Making WeWork work: Is spending the GDP of a country of 11mn people enough to save the company?
SoftBank has revealed that it poured $18.5 billion into US firm WeWork, which is bigger than the entire GDP of Bolivia, a country home to 11 million people. RT’s Boom Bust looks into whether WeWork can be kept afloat.
“WeWork touts itself as a tech company, but let’s be honest here – it’s really a real estate company,” RT correspondent Farah Fronczak said, adding that WeWork hopes that the next Facebook or Google comes out of its offices. However, it’s not working out that well anymore.
The office space startup’s largest shareholder, Japan’s SoftBank, sank a lot of money into rescuing WeWork, hoping to take more control and come up with a new business model. Meanwhile, the office-sharing service offered by the firm is losing its client base as more and more desks are becoming empty.
SoftBank is essentially putting itself at risk with such a big bet, RT’s Rachel Blevins said. Thanks to the money lost on WeWork, the bank’s Vision Fund, which is focused on investing in technology companies, had to scale back on other high-risk investments, and employees fear layoffs.
The rescue efforts, however, may not be enough to save employees from losing their jobs. The company may cut up to 30 percent of the workforce and start outsourcing instead.
“That’s the problem with WeWork, as you’re easily able to outsource these jobs, and unfortunately for these 4,000 to 14,000 [people], they’re going to be out of a job,” Fronczak said.
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