WeWork co-founder and Chief Culture Officer Miguel McKelvey will step down by the end of June after a decade of service. His departure comes as the firm takes a major hit from the COVID-19 pandemic as stay-at-home orders weigh heavily on its occupancy rates.
WeWork has faced months of criticism since August 2019 after its failed IPO revealed mounting losses and irresponsible spending by co-founder Adam Neumann, who resigned in September 2019 under mounting pressure. Once valued as high as USD 47 billion at the beginning of last year, WeWork now has an estimated valuation of less than USD 3 billion.
“After 10 years, I’ve made one of the most difficult decisions of my life – one that I’m not even sure has sunk in just yet,” McKelvey wrote in an email to colleagues. “But at the end of this month, I’ll be leaving WeWork. While it’s hard to leave, and I know there is a lot more work to be done, I could only make this decision knowing the company and our people are in good hands.”
Controlled by Japanese conglomerate SoftBank, WeWork is currently in the midst of a five-year turnaround plan headed by Executive Chairman Marcelo Claure, who has since brought on several executives including WeWork CEO Sandeep Mathrani in an attempt to turn the struggling business around. The firm plans to hit USD 1 billion in revenue this year and become free cash flow positive by 2022.
WeWork secured USD 1.75 billion in credit from Goldman Sachs in February, in addition to SoftBank’s pledge of USD 2.2. billion in unsecured debt in December 2019. However, SoftBank’s CEO Masayoshi Son has publicly termed the firm’s investment in WeWork a “failure”. In April 2020, SoftBank rescinded its USD 3 billion tender offer to purchase shares, prompting WeWork to sue the Japanese company for breaching its obligations under the transaction agreement.
SoftBank has recently reported a record loss of 1.9 trillion yen (USD 18 billion) at its giant Vision Fund, resulting in SoftBank’s worst annual loss of 1.4 trillion yen (USD 13 billion) overall. According to Softbank, WeWork’s losses accounted for around USD 4.6 billion, or 26%, of Vision Fund’s deficit.