings, it was looking forward to opportunities worth $1.6 trillion spread among a market of 300 million clients or “members”.

But a third quarter IPO was botched and by November, its market value crashed to only $7 billion, despite infusion of fresh funds from SoftBank and a restructuring of the executive team with Neumann being shown the door. 2,400 workers, around 20% of the staff was laid off, with 1,000 more jobs dangling by a thread as the company frantically tried to concentrate on core businesses.

The idea behind WeWork was hatched when Neumann was a student in Baruch College, New York in the early 2000s. Having grown up in a kibbutz near Gaza, he wanted to bring that same communal spirit to work spaces, carefully crafting them to millennial tastes without renouncing his unabashedly capitalist ambitions. WeWork was to negotiate long-term leases on prime office space in the world’s major cities, redesigning and refurbishing them before renting them out to individuals and companies, souped up with all sorts of catering, concierge, entertainment, and wellness services, among others.

Neumann met Son at a state event in India organized by Prime Minister Modi in 2016. A few months later, he secured a $4.5 billion initial investment from SoftBank. This was eventually increased to more than $10 billion. Son, for this part, was convinced that he had found the next Alibaba, the Chinese internet startup in which he invested $20 million in 2000. Alibaba now has a market cap of $500 billion with Softbank owning 24% of its shares.

Not only did WeWork expand at breakneck speed to more than a hundred cities globally, becoming the biggest private tenant in Manhattan. It also branched out into new businesses with the same communal, capitalistic, millennial vibe: WeLive for apartments, WeGrow for schools (charging $42,000 yearly tuition), WeMRKT for retail, and RiseByWe for luxury gyms, for instance.

For Neumann, WeWork wasn’t just about real estate, but about a state of consciousness; he was out to transform not only the way we work or live, but the very world in which we live. 

Until then, it’s corporate narrative was that of the iconic stock-market unicorn. But as we all know, unicorns are just the stuff of fairy tales. 

Neumann’s wife, Rebekah was supposed to have told him during their first date: “You, my friend, are full of crap. Every single word that comes out of your mouth is fake.” She was clearly on to something. But love is blind and, unconscionably, she went on to marry him anyway.

Neumann’s governance style was rife with conflicts of interest. He would invest in buildings from which WeWork would take long-term leases, basically engaging in self-dealing. He’d use WeWork almost like a personal ATM, taking out loans to finance luxuries including a $500 million private Gulf Stream jet and $80 million for five exclusive homes in New York and the Bay Area, among others. He once charged WeWork $6 million for the “We” trademark to be used by its new parent, the WeCompany.

He also owned special class shares, with voting rights 20 times the normal ones to ensure corporate control. He even named his wife and two other close friends to a special committee who would choose his successor in case of death. His penchant for drugs and alcohol on company premises, time, and expense was likewise widely known. On top of that was his hubristic, mercurial, tech-nerdy fratboy demeanor. 

The saddest part is that the saga continues. After the failed IPO, SoftBank injects another $1 billion into WeWork to stabilize the company, elevating its exposure in investments and loans to around $14 billion. SoftBank’s Son may have removed Neumann from his top perch, but at the price of extending a $500 million loan and guaranteeing another $185 million for the next four years for “consultancy services”. Meanwhile, the newly laid-off scramble for their severance pay. 

Masayoshi Son has indeed found the new Alibaba, with Adam Neumann making up for what even 40 thieves would struggle to accomplish. Together, they give capitalism a deservedly bad name.

Alejo José G. Sison teaches at the School of Economics and Business at the University of Navarre and investigates issues at the juncture of ethics, economics and politics from the perspective of the virtues and the common good. For the academic year 2018-2019, he is a visiting professor at the Busch School of Business at the Catholic University of America. He is an editor of the recently published "Business Ethics: A Virtue Ethics and Common Good Approach” (Routledge 2018). He blogs at Work, Virtues, and Flourishing from which this article has been republished with permission.