WeCrashed / A WeWork Story About Coworking That isn’t Really About Coworking At AllMar 18, 2022
Apple TV released the new series this week called ‘WeCrashed’ (yep, no spacing). It’s an ‘inspired by true events’ type thing that tells the story of WeWork, a monumental Coworking business that changed the landscape for flexible workspace over the last decade.
Now you know this piques my interest because I’m a Coworking guy, founding Houston’s oldest, longest running, most (and highest) reviewed and now award winning Coworking business (www.worklodge.com). But back in 2013 when I had the idea, I didn’t know who Adam Neumann was. I didn’t know there was a think called Coworking either. But that’s a whole different story.
Shameless plug over.
Back then, I knew I wanted to create a space that people would enjoy going to work from, a place they could meet other like-minded folks and build quality, entrepreneurial relationships. I didn’t know what to call it, I just knew it was needed and fortunately for me, a few other people had the same idea, because Coworking spaces were popping up randomly, all over the country.
Adam Neumann wasn’t the first to have the idea, but he sure was the first to take it main stream. The speed at which WeWork was able to grow, sign leases, build out real estate and create some of the most incredible looking spaces with nothing short of incredible. This is commercial real estate folks. It’s slow, expensive, slow, and did I mention slow?
As they bloomed, their valuation bloomed also. Adam did what many American entrepreneurs did, and played the game.
He asked people for money.
And they gave it to him.
So he asked for more.
And they gave it to him.
Why would anyone stop?
It’s not the business model that’s flawed, it was the integrity and character of individual. That’s where we see the deficiencies shine, but we all have our flaws. It’s what makes us human and why we need others around us. Because we’re better together.
Sounds like a pitch for Coworking, right?
As you watch the show it becomes apparent quickly that his downfall was more around his lack of control around power and money (and everything they bring). But it wasn’t around the ability to execute and deliver. Building an empire across 100+ countries with over 400 locations and serving almost a half million people on their active membership roster in just a few years isn’t too shabby. I can’t think of someone else that’s pulled it off anytime recently.
Tech companies scale all the time doing the exact same thing. Trading off profit today in the hopes of a better tomorrow. That’s how Facebook, Twitter and most of the big guns did it. In the real world, customers are a little slower to get a hold of and cost a little more to acquire. That’s the only difference.
The thing is, when shows like this come up everybody has an opinion and starts blogging (erm…. yes but I’m different, I pinky promise), YouTubing, Reel-ing (is that even a word for Instagram Reels) and generally chiming in. We all love a good ‘fall from the top’ story. But there’s a bigger problem that comes from it all.
Negativity. Around Coworking as a whole.
WeCrashed isn’t a story about Coworking as an industry. It’s about WeWork specifically. And how one company runs itself isn’t the same as how every company does. As a side note, they didn’t crash either. The only thing that changed was a crazy valuation. Just like Tom Brady’s ‘final’ touchdown ball that sold for half a million dollars and is now worth $500. Because he’s coming back!
“It’ll never last.”
“It won’t work.”
“It’s just a scam, real estate arbitrage.”
It fascinates me that there are so many haters of the flexible workspace business model even though it’s been around for decades. Sure is hot its ups and downs, but so does Commercial Real Estate. How is leasing up a big space and breaking it up into smaller spaces designed around amazing, incredible amenities worse than a landlord building a big space (the building) and breaking it up into smaller spaces (the floors)? It makes no sense to me.
Is it because they own the asset? Maybe. But that comes with a whole lot of debt and risk.
How is it any different than the apartment building who leases out smaller spaces? Again, same concept, just a different application.
And now look at 2022 and the ‘new’ hybrid working model. Some would say we saw it coming. Whether we did or not, our spaces are the perfect fit and landlords can’t compete because they’re in the big building business, not small spaces layered with hospitality business. The economy needs Coworking now more than ever. So to vilify the whole industry when it wasn’t even Adam who was the bad guy here seems like a humdinger.
Who were the bad guys I hear you ask? The folks who enabled the behavior of course! They kept giving out money like it was monopoly without checking and validating what was happening. Even my kids know that’s the first 2 things in every situation.
My Coworking business has been cash flow positive, and profitable since before we ever opened our doors. WeWork isn’t. They lost $4 Billion last year. They also ran around 60% to 66% occupancy. We ran more. They lost 25% of revenue through Covid. We lost less. And we’re not the only ones. Sure we’re smaller (by a heck of a lot), but there’s tons of small operators out there that make up this industry and collectively, many of them are doing just great.
It’s crazy to me to think that my little Coworking business in Houston Texas, it makes more money than the giant WeWork across the entire world. But that’s how it is. They’re just playing by different rules. Because they’ve got different goals. And different ways to get there.
I’m excited about the future for flexible workspace and I’m excited about the future for WeWork. I think they’re awesome and they’re great for me. Because rising tides lift up all the ships.
If you’re looking for workspace you should love us too.
Because we’ve got YOUR best interests at the heart of everything we do, not someone else’s. Landlord’s customers aren’t their tenants, it’s the banks. They put the lender’s interests first because they need them more. We put our Members interests first because our model is built around community. It’s our strength. Our super-power. This community first mindset that cares deeply about the relationships between those community members is entirely the fuel that powers our rockets.
Everything we do should be driven by the relentless pursuit of improving the lives of the people we serve. In the words of my buddy Zig Ziglar, “You can have everything in life you want, if you will just help other people get what they want.” Coworking operators are in the business of helping other people get what they want!
Small business is the life blood of American business. I want to be part of that life. I want to be the biggest cheerleader out there, listening to their stories and getting excited. Riding their coattails of enthusiasm, as it fuels me and drives me along with my team and everything we do.
So today, as WeCrashed comes out, I’d like to just take a moment to remind everyone that WeCrashed is a story about one person (Adam Neumann) and one business (WeWork), who fell out of favor with his puppet masters when they were finished with him. Nothing more.
It’s not a story about the flexible workspace industry.
It’s not a story about Coworking overall and it’s not a story about our industry’s future.
Because we aren’t crashing.
We won’t crash.
And we’ll never crash.
How do I know? Because the Coworking companies out there driven by integrity, a passion for their community and who have the discipline and tenacity to stay grounded, will always find a way to serve their members. Because it really is about more than just a building.