In our last article I told my LinkedIn cohorts that I never heard of WeWork until one of my colleagues called and told me to visit him at a WeWork office space. Mind you, I thought he leased the space, however to my dismay he called me lambasting the article I wrote about WeWork and how I was wrong to criticize the miraculous growth the company has experienced. Sure he took me on a grand tour and all, but how in the world would I have guessed that he is just another recruiter for WeWork? He screamed, yelled, and assumed that since we were good friends I would follow up with a article praising WeWork and apologizing for my criticism. He said we could still be the best of friends if I corrected my mistakes. I told him, "Don't worry buddy, I'll make good on writing a favorable article about WeWork, after all you're the one that told me about it!" He seemed to cool down and told me he was counting on me.
Firstly with WeWork, people appear to be working together in a communal office space but there's nothing directly coordinating their shared work. The only thing that's coordinating members' shared experience is alcohol and sexual gratification. It's simply a meeting place of millennials and generation Z to cohabitate on pseudo-business enterprises. WeWork's offices are more for socializing with very small benefits in terms of building legitimate business contacts. WeWork enables unproductive people to meander around the kitchen and coffee pot to discuss their daily experiences of getting nowhere.
WeWork's membership enthusiasm is owning a desk and a chair that inherently makes them feel worthwhile with a piece of real estate that they believe they own. WeWork's mission statement is to create a world where people work to make a life, not just a living. What they created is a fantasyland where no one wants to work and make a living. Just go on LinkedIn and look up anything with the WeWork hashtag. Most are just recruiters promoting WeWork as a sustainably growing company with all the global workspaces they continue to open up. Folks, what WeWork did is build a precarious business model whereby long-term leases are financed by deep pocket investors. The more money the company raises the more debt the company accrues trying to achieve global scale by acquiring long-term leases.
There are reasons why this pseudo company wants to be known as a tech company. First of all, they did not invent co-op office sharing. By labeling themselves as a technological marketing company, their financial disclosures are based on their membership. This means financial institutions and property owners don't have to deal with the financial information of WeWork members. When a company creates a mystique and cult-like environment there will be a lack of data on prices and returns for investors. WeWork wants to undermine the risks associated with membership approximation when enthusiasm weans. For property owners, higher interest rates impose immediate cash flow constraints in the attempt to capture the expectation of appreciated value space. The millenials will never adhere paying more than $700 USD for a table or chair per month. That means WeWork's quest in establishing scale can not be achieved with raising rents relative to inflation.
WeWork is not working in the ideal market conditions without membership promotions and discounts. These subsidized business practices will fall like a house of cards and don't consider whether economic conditions are weakening as a whole with an influx of supply and lessening demand. WeWork's recruiters go around telling everyone they are a tech company, yet the reality is they are only a second-rate leasing company.
Don't take my word for it, just listen to what the workers are saying. On Glassdoor, anonymous employees have flooded the WeWork review page with comments like "passive aggressive toxic cliquish environment - no diversity!!!", "wish they could practice what they preach", "horrible company", "got fired and it was the best thing that could happen to me", "you have to party with them or else you get fired". The negative reviews sharply outnumber the positive ones and paint a dark sinister picture of what's really happening with this company. One of my colleagues who formerly worked at WeWork told me that it's all a bunch of young guys who want to step over everyone and get their way with women. They go around saying the work environment has an enormous amount of diversity, but that's all bull, what they want is young white millennials eager to drink the Kool-Aid. If you have darker skin, you're left with lower pay and bathroom duties.
I asked a real estate agent I play hockey with if he ever heard of WeWork. He laughed and told me that the company is a joke, not because they are taking commissions away from him, but because the company itself struggles in making up their mind of whether they are a coffee shop or tech company. He said the reason why they attacked Starbucks is because every time you walk into a Starbucks you see these nerds with computers voraciously typing away at something. Of course you have the odd few actually trying to build a business, but the majority is most are just surfing the web or gaming online. He told me that WeWork's real business model is the polarity between the aggressive membership drives and the true characteristics of these individuals who want to be by themselves with their computers.
Everything boils down to memberships, not the ownership of real estate or a company's growth in owning that real estate. After a few months, members leave in droves because they can't afford it even with the free food and alcoholic beverages they receive. However once these guys and girls can't meet their partners, they go right back to clubbing and paying for their own booze. I know some companies that rented out WeWork for upwards of 20 chairs and desks, but after a few months they all cancelled and paid their penalty. The reason why is because they simply couldn't stand the overall structure and lack of business connectivity that they were promised.
Again, even though I promised I would write a favorable article about WeWork, I simply couldn't stomach misleading individuals into thinking that this company was worth their time. After my friend reads this our friendship will probably be severed. The only thing I can thank him for is that he's awakened a few bulls in the arena that will continually and systematically attack this company. This company is not worth your money or your time, unless you're an investor who wants to pour billions in a bunch of IKEA furniture that will be discounted when the company plunders.