Articles

WeWork…WhatHappened?

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.

Founded in 2010 by Adam Neumann and Miguel McKelvey in New York City, WeWork heralded a revolution in the shared workspace industry, only to spiral into a dramatic downfall only a decade later.

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.

This is what Elias Makos and I discussed on CJAD 800 AM. Listen in right here

Mitch Joel · WeWork…WhatHappened? – The Elias Makos Show – CJAD 800 AM

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Mitch Joel

Mitch Joel lives at the intersection of technology, business transformation and consumer culture. He is the Executive Director of Next Era Institute, a strategic intelligence platform helping leaders understand the forces reshaping business, technology, culture and society. The Institute identifies which shifts matter, explores their wider significance and translates them into strategic direction and momentum. Mitch is also a globally recognized keynote speaker. He has delivered thousands of presentations across both B2B and B2C industries to organizations including Google, Walmart, LEGO, Shopify, Microsoft, Procter & Gamble and Unilever. Strategy Magazine has called him “one of North America’s leading visionaries.” Mitch built his career by working directly inside the waves of change that reshaped modern business. He founded and built a digital marketing agency that worked with some of the world’s largest brands and was later acquired by WPP, where he served as President of a firm operating in 25 countries with almost 3,000 employees. Mitch is the bestselling author of Six Pixels of Separation and CTRL ALT Delete, and the host of Thinking With Mitch Joel, one of the longest-running business podcasts in the world. His writing and commentary appear in outlets including Harvard Business Review, Fast Company and Inc. Magazine. He is a member of Dr. Marshall Goldsmith’s 100 Coaches and was named to the Thinkers50 Radar. Mitch also hosts Groove – The No Treble Podcast, documenting the oral history of electric bass players. Mitch is also Co-Founder of ThinkersOne, a platform that enables companies to bring personalized thought leadership from world-class experts into meetings, events and off-sites in focused 15-minute bursts.