🧑💻 REMOTE WORK
WeWork plans to file for bankruptcy next week! What’s next for the coworking darling?
We’ve been hearing rumblings of bad news from WeWork for a while but it seems like things have finally boiled over for the coworking giant.
In case this is catching you by surprise, the problem isn’t so much with coworking in general as it is with WeWork specifically...
As Hector Kolonas, a coworking strategist and author of the This Week in Coworking newsletter reports, the coworking industry is going strong with IWG Plc (owner of Regus & other flex work brands) reporting record revenues and the overall market growing steadily year-over-year.
WeWork’s problems stem from years of epic mismanagement - just watch AppleTVs WeCrashed - and a classic case of becoming overleveraged.
As of June, WeWork had leased $13 billion in long-term office leases at a time when rising borrowing costs are hurting the commercial real estate sector.
Basically, WeWork is tied to a hefty rent bill that it just can’t pay!
In case you’re wondering how we got here, WeWork’s brand started to crack back in 2019…
At the time it was one of the hottest companies on the block and valued at an incredible $47 billion. Then WeWork announced plans to go public, but their IPO filings revealed $1.9 billion in losses in 2018 alone!
This triggered a bloodbath!
In less than a year, WeWork’s valuation went from $47 to just $8 billion, and Adam Neumann stepped down as CEO. Since then things have gone from bad to worse as COVID ravaged the corporate real estate market.
WeWork finally managed to go public in 2021 but the celebrations were short-lived. As of this week, their stock price has dropped a shocking 98% since the end of 2021!
There’s no better way to visualize WeWork’s decline than this chart by Visual Capitalist 👇
So, the question that’s on your mind right now is probably “What now, and what does this mean for coworking in general?”
Well as Hector Kolonas notes, if you’re a WeWork fan (I genuinely love working out of WeWork) it’s highly unlikely that this is the end of WeWork.
There most likely scenarios are that either WeWork will use the bankruptcy as a way to restructure their debt and find a more sustainable route, or someone will buy them.
As I mentioned earlier, the coworking space is growing steadily and all studies point to continued growth.
This lines up well with the rising popularity of hybrid work…
Personally, I agree with Nick Bloom that while remote work is getting negative press at the moment, the pendulum will swing back, as companies’ remote operations mature.
Instead of an HQ-focused hub-and-spoke office model, I think more companies will adopt a network of offices with no true ‘HQ’. In this case, coworking spaces are an obvious cost-efficient way of having an ‘office’ anywhere you have a handful of employees.
The last 4 years have been tough for most businesses. WeWork has had it worse than most and taken more than a few shots to the chin, and not only are they still around, but I’d argue they remain the most recognized name in coworking.
Maybe that’s not worth $47 billion, but it’s worth enough that I’m willing to bet this isn’t the end of WeWork.
White House announces new AI executive order
With the new order, the Biden Administration hopes to put guardrails around the technology and protect from some of its worst side effects, without stifling progress and innovation in a field that has so much promise for society.
Software companies working on the largest AI models are now legally required to notify the government and share the results of their safety testing before releasing their models to the public.
In addition, the order also has given several government agencies clear tasks in watching AI development.
This is likely the first of many attempts by the government to shepherd the development of AI, and it’s no wonder why.
AI is likely one of the most impactful technological developments since the advent of the internet and could have huge implications for the workforce and economy.
But while the media loves to highlight the negative scenarios, for now at least the data is quite positive, as reported by a recent McKinsey study on Generative AI.
I’d love to hear your thoughts on AI and the government’s actions. Hit reply to this email and let me know! I read all responses and may include them in the next edition of the newsletter!
That’s it for today! Thanks for reading Remote Insider, let me know what you thought of today’s email, and make sure to comment if there’s anything you want us to cover in future emails 👇