Insiders say WeWork’s IT is a patchwork of cheap devices and Band-Aid fixes that will take millions to fix
Category : entrepreneur
- WeWork’s technology infrastructure is due for an expensive overhaul, current and former IT employees told Business Insider.
- At WeWork’s start, IT was led by a 16-year-old who dropped out of high school to join the company. WeWork later sued him, alleging fraudulent misrepresentation and other claims in a case the parties ultimately agreed to dismiss.
- Redoing what some current and former WeWork IT staff said was outdated and substandard infrastructure could cost tens of millions of dollars — just as the company is looking to drastically cut costs.
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Before its initial public offering collapsed, the office-leasing firm WeWork tried to position itself as a tech company.
But its buildings are loaded with technology that needs to be ripped out and replaced, three current and former WeWork IT employees told Business Insider.
If the company doesn’t upgrade, it’s possible that tenants — or “members” in WeWork parlance — could be unwittingly sharing their data with hackers who gain access to the network through outdated or substandard tech, the sources said.
Two sources broadly estimated this was a project that could cost the company tens of millions of dollars.
“This isn’t a million, two, three million dollar project. This is tens of millions,” one of the employees told Business Insider.
A WeWork spokesperson, who declined to comment on specifics, told us: “At WeWork, we continue to make significant investments in IT and technology to improve our systems and the experience for members. This includes investing in new services and dedicated high-speed internet connections for our growing set of large enterprise customers.”
Some of the upgrades are simply a product of WeWork’s success. Older buildings need to be rewired to support faster, more secure networks for a full load of tenants, all of whom are pounding on the network.
In other cases, the work is a result of shortcuts and fiefdoms, and an inability for the IT folks to get the funding they needed, these employees said.
Early distrust of IT
Adam Neumann, who was recently ousted as CEO, was thought to distrust the IT department, two sources said, after Joe Fasone, an early IT employee, left the company in 2014.
Fasone, who laid the foundations for WeWork tech, couldn’t have brought much experience to the company. He skipped his senior year of high school to join WeWork as its IT director in 2010 at age 16, Forbes said in a profile last year.
He stayed until February 2014, according to his LinkedIn profile. Later that year, WeWork sued Fasone, business partner Matthew Macnish, and three companies, seeking $3.3 million over allegations that included fraudulent misrepresentation and civil conspiracy. The parties agreed to dismiss the lawsuit in 2015.
A representative for Fasone and his businesses declined to comment. Macnish did not respond to a request for comment.
Though Fasone left the company in 2014, a bad taste may have formed. The IT employees we spoke with each believed that one reason they struggled to get budgets for their projects stemmed from this incident.
That WeWork lawsuit wasn’t the end of Fasone’s legal troubles, including with the office company.
Fasone’s company Stage Networks was sued in 2015 by companies for which Stage worked in three separate lawsuits. Together, the companies alleged Stage failed to pay a total of $525,000. In each suit, the parties agreed to dismiss the case, and in two of three, the parties indicated they had reached a settlement.
Fasone, Macnish, Stage Networks, and Fasone’s current company, Pilot Fiber, were also sued in April 2015 by a fiber-optics vendor called Optical Communications Group, which alleged it failed to pay nearly $200,000, according to the complaint. It alleged that Stage started working with Optical in January 2013 — while Fasone was still at WeWork, according to Fasone’s LinkedIn profile timeline — and that Stage stopped paying Optical in February 2014.
Stage was leasing equipment from Optical to provide internet to WeWork’s New York locations, according to Optical’s complaint.
“Because providing fast and reliable internet service is a key to their business, WeWork was concerned that Stage’s failure to pay [Optical] for the circuits would result in a disconnection of internet services at WeWork’s workspaces,” Optical’s lawyers said in the suit.
Optical alleged that because Stage wasn’t paying its Optical bill, WeWork agreed to pay Optical for internet.
Optical founder Brad Ickes told Business Insider that the company settled the suit with Fasone. Records for the case are sealed.
Fasone and WeWork declined to comment on the legal issues, and Macnish and the men’s lawyer at the time did not respond to requests for comment.
Now WeWork’s tech leadership couldn’t be more different from a 16-year-old IT director. In 2017, the company made a splashy tech hire, tapping Shiva Rajaraman as chief technology officer. He came from a short stint at Apple and previously was at Spotify, Google, and Twitter.
In June, Rajaraman talked to Business Insider about how tech fit into WeWork’s positioning.
“One big part of technology is simply making sure we understand operations from soup to nuts, instrumentalize that, and make it better over time,” he said.
‘Routers that are sketchy at best’
Even with the high-profile hire two years ago, WeWork still has major infrastructure gaps, IT employees said.
Under Neumann, each regional director, known as CweOs, handled the networking and technology each building required. The company opened up new locations as fast as possible, and these regional managers were concerned with the costs involved in opening each building. Sometimes, deals would be done with deadlines that failed to consider the lack of a building’s basic infrastructure, like fiber optics.
Some CweOs looked to cut costs in the tech budgets, two sources said.
“You don’t put in the good routers. You put in the second-class routers that are sketchy at best,” one person said, adding that was because Chinese clones “cost pennies on the dollar” compared with the market leader Cisco.
An ex-employee also thought there was a focus on cost at the expense of performance.
“The majority of installations were with equipment that’s end of life. That’s how they cheap out,” the source said. He said that when he was there, WeWork often bought equipment indirectly, rather than from manufacturers, so they couldn’t get tech support if needed.
Sometimes managers saved money by hiring less experienced people to install the network, these people said.
And the situation grew complicated even when WeWork expanded, adding more space in buildings it had previously occupied. One floor might use one contractor and one set of gear, while another floor was a budget job.
“One IT closet looked like a 10-year-old built it — a rat’s nest — and literally side by side, one was professional,” one of the IT employees said.
Some of WeWork’s clients have complained about the company’s weak network security, CNet’s Alfred Ng reported in August. CNet reported that one tenant said that he had been complaining about the insecure WiFi since 2015 and that simple scans of the network allowed him to see sensitive files on 658 devices owned by other WeWork tenants in his building, including financial records.
Other WeWork tenants are taking matters into their own hands and implementing their own network security, one former employee told us.
But if each tenant did that with the most popular method for securing data on an insecure network, known as a virtual private network, they could overload the building’s network and slow everyone down, two sources said.
Big changes are afoot at WeWork, including in IT. After Neumann was ousted in September, co-CEOs Artie Minson and Sebastian Gunningham have been taking a hard look at all parts of the business. As part of the changes, WeWork is working on centralizing its IT operations, a current employee said.
But centralizing may not be enough. As companies tighten cybersecurity practices, a full, costly overhaul may be in order — just as the company’s looking to cut costs.
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