A while back, I wrote about WeWork.
Or more specifically, how the Messiah complex of one of the founders led to him ultimately screwing the company up with an ill-advised planned IPO.
Of course, as is the way with corporate-insanity – especially when you label your company a ‘tech’ company, even if it isn’t – he walked away for failure with a huge pay-cheque, which means being a start-up founder is even more lucrative after the job than it is for a football manager, which blows my mind.
[Though apparently it was not enough, because one of the founders, Adam Neumann, is suing Softbank for ‘abuse of power’ … when in reality, the only case they really have is Softbank giving them so much cash and praise, it led to Adam gaining a Messiah-complex]
Full disclosure, I did some work for WeWork when they first started.
I met Miguel – one of the ‘normal’ founders – and found him, and his ideas for the company both interesting and exciting.
And for a while it was.
They were tapping into a need that wasn’t being met by traditional office lease companies.
They invested in building a WeWork community because they recognised the commercial attraction of it.
They identified ways to profit from giving ‘start ups’ and ‘independent workers’ the sorts of benefits only people in more traditional employment enjoyed.
But then three things happened:
+ They realised the flaw in their business model because they signed long term property leases but had short term tenants.
+ To get long term tenants, they had to appeal to corporates who could screw them down on price, adding further pressure to their position.
+ To counter corporate price negotiation, they re-positioned themselves as ‘masters of igniting corporate culture and efficiency’ – which, at best, was marginally true and at worst, was plainly rubbish … because ultimately they were a contemporary office space leasing company.
Sure they offered more than some of their competitors.
Sure they were incorporating logistics into their offering.
But fundamentally, they sold space in buildings for others to work in.
I’m not knocking that, there’s a lot of very successful businesses who do it.
And I genuinely think the original WeWork idea was a good one – albeit with commercial flaws – but when ego, ambition and cash-flow pressure come together, they can make a pretty deadly combination, which the World – and employees of WeWork – discovered when the IPO forced them to open their books to the World.
However, I can’t help but think if Adam Neumann had waited just 6 months longer before announcing the IPO, he may have discovered WeWork was so in demand by companies wanting to reimagine their office approach post COVID-19, that investors may have overlooked all of his blatant exploitation and delusion.
I’m so glad he didn’t.