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WeWork needs a big, expensive IT upgrade



  • WeWork's technology infrastructure is due to a costly overhaul, current and former IT staff told Business Insider.
  • At the start of WeWork, 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 allegations in a case that the parties eventually 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  • Redoing what some current and former WeWork IT staff said was outdated and substandard infrastructure could cost tens of millions of dollars – just as the company wants to cut costs drastically.
  • Click here for more BI Prime stories.

Before the first public offering collapsed, the office rental company WeWork tried to position itself as a technical company.

But the buildings are loaded with technology that needs to be ripped out and replaced, three current and former WeWork IT staff told Business Insider.

If the company does not upgrade, it is possible that tenants ̵

1; or "members" of WeWork parlance – could inadvertently share their data with hackers who access the network through outdated or substandard technology, the sources said.

Two sources largely estimated that this was a project that could cost the company tens of millions of dollars.

"This is not a million, $ 2-3 million project. This is tens of millions," one employee told Business Insider.

A spokesman for WeWork, who declined to comment on details, told us: "At WeWork, we continue to make significant investments in IT and technology to improve our systems and members' experience. This includes investing in new services and dedicated high-speed services. Internet connections for our growing set of large business customers. "

Some of the upgrades are simply a product of WeWork's success. Older buildings need to be linked to support faster and safer networks for full load of tenants, all of whom are knocking over the network.

In other cases, the work is a result of shortcuts and fiefdoms, and an inability for IT people to get the funding they need, these employees said.

Early distrust of IT

Adam Neumann, who was recently hired as CEO, was believed to distrust the IT department, two sources said after Joe Fasone, an early IT employee, left the company in 2014. [19659006] Fasone, which laid the foundation for WeWork tech, could not have brought much company experience. He skipped his senior year to join WeWork as IT director in 2010, aged 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 charges 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.

Although Fasone left the company in 2014, it may have formed a bad taste. The IT staff we talked to each thought that one reason they were struggling to get budgets for their projects stemmed from this incident.

That the WeWork lawsuit was not the end of Fasone's legal problems, including the law firm.

Fasone's company Stage Networks was sued in 2015 by companies for which Stage worked in three separate lawsuits. In total, the companies have alleged that Stage did not pay a total of $ 525,000. In each case, the parties agreed to dismiss the case, and in two out of three, the parties indicated that 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 optic provider called Optical Communications Group, which claimed Stage failed to pay nearly $ 200,000, according to the complaint. It is alleged that Stage began working with Optical in January 2013 – while Fasone was still on WeWork, according to Fasone's LinkedIn timeline – and that Stage stopped paying Optical in February 2014.

Stage borrowed Optical's equipment 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 non-payment [Optical] for the circuits would result in disconnection of Internet services at WeWork's work areas," Optical's lawyers said in the suit.

Optical claimed that because Stage did not pay its optical bill, WeWork agreed to pay Optical for the Internet.

Optical founder Brad Ickes told Business Insider that the company settled the suit with Fasone. Registrations for the case are sealed.

Fasone and WeWork declined to comment on the legal questions, and Macnish and the men's attorney at the time did not respond to requests for comment.

Now WeWork technology management cannot be more different from a 16 year old IT director. In 2017, the company made a splash of tech hire, choosing Shiva Rajaraman as its technology manager. He came from Apple for a short time and was previously with Spotify, Google and Twitter.

In June, Rajaraman spoke with Business Insider about how technology fits into WeWork's positioning.

"A great deal of technology is simply to make sure we understand operations from soup to nuts, instrumentalize it and do better over time," he said.

& # 39; Routers outlined at best & # 39;

Even with the high-profile rent two years ago, WeWork still has large infrastructure holes, IT staff said.

Under Neumann, each regional director, known as CweOs, handled the networks and technology each building required. The company opened new locations as quickly as possible, and these regional leaders were concerned about the cost of opening each building. Sometimes agreements will be made with deadlines that failed to assess the lack of the building's basic infrastructure, such as fiber optics.

Some CweOs seemed to cut costs in technology budgets, two sources said.

"You don't put in the good routers. You put in second-class routers that are outlined at best," said one person, adding that it was because Chinese clones "cost a penny on the dollar" compared to market leader Cisco.

A former employee also believed that there was a focus on costs at the expense of performance.

"Most installations were end-of-life equipment. That's how they are cheap," the source said. He said that when he was there, WeWork often bought equipment indirectly, rather than from manufacturers, so they could not get technical support if needed.

Sometimes executives saved money by hiring less experienced people to set up the network, these people said.

And the situation became complicated even as WeWork expanded, adding more space to buildings it had previously occupied. One floor could use a contractor and one set of equipment, while another floor was a budget job.

"One IT closet looked like a 10-year-old built it – a rat witch – and literally side by side professional," said one of the IT staff.

Some WeWork clients have complained about the company's poor network security, reported CNets Alfred Ng in August. CNet reported that a tenant said he had complained about the unsafe WiFi since 2015 and that simple scans of the network allowed him to view sensitive files on 658 devices owned by other WeWork tenants in his building, including financial records.

Other WeWork tenants take the matter into their own hands and implement their own network security, a former employee said.

But if each tenant did so with the most popular method of securing data on an unsecured network, known as a virtual private network, they could overload the building's network and slow everyone down, two sources said.

There are major changes at WeWork, including IT. After Neumann was removed in September, co-CEOs Artie Minson and Sebastian Gunningham have taken a hard look at every part of the business. As part of the changes, WeWork is working to centralize IT operations, said a current employee.

But centralization may not be enough. When companies tighten to online security practices, a full and costly overhaul may be in order – just as the company wants to cut costs.

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