WeWork Begins De-Neumannizing
Now under new management, WeWork is busy undoing some of the actions of founder and former CEO Adam Neumann from recent years that ultimately led to his ouster. Whether that will be enough to save the company is an open question.
Office landlords, especially in places like Manhattan and London — where WeWork is the single largest tenant — have a lot at stake in the future of the company.
A WeWork that successfully slims down and stops bleeding cash may lease less space in the short run, but it won't crash down to zero, leaving landlords holding the bag.
The changes at the We Company, WeWork's corporate parent, include even more top executives leaving or being shown the door, a sell-off of companies that WeWork bought, and even getting rid corporate accoutrements such as the customized jet that Neumann and his family used for a while.
Neumann's wife, Rebekah, named a WeWork co-founder and chief brand and impact officer, is giving up her positions with the company, Business Insider reports. She was also founder and CEO of WeGrow, a school for children ages two to 11 which is still part of the We Company, at least for the time being.
Also on the way out are other Adam Neumann associates, who have been characterized as important executives in growing the company, or less charitably as yes-men enabling Neumann's eccentric behavior.
The executives include Vice Chairman Michael Gross, Vice President of Operations and Special Projects Zvika Shachar (also a childhood friend of Neumann's) and Director of Development Roni Bahar, The Real Deal reports.
Even before the failed (or at least delayed) IPO, other executives had left WeWork, such as New York real estate vet Wendy Silverstein, who co-led the company's property investment vehicle, ARK, and Sarah Pontius, its global head of real estate partnerships.
For his part, Neumann isn't completely out of the picture, retaining the position of non-executive chairman of the board and his ownership stake. It isn't clear how that will impact the new direction of the company or what his voting powers will ultimately be in the event of an IPO.
A day after Neumann stepped down as CEO, WeWork put three companies it acquired on the block, the Information reports. The company is looking to sell Conductor, which it bought in 2018, and Meetup, which it bought the year before. Managed by Q, a workplace management platform, is also for sale, even though WeWork has held it for only about six months.
Other dispositions may follow, since WeWork previously seemed eager to prove, via acquisition, that it was more than just a real estate company. In an interview with Bisnow in 2017, IWG CEO Mark Dixon, whose company is an older rival of WeWork, offered the opinion that WeWork seemed to be dabbling in too many things.
"It can be easy to lose your focus," Dixon said at the time. "I am sure they are very good at what they do, but this business needs a lot of capital and it can be very easy to make mistakes when you expand quickly."
Whatever steps new management takes, the hard mathematical fact remains that the company is losing a lot of money. WeWork reportedly has only enough cash to last through the winter, and no access to public market financing, at least for now.
WeWork lost $1.9B in 2018 alone, and in order to meet its growth targets, the company was hoping to raise more than $3B with the IPO, which would have unlocked $6B in new debt.
SoftBank, already an investor in WeWork to the tune of about $10B, might yet come to the company's rescue, however. The Financial Times reports that the SoftBank is in talks with WeWork for an additional $2.5B investment, which would give the investor a larger stake in the company and new co-CEOs Artie Minson and Sebastian Gunningham more time to clean up Neumann's missteps.
