WeWork in case you’ve missed it has quickly become the poster child for everything that is wrong with capitalism, trying to recap everything that went wrong is a story probably best told by others ( can’t wait for the movie), but we can try and summarize for those out of the loop :
Like many I was introduced to this fascinating case by Scott Galloway : WeWTF🎥 Here’s an excellent short video overview if you prefer: https://youtu.be/Cb4CGn4a1Y0Also,also, this is pure Tuesday Morning Quarterbacking,we probably know very little of what happens behind closed doors and speculative solutions are just that...speculative.
- WeWork started as an ecofriendly coworking space in Brooklyn, became successful, was sold and later reincarnated with those proceeds as a
designey-chick-milenial-aspirational-community coworking space.
- Investors liked the pitch, so it soon found itself awash in capital and valued in the billions, justified in part by the narrative of future profits and value added services… it grew like crazy and burned the capital like crazy to fuel this growth, fast forward a few years…
- The party stopped when WeWork tried to go public, thanks to a now infamous S1 Filing, it was realized that WeWork had no value added services, no present profit and no path to future profits , yet high obligations, whats more, the high valuation was at least 10x bigger than a very similar coworking company ( IWG ), there are of course the founders antics which didn't help.
- As of this writing the IPO is off, the founder has been partially removed, and there’s questions of how long WeWork will remain in business, with a high burn rate and sunk costs in the billions WeWork might be dying soon…
And here’s where we jump in, and just to be clear, WeWork seems to have at least 2 big problems, economic/culture/management ones, and then there’s product, I will be focusing on the product side of things, since that’s where I have more experience, for completion sake let me try to save the business side which does look like a mission impossible…
💣 Your mission if you decide to accept it is to turn profitable a real estate company with ~ 3 billion in annual revenue, but 1 billion in losses, obligations ? many (about 13 Billion in VC money, cumulative losses of around 4 billion), liabilities ? a ton ( about 47 billion in long term real estate), runway ? 3-6 months. You will be working with demoralized staff that might or might not help you and there might be a global recession around the corner...This message will self destruct in 3.2.1...💥If you chose combustion I don't blame you, it will probably be less painful.Realistically speaking a financial lifeline is probably WeWorks best bet (one is in the works), such lifeline will probably come with a lot of restrictions, a new board and control from investors, but will give it some breathing room for the next big step...chapter 11, this would allow WeWork to reorganize, rebrand and relaunch. WeWork after chapter 11 will have to be profitable from day one, this might mean that it will shrink and be burdened with obligations for at least the next decade or so.While this high stakes maneuver is being performed, a change towards profitability will need to happen, staff might need to be cut, costs controlled and anything not contributing to the bottom line shed.
And still, if all of this is performed flawlessly, it might still not be enough, that's why I believe that product should be a key component of the coworking space moving forward...
Getting the basics right:
This is not rocket science yet it seems it is. I’ve been working from coffee shops and home offices for almost 20 yrs in different countries, a few years back when coworking places were sprouting everywhere I decide to try them out, they didn't work for me , in part because they are not democratic places ( there’s hierarchies ), or creative places ( free beer & coffee does not equal creativity ) but there’s also a laundry list of things that they also do not offer, compromises and grievances galore.
I am not entirely happy in coffee shops either, but overall they are better places because if I don’t like the one I am at or there’s no room, I can always go elsewhere, there is also the dubious social interaction component, you will meet like minded people and there will be opportunities to cross pollinate or some such in coworking spaces… in my experience the people I want to work with have a budget for offices and social interactions at a coworking space can be awkward, don’t even get me started on mixers/meetups ( get interviewed while drunk/tired after a lecture while stuffing your mouth with pizza ! ).
What do I want ?
- The place to be open late, maybe not 24/7 but some coworking spaces kick you out at 8pm, some of us work through the night.
- A guaranteed comfortable seat, none of those janky ass communal tables with metal chairs.
- Reliable wifi.
- Good coffee or tea .
- Safety, privacy on demand and a neutral ambiance.
- For it not to feel like a cubicle.
These demands which might seem unreasonable are what I have right now, I pay about $100- $200/month at coffee shops depending on country which cover about 4–5hrs of my workday ( noise cancelling headphones not included ), the remaining 2–5hrs I usually work from my home office.
Current coworking spaces offerings are at least twice that much for what I consider less and would need to cost half (or offer something of value) for me to join in, then there’s the like vibe…
The WeWork/Yoga analogy: Years back I had horrible back/leg pain from sitting 8 hrs straight on wooden chairs at the local coffee shop with my brick of a laptop, I decided to enroll at a yoga class.I was fortunate enough to have a great teacher/yogi, and remember she said something to the effect: yoga has a spiritual component and a stretching/mobility component, you can chose one, the other or both, I chose the health aspect alone and couldn't be happier, no more back/leg pain.WeWork in its current incarnation pushes hard on the community/hype/style aspect and not enough on the work one, what's more, you can't choose one or the other... and you get charged more for it, IWG does the opposite, I think neither is the future.
A Machine for working.
A house is a machine for living in…Le Corbusier
The reinvention of the coworking space I think is a design problem (constrained by socio economic factors, but that’s life), and as such it needs to start with understanding the nature of work.
While the physical environment is an important factor, it is not the only one, and perhaps not even the main one, let me ask you this, how many people do you know ( besides Warren Buffet ) that tap dance to work ? will the physical place you go to help ?
Curious Aside while you think about it: When I've been really broke I've brewed my own coffee and gone to public libraries which always renew my hope in humanity, I've also found them to be incredibly creative work spaces ( all those wonderful books and media), but also not very user friendly- uncomfortable and full of rules, but don't you tell the homeless guy watching porn or shooting/showering in the bathroom. Public Libraries as communal work space review: ⭐️⭐️
If the place is but one aspect, what are other ones, and can something like that be packaged into a product, valued in billions and maybe, just maybe save WeWork ?
⬅︎ Hey kind Sir/Madam if you like the article you can 👏 and I get a little 🧀
A pretty cage is still a cage.
I don’t know what you do for work dear reader, but I am going to venture that you are somewhere in between two extremes, on one you do something you dislike but can do for money, on the other you do something you find interesting or love, you might be compensated or not, heck, you might have a mix of both going on.
I think a better coworking place would serve everyone on the above definition and try to move those on the first extreme to the second one, that would truly change the world.
I think WeWork missed the opportunity to deliver on this, even at a basic human level it should have been more of a friendly/optional HR department than just a fancy landlord, let me put this into product form:
WeWork’s exorbitant valuation was based on the promise of synergies and added value through its tech services & platform which are nowhere to be found, this is doubly infuriating because they already had the one thing that could have made me and many others flock to their offices, but instead promised something they didn't had and couldn’t deliver…
Arguably the best asset that WeWork has/had is access to VC capital, but for whatever reason that was reserved only for WeWork the company, and not their customers, there was never a We all become successful mentality and this could have been part of a great product:
Tech to the rescue ?
And how about tech, how would a coworking space with a real tech platform look like ?
I am not entirely sure and it would depend on the budget and capabilities, here’s another instance where I think WeWork missed the mark, if you look at the list of companies bought by WeWork you will notice that they are almost all self serving, I also think they look wasteful, some even malicious (track whose identity and behavior ? ) and not particularly well thought out ( how many workplace and sign in management solutions does one really need ? ).
I think a real coworking tech platform would serve their users needs which in this day and age range from IT solutions to Design Work to Logistics, tricky since they’d need to be good an priced in, but not impossible, one can image an ambitious coworking space that also provides cloud services and in house know-how that would cover everyone that needs a web presence, but can also be expanded to more physical stuff like warehousing/deliveries etc, etc, one can dream:
Should WeWork be saved ?Well, since neither of us are footing the bill, I say who cares, but at another level I think it shouldn't, it should die spectacularly 😱 the reason is simple, a capitalist system that tolerates companies that do not generate profits is not working correctly, is not sustainable and sets the wrong precedent.If on the other hand, WeWork saves itself by providing real value and profits, then I will be the first to applaud them.
The future ?
I offer two takeaways from this short overview of WeWork and coworking.
For better or worse, the nature of work has changed and it will surely change some more, remote, distributed teams, tech freelancers and companies of all sizes will need new and evolving workplaces.
Whoever wins will need to strike the balance in between cost, service and value added propositions, I don’t think we are there yet.
As for WeWork, even though the odds are not in their favor, they could very well end up being the ones that get it right, beyond the financials, a product first approach could help…they also serve as a cautionary story ( another one ) on the dangers of over promising and under delivering, the cult of CEO/Founder personality and hubris in general, but that’s another story.
Thanks for reading,
About the Author: Born Eugenio Noyola Leon (Keno) I am a Designer, Software Developer & Artist currently living in Mexico City, you can find me at www.k3no.com