WeWork
American coworkspace company From Wikipedia, the free encyclopedia
WeWork Inc., headquartered in New York City, is a provider of coworking spaces, including physical and virtual shared spaces, in approximately 600 buildings in 125 cities. The company is notable for its failed IPO in September 2019 amid criticism of founder Adam Neumann and corporate governance issues and its bankruptcy in 2023. After a reorganization, the company is now majority owned by Yardi Systems.
 | |
| Company type | Private limited company |
|---|---|
| Industry | Commercial real estate |
| Founded | 2010 |
| Founders | |
| Headquarters | , U.S. |
Number of locations | 154 locations in 35 countries (2024) |
Area served | Worldwide |
Key people | John Santora (CEO) |
| Services | Coworking |
| Revenue | US$3.245 billion (2022) |
| −US$1.59 billion (2022) | |
| −US$2.03 billion (2022) | |
| Total assets | US$17.86 billion (2022) |
| Total equity | −US$3.67 billion (2022) |
| Members | 547,000 (December 2022) |
Number of employees | c. 4,300 (December 2022) |
| Parent | Yardi Systems 60% |
| Website | wework |
| Footnotes / references [1][2][3] | |
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In September 2019, after filing documentation to become a public company and facing mounting pressure from investors, co-founder Adam Neumann resigned from his position as CEO and gave up majority voting control. Amid growing investor concerns over its corporate governance, valuation, and outlook for the business, the company postponed its IPO, where it sought a US$10 billion valuation,[4] a reduction from the $47 billion valuation it had achieved in January and less than the $12.8 billion it had raised since 2010.[5] Neumann was then forced to step down and sever most ties with the company.[6][7]
The New York Times described the company as "an implosion unlike any other in the history of start-ups", which it attributed to Neumann's questionable tenure and the easy money previously provided to him by SoftBank, led by Masayoshi Son.[8][9][10][11] The company filed bankruptcy in November 2023,[12] which was described by ABC as emblematic of the "excesses of business startup culture."[13] As part of the bankruptcy reorganzation, Yardi Systems acquired a 60% stake in the company in 2024.
History
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Perspective
2008–2015
In May 2008, Israeli Adam Neumann and American Miguel McKelvey established GreenDesk, an "eco-friendly coworking space" in Brooklyn.[14] In 2010, Neumann and McKelvey sold the business and founded WeWork, renting its first location in SoHo, Manhattan, which opened in April 2011.[14] Manhattan real estate developer Joel Schreiber purchased a 33% interest in the company for $15 million.[15]
In 2011, PepsiCo placed a few employees in the location, who acted as advisors to smaller WeWork member companies, making the location a startup incubator.[16][17][18]
By 2013, WeWork customers included 350 startups such as Fitocracy and HackHands.[19]
By 2014, WeWork was considered "the fastest-growing lessee of new office space in New York" and was on track to become "the fastest-growing lessee [lessor] of new space in America."[16] WeWork investors as of 2014 included J.P. Morgan Chase & Co, T. Rowe Price, Wellington Management, Goldman Sachs, the Harvard Corporation, Benchmark, and Mortimer Zuckerman, former CEO of Boston Properties.[20][16]
In February 2015, WeWork was named to Fast Company’s 50 Most Innovative Companies list.[21] On June 1, 2015, Artie Minson, former chief financial officer of Time Warner Cable, joined the company as president and chief operating officer.[22] In August 2015, the company acquired CASE, a real estate and construction technology company, in its first acquisition.[23][24] According to its founder, the speed of the transaction damaged the organizational culture of CASE.[25]
2016
In March 2016, WeWork raised $430 million in financing from Legend Holdings and Hony Capital, valuing the company at $16 billion.[26][27][28][29] In June 2016, the company announced layoffs of 7% of its staff and implemented a temporary hiring freeze.[30] In July 2016, WeWork fired and sued Joanna Strange, an employee who leaked information to the press that showed that WeWork would miss its financial goals.[31] By October 2016, the company had raised $1.7 billion in private capital.[32] In October 2016, WeWork announced plans to open a fourth location in Central Square, Cambridge, with space for 550 desks. WeWork opened offices in Boston's Leather District and Fort Point in 2014.[33] It also announced plans to open a location in Lincoln Square in Bellevue, Washington.[34]
In 2016, WeWork launched a separate but related co-living venture called WeLive in New York City and in Crystal City, Virginia, near Ronald Reagan Washington National Airport in the Washington metropolitan area.[35][36][37] A third WeLive location in Seattle was planned in the new Third and Lenora building in 2020, but the lease was terminated in October 2019.[38] In July 2021, WeWork terminated this business line.[39]
2017
In April 2017, WeWork launched an online store for services and software for its members.[40][41][42] In May 2017, WeWork opened a luxury health club at its Broad Street, Manhattan location.[43] The space includes exercise equipment and a boxing area, general workout area, spa, and a yoga studio with fitness classes.[44][45][46][47] In June 2017, in partnership with Embassy Group, WeWork India, led by then 25-year old Karan Virwani, son of the Embassy Group owner Jitu Virwani, opened its first space in Bangalore, India, named WeWork Galaxy, with capacity for 2,200 members.[48][49][50] In July 2017, the company raised $760 million in a Series G financing round valuing the company at $20 billion.[51][52] Also in July 2017, WeWork announced expansion plans into China, with US$500 million invested by SoftBank and Hony Capital.[53][54] In August 2017, the company raised $4.4 billion from the SoftBank Vision Fund at a valuation of approximately $20 billion.[55][56][57][58] In September 2017, WeWork expanded into Southeast Asia via the acquisition of Singapore-based SpaceMob, and it allocated $500 million to grow in Southeast Asia.[59] In late October 2017, WeWork signed a contract to acquire the Lord & Taylor Building on Fifth Avenue in Manhattan from the Hudson's Bay Company for $850 million.[60] The deal also included the use of floors of certain HBC owned department stores in Germany, New York, Toronto, and Vancouver as WeWork's shared office workspaces.[61][62] The transaction closed in February 2019.[63][64] In October 2017, WeWork acquired Flatiron School, a coding school.[65][66] It was sold in June 2020.[67] In November 2017, WeWork invested in The Wing, a co-working space for women.[68] It sold the stake in January 2020.[69] Also in November 2017, WeWork acquired Meetup for approximately $156 million.[70][71] It was sold at a loss in 2020.[72] In the same month, WeWork invested in Wavegarden, which designs and manufactures artificial wave devices.[73][74] In addition, during November 2017, WeWork announced that in the fall of 2018 it would launch WeGrow, a private school for children aged 3 through students in grade 4.[75] The first permanent location was in WeWork's New York headquarters.[76] In September 2019, Rebekah Neumann resigned as CEO of WeGrow.[77] The WeGrow school closed at the end of the 2019 academic year.[78] In December 2017, the company opened its first location in Singapore.[79]
2018
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In January 2018, students taking online university courses from 2U were given access to WeWork common spaces and meeting rooms.[80] In December 2018, WeWork opened its first location on a college campus at the University of Maryland, College Park.[81][82] In March 2018, WeWork raised over $400 million alongside Rhône Group, a private equity firm to start a fund to purchase properties directly.[83] Also in March 2018, WeWork acquired Conductor.[84][85] Conductor executives bought back the company from WeWork in December 2019.[86] In April 2018, WeWork acquired Chinese coworking operator Naked Hub for $400 million.[87][88][89][90] In May 2018, WeWork acquired MissionU, a self-styled college alternative, for $4 million in stock.[91] MissionU was wound-down shortly afterwards and students were not charged tuition. Cash was returned from MissionU to its investors. MissionU's CEO went on to become COO of WeWork's kindergarten program, WeGrow.[92] In July 2018, the company restricted employees globally from being reimbursed by the company for meals that contained pork, poultry, or red meat. The firm also announced that it would not provide meat for events at its locations nor allow meat at self-serve food kiosks in its locations.[93][94][95] In July 2018, WeWork raised $500 million to expand its business in China, valuing its Chinese subsidiary at $5 billion.[96] In August 2018, WeWork's Flatiron School acquired Designation, a for-profit design school.[97][98] In September 2018, WeWork acquired Teem, an office management software company, for $100 million.[99] It was sold to iOffice in 2020.[69] In November 2018, SoftBank acquired a warrant to buy up to $3 billion worth of shares in the company by the end of September 2019 at a $42 billion valuation.[100]
In 2018, the company purchased a Gulfstream G650 business jet for more than $60 million, cited as an example of CEO Adam Neumann's excessive spending.[101]
WeWork lost over $2 billion in 2018.[102]
2019
In January 2019, WeWork raised an additional $2 billion from SoftBank at a $47 billion valuation. SoftBank considered investing as much as $16 billion but downsized plans due to turbulence in financial markets and opposition from investors. The investment brought SoftBank's total funding in WeWork to over $10 billion.[103][104] In late January 2019, WeWork announced that it would open a location on two floors of a building in Tampa Heights in 2020 as part of its expansion into Tampa, Florida.[105] In April 2019, WeWork acquired Managed by Q, a platform that office tenants can use to hire service providers.[106] It was sold at a loss in March 2020.[107] On April 29, 2019, WeWork filed a draft registration statement for a proposed initial public offering.[108] By July 2019, Adam Neumann had liquidated $700 million of his WeWork stock.[109] On August 14, 2019, the company filed Form S-1.[8][110] The filing revealed significant losses, expensive lease agreements, and a complex relationship with founder Adam Neumann.[111][112] It also disclosed $47 billion of future lease obligations and only $4 billion of future lease commitments.[113][114] The company was then "besieged with criticism over its governance, business model, and ability to turn a profit."[101]
The company changed the legal name of WeWork to We Company and, according to the August 2019 Form S-1 filing, the firm paid $5.9 million to an entity owned by Adam Neumann and other WeWork founders for brand licensing the name.[115][116] In early September 2019, Neumann returned the $5.9 million to the company for the use of the trademark and gave the company all of the trademark rights for the "We" family trademarks.[117]
On August 27, 2019, WeWork acquired Spacious, a company that leases unused space from restaurants during daytime hours and then rents this space to remote workers.[118] Spacious was shut down 4 months later, in December 2019.[119]
On September 4, 2019, WeWork added its first female director, Harvard Business School professor Frances Frei, to the company's board of directors.[117]
On September 13, 2019, the company announced changes to its corporate governance to include the ability for the board of directors to pick a new CEO and not having CEO Adam Neumann's family members on the board. Neumann also agreed to transfer to the company any profits from his real estate deals with the company.[120][121]
On September 17, 2019, amid growing investor concerns over its corporate governance, valuation, and outlook for the business, WeWork formally withdrew its S-1 filing and announced the postponing of its IPO until late 2019.[122] At that time, the reported public valuation of the company was around $10 billion,[4] a reduction from the $47 billion valuation it achieved in January and less than the $12.8 billion it had raised since 2010.[5] In mid-September 2019, unrelated to the company's delayed initial public offering, Wendy Silverstein, the co-head of WeWork's real estate investment fund ARK, departed the company.[123] By September 23, 2019, SoftBank wanted Neumann removed as chief executive.[102] The following day, amid mounting pressure from investors, company co-founder Adam Neumann resigned as CEO and gave up majority voting control in WeWork. Artie Minson and Sebastian Gunningham were named co-CEOs of the company.[124] That same day, WeWork put its Gulfstream G650 aircraft up for sale. Critics said the plane had become a "red flag in the leadup to the company's IPO" and had created problems with employees who didn't receive promised bonuses or raises.[125]
In October 2019, Neumann received close to $1.7 billion from SoftBank for resigning from WeWork's board of directors and severing most of his ties to the company.[126] The $1.7 billion included $970 million for his remaining shares, a $185 million consulting fee, and a $500 million credit to assist him to repay his loans to JPMorgan Chase.[127] He was retained as a consultant with an annual salary of $46 million.[6]
In October 2019, WeWork announced the opening of new co-working locations in Singapore and Manila.[128] Also in October 2019, WeWork abandoned plans to open an office in the U.S. Steel Tower in downtown Pittsburgh. The company had planned to build out as much as 105,000 square feet in the building.[129][130] On October 14, 2019, WeWork warned clients that approximately 1,600 office phone booths at some of its offices in Canada and the United States were tainted with formaldehyde. The company said another 700 phone booths would possibly be taken out of service as a precautionary measure. This situation came to the attention of the company after some members reported eye irritation and a strong odor.[131][132][133][134] On November 6, 2019, SoftBank Group reported $9.2 billion in write-downs on its investments in WeWork.[135] This amount was approximately 90% of the $10.3 billion SoftBank invested in WeWork over the previous few years.[136] On November 21, 2019, WeWork announced layoffs of 2,400 employees, almost 20% of its workforce globally.[137]
2020
In January 2020, WeWork began phasing out free beer at all North American co-working locations and announced plans for a slower growth rate.[138][139] On February 1, 2020, WeWork announced that Sandeep Mathrani, a former senior executive at GGP Inc. and Brookfield Property Partners, would become CEO of the company, effective February 18, 2020.[140] On February 3, 2020, WeWork opened its first location in the Middle East outside of Israel[141] in Abu-Dhabi's technology park Hub 71 under the name WeWork x Hub 71.[142] On February 10, 2020, WeWork announced the temporary closure of 100 buildings in China due to the COVID-19 pandemic.[143] In late March 2020, WeWork laid off 250 employees in an effort to lower expenses, followed by another round of employee layoffs at the end of April 2020.[144][145] On June 5, 2020, McKelvey announced that he would be leaving WeWork at the end of the month.[146]
In 2020, the company vacated 66 locations and re-negotiated lower rent, deferrals, or other lease changes at more than 150 others.[147]
2021
In March 2021, the company reached a deal to become a public company via a special-purpose acquisition company with a $9 billion valuation and merge with BowX Acquisition Corp.[148][149] Post merger, Mathrani would continue to remain CEO but Vivek Ranadivé from BowX and Deven Parekh from Insight Partners would join the new board.[150] The merger was consummated in October 2021 and shares of WeWork began trading on the New York Stock Exchange.[151] In August 2021, WeWork was one of five co-working providers selected by the General Services Administration to provide services for the Federal government of the United States.[152] In October 2021, WeWork announced a partnership with Cushman & Wakefield that included a $150 million investment in WeWork.[153][154]
2022
In January 2022, WeWork announced the acquisition of Common Desk.[155][156] During the 2022 Russian invasion of Ukraine, in March 2022, WeWork closed its offices in Russia.[157] Later in 2022, the company announced that it was developing a software product with Yardi Systems called WeWork Workplace.[158]
In May 2022, WeWork named Andre Fernandez as its new CFO. He replaced Benjamin Dunham, who departed after 18 months at the company.[159]
2023
In April 2023, WeWork faced delisting on the New York Stock Exchange as its stock price had fallen below a $1.00 threshold. The company was valued at $360.9 million, down from its $47 billion valuation in 2019.[160]
At the end of June 2023, the firm had more than 700 locations in 39 countries worldwide.[161] At the time, WeWork spent more than 80% of its revenue on rent and interest, paying over $2.7 billion a year.[162]
On August 8, 2023, WeWork warned that it had "substantial doubt" that it can stay in business any longer and announced that it may have to file for Chapter 11 bankruptcy protection.[163] WeWork said it would be trying to control its expenses, as well as reduce its rent and tenancy costs by restructuring and renegotiating leases with landlords. The company also said it would attempt to retain current occupants of its workspaces and try to raise money by selling some assets. The company made a net loss of $397 million (£311 million) between April and June 2023, though this was an improvement of $238 million compared with the same period a year earlier.[164]
On August 24, 2023, a group of investment management companies that lent cash to WeWork announced they were exploring options to save the company, including a potential Chapter 11 bankruptcy reorganization. The group includes three companies, BlackRock, King Street Capital Management, and Brigade Capital.[165]
In October 2023, Bloomberg reported that investors and creditors, including SoftBank, King Street Capital Management, and others were negotiating to gain control of WeWork.[166] On October 31, 2023, WeWork announced that it would be preparing to file for Chapter 11 bankruptcy as soon as the following week as its forbearance agreement with its creditors was scheduled to terminate effective November 6. As a result, WeWork's stock plunged an additional 37%.[167]
On November 6, WeWork's stock trading was suspended and halted, and WeWork filed a petition under Chapter 11 of the United States Bankruptcy Code in the United States District Court for the District of New Jersey shortly after that, listing liabilities of approximately $10 billion to $50 billion. Most of WeWork's office spaces will remain operational during the bankruptcy procedure. However, the company has entered agreements with its bondholders to request to reject leases and exit largely non-operational leases. Members of affected locations will immediately receive advance notice of their office location shutting down. Almost immediately after the filing was announced, WeWork's stock was delisted from the New York Stock Exchange. The company also filed recognition proceedings in Canada under Part IV of the Companies' Creditors Arrangement Act. Locations outside the United States and Canada and WeWork franchisees are not part of the bankruptcy procedure.[168][169] According to the Financial Times, SoftBank had invested or committed over $16 billion by the time of WeWork's bankruptcy, including a $1.5 billion payment to Goldman Sachs and other creditors days prior to WeWork's bankruptcy as SoftBank had acted as guarantor of WeWork's loans.[170]
2024
On 29 April 2024, a court-approved deal was reached between WeWork and its senior creditors outlining the company's financial restructuring. Yardi Systems, a real estate technology provider and creditor to WeWork, will invest $337 million, acquiring a 60% stake. The remaining $113 million will come from a separate group of hedge funds in exchange for a 20% stake. On 30 May 2024 the deal was approved and Anant Yardi was added to the board of WeWork.[171][172] John Santora was appointed as CEO the following month.[173]
In 2024, WeWork decided to exit the Indian market and sold its stake in WeWork India to Embassy Group.[174]
Legal issues
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Perspective
In September 2018, the company eliminated broad-based non-compete clauses to settle a lawsuit from the Attorney General of New York.[175]
In October 2018, former WeWork director of culture Ruby Anaya filed a sexual harassment lawsuit claiming that at a company event in January 2018, a male employee grabbed her by the waist and forcibly kissed her and that in August 2017, a different employee grabbed Anaya from behind in a "sexual manner".[176] The suit highlighting the company's "frat-boy culture" also alleged that co-founder Neumann "plied [her] with tequila shots during her interview with the company."[177][178] Shortly after this claim was made, WeWork put an end to its unlimited beer for employees and implemented a policy of only four beers per day in the New York office.[179][needs update]
In June 2019, WeWork was sued by the former head of compensation, Lisa Bridges, for gender-based pay discrimination, particularly in granting stock options. She alleged that she was fired after discussing the issue.[180][181][needs update]
Also, in June 2019, Richard Markel, a former WeWork executive making $300,000 per year, sued the company for age discrimination after allegedly being replaced with a younger worker.[182] Markel voluntarily dismissed the case in August 2019.[183]
In October 2019, Medina Bardhi, the former chief of staff for Adam Neumann, represented by Douglas Wigdor, sued the company over various allegations including a gender pay gap, marijuana use by company executives, and pregnancy discrimination.[184][185][needs update]
In February 2020, Ayesha Whyte, former director of employee relations, sued WeWork for gender and race discrimination, "saying she was promised a well-paying job that never materialized, all while less-qualified white people were promoted."[186] In June 2020, the lawsuit was forced into arbitration.[187][needs update]
In April 2020, SoftBank, then the largest shareholder of WeWork, cancelled its $3 billion tender offer to buy shares directly from some of WeWork's major stockholders, citing failure by WeWork to obtain certain regulatory approvals, new criminal and civil investigations, and government actions due to the COVID-19 pandemic as reasons for withdrawing the offer.[188] WeWork then sued SoftBank.[189] On May 4, 2020, former CEO Adam Neumann separately sued SoftBank for withdrawing the $3 billion tender offer.[190] The lawsuits were settled in February 2021.[191][needs update]
On July 8, 2020, former WeWork stock plan administrator Diane Allen, and former head of diversity & inclusion Christopher Clermont, filed separate complaints against WeWork. Both alleged race discrimination, while Allen also alleged gender discrimination and lack of action over a sexual harassment claim.[192][needs update]
WeWork was also sued by several landlords for breach of contract when it failed to pay rent or for closing locations.[193][194][195][needs update]
Notable locations
Notable WeWork locations include:
- 1600 Seventh Avenue
- 330 North Wabash
- 200 Spectrum Center Drive
- Bentall Centre
- Bush Tower
- Central Bank of Ireland
- Constellation Place
- Five Penn Center
- Holyoke Building
- Hôtel de Langeac
- Hotel Europejski
- Madison Belmont Building
- Manhattan Center
- One Nashville Place
- Salesforce Tower
- Totzeret HaAretz Towers
Further viewing
In January 2021, Apple TV+ announced a new show called WeCrashed that follows the launching and fall of WeWork. Jared Leto plays Adam Neumann and Anne Hathaway plays Rebekah Neumann.[196]
In March 2021, Hulu unveiled a documentary titled WeWork: Or the Making and Breaking of a $47 Billion Unicorn, released April 2, 2021.[197]
Further reading
- Wiedeman, Reeves (October 20, 2020). Billion Dollar Loser: The Epic Rise and Fall of WeWork: A Sunday Times Book of the Year. Hodder & Stoughton. ISBN 978-1-5293-8506-9.
- Brown, Eliot; Farrell, Maureen (July 22, 2021). The Cult of We: WeWork and the Great Start-Up Delusion. HarperCollins Publishers. ISBN 978-0-00-838941-3.
References
External links
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