Digital Strategy, Startups and Business

WeWork is a house of cards. It’s a fundamentally weak business model.1 minute read

I’m a huge fan of Michael E Porter’s “Five Forces” model.

With every business I come across, I do a quick mental exercise using the Five forces model.

WeWork is no different. For years I’ve been astonished by the valuations attached to WeWork, which I have seen as a very fragile business with a very fragile business model, as per Five Forces:

Generic product proposition / massive amount of substitute products. Low barriers to entry. High competitive rivalry. High bargaining power of customers. High bargaining power of suppliers. High barriers to exit.

Further, long term lease agreements with short term revenues. Why they didn’t use their funds to at least buy real estate assets I’ll never know. The problem with that would have been that they weren’t valued at astronomical levels, but as a REIT play. Which ironically might have saved them as a business, but curbed their unrealistic valuations as a “technology business”, which it’s not.

I kind of admire Adam Neumann for being able to turn such a house of cards into a business valued so highly and generally regarded so highly by customers and investors. I can’t see it surviving in current form.

Published by Constantine Frantzeskos

I build and grow global businesses, brands, and digital products with visionary marketing & digital strategy | Non-Executive Director | Startup investor and advisor | Techno-optimist