Knotel Co-Founder Exits, Accuses Newmark of Predatory Tactics

The Aftermath of Knotel's Collapse

Earlier in the year, the closure of flexible workspace provider Knotel was reported. The company announced its bankruptcy filing and the subsequent acquisition of its assets.

This acquisition was completed by Newmark, a commercial real estate brokerage and investor, for a sum of approximately $70 million. This marked a significant downturn for Knotel.

A Rapid Decline

Just twelve months before, Knotel had been valued at $1.6 billion. The company’s fall from grace was swift and substantial.

Determining the precise moment when difficulties began for Knotel, which had secured around $560 million in funding, proved challenging. Some attributed the failure to the impact of the pandemic, while others suggested pre-existing issues, including legal disputes and eviction proceedings, were already present.

Founder's Public Criticism

Recently, Amol Sarva, a co-founder of Knotel, publicly voiced strong criticism of Newmark. His statements came in the wake of the company’s bankruptcy.

In a letter distributed to an undisclosed recipient list, Sarva highlighted that Knotel had achieved a run rate of nearly $400 million by early 2020. He also noted the company’s gross profit and its ability to retain over two-thirds of its revenue while prioritizing customer support and maintaining positive landlord relationships.

Allegations Against Newmark

Sarva characterized Newmark as a “stalking horse,” alleging that the brokerage leveraged the bankruptcy proceedings to gain control of Knotel with approximately $100 million in new capital. He asserted that this process damaged key relationships and negatively impacted both customers and partners.

“I’m so disappointed that this was the direction pressed,” Sarva stated. He further explained that the unfolding events led him to the conclusion that he would not participate in the new ownership’s future plans.

Criticism of New Leadership

Sarva extended his criticism to Newmark’s personnel choices, claiming the brokerage had recruited individuals reminiscent of the leadership team from Adam Neumann’s era at WeWork.

As of the time of this report, Newmark had not issued a response to requests for comment. While Sarva’s perspective is clearly colored by his experience, the timing of his realization regarding these issues remains a point of interest.