Joint venture company Wework is in bankruptcy – E24

Wework’s co-working company had a market value of NOK 480 billion four years ago. Now the company warns of “significant doubt about the company’s ability to continue” its operations.

In his time, eccentric CEO Adam Neumann charmed investors so much that it could take minutes from the time he sold the idea to paying investors to Wework.

The company’s business model relied on securing long-term leases, renovating buildings and then letting them move out again in the short term.

The sales plan, which stated that the company, with its technology solutions, was more than just a real estate company, established Wework up as one of the most valuable startups in the world.

But investors are gradually becoming lukewarm. Just four years later the market value was NOK 480 billion, this week notes accounting numbers That the company may be on the verge of bankruptcy.

Because of the significant losses and expected cash needs, as well as the increase in membership flight, “there is significant doubt about the Company’s ability to continue as a going concern,” the company wrote in the report released Tuesday.

Big losses

The company reported a loss of $397 million in the second quarter of this year, or just over four billion crowns. The turnover was $844 billion, 8.6 billion kroner.

This week, Wework also presented the steps it will take to increase liquidity and profits, including by cutting costs and issuing debt and equity.

Wework has raised billions of dollars from companies like Japan’s Softbank, one of its largest shareholders. After the IPO, Wework struggled with profitability and was a loss-making venture for Softbank.

In Norway, Wework has premises in Tjuvholmen and at Haakon VIIs Gate in central Oslo.

tecmagassinet Techcrunch He writes in an analysis that venture capital can work excellent for scaling startups quickly, but explains that it is not a good model for companies operating on low margins.

Parties and feuds

Wework has been widely discussed as a result of former president and co-founder Newman’s unorthodox management style.

Regarding an IPO bid in 2019, the company stated: “We’re dedicating this to an ‘we’ energy – greater than just any of us, but within all of us.”

In 2019, he was forced to leave the company after several negative media reports. Among other things, he writes, Newman sold the rights to the company name to Wework for six million dollars in stock (who later returned), smoking marijuana On a private planealmost without interest Equity loan from Wework And a very corrupt lifestyle.

“A lot of attention has been paid to me,” Newman wrote in an email to his employees after he resigned

– Exaggerated

The coronavirus pandemic hit Wework hard, but problems started piling up even before then. Investors began to be skeptical of Newman’s sales pitch.

Wework is perhaps the most overrated startup in recent years, says Steve Clayton at Hargreaves Lansdowne. Reuters.

With the epidemic, people’s work habits have also changed, which has had a negative impact on Wework.

Fewer companies, from large established companies to start-ups, are willing to enter into long-term lease agreements for geographically specific areas, acting CEO David Tooley said in a meeting with analysts earlier this week.