If you build it… will they come?
It’s hard to imagine flourishing office spaces and this desire for your work space to be something more than a cubicle where most emails get answered and your life’s desires go to die.
Still… this was the promise of WeWork, and the growing work culture that emerged as tech giants and venture-backed startups changed everything we thought we knew about work.
It might be fuzzy to see this after living through the global Covid 19 pandemic, but going to an exciting office space was… exciting.
In that high-octane world of startups, few stories are as vertiginous as that of WeWork.
Rise WeWork Rise.
WeWork’s meteoric rise was fueled by a self-declared innovative approach to office space.
By leasing and refurbishing properties, then renting them out at marked-up rates to companies and freelancers, WeWork wasn’t just offering desks, it was selling a dream.
The spaces were not only functional but stylish, complete with amenities like apps, connected technologies, networking, events, free kombucha and hammocks.
This approach appealed to a wide audience – from freelancers to startups and even large corporations who wanted to be “in” and “seen” as innovators.
It wasn’t just an office… it was a community.
Was this truly innovation?
Was this more about branding and culture than a genuinely unique business model?
Shared office spaces weren’t new, but WeWork’s knack for strong marketing made them seem revolutionary.
Their model was simple yet alluring: Combine modern design with a community-focused environment.
This approach, coupled with aggressive global expansion, propelled WeWork’s valuation to a staggering $47 billion by January 2019.
Still, when WeWork filed for an IPO in August 2019, the financial disclosures revealed substantial losses, raising questions about its business model and sky-high valuation.
The following months saw a postponement of the IPO, the stepping down of CEO Adam Neumann (later dramatized by Jared Leto in the documentary, WeCrashed) amidst governance concerns, and a bailout by major investor SoftBank.
WeWork’s model was based on long-term leases and short-term rentals – a risky proposition vulnerable to market fluctuations.
Something that most real estate experts knew long before the hype.
Then the pandemic.
Covid 19 decimated demand for office spaces.
The tech-industry halo that WeWork wore – positioning itself more as a tech company than a real estate firm – could not save it from the realities of its financial model.
Now, WeWork filed for bankruptcy.
What to do?
With my limited expertise in real estate (beyond some investing and a general interest in this space), it seems obvious that whoever takes over can break these properties down into three buckets: keep, renegotiate, and drop.
Asset liquidation to reduce debt is crucial.
This means selling off non-essential assets, properties, and leases.
The company might then be able to pivot back to its real estate roots, emphasizing sustainability and operational efficiency.
Perhaps a specialization in niche markets – such as tech startups or small businesses?
Maybe some partnerships or acquisitions by larger real estate or tech firms could provide stability and resources?
Even a franchising model might reduce operational costs and risks, making each local WeWork space independently managed and owned?
WeWork is at a crossroads.
Some of that by their own hand and getting ahead of their skis.
Some of that by the aftermath of the pandemic and what, exactly, businesses need as the return to office mandates change and adapt.
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