WeWork Prospectus: Business Communications Gone Wrong

 By early 2019, WeWork, an office-leasing company, had generated a lot of excitement about its initial public offer, that is, its plans to sell stock to the public for the first time. Based on private investment in the company up to that time, financial investors, analysts, and journalists speculated that the shares would sell at a price valuing the company at around $47 billion. WeWork was often spoken of as the next Apple, Uber, or Amazon in terms of the potential for returns on investment.

Much of the buzz centred on Adam Neumann, the company’s co-founder and chief executive. WeWork was not just another company that rented out office space on flexible terms, according to Neumann. He claimed WeWork was refashioning the way people lived and worked all over the world.

Then, in August of the same year, WeWork filed its prospectus to the Securities Exchange Commission, the regulator. A prospectus is a lengthy document often running a couple of hundred pages that must provide certain information about the company’s finances and business plan. Besides being required by the SEC for sales of shares, a prospectus helps potential investors make informed decisions on whether to buy shares or bonds the company is offering for sale.

After the prospectus was filed, analysts and potential investors became so concerned about the viability of the business that WeWork had to withdraw the planned sale. Jargon and terminology did not cause the fiasco, but certainly contributed to it.

An extract

Here is a paragraph from page 12 under the heading “Our Economics:”

 “As we build and open more spaces in existing and new markets, we create additional capacity that lays the foundation for incremental revenue and future profits. As a result, we intend to continue to invest in growth as we believe the timing of our future profitability depends to a significant degree on levers we control.”

 Reading critically will help you develop your own writing. Take a few moments to read the paragraph carefully. Mark any jargon and think about why it is used.

 My analysis

 Here are my observations:

 “As we build and open more spaces in existing and new markets, we create additional capacity that lays the foundation for incremental revenue and future profits. As a result, we intend to continue to invest in growth as we believe the timing of our future profitability depends to a significant degree on levers we control.”

There are simpler words that mean the same thing and say it more clearly:

Additional capacity—more space

Incremental revenue—higher earnings

Timing of our future profitability—when we will make a profit

Rewriting in plain language

Now try to rewrite the paragraph using plain language. Then compare your answer with my rewrite below. Your response need not be identical to mine. Think about the content of the prospectus once it is stripped of jargon.

This is what I get:

 “Building more office space in existing and new markets gives us more office space to lease to tenants. This should increase our profits in the future. We intend to continue to expand. When will we become profitable? That depends on how which options we choose.”

Translated into simple English, the paragraph now seems to say little except the obvious. Of course, if you build more office space, you have more space to rent to tenants. Because you have more space to lease, eventually you should be able to make a bigger profit. As for when WeWork is likely to become profitable, the document says that it all depends on how the WeWork management team decides to play its cards. This is another banal statement.

The impact of terminology and jargon

Jargon and terminology contributed to the failure of the share sale in two ways. First, they acted as a window dressing for a shaky strategy and business plan. Second, clear writing and critical analysis are related, according to research. WeWork’s jargon-heavy prospectus suggests the company may have believed its own hype.

Next exercise

The following section of this course involves an exercise consisting of the next two paragraphs in the prospectus. Please mark terminology and jargon. Then try to rewrite the text in plain language. After you are done, compare your rewrite to the original. Comment on what you have discovered.