THE WEWORK CORPORATE EXPANSIONS – ALL THE MOVING PARTS

Frequently in these posts, we discuss corporate expansion/acquisitions, or, what is more prevalent in today’s corporate environment, the disentangling of corporations from their past mergers and acquisitions (see recent discussions regarding G.E.’s attempts to divest itself of the many acquisitions made by past CEOs).

WeWork, recently valued at $47 billion, is at a different point in its history, where it has achieved good business success at subleasing office space and has started to look around for that next “mountain to climb.”  This could possibly be a latent case of that “seven year itch” – WeWork was founded in 2010.  In the mode of finding that “next mountain,” the company recently rebranded itself as the “We Company” and declared its mission as “elevating the world’s consciousness.”  Interesting.  Apparently, as part of the process to raise world consciousness, the company has determined that making a $32 million investment in pro surfer Laird Hamilton’s natural foods business (Laird Superfood) was one of those ways to accomplish that mission.  (Hamilton is greatly-admired by amateur surfer and WeWork CEO Adam Neumann.)   As well, the company has invested in both a wave pool maker, and an elementary school start-up, WeGrow, when CEO Adam Neumann and his wife weren’t able to locate appropriate schooling for their children in Manhattan.  WeGrow is a private elementary school that accepts children as young as 3 years old and teaches a progressive curriculum that includes yoga and entrepreneurship. Annual tuition at the school is around $42,000.  It’s said that this kind of loose reign on the acquisitions of a company are those that “investors sometimes give founders of highly-valued startups to shape companies according to their vision.”  (ref WSJ).  Although, several former employees have indicated that they had found the variety of investments “confusing for a company trying to reshape the office sector.”  That sounds like their sentiments might have been something along the lines of: “one world at a time.”  And, that frequently is very good advice – we’ve talked recently about the difficulties of companies that do acquisitions for acquisitions’ sake, without regard to the core business.  There are a number of such companies, General Electric among them, that are now struggling to disengage from companies that were acquired without good thought to the effect on the core business and its continuing success.  A Georgetown law school professor has commented that it would be unusual to see “this kind of investing in a publicly traded company,” and that “the investments tied to Neumann” would “raise eyebrows.”  Which is actually what happened late last year when investors discovered that Neumann had made a recent practice of buying property and renting the office space to the company – the company’s investors expressed serious concern about the practice.  Neumann effectively controls the company with a majority share vote, despite owning a minority of shares (see recent post re. Uber and the utilization of this practice).  Perhaps this is one of those instances where that practice might need to be re-examined – certainly, that will be the case if the company ever goes public.  A company is only so good as ALL OF ITS MOVING PARTS, taken as a whole, and moving together toward unified goals.

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