Business

WeWork and SoftBank Latin America Fund announce joint venture: Uber's CEO in Brazil will lead the new operation

In a statement to LABS, Uber said a succession plan is already underway and new leadership for Uber in Brazil will be announced soon

Claudia Woods, new CEO at WeWork Latin America — Claudia Woods, new WeWork's CEO in Latin America. Photo: Courtesy/Uber

Isabela Fleischmann

26.May.2021 16:51 BRT
UPDATED 28.May.2021 14:34 BRT

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Claudia Woods, former CEO at Uber, will lead the new operation;
SoftBank Latin America Fund now has the exclusive right to operate the WeWork brand in Argentina, Brazil, Chile, Colombia, and Mexico;
Uber said a succession plan is already underway and new leadership for Uber in Brazil will be announced soon.

SoftBank will take over WeWork‘s Latin American operation and Uber‘s CEO in Brazil, Claudia Woods, will lead the new operation. Through the new joint venture, SoftBank Latin America Fund now has the exclusive right to operate the WeWork brand in Argentina, Brazil, Chile, Colombia, and Mexico.

“As WeWork continues to optimize its business around the world, working with a local partner in the Latin America region positions the company toward continued and sustainable growth in the region,” the office-sharing startup said in a press release.

But why did SoftBank decide to make a joint venture with a company that provides office-sharing amid a pandemic where social distancing is key? While the pandemic was one of those moments where people didn’t know what the future would bring, and how people would go back to work, SoftBank’s new joint venture bet is on the other side of COVID, as a SoftBank’s spokesman told LABS.

“We see demand for flexible space as one of the many megatrends fueled by the aftermath of COVID. Partnering with WeWork is a great opportunity to invest in that trend, and we can bring our existing ecosystem to bear to help grow the business. Recently it was announced that 50% of US-adults are vaccinated and many companies are looking at the future of workspace. WeWork is a real option for companies who are looking for a hybrid model,” he said.

The company started to have pre-COVID occupancy levels in the U.S, and SoftBank believes that this trend will continue in many parts of the world, including Latin America.

For WeWork, it’s not like a joint venture is a brand new thing. In 2017, the company started thinking about partnerships and joint ventures in other parts of the world. It wanted to find a local partner with expertise in the local market. That’s when it made its first joint venture in Japan. Last year, WeWork expanded and created a joint venture in China and India.

WeWork’s shared office amid the pandemic. Photo: Courtesy/WeWork

According to SoftBank’s spokesman, as the fund moved forward on a joint venture, it wanted to bring in even more expertise in the local market; that’s where Claudia Woods comes in. In a statement to LABS, Uber said a succession plan is already underway, and new leadership for Uber in Brazil will be announced soon. Woods has been Uber’s general director in Brazil for two years and also serves on the boards of AmBev and Oi.

With the changes, Claudio Hidalgo, current head of WeWork in Latin America, will remain at the board, becoming Chief Operating Officer (COO) of the new operation. Also, Michel Combes, president of SoftBank Group International, will be the chairman of WeWork’s board in the region.

WeWork’s first business unit in Latin America was opened in Mexico City in 2016. Five years later, the company has expanded its reach to more than 90 units in 18 cities, offering flexible workspace solutions to more than 60,000 members.

WeWork was hit hard at the beginning of the pandemic when it had to close its co-working offices. That’s when SoftBank reached out to help the company through its financial difficulties and became the startup’s largest shareholder.

Paulo Passoni, Managing Partner, SoftBank Latin America Fund. Photo: SoftBank/Courtesy

Recently SoftBank announced that its CEO Masayoshi Son, and executives Ron Fisher and Simon Segars would be leaving their positions on the Japanese conglomerate’s board. Fisher was the architect of SoftBank’s “disastrous” bet on WeWork.

But according to WeWork, over the past four months, the Latin American market has seen “double-digit growth” in shared office occupancy, reaching nearly 50%, as companies in the region adopt flexible work solutions.

In Q1 2021, WeWork reported sequential month-over-month membership growth globally and said it achieved positive net sales and positive net membership gains for the first time since February 2020.

WeWork also said it continues to see sales strength extend into April and May, but reported a net loss of $2.06 billion in the first quarter due to restructuring expenses as it prepares to go public through a SPAC.

SoftBank Latin America fund: the region’s main mother lode of VC investments

At only two years old, SoftBank Latin America Fund has already invested $2.6 billion in Latin America‘s startups, and these investments are valued at $4 billion.

Paulo Passoni, managing partner at SoftBank Latin America Fund, recently made a statement saying he believes that the amount of capital invested in Latam VC/growth equity companies will eventually reach $20 to 30 billion per year 10 years from now.

SoftBank’s spokesman told LABS that many smart entrepreneurs in Latin America only needed financial support. “We started this two years ago and we are still in the early stages but we are here to stay for a long time,” said the spokesman.