Knotel Inc. is planning to announce that former WeWork Vice Chairman Michael Gross will join as chief executive, as the real-estate startup seeks a turnaround after it filed for bankruptcy.
|NMRK||NEWMARK GROUP INC||15.95||-0.19||-1.18%|
In addition to Michael Gross, Knotel plans to announce that Eric Gross and Yoav Gery will become co-presidents. Eric Gross, Michael’s brother, most recently served as an executive at WeWork, the shared-office pioneer that flamed out ahead of a planned initial public offering in 2019. Mr. Gery most recently was president of Selina Ltd., a global experience-focused hospitality company that was backed by WeWork co-founder Adam Neumann.
Like WeWork and other flexible-office companies, Knotel leases office space long-term and effectively sublets it to companies through short-term deals. The onset of the coronavirus pandemic early last year took a major bite out of the once-booming industry as many customers didn’t renew their contracts.
Knotel’s revenue dropped significantly and it has faced lawsuits over unpaid rent from landlords. The company filed for chapter 11 bankruptcy protection for its U.S. business earlier this year and is in the process of completing a sale to real-estate services firm Newmark Group Inc.
New York-based Knotel, founded in 2016, has raised hundreds of millions of dollars from investors. It expanded rapidly for years and was one of the more aggressive competitors in the co-working and flexible-office-space sector, becoming one of WeWork’s fiercest rivals. In August 2019, Knotel said it had reached a valuation of more than $1 billion.
Mr. Gross’s first major task as CEO will be reducing the startup’s losses. The company said in late January that it plans to close a number of locations as part of the restructuring process.
“I see bankruptcy not as a reflection on the product, which was in many respects ahead of its time, but as a sign of the uncertainty in the market,” Mr. Gross said in an interview Monday. “It’s very compelling to have Newmark behind us. We have deep resources.”
At WeWork, Mr. Gross, who had previously served as CEO of boutique hotel chain Morgans Hotel Group, played a key role in the company’s fundraising efforts and its move into selling flexible office space to big businesses. He left the company in 2019 in the days after Mr. Neumann stepped down as chief executive in the wake of the failed IPO. WeWork is in negotiations that would lead to another attempt at a public listing through a merger with a special-purpose acquisition company, The Wall Street Journal has reported.
In hiring Mr. Gross, Knotel’s new owners are signaling a clear break from the company’s former CEO and co-founder, Amol Sarva. Mr. Sarva was a relentless critic of WeWork’s strategy under Messrs. Neumann and Gross, including its acquisitions outside of real estate and its party-heavy culture. He had a bus painted with Knotel’s logo parked outside WeWork’s headquarters. After WeWork’s failed IPO, he told the Financial Times that “it’s time to dance.”
— Konrad Putzier contributed to this article.