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when you cover IPOs and high-flying
startups are used to seeing dramatic
changes over short periods of time but
nothing in my experience has really
compared to what we work has undergone I
think people felt like they blinked and
and everything was different at last
reporting they're running out of cash
very quickly here sources have told
Bloomberg that the company could run out
of cash by next month I was surprised at
the vitriol and the speed with which
investors apparently rejected what we
work was trying to do from the first day
that we started we work it was about
bringing people together there's an
energy that you feel that energy
something that's hard to explain it's
something that either you feel it or you
don't we like to call it the wheat
generation in less than one year we work
when from one of the most highly valued
startups of all time to losing more than
3/4 of its value
rouse ting its Rockstar CEO and
desperately needing a cash bail out from
its biggest investor just to keep the
lights on in order to understand how we
got here we need to take a look into the
mistakes made along the way the
ambitious vision of we work is
effectively dead period this is a case
study of what a company got too much
money too fast with no effective
oversight on how to spend it they are no
longer the market leader
that company's gonna get smaller and
it's never gonna be ten times bigger I
mean the story is over
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as late as summer 2019 the co-working
company we work was considered one of
the most valuable startups with a forty
seven billion dollar price tag more than
Airbnb stripe and SpaceX but in just a
few months time that valuation has
vanished and the very future of the
company is in doubt to understand how
this happened
it all starts with the company's now
former CEO and founder Adam Newman Adam
Newman is the co-founder of we work and
was its CEO for a long time he came over
to New York for college after being in
the Israeli Navy and started a few
businesses including my favorite example
is a baby clothes line with knee pads
his landlord was actually showing him
another building in Brooklyn when he
came up with the idea of sort of
subdividing that space which Miguel
McKelvey his co-founder who's a trained
architect so we came up with the plans
and then boom they're away they started
a company called green desk which they
sold and that was the first iteration of
we work which they started in 2010 we
work is a new environment for the
workspace so co-working was sort of
where it started today there's a
movement in changing the way people work
2010 was a great time to be starting a
co-working company in New York City
through a bunch of landlords with empty
office buildings vacancies we work
actually presented a solution for them
the very first building down in Grand
Street in downtown Manhattan was where
we work launched its first co-working
spot and from there it was sort of
boomed from 2010 to 2011 it doubled in
size and from then on the growth was
exponential some of their original
investors were people who were involved
in commercial real estate they got some
early investment from a venture capital
firm called benchmark and eventually
sort of kept growing kept taking on new
leases and and started to grow the
business starting in New York City
business grew quickly and by 2015 the
company already quadrupled its valuation
to ten billion dollars Counting
twenty-three thousand customers paying
memberships in 32 locations renting
desks for as little as $45 per month we
works whole idea was let
not just be a commercial office leasing
company let us accelerate the new world
of how people work and make it better
community being surrounded by a group of
like-minded individuals being part of
something bigger than yourself inspires
people to work harder spend more time at
work and just have fun doing it and
initially this attracted the attention
of young entrepreneurs looking to expand
their companies we thought it's about
time to give you a tour of where we work
a tour of where we work and tour of
where we work
you got you got because he got ya you
got your Red Bulls incredible group of
people everyone that I've met through
the way we're community has been
absolutely awesome and all the staff
here are incredible it's almost like a
cult-like sensation that they created
with the very early employee sort of
realizing that we work was more than a
company it was a bit of a family it was
a community and members to sort of
realized that they realize they could
lean on each other in terms of
networking in terms of growing their own
businesses this excitement drew in even
more investors to the company Adams and
his company you know it's not 2.0 it's
10-point oh I mean he's taken it to
really the next the next level and when
you walk into their space and you see
the energy you see the excitement you
see the interaction it's a very very
powerful concept
and the most crucial investor would be
Softbank I would say the time that I
think we were really started to take off
was when Softbank invested in them in
2017 that gave them a valuation of
twenty billion dollars and that's really
when you start to get into the high
ranks of other venture back to private
companies with softbank's investment we
were quickly expanded its footprint
throughout the world and it's the
beginning also of this partnership
between Adam Newman and Masayoshi stone
who's the head of soft bank they have
this meeting that is often told again
and again in the lore of we work where
Adam made this pitch and masa said
that's great but let's make it even
bigger we work is actually one of over
80 companies that saw faint vision fund
has backed with its over a hundred
billion dollars softbank's idea is
there's lots of money out there in this
unique period of transformation let's
make everything happen faster with more
money and let's enable companies that
have smart ideas to get even more
ambitious bigger and faster between 2017
and 2018
Softbank would invest around eight
billion dollars into we work doubling
its valuation to 20 billion in 2017 in
2019
Softbank floated a potential 16 billion
dollar investment which would give them
a controlling stake in the company
ultimately they would scale back to just
2 billion dollars but it was enough to
double we were exfoliation again to 47
billion so at 47 billion which is a
little bit of an illusory number it's
not real but that put we work in the
very top tier of high valued young
startups so the reaction from a lot of
the real estate world was wow that's
crazy in part because there's a company
that trades in the UK called iwg used to
be known as Regis
your trades at a fraction of that and
people were looking at that company
which is profitable and we work which is
not and wondering what the gig is why
people didn't understand
well what Softbank maybe knew that they
didn't and that's because in many
measurable areas like global square
footage members locations country's
revenue and profit iwg is either similar
or much higher than we work except of
course for one area valuation where we
work was valued nearly 13 times higher
than iwg we of course looked at that
every single day and said what are we
missing is there something that we're
not doing is there something that we're
missing is there an ingredient that's
sort of there that we are missing out on
that we can add into what we're doing
but we never found it after getting
these investments from Softbank and
license to spend quickly that's just
what we work did opening more and more
offices around the world making
investments in a variety of different
companies and even opening an elementary
school in New York City it's almost out
of a legend right now how recklessly we
work spend its money on things from a
company that makes wave pools to a
company that makes super foods
led by a guy that Adam met while he was
surfing you know when you see a start-up
that's in the commercial real estate
sector investing in an indoor wave pool
company and in a children's school you
know something has gone wrong but just
how wrong wouldn't be fully realized
until we work announced in August of
2019 that it would file for a public
offering it was the first time since a
bond offering last year that investors
were able to peel back the curtain and
see into the company's financial
performance read its metrics see its
gross I got up really early and it was
was reading it and I remember you know
on my way into the office and it was
still dark outside and there was a small
line in just a couple lines about how
Adam Newman the CEO he had personally
purchased the trademark to the word we
and it sold that back to his own company
for five point nine million dollars
and I looked at that and I thought
that's kind of weird this was just one
of many examples of how the corporate
leadership including Adam Newman seemed
to find opportunities to enrich
themselves at the expense of
shareholders and at the expense of the
company the filings also showed in just
the first six months of 2019 we work
lost six hundred ninety million dollars
bringing its total losses to almost
three billion dollars in the past three
years things stopped changing rapidly
investors are telling we work and it's
bankers you know what this isn't for us
people are throwing out numbers as low
as 12 potentially even as low as 10
billion and all these things that raised
a few red flags just started kind of
added fuel to the fire of this
discussion of is this company ready to
go public it just doesn't feel like it
has the controls in place that you would
expect of a public company that needs to
protect the value for shareholders on
September 17th we were officially pushed
back it's much awaited initial public
offering we have decided to postpone our
IPO to focus on our core business the
fundamentals of which remain strong the
board and in particular Softbank its
biggest investor decide that there needs
to be a big change it needs to come from
the top and that Adam is now more of a
liability toward the company than he is
an asset on September the 24th he
resigns saying too much focus has been
placed on me
he realized he was a distraction to the
company in a vote with all board
directors of which he was one he
actually voted against himself remaining
his CEO to senior wework executives
sebastian cunningham and RD Minson were
appointed as co-ceos among their
housekeeping items sell newman 60
million dollar private jet but multiple
wework acquisitions up for sale
postponed the IPO indefinitely closed
down we grow the company's private
elementary school and lay off thousands
of employees we reported that the
co-ceos Rd Minson and Sebastian gunning
Hamm have secured themselves
multi-million dollar severance packages
at a time when the company doesn't even
have enough cash to pay severance to its
thousands of rank-and-file employees and
it plans to layoff I haven't have you
Softbank would ultimately bail we
workout injecting a much-needed 9.5
billion into the company which now is
valued at less than 8 billion dollars
now that Softbank has bailed out we work
I think the overarching sense is one of
uncertainty for everyone who's involved
in this company you know what I've
talked to ex employees from we work they
often feel pretty drained by the
experience they felt like they came in
drinking the kool-aid thinking we work
was gonna change the world and make
everyone more connected and help people
do what they love and by the time they
left they felt like they hadn't really
been valued and that and that the
company was kind of all over the place
and and they felt worn out there are
some cautionary notes for every other
young company the running the business
in a completely unprofitable manner the
lack of board oversight that there was
no adults in the room saying no and so I
think what happened that we work as a
sign that you can only run a company
without guardrails for so long I mean I
think it's basically a shocker for
everyone I don't think anyone's seen
anything quite this big and this strange
go down but for those of us in tech
there is great precedent for a
transformational change getting underway
and then a bunch of the early folks sort
of flopping I mean there was a time that
eBay was 10 times bigger than Amazon now
Amazon's 50 times bigger than eBay there
was a time that myspace was the only
social network now the only one is
Facebook those kind of reversals happen
quite regularly and so it's not really a
surprise that the first Mouse to chase
the cheese is the one that got caught in
the trap I think that's roughly that
what happened that we were I think we
work as sort of both a little bit of an
outlier in this era of technology
startups but also kind of the perfect
encapsulation of what this era of sort
of easy money and no rules has delivered
in in start-up land
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you