Charisma ≠ Longevity
The information contained on this page is provided for general information only and does not constitute legal advice. For advice tailored to your specific circumstances, please seek professional legal counsel.
The article below has links to third-party websites and are provided solely for informational purposes. No endorsement or affiliation is implied. NOVASTRA LEGAL has no control over the content or availability of these websites and accepts no responsibility for any cost, loss, damage, or disruption arising from their use. No warranties are given as to the security, functionality, or reliability of these external links. NOVASTRA LEGAL disclaims all liability for malware, data breaches, or technical issues resulting from access or use. Access and use are at the user’s discretion and risk.
I recently watched WeCrashed, a series about the rise and fall of WeWork, starring Jared Leto and Anne Hathaway. It was not only entertaining but also a powerful reminder of a harsh truth about entrepreneurship: a business can grow fast on vision and charisma, but without proper governance and a solid legal framework, it is likely to crash.
Why WeWork Crashed (Beyond Its Financials)
At its peak, WeWork, a provider of coworking spaces, was valued at $47 billion USD. It scaled aggressively by signing long-term leases while collecting short-term rents, leading to excessive debt and cash burn. However, WeWork did not crash merely because it scaled too quickly. It crashed because it also lacked the legal and governance systems necessary to sustain its growth. This led to:
Virtually no board independence or oversight, and a co-founder who held near-total control through super-voting shares, which enabled unchecked decision-making and a disregard for stakeholder interests.
Conflicts of interest in the majority of business transactions, which undermined governance and transparency, and diminished investor confidence.
Weak legal safeguards and absent whistleblowing mechanisms which diminished long-term viability and enabled unchecked misconduct.
However, this is not just a WeWork failure. Many fast-growing businesses treat legal professionals as an afterthought, and consult them only when problems arise (after contracts fail, disputes escalate, or urgent regulatory issues emerge). This reactive and defensive approach is no longer fit for purpose.
The Role of Legal
In today’s environment, where businesses raise capital earlier, scale faster, and navigate increasingly complex regulatory spaces, legal must lead, and not follow when something goes wrong. It needs a seat at the table from day one, using the law to shape business decisions, devise action plans, mitigate risks, and drive sustainable outcomes.
For small and mid-sized businesses, legal is often seen as an overhead, and dismissed as something to delay until a deal is signed or an issue arises. However, this mindset creates risk:
Poor contracts reduce profit margins and damage commercial relationships.
Weak governance leads to unaccountable decision-making and a loss of stakeholder trust..
Missed statutory and regulatory obligations can shut down growth opportunities.
In contrast, a strategic legal foundation enables sustainable growth in both the short and long term:
Clear contracts strengthen the commercial position.
Sound governance fosters stakeholder trust and accountability.
Proactive regulatory compliance cultivates investor confidence and unlocks timely opportunities.
The Takeaway
WeWork’s story is extraordinary, as it remains operational. However, its preventable failures have significantly diminished both its valuation and reputation. The takeaway is not to slow down, but to scale with structure and build something that lasts.