Words we never thought we’d hear.
WeWork emerged as 2019’s cautionary startup tale, following billions of dollars in fundraising, an ultra high valuation of US$47 billion mainly pushed forward by SoftBank, and a failed almost IPO. This was all followed by a very public resignation of founder and CEO Adam Neumann, the removal of his wife Rebekah Neumann from her position and the board, and then came the lawsuits. WeWork’s valuation was then brought back down to earth at US$2.9 billion as of May 2020.
Marcelo Claure, WeWork Chairman told the Financial Times the company expects to generate profits and positive cash flow by 2021, a year ahead of schedule. It has slashed its workforce from a high of 14,000 last year to 5,600 people, a figure that has not been previously disclosed.
Now, it also seems that US companies’ pandemic induced “work from home” clause only temporarily hurt the company. WeWork burnt through $482m of cash in the first three months of the year while it dealt with tenants who didn’t pay rent. Now, the tide seems to be cautiously turning.
“We have companies like Facebook, Google and Amazon who have told their employees that they can work from wherever they are. We have a lot of those employees who basically now come to a WeWork facility to use it one day, a week, two days a week, three days a week,” says Claure.
Surprisingly, WeWork posted its strongest month in sales during June, when it spend US$20 million to re-design offices in order to cater to social distancing rules with emphasis on sanitisation. The WeWork chairman says although demand may not be as dense as before the pandemic, there is a need for high quality, sanitised workspaces.
It’s too soon to say whether WeWork will see a significant bounce back, but it does certainly seem to be taking a grown up approach to trimming the fat. By cutting 60% of staff, WeWork is adopting a much leaner model, slowed down hyper expansion and is instead back to focusing on its core business; providing high quality work spaces for companies and entrepreneurs. It also shut down its non-core businesses like coding academy Flatiron School, software company Teem and its stake in co-working start-up The Wing.
Now, it’s time to get back to the basics.