NEW YORK (Reuters Breakingviews) - In the nine years since WeWork was born, ever...
NEW YORK - In the nine years since WeWork was born, everything has gone its way. The firm, which values itself at nearly $50 billion as it goes public, has only known a growing global economy where jobs are plentiful, creditors fall all over themselves to lend money and venture capital flows like the free beer in the shared offices its founder Adam Neumann operates around the world.WeWork is far from the only hot new thing to have never experienced anything but a milk-and-honey environment.
Yet, economic winters are required for healthy springs. More than a decade without a frost risks creating a generation unable to resist the cold – incapable of handling hardship. Without picking too much on WeWork, though its change of name to The We Company alone merits doing so, the New York-based firm really does look like the emblematic creature of the Longest Recovery.
Now, WeWork is not necessarily doomed if a slowing economy leads to declining demand for all those workstations and shared-office memberships, which history suggests it will do. But investors may regret handing over so many of their rights when the business model – blindly hoping that shorter term assets will generate enough money to cover long-term liabilities – is tested by a good old-fashioned recession.
When economies contract, second-rate firms or those with too much debt, suffer most swiftly. For recent examples, think Lehman Brothers, which was both, in 2008, or many dotcoms at the start of the 21st century. Their businesses were too immature to weather what was one of the milder resets in recent memory .
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