- 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 IPO, it will need to convince investors that it’s a worthwhile longterm investment and could survive an economic downturn, despite its losses.
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WeWork, the nine-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 of this year, 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 the FT. Though the company in March projected $3 billion in revenue in the next year, it lost $700 million in Q1 of 2019.
In April, Neumann announced that WeWork has confidentially filed IPO paperwork in December as The We Company, which also includes Neumann’s coliving venture WeLive and “conscious entrepreneurial school” WeGrow. As the company moves towards an IPO, it will need to convince investors that its significant growth makes it a worthwhile longterm 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 over $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: 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 release estate companies), and the wild card that is CEO 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,” wrote Reeves Wiedman for New York Magazine.) A surfing fan, he’s 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 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 is the force that has skyrocketed his company to a near-$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,” Wiedman wrote.
According to WeWork’s website, the company has 743 co-working sites open and coming soon in 124 cities in over 36 countries. The FT reported that WeWork currently has 485 offices, and was in 105 cities as of Q1 of 2019; New York Magazine reported that the company currently has 12,000 employees. WeWork is the largest private office tenant in Manhattan.
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