WeWork, hailed as an innovator in the real estate market, filed for Judicial Recovery in the United States, after years of struggling to stay afloat and find a direction.
This situation teaches us a valuable lesson: the need for an adequate capital structure to face difficult periods.
Along its journey, WeWork has expanded rapidly, offering shared workspaces to startups , freelancers and large companies. However, its rapid expansion was largely funded by SoftBank , which believed that free spending on startups would enable accelerated growth. This led to excess debt and ultimately hardship. The ability to face financial challenges is crucial for any company. A solid capital structure can provide the flexibility you need to weather difficult times, such as renegotiating leases, reducing expenses, or seeking additional financing . In the case of WeWork , the lack of a robust capital structure became its undoing, resulting in a loss of value and the need to renegotiate debt.
WeWork 's trajectory teaches us that not all events are predictable, we don't always account for all future events and an unexpected pandemic can impact even the most successful and beloved companies on the market.
Financial preparation must be accompanied by the ability to adapt to unpredictable scenarios. Therefore, my recommendation to any company is this: grow with some margin of safety; the secret of success is several long years of firm steps.