This week, I’m talking about the top investment news stories of 2019 and what lessons you and I can learn from them. I believe that the less news you watch, the better off you’ll be. And I think that’s especially true when it comes to your money. But I do think it’s a worthwhile exercise to digest some of the top stories from 2019 and what lessons you and I can learn from these news events. 

Today, I’m talking I’m talking about the WeWork IPO disaster. If you don’t know what WeWork is, it’s a pretty amazing concept. If you’re a solo entrepreneur or part of the growing gig economy, WeWork is a dream come true, because it’s the professional alternative to working out of a Starbucks. WeWork rents out professional co-working or shared office space in trendy locations, with all of the amenities of an expensive office, for a fraction of the cost and headaches of leasing office space.

Truly a genius concept and WeWork grew parabolically over the last few years. At it’s core, WeWork is a real estate company. However, in just one short month in 2019, WeWork’s valuation fell to  $10 billion from $47 billion, removed their CEO, and pulled the plug on its IPO. 

So why did WeWork fail? Well, lots of reasons - terrible corporate governance, unstable management, and a valuation that was blown out of proportion. But most importantly, WeWork was losing money - a lot of money, and reportedly hemorrhaging cash as well. In business and in life, it’s all about cash flow. No cash coming in the door and it’s not long before you’re scrambling to pay the bills. 

Despite their terrible business management and financial acumen, the overinflated egos at WeWork thought that the pump was prime to go public, raise additional funds, and importantly I think, get really really rich. 

That didn’t work out how they hoped. Here’s why it’s an important lesson for investors. It is the rare business that can make money for investors when it’s losing money. Amazon is one of the few exceptions I can think of, where it was posting losses for years because it was reinvesting so much back into their infrastructure to dominate the world. 

Just because the idea is great and it may be changing the world in some way, it doesn’t automatically make it a good investment. The financials matter - a lot. So whatever you invest in (whether it’s an IPO, an established business, or your buddy’s start up) never hand over any of your hard-earned dollars unless the financials back it up. 

That’s it for today. Before you go, though, if you haven’t already left a review in Amazon or iTunes for the One Minute Retirement Tip, can I ask a favor of you to go do that right now? It just takes a minute and it helps to spread the word, and helps other people find this podcast.

Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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