Importance of governance/checks and balance

Business schools should use WeWork as a useful case study for multiple reasons. Once revered and valued at $120 billion, the startup pulled the plug on its own IPO after backlash from the market knocked its monstrous valuation down to around $15 billion. Today, its CEO resigned from his position while still remaining as the non-executive chairman.

There are several reasons that can contribute to the spectacular fall of WeWork. One of them is the severe lack of governance. The CEO controlled too much power, including leasing his buildings back to the company, charging the company $6 million for the trademark of WE brand, giving his wife power and buying companies that don’t seem to align with WeWork’s business. You can read more about WeWork in its tremendous take-down.

If there were proper checks and balance of his power, the litany of scandals and problems that contributed to the incredible stumble of the startup wouldn’t have existed. Only after its attempt to go public did the market, analysts and investors put pressure on the company and did things start to change.

The WeWork saga is very much similar to the story about Uber that I read in Super Pumped: The Battle for Uber. Uber’s founder and former CEO was ousted because of his abuse of power and behavior detrimental to the health of the company. Kalanick was removed because the Board and investors decided to put check and balance into Uber after years of keeping blind eyes.

I am actually glad to see this kind of developments take place. It means that the market and investors are doing their job to keep the founders and CEOs in check. As I grow up, I tend to believe that humans are prone to being power drunk and greed. We cannot be trusted with power without governance and checks and balance. That’s why the three-branched government was designed the way it is now. The sad thing is; however, that when you look at what is happening in politics, I really doubt the checks and balance is properly working as it should.

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