- WeWork is reportedly planning to spin off or sell several of its subsidiaries like SpaceIQ and Teem
WeWork is reportedly planning to spin off or sell several of its subsidiaries like SpaceIQ and Teem, according to Axios’ sources. And The Information reported recently that WeWork already received interest to spin-off Managed by Q, Meetup, and Conductor.
SpaceIQ and Teem are companies that make it easier for businesses to manage spaces. For example, Teem is used for setting up conference room scheduling and connecting with visitors in lobbies. And SpaceIQ offers tools for real estate companies to manage floor plans.
Artie Minson and Sebastian J Gunningham, the new co-CEOs of WeWork, have been tasked with a major responsibility to balance out the financials at the company as the planned IPO has been scrapped for now.
“We have decided to postpone our IPO to focus on our core business, the fundamentals of which remain strong. We are as committed as ever to serving our members, enterprise customers, landlord partners, employees, and shareholders. We have every intention to operate WeWork as a public company and look forward to revisiting the public equity markets in the future,” said Minson and Gunningham about the IPO delay.
One of the first major changes that Minson and Gunningham jumped on was a plan to oust about 20 executives marked by nepotism through WeWork’s former CEO and co-founder Adam Neumann, according to The Wall Street Journal.
Some of those executives include WeWork’s vice-chair Michael Gross (Neumann’s friend), chief product officer Chris Hill (Neumann’s brother-in-law), and chief brand and impact officer Rebekah Neumann (Neumann’s wife).
Kazuyuki Sasaki, the former managing director of WeWork Japan, was named as the CEO of that division as a replacement for Hill. Hill was head of the operations in Japan since 2017.
And Business Insider recently reported that some of the other executives that are expected to depart from the company include director of development Roni Bahar, head of global security & safety Zvika Shachar, and chief investment officer Wendy Silverstein. There are about 10 employees who directly reported to Neumann as part of a group known as “the oval” office who are also expected to be leaving the company.
Along with the executives getting let go from the WeWork, the co-CEOs will likely lay off thousands of others who are not connected to the core office rental operations. And they are also going to sell the company Gulfstream G650ER purchased for $60 million. Neumann had used this jet to fly between his homes in New York and the Bay Area of California.
The reason why the IPO was postponed was due to concerns from prospective investors around WeWork’s governance issues and substantial financial losses.
WeWork had raised about $12 billion since it was founded nine years ago. Of that $12 billion, SoftBank had put in more than $10 billion. Crain’s pointed out that the role of SoftBank Group COO Marcelo Claure has been elevated at WeWork due to the liquidity issues.
The company could potentially run out of money next year if the burn rate remains as high as it has been. Sanford C. Bernstein analysts estimated that WeWork is burning through $2.8 billion each year. And in order to hit cash flow positive operations, the company would need about $6 billion more in incremental funding. Postponing the IPO makes that goal even more challenging especially if a recession occurs within the next few years.
