WeWork built its brand on the idea of flexible real estate. Now, it’s betting its future on business services and software.
The office real estate company launched its platform Business Solutions in partnership with VensureHR Thursday, aiming to provide resources including payroll assistance to the more than 612,000 members WeWork has globally.
Speaking to Yahoo Finance, Prabhdeep Singh, global head of marketplace at WeWork, said the new offering is part of the company’s evolution from a real estate company to a larger business marketplace.
“This is really moving [WeWork] from not just a space company but really offering end-to-end business solutions,” Singh said. “I wouldn't say this is the final grand vision and plan, but this is the first step.”
Business Solutions will be offered to WeWork members in the U.S. through a monthly subscription service, targeting small- and medium-sized businesses. While the company would not provide specific pricing, Singh said WeWork would provide the software and labor needed for companies to develop human resources, process payroll, employee benefits, and technology support, among other services. The platform will launch in the U.S. immediately, before expanding globally next year.
“if you're a small business, you're a 10-person company, if you go off the street to try to get this product it's going to be complex,” Singh said. “It might not be bundled, it might not be once a month, it might be more expensive. And so I think that's really the difference that we're going to be able to offer that you just can't get elsewhere.”
The rollout is the latest push by WeWork to turn around its operations, under CEO Sandeep Mathrani, who joined in February. The company nearly collapsed after investors pushed back against its high valuation, questionable balance sheet, and governance structure in a failed IPO attempt. That led to founder Adam Neumann being forced out.
Since then, WeWork has aggressively moved to scale down its real estate footprint by shedding locations and renegotiating rent reductions globally. Last month, the company announced it was selling control of its China business to private equity firm Trustbridge Partners and moving to a more franchise-like model, licensing the WeWork name and services for a fee in the country.
The coronavirus pandemic has only complicated WeWork’s turnaround. Many small- and medium-sized businesses, which make up 52% of the company’s members, cancelled their memberships in the early days of the economic shutdown, as they transitioned to working from home. While businesses have started to rebound and return, new deals in August still accounted for just 50% of WeWork’s volume in February.
This summer, the company said it had slashed its cash burn rate by nearly half and obtained $1.1 billion in new financing from Japan’s Softbank Group.
Akiko Fujita is an anchor and reporter for Yahoo Finance. Follow her on Twitter @AkikoFujita