Charlotte Pieri 37532
Paul Van Straaten 37534
Denis Yakovlevich 36636
Marc Nicolae 37531
Co-Working Space
Mission: “Create a world where people work to make a life,
not just a living.”
COMPANY OVERVIEW
• Headquarters: New York City
• Founded year: 2010
• Members: 600,000
• Number of employees: 15,000
• 743 co-working sites
• 124 cities in 36 countries
• Parent Company: The We Company
• Associated brands: WeWork Labs, WeLive,
WeGrow
BUSINESS MODEL
• WeWork is simply an office-leasing • The leases are not cheap. The
company. It takes long-term leases company reported long-term lease
and rents out spaces for shorter obligations of $17.9 billion in its IPO
periods. filing, a number that is likely to increase
as the company continues to expand
globally.
• WeWork provides shared
workspace to start-ups at lower • This triggered investors’ doubt that
costs than they would spend on WeWork’s worth is $47 billion and
space of their own. that it can be profitable in the long run.
IS WEWORK UNPROFITABLE?
• Though the company in March projects $3
• Estimated worth was $47 billion inflated by billion in revenue but it lost $700 million in
SoftBank but in reality It is $7 billion the first quarter of 2019.
• Analysts have projected that WeWork will
burn through several billion dollars over
the next few years and thus needs to keep
on raising fresh funds at favourable
valuations.
• WeWork looses $219,000 every hour
during 12 months until March according to
Financial Times.
INVESTORS
• SoftBank is the largest shareholder and owns nearly a third • Other Investors:
of We Company. It has directly invested $7,5 billion at $47
• Benchmark – VC firm
billion valuation + $1,6 billion investments into the
WeWork’s subsidiaries. • Goldman Sachs
• SoftBank needs a $24 billion valuation of WeWork to break • Fidelity Investments
even. SoftBank would have made a $7 billion paper profit if • Aleph
WeWork had maintained the $47 billion valuation.
• Glade Brook Capital, etc.
MARKET VALUATION
EVOLUTION: THE RISE..
• Various series of funding
rounds between 2011
and 2017 ➔ steep
increase of valuation
• Maximum valuation
reached in early 2019
with 47 billion USD
FAILED IPO
• Initially scheduled for September 2019 and
valued at $47 billion.
• Investors discover considerable losses
• The value of the company was divided by 5 in
two weeks.
• CEO A.Neumann's excesses brought to light
• The IPO was postponed and then cancelled.
The CEO was dismissed from his position.
..AND THE FALL
• Concerning elements revealed by public disclosure of
financial documents:
- large losses: 1.9 billion USD in 2018
- suspicion of conflict of interests between Neumann
and WeWork
➔ investors realized that they overestimated WeWork’s
value
• Under investors’ pressure Neumann had to resign from
his position of CEO
• October 2019’s valuation: between 8 and 12 billion
according to Forbes
THE “WE” WAS A “ME”
• Investments far away from WeWork domain of
activities (wave pools; therapeutic cannabis…)
• Bought himself castles, rented offices to his own company
• Decadent and authoritarian management style
• Megalomania: “humanity first trillionaire, president of the
world, live forever…”
• Went out with 1 billion dollars
• Did Neumann have any vision for its company’s
future?
WEWORK: REAL
IDEA OR ILLUSION?
• A simple real estate company that was
pitched and sold as a genius start up
• “Any freelance or small company could
have Google offices, with beer taps, Play
Stations, table tennis and stylish
kitchens”
• But this is not technology, this doesn’t
need a patent, it is just merchandising a
lifestyle
A FAILED DIAGNOSIS BY INVESTORS?
Criteria for investment WeWork case
Market size Huge market size
Large and several segments of customers
Team / entrepreuneur Inefficient management
Inappropriate investments
Megalomania
Personal interests ≠ company interests and vision
Unique technology More a lifestyle trend than a new technology
Nothing more than an real estate agency
Illusion of a revolutionary start up
Timing To be discussed?
Coherent financials Uncertain Business Model
Huge losses
Profitable in 2026
A NEW PLAN
• Wework on the verge of bankruptcy
• SoftBank's $10 billion bailout plan
• SoftBank now owns 80% of the company
• Large-scale redundancy plan 20% of its
workforce
• Sale of non-essential assets to the company
• Sandeep Mathrani appointed CEO
(05/02/2020) with a new plan to reach
profitability in 2021
CASE STUDY ON WE WORK
• https://www.youtube.com/watch?v=tXPpjQdZlVk
