Yardi Picks Up WeWork: Another Big Proptech Deal on the Heels of CoStar’s MatterPort Acquisition

It’s been an exciting spring for proptech. As we previously reported, mid-April brought news of Costar’s $1.6 billion acquisition of pioneering digital twin software company Matterport. Then, on April 30, residential and commercial software provider Yardi Systems confirmed a proposal to become WeWork’s majority owner through a subsidiary, as part of a debtor-in-possession financing plan to bring the once high-flying co-working company out of bankruptcy.

It is a fairly spectacular turn for WeWork, which once was valued at $40 billion, to end with Yardi acquiring 60% of the company for less than $400 million. However, perhaps the most interesting aspect of the deal may be what it says about where the biggest value in the company actually is. Although WeWork began as a manager of co-working space and ultimately grew to manage millions of square feet around the world, the deal suggests that the greatest value in the business is its effort to become a software company.

In a statement, Yardi mentioned a technology partnership with WeWork going back to 2022, but WeWork’s ambitions in software go back much further than that. In some respects, both the Matterport and WeWork deals represent interesting cases of value beginning in hardware but ultimately landing in software and data that the cameras and office space fed.

WeWork’s 2017 Fieldlens Acquisition and the Birth of WeOs

Founded in 2010 as a now famed New York co-working space, WeWork’s ambitions as a software platform for managing the full life cycle of office landlord and tenant needs was already in the works when WeWork acquired construction management software platform Fieldlens from its former Clune Construction founder, Doug Chambers, and an investor group led by what would become Building Ventures, a leading AEC industry venture fund.

We had the opportunity to meet with Chambers at WeWork headquarters in New York back in 2017, and toured WeWork’s software development efforts. It was apparent that WeWork was already deep into a vision of using their position between landlords and tenants to gain and share insights that could help provide more efficient and better tenant experiences, as well as better insights about the design and use of space, and even help better manage associated construction work.

BuiltWorlds team members Sam Huffman and Bryant Donnowitz, pictured with Fieldlens Founder and WeWork OS leader Doug Chambers (center), in 2017.

The following year, at our BuiltWorlds Summit, we had the opportunity to visit with Veresh Sita, whose LinkedIn page lists him as former CEO of WeWork Enterprise and Powered by We. In a 2018 BuiltWorlds interview, Sita explained that “at WeWork, data and technology truly underpins everything we do and provides the foundation that our company’s culture is built upon. From site selection and space utilization, which encourages WeWork members to interact in our physical space, to our member network, which facilitates our members’ interaction on a global scale, we use technology to help our members connect both in person in our buildings and globally.”

To that comment, Chambers added, “Fieldlens and WeWork share a vision to create an operating system for physical space that makes building and managing spaces faster, smarter and more efficient.” From this perspective, Yardi, a company which was known more for having developed similar systems in the residential sector, would seem a very fitting partner.

WeCrash: But Maybe We Also Rise Again

In 2018, at the height of WeWork’s software development initiative, the company touched a $40 billion valuation. Fast Company featured an article touting that WeWork “was not the typical real estate company.”

As WeWork prepared to go public in 2019, the Harvard Business Review Came out with an article entitled, “No, WeWork Isn’t a Tech Company. Here’s Why That Matters”. In the article, HBR argues that the characteristics of a modern, successful tech company “do not even remotely apply to WeWork.”  WeWork, the authors argue, “is an office rental company, offering free internet, beer, snacks, coffee, and working space to paying members.”

That may be, but in 2020, WeWork spun off Fieldlens to construction management software company Redteam and today, by virtue of the value in its workplace app, WeWork seems poised to live another day.