WeWork’s fall was as spectacular as its rise, but a hell of a lot faster. In January, the co-working company was worth almost $50 billion, making it one of the world’s most valuable startups. Today, following an aborted IPO, a severe cash shortage and an eventual investor bailout that pushed out its founder-CEO, it’s valued at just $8 billion.

The debacle shows what can go wrong when investors give a charismatic leader like Adam Neumann – who before his ouster was CEO as well as owner of a controlling stake – billions of dollars to run a startup as he sees fit, writes finance expert Greg Putman, who spent two decades managing investments.

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WeWork wanted to be a lot more than a shared workspace. rblfmr/Shutterstock.com

WeWork debacle exposes why investing in a charismatic founder can be dangerous

Greg Putnam, University of North Carolina Wilmington

Adam Neumann both controlled and managed the co-working company he founded in 2011. A finance scholar explains why that can be a serious problem in venture capital-backed startups.

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