In January of 2019, American Express revamped the Business Platinum Card. Previously the card had a relatively steep annual fee for a business card, clocking in at $450 a year. AMEX then turned the card up to 11, raising the yearly fee to an industry high, $595, with additional cards costing $300 each.
American Express had to really up the benefits of this card to make the current cardholders swallow a $145 (32%) increase in the annual fee. One benefit added to the card in February 2019 was supposedly worth $2,700 a year if you used it. Well, less than a year later, and that benefit is going away, which is not really a surprise.
One of the modern-day business Icarus stories is the tale of WeWork.
Founded in 2010, the company was ideally situated to ride the wave of the shared workspace trend. What’s a shared workspace? It’s basically when your company becomes too large to be run out of a Starbucks, and you need to have an actual workspace but don’t want to rent a real office.
I know there are a bunch of people who love WeWork. If you live on the road, it’s great to have a place where you can work beside an airport or hotel lounge and actually have a meeting in a professional setting.
The problem is that WeWork expanded its workspaces faster than the number of customers it had. The only way to make the numbers work was to get more customers. I’m not saying that’s where AMEX came into play, but the timing is undeniable. Giving all of the Business Platinum members free memberships made the member base look larger even if these memberships were most likely sold to AMEX at a much lower cost.
How else could you give a $2,700 benefit to everyone who pays $550 for a credit card????
All of this was happening right as the company was getting ready to launch its IPO. Coincidence?
We don’t know how this story ends, but we know where it’s currently headed. WeWork was scheduled to go public in August of 2019. Once the books were opened to investment banks, the estimated 47 billion dollar valuation of the company (when AMEX struck the deal) went down by 80%. The CEO’s dealings came under scrutiny, showing questionable spending and deals that were seemingly structured to maximize his own profits. The IPO was “delayed,” and the principal investor in WeWork, SoftBank, wrote down their investment in the company by 90%, costing them 9.2 billion dollars.
When walking through New York, we passed a very nice, and expensive-looking, WeWork space in Mid-Town. I said to Sharon, “I wonder what’s going to happen with the AMEX Business Platinum benefit when the company goes under?”
It looks like AMEX doesn’t want to find out the answer to that question. They’re eliminating the WeWork benefit from the Platinum Business card on 1/1/2020. The last day to sign up for a free year membership will be on 12/31/2019. That means anyone who already signed up will not be able to re-up for a second year.
Who knows if those who sign up before the end of the year will even get that full year of membership?
Anyone know of another credit card benefit that lasted for less time than the AMEX Business Platinum WeWork membership?
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This post first appeared on Your Mileage May Vary