As of November 2023, WeWork had 4400 employees, which is only 35 per cent of the 12,500 employees they had in June 2019. There are some key factors that propelled the company’s meteoric rise and then triggered its subsequent downfall.
A Numerical Odyssey
Since its inception in 2010, WeWork expanded its global presence aggressively. The company’s strategy is evident from the number of locations it operated from and the numerical progression underscores the ambitious drive to establish a ubiquitous global footprint.
- 2017: WeWork had 275 locations
- 2018: The number surged to 518
- 2019: Peaked to 850 locations
- 2020: Settled at 792
- 2023: Declined to 777 locations
Leasing Strategy and Financial Vulnerabilities
A pivotal aspect was the unique leasing strategy. In 2019, only 19 per cent of the locations were owned, with the rest (81%) being leased. This approach allowed WeWork to expand rapidly without drying up significant capital in real estate. However, it also exposed the company to considerable financial risks. The commitment to pay landlords, even when office spaces remained unoccupied, created a vulnerability that later came to haunt the company.
As the COVID-19 pandemic unfolded, the demand for office spaces plummeted. This prompted WeWork to close numerous locations and renegotiate the leasing model with landlords. It showcased the necessity for flexibility in the face of unexpected challenges. Despite these efforts, the company continued to grapple with persistent challenges related to its lease obligations. But the pandemic was global and prolonged and complicated things further. Last year, the stock prices took a free fall from USD 110 to a mere USD 1.37.
