WeWork is going public with its tail between its legs. The company announced Friday that it is merging with SPAC BowX Acquisition Corp in a deal that values the company at $9 billion dollars, including debt — a far cry from the company’s peak valuation of $47 billion just two years ago.
WeWork was once viewed as one of the most promising young companies under SoftBank’s innovation fund, flipping real estate in major cities across the world and turning them into chic, millennial workplaces where startups and small companies could work for relatively cheap and drink kombucha on tap.
Its 2019 IPO was hotly anticipated before the dominoes began to fall in dramatic fashion. The company was revealed to have been hemorrhaging billions in losses, and then-CEO Adam Neumann resigned in the wake of the failed IPO and scandals about his behavior in the workplace (although he took a cushy severance and annual salary of several million with him). The entire saga prompted an industry-wide reassessment of the fervor with which investors created and pumped money into unicorns, the prominence of the cult-of-personality CEO, and startups in general. Thinknum, the parent company of Business of Business, came into conflict with WeWork when co-founders Justin Zhen and Gregory Ugwi made a blog post analyzing the company’s data and calling its valuation into question, which led to them being evicted from their WeWork space.
The $9 billion valuation is less than half of the $20.6 billion raised in the company’s history, and WeWork admits in the press release that it still does not have a positive EBITDA. But the company is now attempting to paint itself as emerging from the ashes thanks to the COVID-19 pandemic, which it claims has created a demand for “flexible spaces.”
“COVID-19 has accelerated the demand for flexible workspace among organizations large and small, which WeWork is uniquely positioned to serve on a global basis,” the press release reads.
In a section of the press release titled “A Transformed WeWork,” the company lays out some changes its made since 2019 to steer it in a more efficient direction.
“Since 2019, WeWork has made significant progress towards transforming its business… which contributed to a dramatically improved cost structure,” the press release reads. “The company also… streamlined headcount by 67% from its peak in September, 2019.”
In other words, over two thirds of the company’s workforce has been let go since fall 2019 when its headcount was 12,300 employees, according to Thinknum’s Linkedin Headcount data. Though the data does not display updated headcount after December 2020, the immediate impact of the 2019 fallout is clear: in just one year, 35.6% of employees removed WeWork as their employer on Linkedin. The company’s 2019 prospectus claimed 12,500 employees, meaning that 8,375 jobs were cut over the last two years.
WeWork’s hiring has also all but frozen completely. Two years ago, the company had 1,480 open job listings. By May of last year, it had only 81 — a 94% decrease.
Aside from its bloated workforce, WeWork’s next biggest problem was its incredibly high density of locations. As of 2019, WeWork was the largest tenant in Manhattan and still had locations in-progress during the company’s meltdown which the company now says it has backed out of.
“As of December 2020, the company successfully exited 106 pre-open or underperforming locations and executed over 100 lease amendments for rent reductions, deferrals, or tenant improvement allowances resulting in an estimated $4.0 billion reduction in future lease payments,” the press release reads. “After its strategic asset exits, WeWork retains an unmatched scale and value proposition worldwide thanks to its 851 locations in 152 cities, totaling more than one million workstations.”
The company touted its revenue, which (excluding China) stayed flat from 2019 to 2020 despite the downturn spurred on by COVID-19, as a sign that the company is resilient in the face of unprecedented economic difficulties. But even if WeWork is on the mend and able to become a profitable company, it will be hard to forget the titan it once was — and how hard it fell.
About the Data:
Thinknum tracks companies using the information they post online, jobs, social and web traffic, product sales, and app ratings, and creates data sets that measure factors like hiring, revenue, and foot traffic. Data sets may not be fully comprehensive (they only account for what is available on the web), but they can be used to gauge performance factors like staffing and sales.