WeWork Warns of Possible Bankruptcy

I do not understand why Adam Neumann got that massive exit settlement from We Work?<p>&gt; WeWork founder Adam Neumann received $245m in company stock [....] In addition to the $245m grant, Neumann received $200m in cash, was able to refinance $432m in debt on favorable terms, and allowed a finance company controlled by the former chief executive to sell $578m in WeWork stock. [1]<p>That guy got incredibly rich creating a company that was clearly not viable and seems likely to bankrupt. Corporate government seems to be non-existent here.<p>Who are the people that are left holding the bag? Hopefully it is mostly just private money like the Saudis + SoftBank (if they screw up, they suffer the consequences, that is great) and not public pension funds. Otherwise, the public fund managers should go after this complete lack of governance and oversight.<p>[1] <a href="https:&#x2F;&#x2F;www.theguardian.com&#x2F;business&#x2F;2021&#x2F;may&#x2F;27&#x2F;wework-founder-adam-neumann-enormous-exit-package" rel="nofollow noreferrer">https:&#x2F;&#x2F;www.theguardian.com&#x2F;business&#x2F;2021&#x2F;may&#x2F;27&#x2F;wework-foun...</a>

In my opinion the writing for a way out of this mess has been on the wall for a long time now, post-Covid. This is with the only viable, but still heavily under-utilized product they have left: hot-desking and community workspaces.<p>Having rented multiple dedicated offices from WeWork I can attest that the corridors are become more and more like a post-apocalyptic landscape as the tenants — no longer taking advantage of introductory rents — move out one after the other. Go to the hot-desking spaces floors and you’ll find it bustling and sometimes not even possible to get a seat somewhere.<p>Why they haven’t aggressively cut underperforming locations and consolidated more hot-desking space into the better buildings is beyond me. Especially in the current work environment where arrangements with companies are flexible and the line between home and work becomes ever blurred. It seems like the perfect base to start on to build a new offering for companies that can provide employees with hot-desks on a flexible basis.

Should have happened in 2021 but our &quot;brightest VC minds&quot; thought it would be a good idea to burn even more &quot;free&quot; money on this pit.<p>To be fair, WeWork is just another roll of the dice company from the Uber era of free money. Let&#x27;s pump it up and become too-big-to-fail! It appears WeWork wasn&#x27;t big enough..<p>And they can blame COVID all they want, but the business model was already showing sights of failure before 2020. Yes, COVID accelerated this but it was not the cause.

The story of WeWork is fascinating and sad to watch (for the employees). Adam got his but his employees didn&#x27;t.<p>The financial numbers are pretty sad too.<p>- Market cap below $500 million.<p>- Lost $700 million in 6 months this year<p>- Lost $2.3 billion in 2022<p>- Roughly 3 billion in debt<p>- Total liquidity of only $680 million (only 1&#x2F;3 is cash).

Company I work at went from a trashy long and cramped room in a WeWork where the toilets were always breaking and the elevator buttons didn&#x27;t line up with the floor numbering because it was two buildings stuck together to a two floor small warehouse style building, same area for less than WeWork cost.<p>Even without the push from some to WFH WeWork was a terrible product in the 3 WeWorks I&#x27;ve had to work in.

WeWork&#x27;s most recent 10-Q where the warning comes from: <a href="https:&#x2F;&#x2F;www.sec.gov&#x2F;ix?doc=&#x2F;Archives&#x2F;edgar&#x2F;data&#x2F;0001813756&#x2F;000181375623000059&#x2F;we-20230630.htm" rel="nofollow noreferrer">https:&#x2F;&#x2F;www.sec.gov&#x2F;ix?doc=&#x2F;Archives&#x2F;edgar&#x2F;data&#x2F;0001813756&#x2F;0...</a>

&gt; The spectacular collapse of a company once valued by SoftBank at $40 billion has been years in the making, but is still surprising given the number of large commercial buildings around the world that don the company’s name.<p>Is it actually surprising? If you too many assets that you bought with variable interest rate debt, then going bankrupt in a higher-interest-rate environment is exactly what I would expect.

Several years ago while hustling as a single founder, I hoped to get a desk in a private office (anything but open-space), so I would have a place to come to to focus on work, socialize and feel at work.. So I went to see what WeWork have to offer. There I saw a nice floor with nice looking private offices, finally taken to what they thought might be relevant for me, they showed me a tiny space where half a diner table is hung on the wall and over a diner sofa with the second wall behind the sofa, (now-days these types of rooms are used for private 1 on 1 meetings and zoom calls..) for the price of what I would pay a private office of say 2&#x2F;3 people (pre-WeWork shared office spaces). Just the audacity of the person showing me this for this price struck me how greedy and disconnected WeWork are, got me so insulted I would never check them out again. This is what you get when you get an MBA type business management constantly looking for ways to up the contract prices like its a B2B SaaS business (not that I&#x27;m saying this makes more sense there..)

Honestly surprised WeWork is still around after that documentary on it in 2021

I&#x27;m somewhat surprised by this. I&#x27;m currently working out of a WeWork and not only was it hard to get an office there, but they are constantly expanding the location I&#x27;m in and just opened the fourth location in a 1.5km radius. Cost is also rather high for a very small office (supposed to be for 4 persons, but if with 3 people it feels very crowded). The business of renting office space en masse and renting it out in smaller, much more expensive parts seems rather lucrative to me.<p>I&#x27;m in Hamburg, Germany for reference.

I got 3 month for free with WeWork just before covid (hotdesking only). I went there 2-3 times and found it to be a significantly worse working environment than even a starbucks. The chairs were extremely uncomfortable, the acoustics of the room made it noisy. Really didn&#x27;t see the point and can&#x27;t imagine how they can get people to use them.<p>It might be different in other locations but at least the two locations I&#x27;ve visited in Hong Kong were really not great.

VC capitalism over the past decade resembles the free spending era of Communist central planners tasked with rapidly industrializing their economies.<p>1) Dump enormous amounts of zero-interest capital into {{ sector }}<p>2) Entrust leadership to charismatic politicians rather than domain experts (Adam Neumann)<p>3) Craft a PR narrative emphasizing innovation and diminishing critics (Softbank &quot;Vision Fund&quot;, &quot;swinging for the fences&quot;, &quot;transformational&quot; )<p>4) Construct Potemkin villages to show the world that all is well (going public)<p>5) ...followed by eventual rapid decline and collapse<p>WeWork is the most egregious example, but the same fate awaits the likes of UberEats and Lime and what have you.

It doesn&#x27;t matter what happens to WeWork. Adam Neumann and the other VCs already exit scammed out of it with their millions and additionally dumped on retail.<p>They successfully got away with it, despite knowing that the business has hundreds of millions of dollars of losses pre-IPO, which was over $900M+ [0]; the biggest of all red flags as I said 4 years ago. [1]<p>This company could only exist in a cheap money era with decades long quantitate easing. Now just look at the ship sinking faster as the interest rates are now much higher with no cheap money this time.<p>WeWork is the gold standard of unprofitable companies who are good at losing money whilst pretending to be a &#x27;tech company&#x27; or &#x27;tech startup&#x27; and was just used as a vehicle for an IPO at an extremely inflated valuation before the bubble burst.<p>[0] <a href="https:&#x2F;&#x2F;www.cnbc.com&#x2F;2019&#x2F;08&#x2F;14&#x2F;wework-releases-s-1-filing-for-ipo.html" rel="nofollow noreferrer">https:&#x2F;&#x2F;www.cnbc.com&#x2F;2019&#x2F;08&#x2F;14&#x2F;wework-releases-s-1-filing-f...</a><p>[1] <a href="https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=21213365">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=21213365</a>

The era of cheap money is frequently invoked to explain this grand fiasco but macroeconomic variables have the same relation with any specific project that climate change has with an unusual heat wave.<p>Due diligence, focus on good governance etc are more directly influential in weeding out dodgy propositions and these behavioral aspects need not be closely correlated with any risk-free momey rate.

The TrashFuture episode on WeWork was a delight, and I was actually surprised to learn WeWork was still around: <a href="https:&#x2F;&#x2F;www.podchaser.com&#x2F;podcasts&#x2F;trashfuture-543791&#x2F;episodes&#x2F;i-identify-as-a-tech-company-f-47170019" rel="nofollow noreferrer">https:&#x2F;&#x2F;www.podchaser.com&#x2F;podcasts&#x2F;trashfuture-543791&#x2F;episod...</a>

I go to one about once a week to get out of the house (paying the ad-hoc rate), and they make it impossible to get a membership or even talk about how much a single person office would be (guessing out of my price range, but I actually have money to spend on it so I&#x27;d like to talk). Maybe if you could give them money they wouldn&#x27;t be in trouble.

My company has an office in a London WeWork. They are drastically attempting to control costs, e.g. things like the air con &quot;not working&quot;, more like they don&#x27;t want to turn it on because it&#x27;s expensive.<p>I expect that they will renegotiate the lease on this building to more favourable terms. It&#x27;s either that or the building goes empty.

I liked the spaces but their price are crazy expensive. It makes not sense to spend so much for a wood desk and a chair.

This company is an anomaly in the capital markets. Investors should do their due diligence or they’ll get taken in by an idiot or charlatan and lose their shirt.<p>Just look at their financials: $3.7b in the hole and continual losses pulling them ever further into the red. Even operating cashflow is negative. [0]<p>[0] valustox.com&#x2F;WE

They also carry long overvalued leases on their books at a time commercial real estate is in the dumps still. Some of my friends have been climbing hard into Commercial REITS now for a few years, hoping for that big upswing in office work to boost them.

It&#x27;s not like temp office space companies didn&#x27;t exist no one knew the risks. They&#x27;d been around for years and the pitfalls were well known. But this is what happens when you have lots of cheap money, low returns and massive fomo. Will they learn from this? Of course not, the AI bubble is currently being pumped up and I&#x27;m sure there&#x27;s going to be a few more wonder industries to lose a fortune in just round the corner.

I secretly root for Adam Neumann or any other entrepreneur that hustled their way into hundreds of millions and left VCs holding the bag in the free money era circa 2020...VCs were the ones doing the pump and dump for too long, and someone needed to give them a taste of their medicine.<p>I&#x27;ll never admire Neumann because he squandered over $18bn(!), but there&#x27;s a bit of poetic justice in how he took SoftBank for a ride..

What does WeWork actually sell? I mean... what is their source of revenue, or is it just dumb me and it&#x27;s my own fault that I don&#x27;t know that?

Sad about this because I have a hot desk membership in New York, and it&#x27;s an amazing experience that I&#x27;d probably pay more for honestly.

I have had 4 or 5 attempts with them at upgrading offices. For instance, from the ad-hoc membership to on-demand, then from on-demand to a small office. Their sales staff just don’t seem interested. It’s been a “please take my money” situation for much of the last 3 years.

My company recently moved from a wework equivalent to a much cheaper serviced office. A few less of the flashy features and perhaps a slightly less prestigious address (5 minutes down the road) for a third of the price.

[dupe]<p>More discussion over here yesterday: <a href="https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=37055563">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=37055563</a>

They&#x27;re not bankrupt <i>yet</i>? I thought the pandemic basically killed the business.

that will be a lot of furniture

I feel most awful for Softbank. WeWork was such a terrible investment.

Would also be interested to know what % of Spacs have shown success.

Should I look forward to season 2 of WeCrashed?