José Sarmento Matos/Bloomberg/Getty Images
Visitors outside a WeWork coworking office in London on August 9, 2023.
WeWork, the struggling coworking startup, has filed for bankruptcy protection in federal court.
The Chapter 11 bankruptcy announcement caps a stunning fall for the once high-flying SoftBank-backed company, which was privately valued at some $47 billion at its peak.
“Now is the time for us to move forward into the future by aggressively addressing our existing leases and significantly improving our balance sheet,” David Tolley, CEO of WeWork, said in a press release. “We remain committed to investing in our world-class products, services and team of employees to support our community.”
Once a much-celebrated tech unicorn that promised to revolutionize the future of office work – via, among other things, unlimited craft beer – a perfect storm of factors caused WeWork’s undoing following a botched attempt at go public in 2019.
At the time, IPO filings revealed larger-than-expected losses and potential conflicts of interest with the company’s co-founder and then-CEO, Adam Neumann. Neumann, whose unorthodox leadership style made WeWork’s culture the subject of much media coverage, was ousted in 2019 following pressure from investors. (Notably, Neumann still received a stunning golden parachute upon his departure).
WeWork finally went public about two years later, at a much reduced valuation of around $9 billion. But by 2021, market sentiment and the easy access to capital that had helped prop up much of the startup world before the pandemic had begun to change. Although WeWork presents itself as a technology company, some critics have pointed out that its core business is not technology but rather real estate, leasing space in office buildings for renovation and subletting to startups, freelancers as well as large and small businesses.
Even after its IPO, the company struggled to turn its fortunes around. The flexible workspace provider was facing tough times in the commercial real estate sector after the pandemic led to a rise in hybrid and work-from-home options, threatening the office culture WeWork was built on. Meanwhile, increased competition in the coworking sector, rising interest rates and macroeconomic uncertainty have also clouded WeWork’s attempts to save itself in recent years.
WeWork shares have plunged about 98% in 2023 alone. In May, WeWork announced a leadership shakeup with the departure of its chairman and CEO Sandeep Mathrani, a real estate executive whose Investors hoped he would save the company. WeWork board member David Tolley became interim CEO and was officially named CEO in October. Meanwhile, in August, the company said it had “substantial doubts” about its ability to remain in business over the next year as losses and debt continued to mount.