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Once valued at a mighty $47 billion, WeWork has filed for Chapter 11 bankruptcy in New Jersey.
Despite sinking billions into the business, majority investor SoftBank has cut its losses after a tough four years, exasperated by both post-pandemic working trends and the impact of rising interest rates on the commercial property market.
In the filing, WeWork reported debts of more than $18 billion.
In a statement published on Nov. 7, WeWork CEO David Tolley said the company had entered into a restructuring support agreement and would deal with the debt by addressing legacy leases and “dramatically improving” its balance sheet.
“WeWork has a strong foundation, a dynamic business and a bright future,” Tolley added, saying the “reorganization” would allow the brand to remain the “global leader in flexible work.”
Although reports over the weekend claimed some WeWork spaces had already shut their doors, its leadership asserted that most would remain open for the foreseeable future. So it’s business as usual for the company’s 547,000 members.
Behind closed doors, though, the bankruptcy filing marks a stunning reversal of fortune for the one-time sharing economy darling.
When it first burst on to the scene in 2010, with modular furniture, beer on tap and exposed brick walls, the business was hailed as the future of work.
So, where did it all go wrong, and what’s next?
For Mary Kyriakidi, global thought leader at Kantar’s brand strategy unit, WeWork is an instructive case study for brands at a time of inflation and slow growth; it sacrificed profitability and sustainable growth at the altar of growth at speed.
“What we can learn from its demise is that brands need to focus on profit to deliver growth rather than the other way round,” Kyriakidi said.
In its early days, WeWork marketed itself to investors as a tech “unicorn.” In reality, its business model was an adaptation of a traditional real-estate one; it rented large office buildings and leased the space to gig-economy freelancers, entrepreneurs and small business owners.
Like many startups, it also succumbed to the “cult of the founder,” phenomenon. In this case the charismatic Adam Neumann—once described as the “Steve Jobs” of work—was the ringleader, leveraging his personality to propel the company’s growth.
By 2019, Neumann had renamed WeWork to The We Company and expanded into living space. That year, the business was valued at $47 billion and readying for an IPO.
However, a closer look at the balance sheet and a series of dizzying allegations regarding Neumann’s personal and professional conduct (which would later be dramatized by Jared Leto in the 2022 series WeCrashed) gave investors jitters.
When the 2019 IPO imploded, Neumann was ousted and a leadership reshuffle swiftly followed.
The startup did eventually go public in 2021, though it couldn’t quite shake off the pandemic dust that had settled in empty offices and real estate across the U.S. in its 649 global locations.
Brian Wieser, principal analyst and owner of consultancy Madison and Wall, believes WeWork’s fall has been less about the brand itself and more about its operational woes: “WeWork was losing hundreds of millions each year on an operating basis and needed to deploy hundreds of millions more in ongoing investments in their space,” he said.
Marisa Mulvihill, partner and head of brand and activation at growth strategy consultancy Prophet, argues WeWork’s lack of a cohesive marketing plan, coupled with its determination to pitch itself as a tech business, did play a part in its downfall.
WeWork “went awry,” she says, in its early days when it created a purpose that strayed too far from its core business. She points to Neumann’s description of We-owned companies as being designed “to elevate the world’s consciousness.”
“That might be inspiring, but it didn’t feel relevant or actionable for the business they were in, which was renting office space,” Mulvihill said.
One former senior WeWork employee, with knowledge of its early marketing priorities, revealed the structure of the business simply wasn’t set up to handle sophisticated marketing campaigns. “It was growth at all costs, which meant give everybody deals, do all these things. It wasn’t even about the money, it was about filling up space,” they told Adweek.
The former staffer claimed, during the company’s early stages, that Neumann heavily encouraged brand marketing strategies, to the detriment of performance marketing and driving conversions. At this time, WeWork’s marketing team was not centrally managed, they said, resulting in regional silos that prevented data sharing or any consistent global strategy.
“It was very, very difficult to figure out what was working and what was not, because there was no incentive for those [regional] teams to actually share that information,” the source said. “There was a constant pull and push within WeWork to either become centralized or become regionalized.”
After the failed IPO, the source alleged that regional marketing teams had been sharing inaccurate results. They declined to share specifics, and said the regional teams weren’t necessarily to blame. Instead, they pointed to the broken marketing infrastructure, and pressure from Neumann. “I think that there was always a very strong desire to make sure that everything was great for Adam. He didn’t react well to poor numbers. There was a lot of winging it,” the source added.
Post-IPO, the marketing organization doubled down in an effort to streamline its operations. However, the pandemic upended what little progress the team made and a number of planned campaigns got scrapped, the source said.
Prophet’s Mulvihill argues the company has struggled to stay connected to its strategy and message with frequent leadership changes.
Indeed, the brand’s most recent chief marketing officer (CMO), former Sprint marketer Roger Solé, left in January 2022. He wasn’t replaced for 18 months until Debosmita Majumder joined from Embassy Group in September. Her arrival came after the business warned it had “substantial doubts” about its future.
Prior to that, WeWork had enlisted ad legend and Publicis chairman Maurice Levy as interim CMO from November 2019 for a three-month contract.
Since 2019, WeWork’s creative output has flip-flopped between newspaper ads reassuring existing and would-be members that it was “challenging convention, but nailing the basics,” to billboards reminding people it still existed post-lockdown.
At the start of 2023, it unveiled a new brand identity with agency Franklyn, which the brand said was a more “impactful way to showcase WeWork’s diverse and flexible product and unique community proposition to the world.”
Ultimately, after its chaotic 2019 collapse, WeWork had a chance to re-emerge with relevance during the pandemic as office needs changed. However, it wasn’t able to maintain a coherent narrative on its role in the new working world.
“It evolved its brand positioning but couldn’t connect it to the rapidly evolving narrative around ‘return to work’ which was changing all the time. To stay relentlessly relevant in this environment required keeping a finger on the pulse of the C-Suite,” said Mulvihill.
Post-bankruptcy, the future of the WeWork brand is itself uncertain. But now that it’s able to shed some long-term leases, WeWork can emerge leaner and ready for a new chapter.
Its CEO certainly thinks so.
“We defined a new category of working, and these steps will enable us to remain the global leader in flexible work,” said Tolley in his statement.