- Hollis Johnson
- WeWork is shutting down the restaurant-based coworking subsidiary Spacious it acquired just weeks after it publicly filed for its IPO paperwork, the company confirmed to Business Insider Thursday.
- All of Spacious’s approximately 50 employees were let go.
- In September, intense scrutiny of its finances and leadership forced WeWork to cut its valuation from $47 billion to as low as $10 billion, remove cofounder Adam Neumann as CEO, and delay its initial public offering indefinitely.
- WeWork announced in October that it will also shutter its private elementary school, WeGrow, after the 2018-2019 school year.
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WeWork is shuttering its coworking subsidiary Spacious and laying off all of the startup’s approximately 50 employees, the company confirmed to Business Insider Thursday.
Spacious CEO Preston Pesek announced the closure to employees at an all-hands meeting on Wednesday evening, a current employee told Business Insider. The decision is a part of WeWork’s broader attempts to refocus on its core business after the company’s failed IPO attempt earlier this year, a representative said in a statement to Business Insider.
“As part of WeWork’s renewed focus on our core workspace business, we will close Spacious, an on-demand offering in New York City, on December 31, 2019,” a representative for WeWork said in a statement to Business Insider. “To minimize any disruption, Spacious members will receive prorated refunds as well as discounts on select WeWork memberships in order to maintain access to flexible workspaces and a global community. The Spacious team will receive severance and other forms of assistance to aid in their career transitions.”
Employees were also told that they would receive four month’s severance pay and the opportunity to apply for other positions within WeWork.
WeWork parent The We Company acquired then-rival Spacious in August, Business Insider’s Lisa Eadicicco previously reported, just weeks after the company publicly filed for its now-infamous IPO attempt that was eventually scrapped. At the time, The We Company positioned the acquisition as a means of adding more flexible options for those with a We Membership, the company’s on-demand service that allows individuals to book office space for the day.
Pesek and Chris Smothers founded Spacious to convert restaurants in New York City and San Francisco into coworking spaces. Users had the option to purchase a $20 day pass or choose from annual, monthly, and three-month memberships starting at $129 per month, or use a WeWork membership. In an email to customers obtained by Business Insider, Spacious said it will only sell day passes starting Tuesday.
“Thank you very much for being a partner to Spacious, and we wish you and your business every continued success,” the email read.
The coworking giant began to face its own problems soon after the acquisition of Spacious. In September, intense scrutiny of its finances and leadership from investors and the media forced WeWork to cut its valuation down to as low as $10 billion from $47 billion, remove cofounder Adam Neumann as CEO, and delay its initial public offering indefinitely. Following a rescue deal from SoftBank that hed the investor take a majority stake in the startup, The We Company laid off 2,400 employees in November.
Spacious isn’t the only side business that WeWork is abandoning in the new year. WeWork is also in talks to sell another one of its acquisitions, office management startup Managed by Q, Bloomberg’s Alistair Barr and Ellen Huet reported Wednesday. That deal could help WeWork raise much-needed cash, sources told Bloomberg.
WeWork announced in October that the company’s private elementary school, WeGrow, will close after the 2018-2019 school year. That decision was also a “part of the company’s efforts to focus on its core business,” the company said in a statement to Business Insider at the time. The school was founded and run by Neumann’s wife and fellow cofounder Rebekah Neumann.
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