WeWork changes name for We Company, reveals the details of its contract with SoftBank


Shortly before Christmas, Adam WeWork CEO Adam Neumann was about to sign an agreement that would have changed everything for him and his company. His biggest financial backer, Masayoshi Son, of SoftBank, was willing to give him enough money to fuel not only WeWork's ongoing and gigantic growth plans, but also to buy back all of his other existing investors. The figures on the table reached 20 billion dollars, with a valuation close to 50 billion dollars. With a signature, Neumann would have an unprecedented entrepreneurial freedom to craft his most ambitious projects for his company.

Then His called with bad news.

While both sides were preparing to close the deal, the stock market turmoil in December caused a decline in stocks of SoftBank, down 20% since the end of November. The long-awaited IPO of its Japanese telecom unit was beaten to 14% on the first day of trading. (SoftBank is a conglomerate that includes a variety of technology holdings and VisionFund, a $ 100 billion investment arm.)

His son "called me," recalls Neumann, in an interview Monday at Quick business. He said, "We are partners. What should we do? "His son told him that the agreement that SoftBank and WeWork had been spending for months to negotiate was no longer viable.

It was a hard blow, but WeWork's who worked closely with Neumann under this agreement say that almost immediately he returned to the bargaining table. "It took Adam one day to recover," said a source close to the negotiations.

Working day and night, early January, beginning of the holidays, WeWork and SoftBank have reached a revised agreement, announced this week, on a new $ 2 billion capital worth $ 47 billion. In addition, SoftBank is committed to fund an additional $ 1.5 billion in 2020. WeWork now has more than $ 10 billion in SoftBank financing and nearly $ 7 billion in balance sheet.

Although the numbers are still impressive, WeWork says the reduction in terms of sales raises questions for a company that derives most of its growth from its ability to collect and spend billions of dollars. For the first three quarters of 2018, it generated revenues of $ 1.25 billion but lost $ 1.22 billion.

The company, which will be nine years old this year, has not yet withstood a real economic slowdown comparable to what economists predict for 2019 and 2020. A telling sign: WeWork says that leasing prices are falling in all the cities in which it operates. .

Nevertheless, Neumann insists that nothing will slow WeWork. The company maintains that lower rental prices are a good thing for WeWork's business and that a softening of the markets could create new opportunities. "When 2019 arrives and the world is in a real economic downturn, the only thing you will not see us doing is being scared, slow down or taking less risk," he says. He spoke to me by videoconference from his office in Los Angeles wearing a black T-shirt bearing the title "Creator." He was wearing a casting on one of his fingers. He broke it last week while surfing an 18-foot wave in Hawaii. Laird Hamilton. "For me, a recession is not scary. It's an opportunity, "says Neumann.

This week, at an annual internal conference, the WeWork World Summit, it will announce a major change in the company and strategy level. In the future, the company will no longer be called WeWork but rather The We Company. The new structure is part of Neumann's ambitious ambition to push the market and the company's opportunities beyond commercial real estate. Rather than just renting offices, the company aims to encompass all aspects of people's lives, in the physical and digital worlds, he said.

We will consist of three main divisions: WeWork, its main office business; WeLive, a nascent residential unit; and WeGrow, a rapidly evolving company that currently includes a primary school and coding academy. Although the company has not been able to provide details, it indicates that plans are underway for the construction of its residential and educational units this year. Other acquisitions and new hires will also be made in 2019. The company aims to add 1,000 engineers.

According to Neumann, going beyond the offices has always been part of the plan. Recently, he and his co-founder Miguel McKelvey discovered an old pitch deck that they assembled six months before launching WeWork. It goes back to 2009 and we developed plans for everything from WeSleep to WeSail through WeBank. Now, says Neumann, the company is in a financial and logistical position to realize these ambitions. When asked about WeBank, Neumann confirms, "It's coming," but he refuses to give details.

Now, from 2019, the pressures on WeWork and Neumann are increasing. Can the company support its valuation of 47 billion dollars? Can it survive a real economic downturn or a more restrictive environment for cheap capital?

Neumann says he and his team thrive under pressure. "Do you know how long it takes a diamond to be created?" He asks me. "Half a million to 4 million years. I like this analogy: to do something very valuable, you have to apply a lot of pressure.