Treehugger has always loved the idea of coworking. It’s what one of the first Treehugger writers, Warren Mclaren, would call a PSS—or Product Service System—something that “you only need pay for the time you use it.” Treehugger contributor Kimberley Mok wrote about coworking:
And then we got WeWork, which was sort of coworking on steroids. It made no sense to me, having been in the real estate development business through a few business cycles. I wrote long before it imploded in a now-archived post:
I concluded: “WeWork is not a technology company. It’s a real estate company, with bricks and mortar and $18 billion in lease commitments.”
So I looked forward to reading “The Cult of We: WeWork, Adam Neumann, and The Great Startup Delusion” by Eliot Brown and Maureen Farrell, both writers at The Wall Street Journal. What really happened? How did the idea of coworking get co-opted and turned into a monster that ate New York and many others cities?
Much of the book is about Adam Neumann and his excesses—his lifestyle of eight homes and expensive jets. But there is also a good analysis of what made WeWork spaces work. It was well designed and did not feel like old-fashioned offices. I had been in many “serviced offices” like those offered by competitor Regus; they were drywall boxes with plastic laminate desks and very little charm. Partner Miguel McKelvey, an architect who doesn’t get nearly as much credit for the early success of WeWork as he should, designed these spaces very differently. According to Brown and Farrell,
Neumann pitched WeWork as a technology company, as a form of social network made of brick and glass. Investors ate it up, with firms “wanting to tap into the burst of well-educated young people opting to live in city centers.” Tech startups loved it; big companies that wanted to look like tech startups loved it. There was only one problem for some investors: It looked like a real estate business.
Brown and Farrell write:
Real estate is different. You have to build out each office and buy each desk. It takes time and money and it doesn’t really scale. Brown and Farrell explain that “this is why real estate companies raise less money than tech companies and do so from non-software investors.”
Lots of people in the industry didn’t get it. The CEO of Regus, a company that almost went bankrupt in the dot-com bust and knew something about business cycles, thought he was doing pretty much the same thing. Some landlords didn’t get it; I wrote earlier about Michael Emory, one of the smartest players in Toronto real estate and who owns all the best old brick buildings but wouldn’t rent to WeWork, telling The Globe and Mail:
Meanwhile, the biggest investor of them all, Masayoshi Son, founder of Softbank came on board with billions, and WeWork was going to take over the world. The book becomes a different story, described as a “crazy train” that all collapsed when the company prepared for an initial public offering (IPO) and had to expose the real workings of the company with conventional accounting practices. And it turns out:
The IPO got canceled, Neumann fled to Israel, and the party was over.
But Coworking Is Not Over
The coworking party is not over; I continue to believe it is just getting started. Some, including me, believe the pandemic will lead to a boom in neighborhood coworking spaces, much like Locaal, the one nearest to my home.
Sharon Woods wrote in The Public Square:
The question always comes up: “Why is this on Treehugger?” The answer is that in a climate crisis we need 15-minute cities where people are not commuting miles to work, so we need workspaces closer to where people live. We need to share resources. And as Mok noted, we need spaces with “a common vision, a shared identity of sorts, allowing for deeper connections between its members to happen.” We need coworking; we just don’t need Neumann.
Other reviewers might do a better job on the business side; Christopher Mims, who has been mentioned on Treehugger many times, calls it one of the five best business books of all time, and that’s high praise. I look at it as a parable about how greed destroyed a great idea, and hope that architect Miguel McKelvey got out with something.
