Ex-Knotel CEO Amol Sarva Slams Newmark for Hiring ‘WeWork Bros’
In an email sent on Friday night, Sarva criticized investor Newmark for pushing for the bankruptcy process, using it to take over Knotel, then naming former WeWork executive Michael Gross as his replacement, The Real Deal first reported.
“This process undermined lots of important relationships and hurt lots of customers and partners,” Sarva wrote, according to the email shared with Commercial Observer. “I’m so disappointed that this was the direction pressed. The process made clear to me that I would not choose to be part of the new owners’ way of moving forward.
“Only to confirm that judgment, they have literally hired a group of Adam Neuman[n]-era WeWork bros to lead the company forward,” Sarva added.
Representatives from Newmark declined to comment and Gross did not immediately respond to a request for comment. (Disclosure: Observer Capital, led by Observer Media Chairman and Publisher Joseph Meyer, is a Knotel investor.)
Sarva founded Knotel in 2016 with Edward Shendorvich to offer midsize and enterprise companies private workspaces with their own branding managed by Knotel and with flexible lease terms. It pitched itself as a more stable alternative to WeWork, even parking a bus outside WeWork’s headquarters to lure new members, and was crowned a unicorn in 2019.
While Sarva said the company was close to profitability, it lost $223 million in 2019 and dealt with high vacancies in its portfolio (which Sarva previously told CO was par for the course for flex office companies.)
The coronavirus pandemic exacerbated Knotel’s problems as it forced workers to abandon the office and work from home. Knotel cut staff, ditched huge chunks of its portfolio, and is facing dozens of lawsuits from landlords around Manhattan for nearly $12 million unpaid rent.
Knotel eventually filed for bankruptcy in January, with Newmark providing about $20 million in financing to the flexible workspace company.
Newmark also made a $70 million stalking-horse bid to acquire Newmark, which was approved by a Delaware court last month. The brokerage named Gross, who previously served as vice chairman at WeWork, as Knotel’s new CEO to steer the firm out of bankruptcy and reduce its losses. It also named his brother, Eric Gross, and Yoav Gery to serve as co-presidents.
In his email, Sarva said that he was working on starting up a new company, but did not give details about it yet.