If you are not familiar with WeWork, it’s core business is renting out shared office space to clients that range from individuals in need of a desk part-time to companies looking for an alternative to a multi-year lease, in short, its COWORKING SPACE.
In just 8 years, WeWork has grown into a global community, transforming people’s workplace into a beautiful, inspiring environment and that commitment to building the best workplaces in the world extends to their own employees. A company is driven by its mission: “Create your own life’s work”.
Moreover, that mission was paying off. WeWork’s real estate portfolio covers more than 14 million square feet area, they have more than 220,000 members in around 280 locations.
WeWork company was founded by Adam Neumann in 2010. At one time WeWork had more than 5,000 employees in over 280 locations spread across 86 cities in 32 countries. In January 2019 the firm rebranded to the We company and its valuation was stated as $47 billion. But the most interesting fact was yet to discover.
Even if you are not working in the Hi-Tech stratosphere, you must have heard about the WeWork fiasco.
This highly covered news item raised serious questions about WeWork’s through financial profitability and diminished its appeal among investors. The company spiraled from a $47 billion valuation to talks of bankruptcy within 6 weeks, while its founder and CEO were removed from his position.
Some reshuffling in the We-work leadership and an injection of funding from its main backer, Softbank has managed to keep the company afloat.
But the commercial real-estate company’s future is still unclear.
Don’t be mistaken, the WeWork story is not an isolated incident. In the past few years, a handful of technology IPO’S have shown an overvaluation by investment bankers and subsequently – a significant fall in trading price.
The question is what if anything could WeWork and similar tech startups do differently to strengthen their business and boost their IPO viability.?
I opine marketing holds the key to the solution.
So let’s review the WeWork story of demise together. I will pinpoint the intersections where a helping hand from the CMO or marketing director could have possibly turned things around.
Ready to dive in?
WeWork IPO timing – be prepared to open your shop for inspection
As soon as WeWork filled it’s IPO paperwork in August 2019, releasing its financial statement to the public, the secret was revealed. As a result the company immediately faced intense scrutiny from investors and the media.
Because while the company brought in revenues of $1.8 billion in 2018 its losses for that year totaled $1.9 billion.
In other words, it was clear that the company was not profitable.
WeWork did not try to gloss over this; instead, management decided to postpone the IPO to September. In the meantime, scrutiny shifted from its finances to its CEO. Adam Neumann. It appeared he was spending company money superfluously. The “party Gay” image put a taint on the WeWork brand.
So how can marketing help companies avoid the WeWork trap?
When planning an IPO, it would be wise to run a clean ship from day one and make sure that business is self-sufficient and profitable. However, establishing how the company presents its business in the perspective is just as important. This is where branding comes into play and it’s the moment for us marketers to shine.
But how exactly can we go about strengthening the brand?
In 2019 best Global brand report given a list of attributes that companies should strive for:
- Clarity – over its values and positioning.
- Commitment – an internal belief in the brand.
- Governance – and effective operating model for deploying the brand strategy.
- Responsiveness – the ability to constantly evolve the brand in response to the market.
- Authenticity – a defined story and the deep-set of values.
- Relevance – for the target market.
- Differentiation – as perceived by consumers.
- Consistency – the ability to deliver what it promises across touchpoints.
- Presence – the degree to which consumers and influencers speak positively about the brand.
- Engagement – the ability to foster a strong sense of identification with the brand.
“Marketing analysis is the key to building a viable business model “, says business planner Tim Berry. You need to know as much as you can about your target market.
Marketers are not only pros at getting this information, we are also equipped with the capacity to measure and quantify the market, break it down into specific segments and identify trends that could influence the company’s offering in the future.
The business model- let the CMO lead the charge
WeWork former CEO, Adam Neumann has been painted as having quite a bit of hubris and perhaps this also contributed to the company’s downfall. while it became clear that the business model wasn’t working, and that we work was ultimately losing money. Perhaps what was missing was a partner and planning and that could easily be the company’s CMO.
In fact, a 2017 study by KPMG showed a direct link between organizations that focus on customer centricity and business growth. It found that companies who demonstrated customer experience*(CX) leadership achieved double the revenue growth and 5 times the profit growth. (EBITA).
So, what have we learned from the WeWork story?
When it comes to building a successful and scalable business, companies should not underestimate their marketing function. Marketing should be an integral part of establishing the organization’s business plan. A savvy CMO can develop a strong brand that tells the company’s story and highlight its unique value to the market.
They can also create a scalable Coworking business model that will allow the business to grow in a profitable manner.
All of the factors are especially critical for tech startups to take into consideration before going to IPO.
Giving marketing a central role in the planning stages can work wonders in building the business and establishing a good reputation, which will help woo investors further down the line. Furthermore, even when things are looking down marketing can and should be called in to help restore the company brand and sway public support.
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