Introduction to Corporate Finance

In 2010, Adam Neumann and a business partner opened the first WeWork space in New York’s Little Italy. WeWork provided shared office space for businesses that would rent space as needed, sometimes only for a day. By 2019, WeWork operated in more than 111 cities in 29 countries. Revenues had grown to about $3 billion, but the company was still losing money. Early in 2019, the giant tech investor SoftBank made a major bet on WeWork, which valued the company at $47 billion.

Unfortunately, everything was not rosy at WeWork. In the middle of 2019, the company filed to go public in an IPO, but then changed its mind. In late 2019, Softbank agreed to another major investment, but it pulled the deal in 2020. What happened? Among other things, the COVID-19 pandemic hit, calling into question the company’s entire business model of shared, face-to-face meeting spaces. But in a surprise to many, in July 2020, Marcelo Claure, who was brought in to revitalize WeWork, announced the company should be profitable by 2021.

Understanding WeWork’s story as it progressed from a start-up to a multibillion-dollar enterprise and its subsequent struggles takes us into issues involving the corporate form of organization, corporate goals, and corporate control, all of which we discuss in this chapter.