Running the numbers here. WeWork has 12.500 employees with 500 locations. That means on average 25 employees per location. That sounds absurd for workspace management, especially since construction / renovations / cleaning are most likely outsourced.
Let's cut them some slack and assume that half the workforce is focused on expansion (6250 employees) and that one in 25 are secretarial or HR (i.e. not related to daily operations of a workspace). That STILL means >10 workers per location full time.
When I was in a WeWork (not a good experience fwiw; not horrific, but definitely not good), the cleaning staff seemed to be WeWork employees. Direct hires too, which I liked.
I first heard of WeWork a few months ago. Seemed like just another company (admittedly I did very little to look into it). How is it that this company went from filing for public offering to laying off up to 25% of it's work force (along with a ton of other things I can't think of specifically at the moment) in just a few short weeks?
The “How I Built This” on WeWork[1] was fascinating. Basically the 2008 financial crises increased vacancies in trendy places a lot. WeWork grew up with the trends in coworking. But really has turned into a very fancy middle man for turning buildings into beautiful coworking office spaces. The brand for a while had some cache, but the thing is many are realizing that they can also build beautiful coworking spaces and there’s no magic secret sauce IP or tech that makes WeWork special here. In this context, WeWork has only gotten weirder and full of itself... they just seem disconnected from reality from what they are while at the same time losing money hand over fist.
They were counting on a big chunk of cash from the IPO that they could use to pay the interest on their massive debts and keep expanding and developing to keep the growth/valuation story alive. This was all undone when outside investors saw the S-1 had no clothes. Those debt payments still need to happen though, and no one buys the valuation story anymore so something has to give.
> How is it that this company went from filing for public offering to laying off up to 25% of it's work force...in just a few short weeks?
The wewtf link someone else posted is good, but essentially, it was burning through cash in order to grow. Its private investors (mostly Softbank) were OK with that, but the public markets weren't. They also didn't like management and corporate structure). Not being able to raise cash to continue hypergrowth and having faced a reckoning about the true business prospects and valuation, they have to cut back.
> ...focus on our core business, the fundamentals of which remain strong
I actually buy this line. At the end of the day, they're getting money for a product, so there's a business there. The main risk with We is that there's a recession, occupancy drops to 50%, and they're stuck with the leases. But that's not a unique risk.
> Minson and Gunningham are also looking to sell some of the companies WeWork purchased in recent years, as well as the Gulfstream G650 the company bought last year for $60 million
> “I rarely give away my power, and when I do, it’s to my wife,” who he said was “99 percent right,” according to multiple people who watched the speech. Neumann concluded with yet another moment of life coaching: “Change your inner self. Change the world.”
> "The S-1 detailed the extent to which Neumann controlled his company, and had benefited personally from his position: he had bought buildings in which WeWork then took out leases, and received $5.9 million in exchange for selling a set of We-related trademarks to his own company. One clause called for Rebekah to name a successor in the event of Adam’s death. The entire thing was dedicated, in an epigram, “to the energy of We — greater than any one of us but inside each of us.”"
Was almost an inevitability it seemed like with all the other news, IPO ended etc. While this is a huge deal, is it really going to change anything about the underlying business?
Let's say there's only 10% of employees or some very low number. Would then the Real Estate deals put in place vs. the Revenue received for re-leasing them pencil out positive?
I wouldn’t correlate the two. Despite the focus on brand to imply the contrary, WeWork isn’t a tech company. They’re a real estate lease flipping company.
I hope everyone can take break from the we-work-bashing for a few minutes and agree that regardless of screwy business models, almost four thousand people being laid off is sad. I suppose everyone is partially responsible for understanding the viability of his company and taking that risk in an informed fashion, it's still not a good thing.
Or increase the WeWork bashing: the need for these layoffs is a sign of failure. I’ve said it before in a different situation, and someone took the time to find me on Twitter to tell me what they thought: layoffs in startups (or companies pretending to be a startup) indicates that maybe those seats shouldn’t have been warm to begin with.
itcrowd|6 years ago
Let's cut them some slack and assume that half the workforce is focused on expansion (6250 employees) and that one in 25 are secretarial or HR (i.e. not related to daily operations of a workspace). That STILL means >10 workers per location full time.
No wonder the financials don't add up.
crummy|6 years ago
fullshark|6 years ago
IWG plc which is their major competitor has 9,000 people so I'm not sure it's that crazy. Might explain why they want to trim 25% also!
https://en.wikipedia.org/wiki/IWG_plc
x0x0|6 years ago
op00to|6 years ago
alephnan|6 years ago
Yhippa|6 years ago
Mockapapella|6 years ago
softwaredoug|6 years ago
1 - https://www.npr.org/2018/08/31/643774290/wework-miguel-mckel...
hprotagonist|6 years ago
vpribish|6 years ago
dehrmann|6 years ago
The wewtf link someone else posted is good, but essentially, it was burning through cash in order to grow. Its private investors (mostly Softbank) were OK with that, but the public markets weren't. They also didn't like management and corporate structure). Not being able to raise cash to continue hypergrowth and having faced a reckoning about the true business prospects and valuation, they have to cut back.
> ...focus on our core business, the fundamentals of which remain strong
I actually buy this line. At the end of the day, they're getting money for a product, so there's a business there. The main risk with We is that there's a recession, occupancy drops to 50%, and they're stuck with the leases. But that's not a unique risk.
koboll|6 years ago
gniv|6 years ago
mhb|6 years ago
bithavoc|6 years ago
That is just obscene.
kasperni|6 years ago
Neumann does come away as a bit over the top:
> “I rarely give away my power, and when I do, it’s to my wife,” who he said was “99 percent right,” according to multiple people who watched the speech. Neumann concluded with yet another moment of life coaching: “Change your inner self. Change the world.”
> "The S-1 detailed the extent to which Neumann controlled his company, and had benefited personally from his position: he had bought buildings in which WeWork then took out leases, and received $5.9 million in exchange for selling a set of We-related trademarks to his own company. One clause called for Rebekah to name a successor in the event of Adam’s death. The entire thing was dedicated, in an epigram, “to the energy of We — greater than any one of us but inside each of us.”"
xfour|6 years ago
Let's say there's only 10% of employees or some very low number. Would then the Real Estate deals put in place vs. the Revenue received for re-leasing them pencil out positive?
rossdavidh|6 years ago
rubicon33|6 years ago
bdcravens|6 years ago
einpoklum|6 years ago
sg47|6 years ago
big_chungus|6 years ago
whateveracct|6 years ago
Nah, I'd say leadership is clearly at fault. Layoffs are pretty much always failures of leadership.
bdcravens|6 years ago
jcomis|6 years ago
Why?