The Rise and Fall of WeWork: From Promising Startup to the Verge of Bankruptcy

WeWork, the American coworking giant, is on the verge of bankruptcy, after having been one of the most promising American start-ups.

A meteoric rise, then a dizzying fall. After being one of the most promising American start-ups, WeWork is now only a few steps away from bankruptcy. Weighed down by gigantic losses, abandoned by investors, the “coworking” giant is trying to keep its head above water but the latest efforts seem in vain. Perhaps the end of the story after only a dozen years of existence, which saw it go from ambitious start-up to fallen star.

WeWork was founded in 2010 in New York. Adam Neumann, a young thirty-year-old from Israel, founded the company with his friend Miguel McKelvey. After a first successful experience in a Brooklyn loft, where they set up a shared work space with the owner of the building, the two partners quickly measured the potential and decided to launch themselves into the growing coworking market. , convinced of their economic model.

In the wake of the financial crisis, young businesses and self-employed workers are struggling to find premises at affordable rents. Instead of offering a huge office space to a single company, WeWork prefers to fragment the surface area into a multitude of spaces, from individual offices to entire floors, rented separately and to which are added a range of services. WeWork’s first coworking space opened in Manhattan’s SoHo neighborhood in April 2011.

CEO financial maneuvers

Success is rapid, even insolent. The openings follow one after the other: at the end of 2018, WeWork was established in around a hundred cities around the world, with more than 400 coworking spaces on the clock. Displaying resolute confidence, Adam Neumann, now CEO, charms investors and raises several hundred million dollars. Then met the boss of the Japanese conglomerate SoftBank, Masayoshi Son, who will invest colossal sums from the summer of 2017.

The company was renamed “The We Company” and focused on new markets, including gyms and apartment rentals. With great fanfare, WeWork is preparing its arrival on Wall Street. But some investors were already skeptical about the company’s accounting, annoyed by Adam Neumann’s speech and the lack of transparency, and the financial information published ahead of the IPO finally convinced the others.

WeWork is accumulating losses, casting doubt on its solidity. Above all, press articles reveal the financial maneuvers of Adam Neumann. To reassure the markets, the company is reforming its governance and reducing the powers of its boss. Insufficient: theoretically valued at $47 billion in January 2019, this is only half as the IPO approaches. Scheduled for the month of September, it was finally postponed to an indefinite date.

The health crisis as a final blow

SoftBank saves WeWork from bankruptcy by injecting several billion dollars into it in October of the same year. The Japanese conglomerate then climbed from 29% to 80% of the capital. Adam Neumann is definitively ousted from the company’s management bodies. WeWork, whose image has been seriously damaged and which has long since lost its status as a promising nugget, is trying to redress the situation and continues to open new coworking spaces.

A few months later, it was the Covid-19 pandemic that delivered the final blow. The health crisis, confinements then the rise of teleworking are emptying its offices. The company, which ended up going public in 2021, much later than expected, is unable to meet its liquidity needs and continues to suffer financial losses. In November 2023, its capitalization only amounts to $61 million, after having lost 98% of its value since the start of the year.

The setbacks of WeWork, which is preparing to file for bankruptcy protection next week according to the Wall Street Journal, have even inspired a television series. The streaming platform Apple TV+ released an eight-episode miniseries last year called WeCrashed, which charts the rise and then fall of WeWork. In the title role, Jared Leto plays ex-boss Adam Neumann, while Anne Hathaway plays his wife, Rebekah Neumann. A typically American “rise and fall” story: Hollywood loves it, the stock market a little less.