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In a way, WeWork suffered from the corporate equivalent of long covid. Any company with a business model predicated on people leaving home to go elsewhere for work was likely to suffer when lockdowns began in early 2020. Other companies succumbed quickly. IWG, the Swiss co-working giant, filed for bankruptcies for some of its subsidiaries and brands that first year of the pandemic. Knotel, a flexible office startup, similarly filed for Chapter 11 protection the following year.
WeWork survived as long as it did thanks to the lavish support of SoftBank, its chief investor. That support continued until days before WeWork’s Chapter 11 filing, in fact, when SoftBank paid out $1.5 billion to Goldman Sachs and other creditors. But just as the changes wrought by the pandemic, including more liberal work-from-home policies, have driven down the value of commercial real estate, so have they eventually doomed WeWork.
The company’s office space has gone heavily unused, even as it has had to keep paying rents to its landlords. In the second quarter of 2023, it revealed that its occupancy rate across locations was 72%. Just before WeWork declared bankruptcy on Nov. 6, its real-estate advisor was negotiating with more than 400 landlords, trying to get their leases changed to more favorable terms.
But arguably the pandemic eroded not just the culture of going to work, but also the culture of being at work. WeWork had been distinctive for its work-hard-play-hard ethos: its numerous parties, its gyms and pools and rock-climbing walls, its luxurious coffee machines, its conviction that the best work-life balance was one in which work and life blended entirely into each other.
These amenities were expensive, naturally. (Even much wealthier companies like Meta and Google have recently decided to do away with many of their luxe office benefits.) But they also clearly proved insufficiently tempting for workers. In fact, it seems (at least to this writer) that the pandemic encouraged people to further separate work from life, not whisk them together into a thicker emulsion—and to be less consumed by work, rather than using perks to sweeten the task of working more. Quiet quitting, Bare Minimum Mondays, and the Great Resignation were all signs of this post-covid realignment of workers’ attitudes. WeWork was, in part, a casualty of the downshift in work as well.
BY THE DIGITS
$18.6 billion: The volume of debt that WeWork reported in its bankruptcy filing
$47 billion: WeWork’s peak valuation, in January 2019, driven by SoftBank’s investments in the company
$45 million: WeWork’s valuation as of Friday, Nov. 3
$14 billion and counting: SoftBank’s losses through its investments in WeWork
56%: The proportion of outstanding WeWork shares owned by subsidiaries of SoftBank’s Vision Fund
660: The number of WeWork locations, across 37 countries, listed on the company’s web site, down from 764 locations two years ago
20 million: In square feet, the area of office space WeWork was renting as of June (1.85 million sq m)
69: The number of underperforming commercial real-estate leases that WeWork is seeking permission to reject, in its bankruptcy filing
$100 million: What WeWork owes in unpaid rent and lease termination fees, some of which it will dispute or renegotiate in bankruptcy court
QUOTABLE
“Going into bankruptcy—a Chapter 11 like this—is like open heart surgery. With the right doctors and surgeons, there’s a chance of success. But it’s not risk-free, and every aspect of the company is going to be touched.”
—Isaac Marcushamer, a partner and bankruptcy lawyer at DGIM Law, speaking to Bloomberg
ONE 💲 THING
What kind of poetry would it be for WeWork to be lifted out of bankruptcy by Adam Neumann, its much-lambasted co-founder? Would it be a lyric end, or a satirical verse, or a limerick with a twist in its tail?
People are speculating. Neumann walked away from WeWork with unusually lavish terms for a man who had driven a company to excess. He earned at least $770 million when WeWork went public in 2021, and further convinced SoftBank to loan him $430 million against his WeWork shares as collateral. (Those shares are now worthless. Presumably, Neumann will tell SoftBank it is welcome to them.) The Bloomberg Billionaires Index puts Neumann’s net worth at $1.7 billion—and that’s without his stake in Flow, a startup valued at $1 billion as of August 2022.
Neumann released a short statement when the news of WeWork’s bankruptcy filing broke. It was “challenging” for him to watch from the sidelines as the company crumbled, he said. The product that WeWork offers “is more relevant today than ever before. I believe that, with the right strategy and team, a reorganization will enable WeWork to emerge successfully.” Which may just be a thing to say. Or it may be a kind of rhetorical throat-clearing, leading up to a declaration that he, Neumann, will be the one to assemble the right strategy and team.
Thanks for reading! And don’t hesitate to reach out with comments, questions, or topics you want to know more about.
Have a work-free weekend!
—Samanth Subramanian, Weekend Brief editor