- WeWork, the coworking-space company, is valued at $47 billion, but it’s hemorrhaging money.
- WeWork is losing $219,000 hourly. In 2018, the company’s losses and revenues both doubled, to $1.9 billion and $1.8 billion, respectively.
- As WeWork moves toward an initial public offering, it will need to convince investors that it’s a worthwhile long-term investment and can survive an economic downturn despite its losses.
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WeWork, the 9-year-old coworking startup now operating under the We Company umbrella of companies, may have a whopping $47 billion valuation, but it’s hemorrhaging money: $219,000 every hour of every day during the 12 months leading up to March, according to the Financial Times.
In 2018, WeWork’s losses and revenue both doubled, to $1.9 billion and $1.8 billion, respectively. According to FT, though the company in March projected $3 billion in revenue in the next year, it lost $700 million in the first quarter of 2019.
Business Insider has reached out to WeWork for comment, and will update this post if we hear back.
In April, CEO Adam Neumann announced WeWork confidentially filed initial-public-offering paperwork in December as the We Company, which also includes Neumann’s coliving venture, WeLive, and the “conscious entrepreneurial school” WeGrow. As the company moves toward an IPO, it will need to convince investors that its significant growth makes it a worthwhile long-term investment despite equally large losses.
SoftBank CEO Masayoshi Son is the major investor in WeWork and a mentor to Neumann (his wife, Rebekah, refers to Son as "Yoda"). Son has invested more than $10 billion in WeWork. In December, Softbank was expected to invest $16 billion in WeWork but ended up investing only $6 billion, with $1 billion of that going toward existing shares, prompting renewed scrutiny of its business model.
Uncertainty about WeWork can be boiled down to three concerns: the stability of its model (pairing long-term office leases with short-term occupants and what that might look like during a recession), its categorization (Should WeWork be compared against tech companies or real-estate companies?), and the wild card that is Neumann.
New York magazine's Intelligencer published a profile of Neumann in June, depicting the CEO as zany and idealistic. Neumann forbid employees from expensing meals containing meat last summer. His commencement speech at Baruch College in 2017 recounted his early years in New York City, which he spent clubbing and "hitting on every girl in the city."
When asked about his personal superpower, Neumann brought up a character from the TV show Heroes ("Neumann neglected to mention that this was the show's villain: a serial killer who murdered people to get their powers," Reeves Wiedeman wrote for New York magazine.)
A surfing fan, he has seemingly blurred the lines between his personal interests and WeWork's, investing on behalf of the company in a wave-pool startup called WaveGarden and the big-wave surfer Laird Hamilton's so-called superfood startup, which sells things like "performance mushrooms," powdered coconut water infused with beets and turmeric, and highly caffeinated coffee.
And yet, Neumann's ambition and salesmanship are the forces that have skyrocketed his company to a nearly $50 billion valuation in under a decade.
"There are hundreds of co-working companies around the world, but what has long distinguished WeWork is Neumann's insistence that his is something bigger," Wiedeman wrote.
According to WeWork's website, the company has 743 coworking sites open and coming soon in 124 cities in more than 36 countries. FT reported that WeWork has 485 offices and was in 105 cities as of the first quarter of 2019; New York magazine reported that the company has 12,000 employees. WeWork is the largest private office tenant in Manhattan.