Adam Neumann, a 28-year-old young man from Israel, came up with the business idea of a shared office in Brooklyn, New York, in 2008. The plan was to rent a floor of a building, divide it into several, and receive rent. He founded the company with Miguel Mckelby and expanded to seven branches in two years. Confirming its potential for success, Neumann opened a new shared office after selling the company in 2010. It was the beginning of WeWork.
It penetrated the demand of financially struggling startups. Startups flocked to seize networking opportunities with related companies. WeWork has emerged as an icon of the sharing economy, operating more than 800 branches in 120 cities around the world within nine years of its foundation. WeWork has emerged as a unicorn (a startup with a corporate value of more than $1 billion) to the extent that it was valued at $47 billion in 2019.
The company, which pushed for an initial public offering (IPO) in 2019, faced a crisis after its poor management was revealed. After Neumann left the company to take responsibility for the IPO failure, Softbank, the largest shareholder, took over 80% of the shares to provide funding. In the end, WeWork merged with SPAC (Spac) in 2021 and was indirectly listed on the New York Stock Exchange and was evaluated to be on a stable track.
However, Bloomberg reported that WeWork said in a recent U.S. Securities and Exchange Commission (SEC) disclosure, “The sustainability of the company is questionable due to operating losses and cash shortages,” adding, “We can consider all alternatives, including measures under the Bankruptcy Act.” The main reasons for the WeWork crisis, which even mentioned the possibility of bankruptcy, are the spread of telecommuting due to COVID-19 and the increase in the vacancy rate of office buildings in the U.S. The weakening of the exclusive status of the shared office market due to the emergence of competitors and the limitations of the profit structure that only ended in the real estate rental business also urged the crisis. Companies should also have the ability to respond quickly to rapid changes in the global market environment. To minimize risks, it will be necessary to secure core competitiveness through constant innovation.
