WeWork, once among the world's most valuable start-ups and most-hyped industry disruptors, has just filed for bankruptcy.
At its peak, the co-working titan was valued at about $47 billion, and was viewed as the future of workplace collaboration and a darling of the start-up community.
However, the bumpy road to its rise and eventual downfall was no secret.
The National briefly charts what happened to WeWork and what comes next.
What is WeWork and who was behind it?
WeWork began as GreenDesk in 2008 in Brooklyn, and adopted its current name in 2010.
It provides co-working spaces and, according to its website, intends to build “a global community … constantly reimagining how the workplace can help everyone, from freelancers to Fortune 500s, be more motivated, productive and happy”.
Its founders are Adam Neumann and Miguel McKelvey.
Mr Neumann, an Israel-born businessman, gained prominence for his erratic behaviour and aspirations, including his goal of becoming the world's first trillionaire and “president of the world”, and plans to live forever and expand WeWork to Mars, as reported by the New York Times.
How did WeWork go bankrupt?
A series of missteps contributed to WeWork's downfall. Industry analysts have said in the past that Mr Neumann's business model was too expensive to operate and offered little profitability.
Japan's SoftBank Group, WeWork's biggest shareholder that would eventually become its owner, also set lofty expectations for the company. SoftBank's chief executive Masayoshi Son admitted to shareholders in June that he “fell in love” with WeWork.
But it is widely believed that it was in 2019 that WeWork's downfall began, coming to a head in a failed initial public offering early that year.
WeWork was legally renamed to We Company in the several months leading up to the planned IPO. But investors baulked at Mr Neumann's behaviour, the company's grandiose business expectations and sizeable losses, as well as the general uncertainty of its direction, leading to the listing being called off.
The Covid-19 pandemic then dealt a severe blow to the office space market worldwide.
In October 2021, WeWork did manage to finally float its shares through a merger with a special purpose acquisition company, also known as blank-cheque company.
However, the company has struggled as demand for working space continues to tighten. The office space market in big cities is at risk of losing about $800 billion by 2030 as vacancies rise due to people opting for remote or flexible working arrangements, an earlier McKinsey & Co study showed.
While office attendance stabilised and recovered slightly after the Covid-19 pandemic, it remains 30 per cent below pre-pandemic levels, the global consultancy said.
The biggest sign of the impending bankruptcy came in August when WeWork's shares plummeted, falling to almost zero. Concerns about its poor financial performance and heavy debt prompted the company to admit that such a move was possible.
Rumours intensified last week and eventually culminated in the actual filing on Tuesday.
How did SoftBank become involved?
SoftBank, whose Vision Fund is the world's biggest technology-focused venture capital fund, invested $500 million in WeWork in July 2017 when it expanded into China. In August of the same year, WeWork raised $4.4 billion from the fund, valuing it at about $20 billion.
SoftBank threw a lifeline to the ailing company in October 2019 but, in return, Mr Neumann had to step down as chief executive.
The package included $5 billion in new financing and the acceleration of an already existing $1.5 billion commitment to rescue WeWork, which would have run out of cash as soon as November that year.
Mr Neumann was succeeded in 2020 by Sandeep Mathrani, who also stepped down in May 2023 and was replaced by David Tolley, who remains chief executive.
Tokyo-based SoftBank, which said it believes WeWork's move to file for bankruptcy was for the best, said on Tuesday that it would “continue to act in the best long-term interests of our investors”.
What comes next for WeWork offices and the co-working industry?
WeWork, which has listed $15 billion in assets, will continue operating as it works to raise finances.
More than 90 per cent of its lenders have agreed to a restructuring plan that will wipe out about $3 billion of debt.
The company said it would also file for bankruptcy in Canada but stressed that its operations outside North America would remain unaffected.
The National was not able to reach WeWork for comment.
WeWork's bankruptcy signals a re-evaluation of the flexible workspace sector, Oliver Baxter, founder of Dubai-based Workplace Maven, told The National.
This will open the robust and rapidly growing industry, particularly in the UAE, with many “alternative providers who can absorb the demand”, he said.
WeWork's situation can be seen as an opportunity for local entities that have established relationships with, for example, hotels, to diversify into business centres, Mr Baxter said.
“They could leverage their networks to offer flexible workspaces, capitalising on the short-term gap in the market. This strategy could appeal to businesses seeking agility and minimal capital expenditure during uncertain economic times.”
Tamkeen's offering
- Option 1: 70% in year 1, 50% in year 2, 30% in year 3
- Option 2: 50% across three years
- Option 3: 30% across five years
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Zayed Sustainability Prize
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
Milestones on the road to union
1970
October 26: Bahrain withdraws from a proposal to create a federation of nine with the seven Trucial States and Qatar.
December: Ahmed Al Suwaidi visits New York to discuss potential UN membership.
1971
March 1: Alex Douglas Hume, Conservative foreign secretary confirms that Britain will leave the Gulf and “strongly supports” the creation of a Union of Arab Emirates.
July 12: Historic meeting at which Sheikh Zayed and Sheikh Rashid make a binding agreement to create what will become the UAE.
July 18: It is announced that the UAE will be formed from six emirates, with a proposed constitution signed. RAK is not yet part of the agreement.
August 6: The fifth anniversary of Sheikh Zayed becoming Ruler of Abu Dhabi, with official celebrations deferred until later in the year.
August 15: Bahrain becomes independent.
September 3: Qatar becomes independent.
November 23-25: Meeting with Sheikh Zayed and Sheikh Rashid and senior British officials to fix December 2 as date of creation of the UAE.
November 29: At 5.30pm Iranian forces seize the Greater and Lesser Tunbs by force.
November 30: Despite a power sharing agreement, Tehran takes full control of Abu Musa.
November 31: UK officials visit all six participating Emirates to formally end the Trucial States treaties
December 2: 11am, Dubai. New Supreme Council formally elects Sheikh Zayed as President. Treaty of Friendship signed with the UK. 11.30am. Flag raising ceremony at Union House and Al Manhal Palace in Abu Dhabi witnessed by Sheikh Khalifa, then Crown Prince of Abu Dhabi.
December 6: Arab League formally admits the UAE. The first British Ambassador presents his credentials to Sheikh Zayed.
December 9: UAE joins the United Nations.
What the law says
Micro-retirement is not a recognised concept or employment status under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations (as amended) (UAE Labour Law). As such, it reflects a voluntary work-life balance practice, rather than a recognised legal employment category, according to Dilini Loku, senior associate for law firm Gateley Middle East.
“Some companies may offer formal sabbatical policies or career break programmes; however, beyond such arrangements, there is no automatic right or statutory entitlement to extended breaks,” she explains.
“Any leave taken beyond statutory entitlements, such as annual leave, is typically regarded as unpaid leave in accordance with Article 33 of the UAE Labour Law. While employees may legally take unpaid leave, such requests are subject to the employer’s discretion and require approval.”
If an employee resigns to pursue micro-retirement, the employment contract is terminated, and the employer is under no legal obligation to rehire the employee in the future unless specific contractual agreements are in place (such as return-to-work arrangements), which are generally uncommon, Ms Loku adds.
Heavily-sugared soft drinks slip through the tax net
Some popular drinks with high levels of sugar and caffeine have slipped through the fizz drink tax loophole, as they are not carbonated or classed as an energy drink.
Arizona Iced Tea with lemon is one of those beverages, with one 240 millilitre serving offering up 23 grams of sugar - about six teaspoons.
A 680ml can of Arizona Iced Tea costs just Dh6.
Most sports drinks sold in supermarkets were found to contain, on average, five teaspoons of sugar in a 500ml bottle.
GREATEST ROYAL RUMBLE CARD
The line-up as it stands for the Greatest Royal Rumble in Saudi Arabia on April 27
50-man Royal Rumble
Universal Championship
Brock Lesnar (champion) v Roman Reigns
Casket match
The Undertaker v Rusev
Intercontinental Championship
Seth Rollins (champion) v The Miz v Finn Balor v Samoa Joe
SmackDown Tag Team Championship
The Bludgeon Brothers v The Usos
Raw Tag Team Championship
Sheamus and Cesaro v Bray Wyatt and Matt Hardy
United States Championship
Jeff Hardy (champion) v Jinder Mahal
Singles match
Triple H v John Cena
To be confirmed
AJ Styles will defend his WWE World Heavyweight title and Cedric Alexander his Cruiserweight Championship, but matches have yet to be announced
Electric scooters: some rules to remember
- Riders must be 14-years-old or over
- Wear a protective helmet
- Park the electric scooter in designated parking lots (if any)
- Do not leave electric scooter in locations that obstruct traffic or pedestrians
- Solo riders only, no passengers allowed
- Do not drive outside designated lanes
The%20specs
%3Cp%3E%3Cstrong%3EEngine%3A%20%3C%2Fstrong%3E2.3-litre%204cyl%20turbo%0D%3Cbr%3E%3Cstrong%3EPower%3A%20%3C%2Fstrong%3E299hp%20at%205%2C500rpm%0D%3Cbr%3E%3Cstrong%3ETorque%3A%20%3C%2Fstrong%3E420Nm%20at%202%2C750rpm%0D%3Cbr%3E%3Cstrong%3ETransmission%3A%20%3C%2Fstrong%3E10-speed%20auto%0D%3Cbr%3E%3Cstrong%3EFuel%20consumption%3A%20%3C%2Fstrong%3E12.4L%2F100km%0D%3Cbr%3E%3Cstrong%3EOn%20sale%3A%20%3C%2Fstrong%3ENow%0D%3Cbr%3E%3Cstrong%3EPrice%3A%20%3C%2Fstrong%3EFrom%20Dh157%2C395%20(XLS)%3B%20Dh199%2C395%20(Limited)%3C%2Fp%3E%0A
THE BIO
Age: 30
Favourite book: The Power of Habit
Favourite quote: "The world is full of good people, if you cannot find one, be one"
Favourite exercise: The snatch
Favourite colour: Blue
The biog
Age: 59
From: Giza Governorate, Egypt
Family: A daughter, two sons and wife
Favourite tree: Ghaf
Runner up favourite tree: Frankincense
Favourite place on Sir Bani Yas Island: “I love all of Sir Bani Yas. Every spot of Sir Bani Yas, I love it.”
BMW M5 specs
Engine: 4.4-litre twin-turbo V-8 petrol enging with additional electric motor
Power: 727hp
Torque: 1,000Nm
Transmission: 8-speed auto
Fuel consumption: 10.6L/100km
On sale: Now
Price: From Dh650,000
UK-EU trade at a glance
EU fishing vessels guaranteed access to UK waters for 12 years
Co-operation on security initiatives and procurement of defence products
Youth experience scheme to work, study or volunteer in UK and EU countries
Smoother border management with use of e-gates
Cutting red tape on import and export of food
more from Janine di Giovanni
Graduated from the American University of Sharjah
She is the eldest of three brothers and two sisters
Has helped solve 15 cases of electric shocks
Enjoys travelling, reading and horse riding
BUNDESLIGA FIXTURES
Saturday
Borussia Dortmund v Eintracht Frankfurt (5.30pm kick-off UAE)
Bayer Leverkusen v Schalke (5.30pm)
Wolfsburg v Cologne (5.30pm)
Mainz v Arminia Bielefeld (5.30pm)
Augsburg v Hoffenheim (5.30pm)
RB Leipzig v Bayern Munich (8.30pm)
Borussia Monchengladbach v Freiburg (10.30pm)
Sunday
VfB Stuttgart v Werder Bremen (5.30pm)
Union Berlin v Hertha Berlin (8pm)
