Knotel CEO Amol Sarva bragged about overtaking WeWork. He was just replaced by 2 former WeWork execs.
- Knotel cofounder and CEO Amol Sarva is out, replaced by WeWork’s former vice chairman.
- New owner Newmark named Michael Gross as CEO and Eric Gross and Yoav Gery as copresidents.
- Sarva alienated rivals, employees, and business partners, a dozen sources told Insider.
- Visit the Business section of Insider for more stories.
Knotel’s controversial cofounder and CEO Amol Sarva is being replaced by executives from the company he boasted about beating.
Major commercial real estate advisory firm Newmark, which is set to close shortly on its acquisition of the troubled flexible-office company, named the new leadership on Monday. WeWork’s former vice chairman, Michael Gross, will be Knotel’s CEO, while his brother Eric Gross and Yoav Gery will be copresidents.
Michael Gross was close to WeWork founder Adam Neumann and was part of a raft of executives who quit or were fired shortly after Neumann was ousted in September 2019. Eric Gross worked in WeWork’s property investing arm. And Gery was previously the president of Selina, a hospitality company that counted Neumann among its investors.
The Gross family drew scrutiny during WeWork’s 2019 attempt to go public because the company paid the brothers’ parents – licensed Florida real estate brokers – to broker at least one building lease in Miami, the Wall Street Journal reported at the time as part of a larger look at WeWork’s conflicts of interest.
In late January, coworking company Knotel filed for bankruptcy after its pre-pandemic financial difficulties were compounded by the hostile environment for office space because of the mass switch to remote work. Weeks later, Knotel’s other cofounder, Edward Shenderovich, stepped down, with plans to return after the bankruptcy process finishes. Shenderovich did not immediately respond to a request for comment.
Neither Knotel nor Newmark immediately responded for comment about what level of involvement, if any, Knotel’s cofounders will have in the future.
The trio of new leaders will focus on Knotel’s restructuring, as the flex-workspace firm continues to shed locations and emerge from its Chapter 11 bankruptcy proceedings under Newmark.
“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,” Michael Gross told the Wall Street Journal on Monday.
On an introductory call with some Knotel employees on Monday, the Gross brothers admitted that WeWork admired Knotel’s model, which focused on inking full-fledged businesses as tenants rather than individuals and small startups. To go after the same customers, WeWork launched a new effort called HQ by WeWork.
Sarva’s pitch was that Knotel would make WeWork obsolete
Shenderovich and Sarva cofounded Knotel in 2015, on the heels of WeWork’s meteoric rise. Media-savvy Sarva became the face of the company, making the rounds on business TV shows to proclaim that Knotel would overtake WeWork in the same manner that Amazon had outgrown early competitors like eBay.
Sarva, a 43-year-old serial entrepreneur, propelled the firm into the spotlight, but not without alienating rivals, employees, and business partners along the way, over a dozen people close to the company told Insider in early February.
The CEO told employees not to pay bills and told staff that brokers and landlords “need us, we don’t need them,” two former insiders at the company said.
See more: Behind Knotel’s meltdown: A dozen insiders trace the coworking firm’s turbulent fall into bankruptcy after losing $400 million in 2 years
Behind the scenes, Sarva cast himself as an offbeat CEO with little regard for the customs and etiquette of the commercial-real-estate industry and the larger corporate world. In 2018, he wore an unbuttoned green military blazer to an annual black-tie gala attended by thousands of power players in New York real estate.
At Knotel’s corporate headquarters, in Manhattan, he’d pass out beaded necklaces to employees, telling staff “you need to fly your flag” and “find your inner peace,” a former company executive said.
In the face of increasingly negative news about Knotel and the larger commercial real estate industry, Sarva claimed over the summer that Knotel would be profitable by the end of 2020 and that he would raise $100 million to carry the company through the upheaval. The funding never came in and in late October, the company cut another 20 employees. Sarva spun the bad news, telling employees that Knotel could be profitable by the end of the first quarter of 2021.
Knotel lost a total of $202.3 million in the first 10 months of 2020, according to financial information reviewed by Insider. In 2019, it lost $223 million, Insider previously reported.
On January 31, the company filed for Chapter 11 bankruptcy ahead of a proposed sale to Newmark, one of its investors.
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