Two people wearing masks holding Shake Shack bags walk past a WeWork office building amid the coronavirus pandemic on May 12, 2020 in New York City.
Alexi Rosenfeld | Getty Images
WeWork is finally making its public market debut as the world of work goes through an upheaval.
In 2019, WeWork pulled its attempt to go public after its IPO documents were heavily scrutinized regarding its finances and corporate governance, leading co-founder Adam Neumann to resign as its chief executive. The company had been valued at as much as $47 billion during private funding rounds.
On Thursday, the company will go public on the New York Stock Exchange under the ticker “WE” through a SPAC, or a special purpose acquisition company, that was formed by venture capital firm Bow Capital. The deal will provide WeWork with cash proceeds of about $1.3 billion, according to an SEC filing.
The move comes as what the future of work will look like has never been less clear, as the coronavirus pandemic has forced both employers and employees to reassess and reimagine the workplace and their jobs.
“One size fits all is dead. The corporate headquarters as we knew it, 9-5, five days a week, corporate HQ, I don’t think we’re ever going back to that,” Marcelo Claure, the executive chairman of WeWork, said at last week’s CNBC @Work Summit. “We’ve all learned that we’re capable of doing a lot of work from home. However, at the same time, we’ve all learned that we got to go back to the office to perform some tasks.”
Companies have been split on where their employees will work from moving forward.
For example, PwC had previously planned to bring most of its 55,000 U.S.-based employees back to offices on a hybrid schedule that would see them work from the office one to three days a week next month. However, the company instead announced earlier this month that all U.S. employees that can telework will have the ability to work virtually in the continental U.S., impacting around 40,000 workers.
Many others, especially in the financial sector, have pushed for workers to return to the office. In a letter to shareholders earlier this year, JP Morgan CEO Jamie Dimon said that “remote work virtually eliminates spontaneous learning and creativity because you don’t run into people at the coffee machine, talk with clients in unplanned scenarios, or travel to meet with customers and employees for feedback on your products and services.”
“We are definitely a company that has worked from office culture,” said Cathy Bessant, Vice Chair of Global Strategy at Bank of America, at the CNBC At Work event. “The reason for that is that informal collaboration that you’re talking about we believe produces a better and more sustainable outcome.”
Workers have been clear about their expectations. Seventy-six percent of the 903 workers polled in a recent CNBC-Catalyst report said they want their company to make work permanently flexible in terms of schedule and/or location. Of the 50% that said they were looking to make a career change, 41% are seeking flexible and/or remote work.
“The world has changed forever, and flexibility is the name of the game,” Claure said. “Companies are going to take many different stances; some are going to take work from home and because they’ve learned that they can run their business as efficient working from home. Some are going to push employees to go back to the office and most companies are going to have a hybrid approach, which is to give employees the flexibility to work a few days from home and come to the office when they need to go to the office.”
Claure said the companies that look to “push their way through and force employees back … I don’t think that’s going to work.”
“I think those leaders that believe that, ‘hey once the pandemic is over, the world goes back to normal.’ I think that’s a big failure,” he said. “I think we’re in a world of flexibility. I think we’re in a world of a hybrid workspace.”
In a tight labor market, workers are more empowered to seek out employers that mirror what they’re looking for on a variety of topics, especially the workplace arrangement.
“We’re all fighting to attract the best talent and suddenly employers are asking, what is your work from home or what is your flex consideration,” he said. “In the past, that wasn’t the case: can I work from home, do I need to go to the office, do I need to move close to headquarters? These things before weren’t even part of the conversation.”
“Revenue was never a problem,” said WeWork CEO Sandeep Mathrani in an interview on CNBC’s “Squawk Box” on Thursday. “Occupancy was never a problem.”
It was an upside-down cost structure which threatened the company, Mathrani said, and the company cut $1.9 billion in costs during the pandemic. The pandemic also allowed WeWork to take advantage of the shift in the world with clients not wanting long-term leases; the development of an all-access card program for flexible workers which now has 32,000 members and $100 million in revenue; and what had been an internal software business managing desks, conference rooms and offices which it has been able to sell as a third-party enterprise software offering. Quarterly revenue is now growing 10-15% and Mathrani said if occupancy continues to trend higher WeWork “will be profitable” sometime next year.
“Three years ago the value of WeWork was zero, it was on the verge of bankruptcy and needed cash, and the fact we’ve taken it from zero to $8 billion to $9 billion in two years is great,” Claure said on “Squawk Box.”
Claure said at the CNBC @Work Summit that collaboration face-to-face is still key, and that’s why “a lot of companies are basically renovating their space and are creating these collaboration workspaces where people come in, they collaborate, they innovate, they talk.”
However, he did say there were some elements of people “overdoing it,” especially in sales.
“I remember myself getting on a plane to China for a one-hour meeting to try to sell something. I think that has changed,” he said. “I think what we’ve learned is there are tasks you can do from home, there are tasks you need to go do in an office and be able to see your coworkers, your bosses, see your employees face to face so it’s totally flexible, totally hybrid.”
Claure said that roughly 1% to 2% of current commercial real estate space is what he called “flexible spaces,” akin to what WeWork offers. He said he predicts that flexible spaces will make up 20% to 30% of that space in the future, which will be partially driven by WeWork itself — while the company’s spaces amount to 1% of the total office stock in New York City, it was involved in 25% of all leases during the second quarter, Claure said, adding that London (1% of all commercial real estate and 37% of leases) and Miami saw similar splits.