What's Next For WeWork? New CMO Says Shared Office Space Company Has Right Strategy

Co-working office space rental company WeWork’s newly appointed chief marketing officer says though the company is hemorrhaging money, its underlying business is still solid. The trick will be convincing landlords.

Maurice Levy, chairman and former CEO of Publicis Groupe, was appointed to the marketing spot Friday after the shared office space firm began laying off personnel in a restructuring necessitated by its failed initial public offering.

“We have the right strategy, the right people and should reap the fruits quite quickly,” Levy told the Financial Times.

WeWork, which lost $1.6 billion last year on revenue of $1.8 billion, has begun laying off 2,400 of its 12,500 employees and outsourced the jobs of 1,000 cleaners. It also has begun divesting itself of non-core businesses, a move that is expected to affect 1,000 more employees.

SoftBank had a 29% stake in WeWork before the IPO was delayed in September and then canceled in October, on a $10.65 billion investment. It took a majority position and agreed to a multibillion-dollar cash infusion to stave off bankruptcy after the IPO was pulled and co-founder/CEO Adam Neumann was ousted.

Levy doesn’t plan to stay long, just long enough to rebuild the company’s credibility with landlords and prospective renters.

“This is a story of space as a service and … transforming the way people are working,” Levy said. At the core, he said, “the business is not damaged. The mistakes have been at the fringes.”

Fitch ratings, which downgraded WeWork to CCC+, has estimated WeWork needs to cut $1 billion from its overhead to firm up its position. Losses last quarter were $1.25 billion.

WeWork Executive Chairman Marcelo Claure unveiled a five-year turnaround plan Friday that projects profits by 2023. The company plans to keep leasing space in its 12 top markets and will take a more cautious approach in other markets, eschewing long-term agreements. Financial discipline and accountability also will be a focus.