Three startup founders who sold their companies to WeWork have learned some painful lessons since the office-space firm spun into a ditch this summer.
One saw his business die. Another managed to regain control of his creation. And the third is trying to do the same thing, but a rival might grab it first.
In recent months, after abandoning plans for a public offering and announcing a drastic restructuring of the company, WeWork’s leadership said it would sell a handful of companies to cut costs. Not all are making a smooth exit.
Spacious, a small office-space firm in Manhattan acquired by WeWork in late August, told clients Thursday that it would shut down at the end of the year. Presten Pesek, who launched the firm in 2016, did not immediately respond to a request for comment.
“As part of WeWork’s renewed focus on its core workspace businesses, Spacious will close its doors,” the company said in its message.
Meanwhile, Seth Besmertnik, the founder of marketing software company Conductor, announced Thursday that he and employees of the firm had bought back the company from WeWork. Neither he nor WeWork would disclose the price.
A provider of search engine optimization tools, Conductor was acquired by WeWork in 2018 for $113.6 million. The deal included $16 million in cash and $98 million in stock priced at WeWork’s then-$21 billion valuation. It was among 14 companies purchased by WeWork under the mercurial Neumann.
A third company among them, office services firm Managed by Q, is being fought over by its founder, Dan Teran, and a major rival, San Francisco-based Eden. The two parties submitted bids months ago. Teran sold WeWork his company in April for $220 million.
WeWork is selling other firms too, and shuttering ventures it launched. Meetup, a platform that facilitates group meetings and was acquired in December 2017 for $156 million in cash, is on the chopping block. WeGrow, an elementary school in Manhattan launched by Neumann’s wife, Rebekah Neumann, is closing down.
In other cost-cutting efforts, WeWork has announced thousands of layoffs in recent weeks, including 911 in New York City, according to a notice filed with the state’s Department of Labor. Over the summer it abandoned plans for an initial public offering, replaced Neumann as CEO and paid him a king’s ransom to essentially go away. The company’s valuation plunged to $8 billion from a lofty $47 billion as speculation mounted that it would go bankrupt.
Besmertnik is the only success story to emerge from WeWork’s sell-off. He founded Conductor in 2006 and raised $60 million including from Catalyst Investors, Investor Growth Capital Limited and Matrix Partners. Conductor says it now has more than 400 enterprise clients, including Citibank and SAP.
To buy back the firm, Besmertnik courted an investment from Jason Finger, the CEO and co-founder of Seamless, who will join the firm’s board. Conductor’s employees, which number more than 250, will receive stock in the company.
WeWork’s co-CEO Artie Minson said in a statement that “we know Seth and leadership will continue to scale this business as an independent company and look forward to witnessing all that he and the Conductor team will accomplish in the years ahead.”