Tech CEOs are piling on online following the WeWork chief exec’s assertion that only the “least engaged” employees want to keep working from home.
During The Wall Street Journal’s Future of Everything festival on Wednesday, Sandeep Mathrani, who took the helm of WeWork in 2020, discussed the future of the office, saying that he’s seeing employees who want to work at the office a few days every week and work remotely on other days.
But he added that the number of days workers want to stay at home is directly correlated to how engaged they are with their work.
“It’s also pretty obvious that those who are overly engaged with the company want to go to the office two-thirds of the time at least. Those who are least engaged are very comfortable working from home,” Mathrani said.
Since the interview, Mathrani’s fellow CEOs haven’t hesitated to point out that, as the the CEO of a commercial real estate company, he has a vested interest in employees returning to the office.
Aaron Levie, CEO of cloud content management firm Box, pointed out the absurdity of viewing your most engaged employees as the ones who use your product the most.
As a coworking startup, WeWork relies on people returning to the office to boost its business. Though the company’s current occupancy rate is below 50%, WeWork recently told investors it expects occupancy to soar to 75% by the fourth quarter of this year.
Marcelo Claure – WeWork’s executive chairman and the CEO of WeWork’s largest financial backer, SoftBank Group International – told Insider in a statement earlier this year that “WeWork is incredibly well positioned to springboard into a future” thanks to its technology and “a new appreciation of the value of flexible workspace.”
The founder of a company acquired by WeWork described the lessons from a whirlwind process of joining Adam Neumann’s startup in a Twitter thread on Wednesday.
Dave Fano worked at WeWork for nearly four years after his architecture and planning company, CASE, was acquired in 2015, according to his LinkedIn profile. But it almost didn’t happen.
“We spent 7 years building an amazing culture of trust and transparency, and in a span of 24 hours, almost lost it all,” Fano wrote. “Caught up in trying to get the deal done, we lost sight of how this process would make everyone feel.”
Fano said CASE told its workers of the WeWork acquisition and asked them to return signed documents within 24 hours. The entire process took less than a month from when a verbal agreement was reached to when the deal officially closed.
The transaction put many of the firm’s employees in a tailspin, Fano said. CASE was given less than two weeks after the letter of intent was signed to officially close the deal by informing employees and getting the workers to review WeWork’s employment agreement.
According to data from Forbes, most mergers and acquisitions take about four to six months, but can also encompass a period of several years. Even at that rate, many employees choose to leave companies after mergers and acquisitions. Data from the MIT Sloan Management School found that within the first year of a company’s acquisition 33% of workers leave the company as compared to the standard rate of 12%.
“That was one of the worst business decisions I’ve been a part of in all my career,” Fano, who’s now the CEO of career planning company Teal, said in his Twitter thread.
Eventually, Fano said, he asked for more time from CEO Adam Neumann, who agreed to give the team several extra weeks.
Despite the extra time, he said the company still lost many employees as a result of the acquisition. But he does not regret his decision to join WeWork.
Fano said the situation opened his eyes to the importance of company values. By asking employees to make a 24-hour decision, he felt he violated a culture of trust and dependency.
“As intense as that moment was, I would not trade it for the following 4 years at WeWork,” he wrote. “Everyone experienced incredible career growth. WeWork enabled people to explore new career paths, take on new responsibilities, and build relationships that will stay with them forever.”
The documentary, which is available now on Hulu, brought many of aspects WeWork’s cult-like work environment – including mandatory, alcohol-fueled employee retreats – to life, and juxtaposed CEO Adam Neumann’s lofty promises with his irresponsible spending.
Here are 4 of the most surprising details revealed in the film that highlight how much of a cult WeWork resembled. WeWork was not immediately available for comment.
WeWork summer festivals would start serving alcohol at 4 a.m. and there would be open bars in every 50-yard radius.
Don Lewis, one of at least ten lawyers at WeWork, described the company’s environment as “legitimately the craziest work experience you’ll ever have in your life.”
Every year, WeWork hosted an annual “Summer Camp” employee retreat. Lewis said the Summer Camp started serving alcohol at 4 a.m. and had open bars set up every 50 yards. Scenes from inside the retreat showed raves of hundreds of young people dancing to techno music and pouring beer on top of each other.
“If you wanted to drink ’til the end of time, you could drink ’til the end of time,” Lewis said laughing.
WeWork insiders said Neumann, his wife Rebekah, and other executives would give back-to-back speeches for hours during the day, and at night they would party. Ashton Kutcher and Rick Ross appeared on the summer camp stage in the movie.
WeLive designer Quinton Kerns said he tried to get out of the summer camp one year but was told they were mandatory. Lewis said the company used tracking bracelets to make sure all employees were in attendance.
A WeLive commune designer said he “designed everything to hold the weight of two people” because every person living there was young and single
Launched in 2016, WeLive was a co-living, micro-apartment space that charged $1,375 a month for a room that was “200 square-feet on a good day,” former WeLive member August Urbish said in the documentary.
Urbish said he got a text from a friend that allowed him to rent a space in WeLive after completing an essay on why he would make a good candidate. Once Urbish arrived, he said he noticed most residents were young and single.
WeLive designer Kerns said the crew had designed everything for “the weight of two people,” suggesting the single millennials were having sex regularly.
“Everybody was single,” Kerns said. “We actually had a saying that everything had to be designed to hold the weight of two people.”
Later in the movie, Urbish said he alienated his friends outside of WeLive because of all the time he spent in the commune.
“Every time a friend outside of the We community would come over, they would only come over only that one time because they would walk out with this strange impression of what it is,” he said. “Pretty quickly, I had alienated most of my friends outside of the building.”
WeWork had dozens of C-level managers called ‘C-We-Os’ that new employees were expected to familiarize themselves with. One employee joked that is was so they could ‘bow down’ to the execs in the office.
Former WeWork product manager Joanna Strange said employee orientation meetings occurred every Monday and featured a presentation about the “mythology of WeWork.” Strange, who called the videos “propaganda,” said new employees would loudly chant “WE-WORK” at the end of the video so that the whole office could hear.
Strange said orientation videos had many slides that introduced new employees to everyone at the C-level, who WeWork referred to as “C-We-Os.”
Lewis described “C-We-Os” as “mini-CEOs” in different regions who went on skiing trips and race car driving excursions, which were presented during the orientation videos.
“The C-We-Os are people who just want to talk about their awesomeness, they had that very much in common with Adam,” Strange said. “It was almost like you needed to know who was at the top so when they came past you could bow down to them.”
Lewis added there were no minorities in the WeWork C-suite: “There wasn’t proper diversity at WeWork, period, hard stop.”
One manager bragged to colleagues over email about how many people on his team he fired: “Ha bitches I cut more than 7% of my team!”
In 2016, Strange said she was working both her job and her manager’s job to the point where he gave her his passwords. Strange said she used the passwords to log onto her manager’s accounts to do his work for him at times.
Strange said one day she found an email in her manager’s inbox with a list of people he will fire that included her. She said it appeared each manager had to cut 7% of their employees because WeWork was losing money.
Strange said her manager bragged about firing more than 7% of his workers, and that he wrote “Ha bitches I cut more than 7% of my team.”
After losing its chip manufacturing edge, Intel has been stuck in a business-model identity crisis. Should it split its manufacturing and design operations? Should it produce chips for other companies? Should it outsource its own production? Intel CEO Pat Gelisinger, just one month in the top job, gave his answer on Tuesday: Yes to all of the above!
Intel will double down on chip manufacturing, pouring $20 billion to build two new fabs in Arizona. The fabs will produce the most advanced chips for Intel, and for outside customers – a shrewd move that allows Intel to benefit from US and European anxieties about dependence on China, and to (eventually) tap into all the new chip buyers that have created today’s shortages.
Perhaps unconsciously, Nadella channeled his predecessor former Microsoft CEO Steve Ballmer. “Creation, creation, creation” he told Bloomberg in an interview last month, describing his view that internet creators will drive growth in the cloud business. Nadella’s phrasing, if not his delivery, was reminiscent of Ballmer’s meme-famous war chant from two decades ago of “Developers, Developers, Developers!”
WeWork’s SPAC Shaq attack. The office space sharing business has only gotten uglier in the 18 months since WeWork scrapped its IPO, with the pandemic turning downtown business centers into ghosttowns. But WeWork will get its public listing after all, thanks to the SPAC boom. The company will merge with BowX Acquisition Corp, a blank-check company that counts basketball legend Shaquille O’Neal as an advisor, in a deal that values WeWork at $9 billion – about one quarter of its $47 billion valuation in 2019.
Better than Zoom. Coronavirus vaccines have put the end of lockdowns in sight. But for those who’ve decided they actually enjoy staying indoors, the cloisered life won’t have to mean taking a vow of celibacy according to London-based Raspberry Dream Labs. The company is developing a virtual reality set up that delivers sounds, visuals and scents, as well as haptic pulses that provide a sense of being touched. Pandemic or not, the company believes the future of intimacy is remote.
“I don’t think we can expect that any platform will find every instance of harmful content. I think we should hold the platforms to be responsible for building generally effective systems of moderating this content.”
– Facebook CEO Mark Zuckerberg at Thursday’s Congressional hearing responding to a question about whether he should personally be held liable for damages caused by misinformation on Facebook.
The transaction will be funded with BowX’s $483 million of cash in trust, WeWork said, in addition to an $800 million private investment group groups including Insight Partners, funds managed by Starwood Capital Group, Fidelity Management & Research Company LLC, Centaurus Capital, and funds and accounts managed by BlackRock.
The transaction is expected to close by the third quarter of 2021.
BowX was formed by the management of venture capital fund Bow Capital. Vivek Ranadiv, who also owns the NBA’s Sacramento Kings, and Murray Rode are the co-CEOs of the SPAC.
According to BowX’s SEC filings, the blank check company initially set out to acquire a business in the technology, media, and telecommunications industries. The company said it aimed to invest in a technology company that capitalizes on trends in digital transformation, but added that there was potential it would target a business in any industry, sector, or geographic location of choice.
WeWork lost $3.2 billion in 2020 as the pandemic forced its coworking spaces to shutter, down from $3.5 billion the year before, the Financial Times reported Monday.
Those losses came despite WeWork cutting its capital expenditures to just $49 million, down nearly 98% from $2.2 billion in 2019, as occupancy rates at its properties plummeted from 72% to 47%, according to the Times.
But WeWork is still eyeing a public offering, now through a potential merger with BowX, a special purpose acquisition company (SPAC), which counts former NBA star Shaquille O’Neal among its advisors, the report said.
WeWork declined to comment.
According to the Times, WeWork is seeking $1 billion in new funding, and hopes to go public at a valuation of $9 billion, including debt. The Wall Street Journal previously reported in January that WeWork was eying a deal with the SPAC that would value it at $10 billion.
The new valuation would be less than a fifth of the $47 billion WeWork sought when it initially announced its plans for an initial public offering in 2019. Those dreams were shattered amid revelations about the company’s shaky finances, conflicts of interest, and the wild partying culture fueled by founder and then-CEO Adam Neumann.
But one investor pitched by WeWork doubted its most recent projections, which included revenues of $7 billion by 2024, adjusted earnings of $485 million next year, and 90% occupancy rates by the end of 2022, according to the Financial Times.
Neumann, after stepping down as CEO, also sued SoftBank for backing out of buying nearly $1 billion of his WeWork shares. As part of a proposed settlement, Neumann will get a $50 million payout on top of $500 million from SoftBank for buying his shares, and will leave WeWork’s board for a year, Bloomberg reported last month, helping open the door for a public offering.
The office-sharing company, which tried but ultimately failed in its attempt to go public at a valuation of around $48 billion in 2019, is in talks to combine with a SPAC, the report said, citing people familiar with the matter.
A deal could value WeWork at $10 billion, which would be a dramatic fall from its peak valuation of $47 billion in 2019 when SoftBank led a funding round.
SoftBank remains a majority owner of WeWork, and the Japanese conglomerate marked down its valuation for the company to $2.9 billion amid the COVID-19 pandemic last Spring.
While SoftBank has been weighing offers from a SPAC affiliated with Bow Capital Management LLC, it has also received separate offers for a new private investment round that it is considering, according to the report.
Proceeds raised from either potential deal would be used to fund growth initiatives, the report said.
There is no guarantee that WeWork will strike any deal, and the talks are complicated, the people said.
The company has been working to clean up its image after extravagant spending by its former CEO and co-founder Adam Neumann tanked its planned public debut more than a year ago.
SPACs have been all the rage over the past year as companies look for a faster and cheaper route to go public relative to the traditional IPO. Nearly $75 billion was raised by 219 SPAC IPOs in 2020, and 2021 has been off to a strong start as well, with more than 80 SPAC debuts so far this month, according to data from SPACInsider.