We’re old enough to remember when owning a company that continues to lose money and has no clear path to profitability was a bad thing. Uber changed that perception when it went public earlier this year despite being on a long-term path to bankruptcy, so you can see how the folks at shared workplace provider WeWork had visions of dollar signs dancing in their heads.
Alas, this decade’s version of “irrational exuberance” ended and WeWork was forced to shelve its IPO when investors demonstrated they are “wary of ambitious young companies that have run up huge losses and might not become profitable for years.”
The lesson: The proposed IPO dramatically increased scrutiny of both WeWork’s financial model and its corporate governance, and its collapse had as much to do with its flighty management and policies as it did its finances. WeWork’s failure to understand its vulnerabilities meant it couldn’t control the story, and it quickly spiraled out of control.
Jeremy Story is a Vice President at GroundFloor Media, where he co-leads the firm’s Crisis Communication & Reputation Management practice. He has more than 20 years experience helping companies ranging from start-ups to the Fortune 100 prepare for, manage, and recover from crisis issues.