© Unsplash/Sargent Seal
It's almost the end for WeWork. The largest coworking company and 2nd American unicorn in history has just announced its filing for bankruptcy.
For sector experts, this news is not really a surprise. The company founded by Adam Neumann has already suffered several setbacks, notably in 2019, narrowly saved from bankruptcy.
How could a company valued at $47 billion also collapse? quickly? Answers in 5 key dates in the history of WeWork.
While coworking is not really democratized, Adam Neumann, an entrepreneur previously unknown, founded the company The We Company with his friend Miguel McKelvey.
Like Steve Jobs and Steve Wozniak, Adam Neumann takes on the role of charismatic leader while Miguel McKelvey manages operations. Their concept is simple: in a world where self-employment and start-ups are growing, renting office space is too expensive. Their solution: rent giant offices to share with several very small companies and self-employed workers for a rather expensive monthly rent (650 euros per month in Paris for example).
They aim for a premium service with premises located in the most exclusive districts of the world's major capitals and luxury services. The first WeWork is born in New York and shakes up the coworking market.
In August 2017, WeWork had 2,000 employees and 130,000 daily users spread across 260 open spaces in 16 countries (including Paris Lafayette in France, office opened in 2016).
To continue its development, the start-up needs funds. Lots of funds. Softbank, partner of the unicorn, then decided to invest $4.4 billion, bringing its stake to $7.4 billion. At that date, WeWork was valued at $20 billion.
In August 2018, Softbank came back with an additional $1 billion, then $3 billion in November. the same year for payments scheduled for January and April 2019.
These investments mainly allow WeWork to continue to expand throughout the world while still providing premium services. This is for the official version.
In reality, the company is also preparing an IPO and is therefore seeking to increase its valuation before this operation. Less gloriously, the company's operating costs explode, notably because of the lifestyle of Adam Neumann and his wife, who do not hesitate to draw on the start-up's resources to finance sometimes risky projects. .
Obviously, these strange operations did not remain without consequences. In October 2019, when it was due to go public, WeWork gave up. In question, the enormous deficits camouflaged by Adam Neumann, an uncertain economic model (with prohibitive prices) as well as ineffective management.
The cancellation of the IPO has the effect of a bombshell. The start-up loses half of its valuation. While it had peaked at 47 billion dollars, it is now only 8 billion. Adam Neumann is fired and Softbank, which controlled a third of the capital, injects an additional 10 billion to take control of the company.
Without this investment, WeWork could already have been bankrupt.The rescue of Softbank will not prevent the company from laying off 2,400 people out of the existing 12,500 as well as transferring 1,000 employees to subcontractors. Shortly after, Miguel McKelvey left the company.
After suffering the effects of the Covid crisis confinements, WeWork finally made its IPO via the merger with a SPAC (special purpose acquisition company). It raised $420 million and was valued at $9 billion at that time.
Indebted, WeWork survives thanks to a restructuring planestablished with creditors. Above all, analysts no longer really believe in the economic model of the start-up which has not really changed its strategy. The ouster of Adam Neumann will not have changed anything.
At the end of March 2023, WeWork is valued at less than a billion dollars. The company explains that it renegotiated $1.5 billion of its debt, increasing it to $2 billion. Five months later, WeWork is only valued at $280 million. In addition to paying for the mistakes of the past, the company had to face the Covid crisis, a complex macro-economic context as well as the development of teleworking.
WeWork then announces a final plan of restructuring with layoffs, the sale of loss-making offices or even the issuance of debt. But as of November 1, 2023, WeWork's valuation continues to plummet, falling to $64 million, as the company has not repaid its creditors.
As announced by Wall Street Journal, WeWork has just announced its bankruptcy.