What is WeWork and why it has been the hot topic since 2019, what exactly the co-founder of the company did and is the company still investable, let’s take a peep into it
WeWork – is famous as an American Real-estate start-up, which specializes in providing co-working spaces on a rental basis and that's pretty much WeWork on books.
Adam Neumann, Co-founder of WeWork along with his wife and Miguel McKelvey. They started the company in 2010 and up until 2019, it’s success was all that was talked about.
What actually happened in 2019 and, how did the company go from having a valuation of $47 billion to being worth less then $8 billion in just one year. To understand it better, I have divided the time frame of WeWork during the period of 2019 into 3 stages
Stage 1: Pre-IPO Announcement
WeWork started the year 2019 pretty strong, In January they also announced Softbank completing a $6 Billion investment in the company.
After the Softbank investment, the company was valued at a stunning $47 Billion, making WeWork the second most valuable startup after Uber.
At the same time, WeWork announced an Umbrella entity called the We Company, that would include WeWork the main co-working business as well as an apartment concept called WeLive, a Gym Concept WeRise, a retail concept “Made by We”.
The most debatable of them was WeGrow, which was an experimental school started by CEO Adam Neumann’s wife Rebekah Neumann.
In April 2019, the company confirmed that they have filed to go public, even though the company was making losses.
Stage 2: IPO Cancellation
The documents that were filled with SEC were finally made public in August 2019, mentioning the name Adam almost 169 times which definitely raised hands.
It was later reported that Adam owned properties, that he was leasing back to the company and making money.
One more odd to look was also Adam cashing out thousands of dollars, because that’s not something that startup founders would generally do.
It was found that there was no formal employment agreement and all the executives had kind of given him their voting rights, allowing him basically to do anything.
Another startling fact was, that Adam had the trademark for the word WE and when the company was rebranded as WeCompany, he made his own company pay him around $5.9 million to use the word WE.
Eventually, people started talking about Adam’s behavior, his drinking problem, him getting high on the private jet, and that became the final call for the investors.
And finally, in September it was decided to postpone the IPO and within a week, Adam was forced out of the company.
Stage 3: Post-IPO Cancellation
WeWork still needed the money that they were hoping to get from this IPO, there were reports stating that they only have enough cash in hand to survive barely for 2-3 more weeks.
So on October 22nd, Softbank announced a bailout package of $9.5 Billion.
Even with the company facing a crisis situation, Adam got a sweet package of $1.5billion for quitting his job as the CEO of the company and at the same time, more than 2400 employees of the company were laid off.
Present Situation :
The company is still running and according to the current Co-CEO Sebastian J. Gunningham, it's going to be profitable by 2021, and Softbank's optimism is also still high on WeWork.
In February 2020, Real-estate proficient Sandeep Mathrani started working as CEO of the company, giving the company an edge over its competitors.
With work from home becoming the new normal, the company executives have to be literally on their feet to make WeWork a success again.
Write-up by- Muskan Aswani
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