The Cult of WeWork
“Outside the walls of WeWork, all was noise and struggle, failure and filth. But here, all had been perfected. The best people had made the best systems and the best systems had reaped funds, unlimited funds, that made possible this, the best place to work.”
Forgive us; the well-read amongst you will recognise we’ve taken a liberty in this quote. Whilst it does describe a dystopian society of the future, it is in fact from Mae, the lead character in Dave Egger’s seminal book The Circle. This highly-recommended novel describes a society that lives and works together. It describes a community that does everything together. They learn together, work out together, live and work together, constantly sharing everything about their entire lives. The inhabitants of this society even go so far as scoring points through what they share and how they interact with each other. The book is fundamentally about a large corporate monopolising society under the guise of social good.
Sound familiar? The similarities between The Circle and WeWork are staggering.
First a little history. Starting in 2010, WeWork has now obtained over $4billion in funding, valuing the company at over $20billion (a figure only surpassed by AirBnB and Uber amongst American technology startups), including a recent $500 million round to take their flexible workspace model to China. They are now present in 21 countries and have recently been on a spending spree, acquiring six companies including four in the last five months alone.
Such frenetic growth isn’t unusual in a well-funded tech company. Indeed, it is fair to say that such growth can inspire generations of entrepreneurs to attempt such a journey for themselves. However, not all well-funded tech entrepreneurs make statements such as this by WeWork Co-Founder, Adam Neumann:
“No one is investing in a co-working company worth $20 billion. That doesn’t exist. Our valuation and size today are much more based on our energy and spirituality than it is on a multiple of revenue.”
“Energy and spirituality?” What a very strange statement.
This explanation begs analysis of WeWork’s strategy. Do the patterns of growth and investment, combined with public statements such as this, suggest they are building a sustainable business? Or are they building a cult in homage to Dave Egger?
Not just a Co-Working Provider
There is no doubt that WeWork have initiated change at the heart of the office-space industry and for that they should be applauded. At the time of writing, WeWork’s core business leases co-working spaces to over 150,000 members, employing nearly 3,000 staff at 277 locations in 59 cities across 21 countries.
This is really impressive growth in just 7 years. The company is on track to do an estimated $1.3 billion in revenue in 2017 (with operating margins around 30%). Quite astounding given its age.
Whilst they were most certainly not the first co-working operation, they were the first to create a brand around it. The WeWork brand is the epitome of progress, collaboration and hits at the heart of what it means to be an entrepreneur. They hit a market at the right time, in the right places with the right proposition; flexibility in an age of rigidity.
However, most successful businesses, after an initial period of growth, struggle with what comes next – particularly in this case with a model that has no intellectual property. This naturally leads to a risk-hedging strategy as they seek increased share-of-wallet.
In WeWork’s case, the way they describe this is astonishing:
“We’re still at the very early stages of our growth, and ‘We’ remains our foundation. Now more than ever, creating opportunities for connection, promoting love and a focus on humanity is essential to empowering everything we do. Our responsibility is to humanize.”
You read that right. WeWork believe it is their “responsibility to humanize.” And nowhere does it mention the workplace as the focus of this humanization. Clearly the plan is a lot more ambitious than this. In their own words again, here is what it looks like:
“We’re also focused on wellbeing programs, education and experiences that foster friendship, collaboration and empowerment as well as new ways of thinking about social impact with all humans in mind.”
Humanization. Friendship. Collaboration. Empowerment. All humans.
Their portfolio shows us what this looks like so far:
- WeWork – The first and original We brand. Providing flexible work conditions. Established and successful model that shows no sign of abating;
- WeLive – A new initiative providing co-living. Accommodation providing private spaces with a range of communal amenities;
- WeGym – To quote an American staff member “if you work and live with us why wouldn’t you go to our gyms?” ;
- WeLearn (assumed name!) – WeWork recently acquired the Flatiron School, providing access to a school that specialises in coding; and
- WeGrow – Yes, you can now allow the company to raise your children while you’re at the WeGym or slogging away at WeWork.
Share of Wallet (and Mind)
WeWork have recognised that our work is a large portion of our lives but only one third of our day; they are now seeking ways to monetise the rest of our day and, ultimately, monetise every aspect of our lives, while simultaneously diversifying their portfolio risk.
All of this shows the attempt by WeWork (or perhaps we should just call it WeHumanize) to provide for every part of our lives. But this grab isn’t just about our physical lives. No, it’s also about our digital lives. WeWork want to retain control of it too, all within their platform.
To wit: in April 2017 they launched a “services store;” letting WeWork members pay for products like Slack, Lyft, UpWork, Adobe, and many more right from their WeWork account, complete with discounts. This was then built upon further with the acquisition of MeetUp in late 2017.
This online platform encourages offline meetups. WeWork recognised an increasing number of MeetUps were taking place in their spaces and so the platform was acquired for an undisclosed sum. On paper, this looks like a great deal for both parties. There is a natural symbiosis – WeWork were looking for ways to engage their members while MeetUp were looking for great venues.
Again though, this is straight out of The Circle. In the book, characters are encouraged to join up with networks that held their interest outside of work and then to interact with them both online and, ultimately, offline. But WeWork is all about social good and not about a corporate controlling society, right?
WeWork’s attempts at gaining mindshare doesn’t just stop at providing for day-to-day needs. No, just as in The Circle, they organise events where members are encouraged to socialise together. This isn’t just about free beer on Friday evenings – no, it even includes “summercamps:”
“More than 1,200 tents, trailers and teepees have sprouted in the meadow. There are food trucks and beer trucks and dozens of bars.
On one edge of the field (near the roller disco, rock-climbing wall and a building façade that reads “Mac ‘n’ Cheese”) amateur acrobats dangle from a full-size trapeze.”
I know what you’re thinking – that’s enough quotes from ‘The Circle,’ guys. Except that quote is describing WeWork itself. In fairness though, WeWork had Florence and the Machine play at their camp this year and not just house band TenaciousWe. Seriously.
With Great Power Comes Great Responsibility
As WeWork spread their horizontal wings into other parts of our lives, it’s important to ask the leaders behind the business what kind of leaders they want to be. Adam Neumann’s Co-Founder, Miguel McKelvey is now the “Chief Culture Officer” (as an aside, Dave Egger might want to borrow that job title for the next book) and said this of Adam:
“He’s realized that motivating with fear is not effective. He used to think fear was a positive thing. Adam now understands that treating people with dignity and respect, and fueling them with positive energy, is a much better way, and he has an incredible ability to do it.”
Eek. Do we want an individual whose natural leadership style is fear in charge of all parts of our lives? Or can we rest assured that his style has changed as professional managers influence him?
Completing the WeCircle
WeHumanize is no doubt an amazing PropTech story, showing incredible growth and raising staggering amounts of money along the way. But will this land grab for mind and wallet share across every part of our lives – and we mean EVERY part – really resonate with key customer groups in the long run? Will people want to have every part of their daily lives mapped out for them?
WeWork has a fantastic position of growth and influence. They are doing all the right things from the perspective of future-proofing their core business. However, they must be careful. Society is a fickle beast that doesn’t do what Hollywood suggests it might. They may just need to consider the potentially negative perceptions which their audience may form first, before trying to complete the WeCircle.
Let’s also hope that the Founders of WeWork have the same morality as The Circle’s Mae, and can avoid a completely dystopian outcome in the society that they are trying to build. The alternative is frightening.