Remember WeWork? The company that was supposedly “elevating the world’s consciousness”… from a shared desk? Yeah, that one. The one that went from a mind-boggling $47 BILLION valuation to a spectacular, dumpster-fire implosion. It’s a story so wild, it’s almost hard to believe. But it’s painfully real, and man, does it scream lessons for us regular investors trying to build wealth.
I’ll be honest, watching that whole saga unfold was like watching a slow-motion train wreck. You couldn’t look away. And as someone who champions the steady, often “boring” world of dividend investing, it was a masterclass in what not to do, and why focusing on fundamentals is, well, fundamental.
From Messianic Vision to Wall Street Darling
It all started with Adam Neumann, a charismatic guy with long hair, a messianic smile, and a grand vision. He wasn’t just renting office space; he was building communities. He was selling a vibe, a lifestyle. WeWork wasn’t just offices; it was a “physical social network.” Sounds cool, right?
And for a while, everyone bought it. Hook, line, and sinker. Softbank, the Japanese investment giant, poured in BILLIONS. They saw the next Google, the next Amazon. The valuation soared to that infamous $47 billion, more than established giants like Airbnb or even SpaceX at the time! I remember reading those headlines and thinking, “Really? For office rentals?” Something felt… off.
They expanded at a breakneck pace, opening new locations like they were handing out free coffee (which, to be fair, they were). The narrative was powerful: “We’re a tech company, not a real estate company!” Neumann was the visionary, the disruptor.
But here’s the kicker, and this is where my dividend-focused brain starts screaming: their actual business model was pretty basic. They’d sign long-term leases on buildings, jazz them up with cool furniture and kombucha on tap, and then sub-lease smaller spaces on shorter terms, reconsidering that point… It’s real estate, plain and simple. Glorified, venture-capital-fueled real estate.
You can call a donkey a racehorse all day long, but it ain’t winning the Kentucky Derby.
The Cracks Begin to Show (And Then the Walls Cave In)
The hype train chugged along, fueled by seemingly endless investor cash. Neumann was living large, private jets, investments in spiritual schools, even a wave pool company (because, why not?). The company, now “The We Company,” was branching into co-living (WeLive) and even education (WeGrow). It was an empire built on… well, what exactly? Certainly not profits.
Then came the moment of truth: the IPO filing, the S-1 document. This is where companies have to lay all their cards on the table. And oh, did WeWork’s cards stink.
The numbers were horrifying. Losses in the billions. In 2018, they lost $1.9 billion on $1.8 billion in revenue. Think about that. They were losing more money than they were making! They were burning through cash like it was going out of style.
And the governance? . Neumann had bought properties himself and then leased them back to WeWork. He even trademarked the word “We” through a personal company and then sold it back to WeWork for nearly $6 million! The audacity! He had super-voting shares, meaning no one could really challenge him.
This really makes you think, doesn’t it?
The media, once enamored, turned vicious. The IPO was pulled. The valuation plummeted from $47 billion to $15 billion, then to under $8 billion, faster than you can say “due diligence.” Neumann was eventually pushed out, but not before snagging a reported $1.7 billion golden parachute. Can you believe that? The guy who nearly tanked the whole thing walked away a billionaire, while employees faced layoffs and investors nursed massive losses.
What We, as Savvy (or Aspiring) Dividend Investors, Can Learn
Okay, so why am I, The Dividend Prince, rambling on about this spectacular flameout? Because it’s a goldmine of lessons.
1. Hype is a Drug, Fundamentals are Food: WeWork was 99% hype, 1% sustainable business model. As investors, especially dividend investors, we need to look past the slick presentations and charismatic CEOs. We need to ask: Is this company actually making money? Does it have a real, defensible moat?
Dividends, my friends, don’t come from hype; they come from actual profits and cash flow.
2. “Tech Company” Isn’t a Magic Wand: Just because a company has an app or uses trendy buzzwords doesn’t make it a high-growth tech marvel. WeWork was, at its core, a real estate company with massive long-term liabilities (leases) and uncertain short-term revenue. Its unit economics were just… bad. I always tell people, dig into what the company actually does and how it actually makes money.
3. Profitability Matters. Eventually, Always: Growth at all costs is a dangerous game. For a while, investors didn’t care that WeWork was bleeding cash, as long as it was “disrupting.” But the music always stops. Companies that can’t figure out how to be profitable are just burning investor money. As dividend seekers, we need profitability. That’s where our payouts originate.
4. Beware the Cult of Personality (and Shady Governance): A visionary leader can be great, but not when they have unchecked power and a tendency to treat the company like their personal piggy bank. Strong, independent boards and transparent governance are crucial. When I look at a company for its dividend potential, I also glance at who’s running the show and if they seem to respect shareholder capital.
5. Easy Money Can Lead to Dumb Decisions: The era of near-zero interest rates meant capital was cheap and plentiful. Softbank’s strategy seemed to be “drown ’em in cash and tell ’em to grow faster.” This fueled WeWork’s reckless expansion and acquisitions without a clear path to profitability. It’s a good reminder that constraints can actually breed discipline.
The Sobering Reality Check
WeWork eventually filed for bankruptcy in November 2023. From $47 billion to zero. It’s a brutal, cautionary tale.
For me, it reinforces why I stick to my knitting: finding solid companies with proven business models, a history of (and capacity for) paying and growing dividends, and sensible management. It might not be as sexy as “elevating the world’s consciousness,” but it sure helps me sleep better at night.
The WeWork saga is a reminder that the shiny new thing isn’t always the best thing. Sometimes, the tried and true, the businesses that consistently generate cash and share it with their owners (us shareholders!), are the real unicorns.
That’s it for today! If you found this post helpful, subscribe to my newsletter or visit my website for more valuable content on stock and dividend investing. You can explore tools for dividend investors in the Resources/Tools section!
Disclaimer: The content shared here is for general information and learning, not as a direct guide for your specific investment choices. I always recommend doing your own thorough homework and/or chatting with a qualified financial advisor before you decide on any investment moves.
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