Scott Bayens: The Emperor’s new clothes and the lesson of WeWork’s demise |

Scott Bayens: The Emperor’s new clothes and the lesson of WeWork’s demise

A story that caught my eye last week read, “WeWork lays off 2,400 employees.” Given what had been previously reported about the New York-based commercial real estate startup, it wasn’t a surprise.

Weeks prior, since it came to light WeWork was on verge of collapse, headlines like, “WeWork delays IPO after frosty response”, “WeWork isn’t a tech company; it’s a soap opera” and “The spectacular rise and fall of WeWork” were as numerous as the number of investors and employees who ended up getting burned.

For those not familiar with the debacle: WeWork provided shared workspaces for technology startups as well as more established companies like Microsoft. Founded in 2010, by 2018 WeWork managed more than 40 million square feet of commercial space. Over time, it became a darling of private equity firms and raised extraordinary amounts of investment capital, including nearly $1 billion from SoftBank. At one time, the company had more than 5,000 employees in over 280 locations, spread across 86 cities in 32 countries.

In January, the firm announced it would be going public and stated its value as $47 billion. However, once WeWork opened its books, it became clear it wasn’t the success it had touted itself to be. It lost nearly $2 billion in 2018 and was suffering a “crisis of management.” Once excited investors quickly lost confidence and eventually company co-founder Adam Neumann resigned as CEO, but not before walking with a $1.7 billion severance. More layoffs are expected and the lawsuits are flying.

Obviously reminiscent of the real estate crisis that helped bring the U.S. economy to its knees in 2008, WeWork’s overnight crash and burn has been an eye-opener to investors and consumers. A stark reminder of, if things look too good to be true, they usually are. The incident provided a healthy slap in the face to those enticed by future ventures to ensure financials match the hype, companies are actually turning a profit, not over-leveraged and haven’t grown too quickly to remain sustainable.

The same is true of real estate firms. Today, more established realty brands in Aspen are under siege from any number of online tech companies like Zillow, RedFin and OpenDoor. Using verbs like decentralizing, disrupting and automating, they aim to attract consumers (buyers and sellers) by effectively cutting out the middle man (real estate brokers) as well as eliminating all or part of broker commissions.

I get the attraction. Why not go online and do it yourself? Why pay that 3% to 6% out of your gross proceeds? After all, it’s all in the palm of your hand and what value does a real estate broker or “old-world” brokerage firm really have? Like WeWork, when choosing an online brokerage or even one of the new sexy “tech-centric” startups, be sure to do your diligence lest you find yourself caught up in the next Wall Street goat rodeo.

Does your real estate firm market itself as a technology company? Is it backed by private equity and venture capital or is it transparently, publicly traded? Is it a case of “Grow It to Sell It” or does it have a history of longevity, stability and profitability? Does the CEO and company have a reputation for ethics and integrity? Anyone who looked honestly at WeWork knew it was a dumpster fire rather than an a viable investment option.

What I’m getting at in part is the importance of institutional knowledge. The definition of which reads, “the combination of experiences, processes, data, expertise, values and information possessed by company employees.” I am proud to say I work for an organization like that; one where I have the benefit to learn from those who came before me and what they have mastered. And in terms of tech, we have all the same tools the nuevo-firms boast, and even a few more.

And then there’s the oft-forgotten concept of creating value; a broker providing the benefit of their relationships, knowing the market outside their back door, providing information about schools, local organizations, and even offering introductions to future friends.

I’m not saying to avoid what’s new and innovative, just suggesting the local expert you choose has boots on the ground and roots in the community. Real estate firms will come and go, as will brokers. Change is inevitable and important, but so is standing the test of time.

Scott Bayens (GRI, ABR, CNE) is a realtor and top producer with Aspen Snowmass Sotheby’s International Realty. His Deeded Interest appears the fourth Sunday of every month. Learn more at his website at

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