After a tough 2019, WeWork is turning to a real estate executive to right the ship. Sandeep Mathrani will take over at We Company, the parent company of WeWork. Marcelo Claure, SoftBank’s COO and We’s executive chairman, hired Mathrani.
Mathrani is coming over from Brookfield Property Retail, where he was the CEO between August 2018 and January 2020. Before that, the real estate executive spent eight years at the helm of General Growth Properties headquartered in the Chicago area.
With Mathrani’s hiring, Softbank intends to refocus on WeWork’s core business. Mathrani brings decades of real estate development experience and a much calmer demeanor to a company marked by eccentricity for nearly a decade.
WeWork’s Alarming Downward Spiral
At the start of 2019, WeWork was looking forward to a big year. The company had offices in 77 cities in 23 countries. In early 2018, WeWork leased over 6.5 million square feet of office space to more than 500,000 businesses and entrepreneurs. It was valued at $47 billion at one point and was the second-largest office space provider in the U.S. behind Regus.
By August, it was clear that things weren’t as they should be. The company’s IPO paperwork revealed huge losses and unhealthy power dynamics. Co-founder and former CEO Adam Neumann had flown too close to the sun.
Since September, Artie Minson and Sebastian Gunningham have served as co-CEOs, trying to stabilize the business. Today, WeWork is still a unicorn startup. However, with a valuation of $8 billion, it’s just a shadow of the behemoth it once was.
Bringing WeWork Back to Life
In November, WeWork announced it was laying off 2,400 employees and cutting various business units. The company was also looking into communal housing, education, and food-related businesses before its tumultuous season began.
Softbank injected $5 billion into WeWork to acquire 80 percent of the company. The private equity firm had to accelerate a $1.5 billion investment that it had planned for 2020 because WeWork nearly ran out of money. In the three months ending September 2019, WeWork lost $1.25 billion.
Mathrani has a long road ahead with We Company. However, he appears ready for the challenge. “I am honored to be joining WeWork at this pivotal time in its history. The Company has redefined how people and companies approach work with an innovative platform, exceptionally talented team and significant potential if we stick to our shared values and maintain our members-first focus.”
Co-Working Not Slowing Down
Despite WeWork’s challenges, the co-working industry continues to grow. Companies like Industrious and Knotel are expanding in the wake of WeWork’s struggles. Through 2022, the number of available coworking spaces will grow at a rate of 13 percent around the world.
Coworking is no longer a trendy option for cost-conscious or budget-tight businesses. Instead, it’s a viable strategy for creating vibrant office environments, while offloading back-end management and utility responsibilities.
We’ll see if Mathrani can restore WeWork to its former glory. As for Neumann, he and his family are off the grid, traveling the world in private planes on his $1 billion golden parachute. Sometimes, failure is lucrative.