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We work once a venture capital darling has filed for chapter 11 bankruptcy.
We
work
once
a
venture
capital
darling
has
filed
for
chapter
11
bankruptcy
The filing marks a stunning reversal for the desk rental giant that was once valued at
The
filing
marks
a
stunning
reversal
for
the
desk
rental
giant
that
was
once
valued
at
$47 billion.
47
billion
Wework was the poster child of the unsustainable start up frenzy
Wework
was
the
poster
child
of
the
unsustainable
start
up
frenzy
of the 2010 s rise and fall so dramatic.
of
the
2010
s
rise
and
fall
so
dramatic
It was characterized in an Apple TV series who
It
was
characterized
in
an
Apple
TV
series
who
is in a fight,
is
in
a
fight
the smart guy or the crazy guy.
the
smart
guy
or
the
crazy
guy
Are you crazy enough?
Are
you
crazy
enough
I may be,
I
may
be
I may be,
I
may
be
here's how we work went from being one of the country's most valuable start ups to a bankrupt penny
here's
how
we
work
went
from
being
one
of
the
country's
most
valuable
start
ups
to
a
bankrupt
penny
stock now worth a fraction of its peak value.
stock
now
worth
a
fraction
of
its
peak
value
We work co founded by Adam Newman specialized in leasing shared workspaces in
We
work
co
founded
by
Adam
Newman
specialized
in
leasing
shared
workspaces
in
metropolitan areas around the world.
metropolitan
areas
around
the
world
We're a company that builds communities.
We're
a
company
that
builds
communities
We have our mission.
We
have
our
mission
Our main thing that we do is curate and create culture.
Our
main
thing
that
we
do
is
curate
and
create
culture
Wework was founded in 2010 right after the global financial
Wework
was
founded
in
2010
right
after
the
global
financial
crisis and it basically seized on this casualization of the
crisis
and
it
basically
seized
on
this
casualization
of
the
workforce that was emerging after that,
workforce
that
was
emerging
after
that
we work raked in funding from a roster of major investors from venture capital firm,
we
work
raked
in
funding
from
a
roster
of
major
investors
from
venture
capital
firm
benchmark capital to banks like JP Morgan and Goldman Sachs,
benchmark
capital
to
banks
like
JP
Morgan
and
Goldman
Sachs
the founder,
the
founder
Adam Newman was able to convince all of these people that,
Adam
Newman
was
able
to
convince
all
of
these
people
that
that we work was a disruptive tech company that that was going to
that
we
work
was
a
disruptive
tech
company
that
that
was
going
to
do to the office market.
do
to
the
office
market
What, what Facebook did to sort of social media and,
What
what
Facebook
did
to
sort
of
social
media
and
and, and what Uber did to,
and
and
what
Uber
did
to
to uh transportation,
to
uh
transportation
they ended up raising over $10 billion for what was effectively a
they
ended
up
raising
over
10
billion
for
what
was
effectively
a
real estate company worth a lot less than $10 billion.
real
estate
company
worth
a
lot
less
than
10
billion
In 2019.
In
2019
Wework hit a peak valuation of $47 billion and took steps towards an
Wework
hit
a
peak
valuation
of
47
billion
and
took
steps
towards
an
initial public offering.
initial
public
offering
At the time,
At
the
time
the private tech start ups were seen as this really sort of powerful engine of the
the
private
tech
start
ups
were
seen
as
this
really
sort
of
powerful
engine
of
the
future economy.
future
economy
And there was a lot of optimism about them.
And
there
was
a
lot
of
optimism
about
them
So they get ready to go public and sort of reveal their numbers to the world and people
So
they
get
ready
to
go
public
and
sort
of
reveal
their
numbers
to
the
world
and
people
kind of wake up while we worked revenue was growing.
kind
of
wake
up
while
we
worked
revenue
was
growing
So were its expenses despite raking in billions in funding,
So
were
its
expenses
despite
raking
in
billions
in
funding
we were yet to announce a profit since its founding in 2010.
we
were
yet
to
announce
a
profit
since
its
founding
in
2010
There were also all of these,
There
were
also
all
of
these
these conflicts of interest and related party transactions that are really
these
conflicts
of
interest
and
related
party
transactions
that
are
really
concerning for investors in the IPO documents.
concerning
for
investors
in
the
IPO
documents
So Adam Newman owns stakes in four buildings that he leased to
So
Adam
Newman
owns
stakes
in
four
buildings
that
he
leased
to
Wework.
Wework
And so he's on both sides of those deals on top of concerns about wework from public market
And
so
he's
on
both
sides
of
those
deals
on
top
of
concerns
about
wework
from
public
market
investors.
investors
Questions over Newman's leadership style also threatened the company,
Questions
over
Newman's
leadership
style
also
threatened
the
company
Adam Newman had this a chaotic approach to management.
Adam
Newman
had
this
a
chaotic
approach
to
management
One day,
One
day
he would decide that 20% of the staff,
he
would
decide
that
20
of
the
staff
the bottom 20% needed to be fired every year.
the
bottom
20
needed
to
be
fired
every
year
Adam was really into spending in all these eclectic
Adam
was
really
into
spending
in
all
these
eclectic
ways.
ways
They had a small unit and we work that was making self driving robots to go around and
They
had
a
small
unit
and
we
work
that
was
making
self
driving
robots
to
go
around
and
drop mail off at people.
drop
mail
off
at
people
They bought a $63 million jet that Adam directed and was a huge fan of it
They
bought
a
63
million
jet
that
Adam
directed
and
was
a
huge
fan
of
it
is just like one excess after the other at its peak,
is
just
like
one
excess
after
the
other
at
its
peak
we work ultimately their 2019 IPO and shortly after Newman
we
work
ultimately
their
2019
IPO
and
shortly
after
Newman
resigned as CEO walking away with more than $1 billion from Softbank,
resigned
as
CEO
walking
away
with
more
than
1
billion
from
Softbank
a tech investor that acquired Wework.
a
tech
investor
that
acquired
Wework
It was such an extraordinary amount of money for someone who had actually really
It
was
such
an
extraordinary
amount
of
money
for
someone
who
had
actually
really
destroyed so much value after creating it.
destroyed
so
much
value
after
creating
it
I think that's a stain that still stays with him.
I
think
that's
a
stain
that
still
stays
with
him
When you sort of mention Adam Newman and we work,
When
you
sort
of
mention
Adam
Newman
and
we
work
people often say like,
people
often
say
like
isn't that the guy who got really rich while investors lost everything?
isn't
that
the
guy
who
got
really
rich
while
investors
lost
everything
And that's accurate.
And
that's
accurate
Not long after Newman's departure,
Not
long
after
Newman's
departure
COVID-19 spread across the globe.
COVID-19
spread
across
the
globe
Demand for office space decreased rent dropped and we work's entire business
Demand
for
office
space
decreased
rent
dropped
and
we
work's
entire
business
model became its own Achilles Heel.
model
became
its
own
Achilles
Heel
So they just have these rents that are from a different era that they're paying while their tenants are paying them a lot
So
they
just
have
these
rents
that
are
from
a
different
era
that
they're
paying
while
their
tenants
are
paying
them
a
lot
less.
less
They have been burning through $300 million a quarter of
They
have
been
burning
through
300
million
a
quarter
of
cash.
cash
Four years after pledging to restructure to rationalize.
Four
years
after
pledging
to
restructure
to
rationalize
It's just completely untenable.
It's
just
completely
untenable
We filed for bankruptcy barely four years after the company reached its peak
We
filed
for
bankruptcy
barely
four
years
after
the
company
reached
its
peak
valuation and more than two years after it went public under new leadership in
valuation
and
more
than
two
years
after
it
went
public
under
new
leadership
in
2021 the tank of cash that once overflowed ran
2021
the
tank
of
cash
that
once
overflowed
ran
out,
out
they were never able to make a profitable business.
they
were
never
able
to
make
a
profitable
business
It's an extraordinary tale in that they raised over 16 billion of equity and debt
It's
an
extraordinary
tale
in
that
they
raised
over
16
billion
of
equity
and
debt
over 13 years,
over
13
years
but this may not be the end of wework story.
but
this
may
not
be
the
end
of
wework
story
The business will likely go on.
The
business
will
likely
go
on
They're going to need to cancel a ton of leases,
They're
going
to
need
to
cancel
a
ton
of
leases
cancel their debt and presumably can come out of this a real business
cancel
their
debt
and
presumably
can
come
out
of
this
a
real
business
that can make money.
that
can
make
money
They have some locations where it's profitable,
They
have
some
locations
where
it's
profitable
but it's going to need a lot of work in bankruptcy court to get there.
but
it's
going
to
need
a
lot
of
work
in
bankruptcy
court
to
get
there
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