WeWork is a benchmark in the market – just not for the reasons I would like. The failed IPO of 2019 revealed to the market a company that was nothing more than a house of cards: cashless and supported only by the promises of its founder, Adam Neumann. The fall in valuation from US$ 47 billion to US$ 2.9 billion was the last straw for the Japanese fund Softbank – which had already invested more than US$ 10 billion in the company – to take control, removing Neumann. More than two years after the near bankruptcy, the private equity fund, which now holds 65% of the shares, managed to restructure WeWork with firm management. In 2021, the group finally went public to reach the current US$ 9 billion market value. And Latin America has become one of the company’s showcases, with a growth rate above the global average.
With the success of the model implemented in the region, Softbank, which leads the operation here through a joint venture, will use the results to defend its formula in other markets. But the apparent lull at WeWork — at least within the group’s parameters — is still not a sign of a smooth path. Two recent events raise new uncertainties about the future of the business: first, Marcelo Claure, former head of operations at Softbank, who led the restructuring of WeWork, resigned in January, and the fund has not yet named his replacement. The second thorn in the company’s side is a possible return of Adam Neumann, which would scare away investors.
For now, Softbank prefers to deal with the operation’s issues. The guideline is to expand the business model developed for the world of hybrid work, in which WeWork operates with a more flexible structure, at the service of its customers’ operations. The company has already launched technology products, such as management software, and is redesigning the physical spaces. Felipe Rizzo, leader of the Brazilian operation, attributes this approach to the growing demand for spaces for meetings and corporate events since the last year. The six Latin American countries, under the command of Brazilian Claudia Woods (ex-Uber), have some of the highest network occupancy rates in the world, with Brazil being the leader in the region. “In January, São Paulo was the city with the highest flow in this market,” said Rizzo. In 2021, the company opened four offices and registered the highest number of clients since its arrival in 2017.
WeWork reached 65% occupancy globally in 2021, according to market estimates, which improves the company’s prospects for turning the tables in 2022, when it would be possible, for the first time, to operate in the dark. The logic is that the company would be able to extract more revenue per square foot than other coworking offices. Thus, the company’s turning point to achieve profit could be reached, according to analysts, still in the first half of this year, when it has chances of reaching 70% occupancy. Having already reached the levels of 2019, in Latin America, the goal has already been reached. Therefore, for Rizzo, the focus in 2022 will be to grow at the pace of the market, which will already be reflected in profitability.
“In January, São Paulo was the city with the highest flow in this market [América Latina]” Felipe Rizzo leader of Wework in Brazil.
SPOT Former CEO Adam Neumann’s excesses have turned WeWork into a financial market myth – one that gets movie versions. So much so that his story will be told in the series WeCrashed, which will be released on Apple TV + on Saturday (12), with Jared Leto and Anne Hathaway in the roles of Neumann and his wife, Rebekah. The North American streaming platform Hulu launched last year the documentary that analyzes the trajectory of the company. The executive, who now operates a cryptocurrency investment fund, has turned a shared office business into something of a cult, gaining a following for the brand and fascinating investors.
The WeWork myth was built over nine years of grandiose events, packed auditoriums and even the rallying cry. Neumann even trumpeted the creation of WeCompany, which would involve residential apartment operations, gym chains and stores, in addition to an elementary school led by Rebekah, which was opened in New York and then closed in the company’s restructuring. . In an attempt to erase the blemish of history, the company is focused on turning the tide on cash flow. For this, it still needs to address the questions about Softbank’s new leadership, which will be answered at the board meeting, on March 29, when the fund will appoint names to succeed Marcelo Claure, in addition to evaluating Neumann’s situation, in case the executive resolves resurface by then, evoking a past WeWork prefers to forget.
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