WeWork has shelved its IPO and embarked on a cost-cutting program. But it may already be too late to save it.
to fund his lifestyle and gave senior jobs to family and friends. No wonder no-one wanted to give the company any money while he was in charge.
This, in a nutshell, sums up the problem with We. It is not so much the We Company as the Me Company. Neumann’s departure may enable the company to stop the cash drain, but I wonder what distinctive features will remain once the costly Neumannisms have been eliminated. It is, after all, just a property leasing company which does a bit of interior design – and that is neither unique nor particularly interesting as a business model.
The We Company has now embarked on a drastic bloodletting in a belated attempt to get its costs under control. It haswith landlords, announced plans to sell parts of the business, and indicated that it could lay off up to 5,000 people, more than a third of the workforce. And there may be further cuts to come. Cancelling the IPO not only deprives We of $3.5bn of new money from investors, but also means losing access to $6bn of new lending facilities from banks. The company burned through $2.
The parlous state of We’s finances, and its shaky corporate governance, did not go unnoticed by credit agencies. On Thursday 26 September, S&P downgraded We’s debt from B to B- with a negative outlook,Governance-linked questions and a series of changes in the week following the S-1 filing have weakened the prospects for a successful IPO by year-end, creating uncertainty about access to alternative capital resources.
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