WeWork eyes traditional companies, MNCs to hit profitability by 2021-end

Co-working space WeWork, which is pulling levers to break even by the end of next year, is eyeing a large pipeline of traditional companies and MNCs to achieve profitability. 

“We have an active and large pipeline and that converted into real memberships. We should be able to become profitable by the end of 2021,” said the company’s global Chief Executive Officer Sandeep Mathrani, who took over in February. Post-Covid the company has right-sized its real estate portfolio and sold all non-core business to cut costs.

Although the company is seeing demand gradually return to pre-Covid levels, it will still take up to the middle of next year for the demand to return to 65 per cent of pre-Covid occupancy levels.

In India, apart from new-age firms such as WhiteHat Jr, the company has signed leases with traditional companies such as law firm Khaitan and Co which have moved its entire office to a WeWork space. 

“There has been a complete mindset change for traditional businesses who earlier followed the notion that they had to have an office that belongs to them in a marquee building and are now looking at flexible space providers,” said Karan Virwani, CEO, WeWork India. Large tech players as well as banks are also getting rid of traditional spaces and looking at coworking spaces, added Virwani.

After profitability, the next step could be an IPO. “I’m a big believer in one step at a time. We’ll show profitable growth and then decide what the path forward is,” said Mathrani. 

Stressing on the importance of India as a market, Mathrani said the country will gain significance as the company continues with the hub-and-spoke model providing flexible workspaces. “Cost becomes a factor while coming out of a depression and looking to save costs, India becomes an obvious choice for the MNCs,” he said. Giving examples he spoke of H1B visa restrictions, saying there is a huge shortage of data scientists in the US. That adds to the benefit to India because people learnt how to operate remotely. Also, in the education space, foreign universities are now thinking of online education, which would benefit India in the long run. 

The New York-headquartered company had earlier announced that it  will be investing $100 million in its Indian business looking to get over the Covid-19 crisis.

The SoftBank-backed company has seen a sharp decline in its valuation from $47 billion in 2019 to $2.9 billion in May this year.