Can WeWork survive? Should it?
It’s striking to me how the media hypes certain companies to ridiculous heights with fawning, uncritical coverage, only to join in the feeding frenzy of negativity when the same companies inevitably encounter problems. In that respect, I suppose, the media plays a central role in the tech-era bubbles that we’ve lived through over the past two decades.
What else could be prompting this observation right now than the story of WeWork? This story hits home for us at goodcounsel, literally, since we work at WeWork.
Flawed or fraud?
I won’t rehash the tale of WeWork’s amazing rise and sudden fall, fueled by the blank checks written of Masayoshi Son and his $100B Vision Fund and the swollen ego and avarice of founder Adam Neumann. (See related post on the perils of “Blitzscaling.”) But it is quite an interesting tale (some good podcast coverage here and here, articles here and here) in much the same way as is the story of Theranos (essential podcast here, a timeline of articles here). Both companies had charismatic leaders, Adam Neumann and Elizabeth Holmes, who made grand pronouncements that people wanted to believe and that the media credulously hyped, both convinced well-known, deep-pocketed investors to reach deep into those pockets, and both (companies and founders alike) have experienced epic falls.
Whereas Theranos was a complete fraud, peddling a product that never really existed and actively concealing that fact, WeWork – though not meriting anything like the $47B valuation that investment bankers sought to put on it prior to its now-scrapped IPO – has a real business, with a real product and significant revenues (though not yet profits).
A real business below the BS
From my perspective as a customer of two years, WeWork offers a solid value. The physical spaces are comfortable and well designed. (My teens love visiting here.) The employees running the day-to-day operations are notably friendly, capable, and responsive to their customers, and do a terrific job engendering the sense of community that is part of WeWork’s core values. The housekeeping staff here seem to be treated as a respected part of the team, and are employees rather than contractors, which is quite unusual. It’s easier for a small company like ours to let WeWork handle operations while we attend to our core business.
In other words, there is something real at the heart of Neumann’s original vision, even if it was a bit oversold, and he certainly deserves some credit for bringing the company to life. Now of course, it would be fair to point out that it is easy to grow and do original things that cost money while a sugar daddy in Japan providing limitless funding. Without a doubt, Neumann does not remotely deserve the obscene $1B share repurchase plus $185MM in consulting fees that Softbank inexplicably decided to pay him on his way out the door – especially as the axe is poised to fall on large hunks of the company. This includes the aforementioned housekeeping staff, who are going to be laid off, albeit with a guarantee of rehire by an outside contractor. (Back to business as usual in rental properties, it seems – oppressed housekeeping staff with low wages and benefits.) WeWork staff are right to speak out about the injustice of it.
Waiting for the company’s next chapter
I am pulling for those who remain at WeWork to right the ship and prove that the positive, values-oriented culture that they have begun to build can operate drive a highly profitable business. This culture has found a receptive audience among Millennials and many others, both those who work for WeWork and at WeWork. It is a vision of a working culture that deserves a chance to prove itself.