Unit Coordinator: Stella Xu

2022-23S BSS064-6 Leading and Managing Organisational Resources

Case Study for Business Report: WeWork

Adapted Harvard Business Publishing case studies (2021), the journal articles and Bloomberg
reports

Corporate governance in technology business/real estate sector: WeWork

WeWork Inc. the US office space provider provides co-working spaces for individuals and
entrepreneurs, which the enterprise clients represented nearly 50 percent of WeWork’s customer
base. Its model was simple—renting office space from property owners’ wholesale, breaking it into
smaller units, and selling these units via memberships at a profit.

Business performance

Founded in 2010 by Adam Neumann and Miguel McCelvey, the company began with a single office in
New York, and by 2019, the company had grown to over 528 locations in 111 cities across 29 countries,
with 527,000 global membership including 38 percent of the Global Fortune 500.

Financial performance

In September 2019, reports surfaced that WeWork was targeting a valuation of between $20 billion
and $30 billion for its IPO, well below its last private valuation of $47 billion just months prior. It was
also reported that the company was considering laying off up to 5,000 staff nearly one-third of all
employees—because of cash flow concerns.

(The Economist, 2021)

WeWork, for the first quarter 2022has posted another quarterly loss despite rising revenues and
growing demand for the flexible workspace it provides. The US group recorded a net loss of $504mn.
That marks an improvement on the $803mn lost over the previous three months, with quarterly
revenues up 28 per cent year-on-year and above the upper range of guidance at $765mn.

Some of the major challenges WeWork confronts stem from following:

 Top Leadership shake up
The former CEO Adam Neumann was criticized for questionable corporate governance. On September
24, 2019, Neumann stepped down as WeWork CEO, and less than a week later, on September 30,
2019, the company delayed its IPO indefinitely. WeWork executives Artie Minson and Sebastian
Gunningham stepped in as co-CEOs, filling Neumann’s vacant post. In the wake of the missed IPO, the
company was running out of cash and quickly approaching insolvency.
 Unit Coordinator: Stella Xu

When Sandeep Mathrani took over as CEO, he had emphasized that WeWork was a real estate
company. While the company had made significant progress since it’s attempted IPO in September
2019, he knew that he still had more work to do to turn the company profitable and prepare it for its
next phase of growth. Mathrani wondered how he would lead a company that increasingly blurred
the line between digital and physical. And what additional skillsets would he need to add to the
company for its continued success.

 Corporate governance: Global restructuring, cutting cost and improving profitability

In addition to rebuilding trust with employees, Mathrani knew he needed to execute layoffs to make
the company’s cost structure sustainable, rebuild WeWork’s reputation with the press, renegotiate
with property owners to get out of unprofitable properties, and convince WeWork’s key member
tenants to stay with the company.

Mathrani’s original plan getting to profitability depended on keeping revenue flat by cutting off $1.5
billion of cost. However, he had not planned for the Pandemic and revenue decline, which dropped
40 percent. As a result, he accelerated the process and started cutting costs immediately. Whilst in
the original plan, I was going to streamline the organization over a two-year period.

 Resource management internally

In March 2021, just as the company was in the midst of the COVID-19 pandemic and was exploring
ways to grow and capitalize on the technology side of the business, WeWork announced that it would
be going public via a merger with BowX Acquisition Corp, a special purpose acquisition company—a
shell company designed to bring companies public (SPAC). On October 21, 2021, WeWork went public
via a SPAC. The transaction valued WeWork at $9 billion. As WeWork began its life as a public company
and prepared for its next phase of growth, Mathrani realized that the biggest challenge facing the
company would be figuring out how to balance resources internally. The company had a limited pool
of resources, so it would need to decide how to balance supporting WeWork’s core real estate product
with productizing the underlying technology for external customers, blending the digital and physical
in the process.

As Mathrani prepared for the upcoming board meeting, WeWork’s first as a public company, he
reflected on the company’s future. He believed that WeWork was better positioned than anyone to
navigate a post-pandemic hybrid work world. He wondered what else he could do to ensure the
company’s continued success post-pandemic. WeWork wants to be a tech company again, selling
software called WeWork Workplace to help companies manage employees and office space.

Reference list
Bloomberg Markets (2022) WeWork Inc. company profile and news
https://www.bloomberg.com/profile/company/WE:US?leadSource=uverify%20wall

Cheng, Y. J., Maiden S. E. (2021) ‘WeWork, but does Corporate Governance work?’ Harvard Business
Publishing Education

Harvard Business Review (2020) ‘WeWork Cofounder Miguel McKelvey: Blind Spots in Leadership’
https://hbr.org/podcast/2020/11/wework-cofounder-miguel-mckelvey-blind-spots-in-leadership

Platt, E., and Edgecliffe-Johnson, A (2020) ‘WeWork: how the ultimate unicorn lost its billions’
Financial Times https://www.ft.com/content/7938752a-52a7-11ea-90ad-25e377c0ee1f
 Unit Coordinator: Stella Xu

Stanford Graduate School Business (2021) ‘WeWork in 2021, the next chapter’ cited in Harvard
Business Publishing Education

The Economist (2021) ‘WeWork begins a humbler second actThe refurbished flexible-office firm once
again eyes a stockmarket listing’ https://www.economist.com/business/2021/03/31/wework-begins-
a-humbler-second-act

The Economist (2021) ‘A chastened WeWork lists on the New York Stock Exchange The company is
better disciplined, but still unprofitable’ https://www.economist.com/news/a-chastened-wework-
lists-on-the-new-york-stock-exchange/21805772

Ulaga, W., Niessing, J., and Brandwein N J. (2019) ‘WeWork - Service Excellence through Business
Model Innovation: Creating Outstanding Customer Experiences by Leveraging Data, Analytics and
Digital Technologies’ cited in Harvard Business Publishing Education