WeWork unbundles its products in an attempt to make itself over, but will the strategy work? – TechCrunch

For years, there was a debate as to whether WeWork was a tech company or a real estate play. At first, most people saw WeWork as a real estate startup disguised as a tech startup.

And as it continued to scatter more and more property, the lines continued to blur. Then we all looked at the valuation of the company and the plans for its IPO were ablaze. Today, WeWork is rumored to be Going public Via A spac At $ 10 valuation, far below $ 47 billion in value after that Investment of $ 1 billion in its SoftBank-led series Round in January 2019.

Co-founder and then CEO Adam Newman is notorious stepped down Later that year amid allegations of a toxic combination of arrogance and poor management. WeWork has since been very publicly trying to cash in on itself and revolve around investor – and public – perception.

In March 2020, chairman Marcello Claire commissioned a strategic, five-year plan in earnest. In the same month, a Belgaum company named a real estate – not technically. New CEO, A trick that manipulates the tongue.

WeWork also aims to be re-created Free cash flow positive As part of its plan from one year to 2022, it was intended to both boost valuations and win investor confidence.

This saw the possibility of the death of competitor Nototel, which ended Filing for bankruptcy And selling the property to an investor, and realized that the company needed to learn from some of the mistakes.

Now the question is: has WeWork legitimately turned a corner?

Since the implementation of its turnaround plan, the company says it has moved out of more than 100 pre-open or vulnerable locations. (this is More than 800 places Globally, according to its website.) WeWork limited its net loss in Q3 2020 to $ 517 million from $ 1.2 billion in the third quarter of 2019.

Meanwhile, revenue declined due to the effect of coronovirus. Revenue increased to $ 811 million in the third quarter of 2020, compared to $ 934 million in Q3 2019.

The epidemic presented WeWork with challenges, but also – some might say – opportunities.

With so many people forced to work from home and to avoid others during work, the office space in general struggled. WeWork either had to adapt, or potentially was a major setback for its valuation and bottom line.

WeWork’s dilemma is similar to real estate companies around the world. With so many companies not only temporarily, but permanently, even remotely working people have had to adjust everywhere.

For example, as McKinsey Recently told, All landlords have been forced to be more flexible and reorganize tenant leases. So really, anyone operating commercial real estate has to become more flexible, just like WeWork has.

For its part, WeWork has taken some steps to optimize. For one, it realized that its membership-only plan was no longer going to work, and a drop in membership was evidence of this. Therefore, it opened up its buildings to more people through new people. on demand And all Access the option. The goal was to give those who were tired of getting out of their own homes, one day a week, to work. WeWork saw an opportunity to offer its office space as a perk through offering All Access with companies, as well as universities that wanted to give their students an alternative place to study.

for example, Georgetown formed a very unique partnership with WeWork, a location of which “serves as their replacement library and common place.” And, Companies such as Brandwatch have recently opted out of leveraging traditional locations of WeWork rather than providing employees access to WeWork locations around the world through All Access Pass.

WeWork has also launched new product features. The company launched in the beginning of the year Ability to book space outside weekends and business hours.

Intolerance of space

I spoke with Prabhdeep Singh, Head of WebWorks, MarketPlus, who is overseeing new products and is also considering making WeWork’s shift online to learn more about the company’s new strategy.

“All we have done is expose our place,” he said. “It used to be that the only way to enjoy our spaces was through a bundled subscription product and monthly subscription. But we realized that with COVID, the world was shaking, and to open our platform to a wider group of people and make it as humanly resilient as possible. So they can now book a room for half an hour or pass a day for example. Use cases are very broad. “

Since the debut of On Demand as a pilot in New York City in August 2020, demand has been steadily increasing, according to Singh. So far, reservations have increased by 65% ​​- and revenue by 70% – in the fourth quarter of 2020. But of course, it is still early and they were starting from a small base. He said that about two-thirds of the demand reservations are made by repeat customers.

Singh said, “In the last year and a half, we are really figuring out what we want to focus on.” As a flexible space provider, we are seeing where the world is going. And When we are a small part of the entire commercial office space industry, we are working to use technology to enable a great workspace and a flexible workspace experience through the digitization of our spaces. “

For now, some things are showing. In February, WeWork says it had about twice as many active users as compared to January. Also, people obviously like the option of coming in closed hours. Weekend bookings now account for an estimated 14.5% of total bookings.

The company said that approximately two members have purchased all access passes during COVID in February 2020, compared to January 2020 to complete their existing private office space.

At the beginning of COVID-19, WeWork saw High departure Small and medium-sized businesses (SMBs) compared to its enterprise members, partly due to the nature of their businesses and the need to manage cash flow more, the company said. But in the third quarter of 2020, SMB desk sales were up 50% in the second quarter.

Interestingly, during the epidemic, WeWork has seen its enterprise segment grow at twice the rate of its SMB, which now accounts for half of the company’s total membership base.

Although it is slowing investment in new real estate assets in some markets, it is still working to “right-size” its portfolio through exits.

And, when it comes to its finances on March 2, WeWork said Bond The companies were trading at the highest point since the summer of 2019, when the company failed to go public. It is above the 52-week low of around 52%.

“For a ~ 10% yield” at 92%, creditor sentiment is clearly positive and a testament to the overall market confidence that WeWork’s flexible workspace product has a viable future in real estate, “a spokesman TechCrunch.

Just last March, WeWork is Bond Were Trading at 43 cents on the dollar and P & Global lowered WeWork’s credit rating to the junk sector and kept the company under watch for further declines, reports Forbes.

Nevertheless, the company is not followed. Singh told TechCrunch that to make Webwork’s value proposition even stronger, it is working to offer “trade in a box”. At the end of last year, WeWork partnered with several companies to offer SMBs and startups, for example, services such as payroll, healthcare and business insurance.

Many people who come to WeWork are growing businesses, ”said Singh. “So while we are stuck with our core business services, we are working to offer more as a true suite of HR services, which can be complex and expensive for a small business.”

It is also working to be able to offer its on demand product globally so that people can choose to operate outside of a webwork space from any of its locations around the world.

Singh said, “At the moment, we are in the biggest task from home use.” “I think we are going to shift to the biggest return for the experiment so far. We are just going to be very well positioned. “

The company appears to be trying to become a more sophisticated real estate company that may not be as attractive as in the Adam Newman era, but is more stable and more in demand. But is it trying to do too much, too fast?

It will be interesting to see how all this happens.


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