This isn't a failure of capitalism, its just due to blind optimism and lack of governance with people falling under the spell of a charismatic CEO imho. If it had worked, everyone would be saying this guys a genius.
I looked at WeWork at one stage for an office, the prices seemed crazy, I didn't understand how any one was using it, you've been able to get serviced offices for years for way cheaper. He did OK though, he gets out with a bag of cash and leaves someone else carrying the debt.
You aren't asking "why" enough. It's not just a bad actor... Why was it possible for him to do what he did? Why was he allowed to personally succeed and leave others the debt?
greed, and a lack of oversight? I'm no fan of capitalism, it has many flaws. I'm not upset at VC's losing money though, thats the risk they take, it's a high stakes game, thats why the IPO failed, there are more rules for a listed company. The only alternative I can see is to regulate who can invest their money in what, I can't see that working, unless I'm missing something.
There is a failure for the employees, but everyone knows, or should know they're rolling the dice working for a startup, as others have said shares are lottery tickets, and the system is stacked against you as an employee ever making money.
I looked at WeWork at one stage for an office, the prices seemed crazy, I didn't understand how any one was using it, you've been able to get serviced offices for years for way cheaper. He did OK though, he gets out with a bag of cash and leaves someone else carrying the debt.