Earlier this year Adam Neumann rebranded WeWork as The We Company, saying his sprawling shared office company’s mission was to “elevate the world’s consciousness.”
Now WeWork’s once-massive IPO is just a memory, Neumann is gone as CEO, and the company wants to reassure its investors that it is going back to basics.
In an investor presentation done last month in the wake of Neumann’s abrupt ouster, WeWork said it will jettison a slew of noncore assets and shrink its workforce as part of a 90-day revamp intended to slow the hemorrhaging of cash and to stabilize the company.
Over the past few years under Neumann’s leadership, WeWork acquired a wide variety of companies, including several businesses unrelated to office-management services, such as Wavegarden, a maker of wave-generating technology for surfing sites. But many of them do have applications that bring support services to WeWork’s far-flung empire of workspaces, such as Managed by Q, a venture-backed provider of janitorial and other services. (Read more about the company’s acquisitions.)
WeWork’s investor presentation, which was prepared when the company was considering rescue financing from JPMorgan Chase, didn’t specify which businesses would be on the auction block.
Representatives from New York-based WeWork weren’t immediately available to comment, but the investor deck’s mention of divesting noncore businesses showed logos of seven subsidiary companies or investments including Meetup, SpaceIQ and Managed by Q. It also showed the logo of The Wing, the women-focused community that WeWork invested in, a potential stake sale that has been previously reported.
Despite the turmoil surrounding WeWork’s failed IPO, the company’s office occupancy has been growing, according to the investor deck. Its run-rate revenue, a measure of its sales growth, has more than doubled to over $4 billion through the third quarter. New-desk occupancy sales totaled 167,000 for the quarter, up 37% over the year-ago quarter.
In addition to divestitures, WeWork says in the investor deck that it intends to lower overhead in part by cutting staff primarily across its administrative and venture operations. Workers who provide onsite support at WeWork office space won’t be affected by the job cuts, the investor presentation says.
WeWork’s plan to close Rise, a wellness subsidiary, is now being re-evaluated, the company said.
Artie Minson and Sebastian Gunningham, who were named co-chief executives when Neumann departed, told employees in an October meeting that layoffs were in the works, Bloomberg reported. Job cuts being considered could be in the thousands, according to the report.
The company is also attempting to boost confidence in the new management at the top. Drawing a contrast with the Neumann era, WeWork said it’s moving forward under “proven executives” versus its “investor-led” past. Minson, a former CFO and co-president of WeWork, has years of previous experience at Time Warner Cable and AOL. Gunningham was a longtime top adviser to Jeff Bezos at Amazon.
Separately, on Friday a former employee of WeWork filed a proposed class-action lawsuit against Neumann and WeWork’s leadership, alleging a broad array of mismanagement and lack of oversight led to the company’s collapse in value.
In a complaint filed in San Francisco Superior Court, Natalie Sojka said that employees and others owning shares have suffered financial losses from those management practices. Company representatives weren’t immediately available to comment on the lawsuit, but a WeWork spokeswoman told Reuters that the charges were without merit. Sojka has not yet responded to a request for comment.
Sojka’s suit, which lodges a series of conflict-of-interest accusations against Neumann, cites as an example his ownership of the We Co. trademark, for which the company paid him $6 million, according to the filing. Neumann also spent $60 million in company funds to buy a Gulfstream jet, the suit says.
In the $8 billion bailout that gives SoftBank majority control of WeWork, Neumann has relinquished any management role in an arrangement that could hand him a payout of $1.7 billion, The Wall Street Journal reported. Neumann remains a board observer.
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