In defence of WeWork

We’ve all heard the news about WeWork filing for bankruptcy this week.?

People seem to be falling over themselves to write social posts and op-eds, almost revelling in the situation. I’m not saying they’re wrong, but I believe there needs to be some balance.?

WeWork is not some scammy Fyre Festival-like-fraud. It’s a real product, with real customers, that has made a real impact on how we all work.?

Crucially, WeWork drove the category of flexible workspace into the mainstream, which has spawned 1000s of flexible workspace brands in 100,000s of buildings and made office space just so much better.

It’s sad to see the situation WeWork is in at the moment, and whether it survives or not, I think it’s important to acknowledge what it has achieved.

Having worked in the flexible workspace market for the past 10yrs, I’ve seen this first-hand.

WeWork made the Googleplex accessible to us all

“WeWork is just ping-pong tables and beer taps” has become a trope in recent years. And whilst this has been a core feature of the brand, it’s important to remember why WeWork did this. In the late 2000s / early 2010s, Google created the Googleplex, which was the opposite experience to a typical, dull, corporate, white-walled cubicle office.?

This was intentional. Google stood for the “new world”, driving innovation and creative thinking. A huge part of the office looking like this was to draw the most ambitious people in the world away from professions such as finance, consulting and law, to a career in tech.?

We were all in awe of the Googleplex, and the film, “The Internship” (despite being a satire) cemented this office aesthetic into mainstream culture - further compounding the impact that The Social Network already had on an entire generation wearing hoodies, trainers (and pyjamas!) starting their own startup.

We all wanted to work at the Googleplex. And here came WeWork giving access to the Googleplex experience to anyone - whether you were a freelance graphic designer or a Fortune 500 company.?

Of course, times have moved on, and many of those playful aspects of office space are now ridiculed instead of desired, but the WeWork product (and most of the flex workspace brands) have moved on and matured with the times.?

There’s also a ton of people who hate the WeWork product. And that’s ok, many people are offended by Starbucks coffee, but it’s still the global mainstream coffee brand.?

There’s also, literally, thousands of other flexible workspace brands of all shapes, sizes, aesthetics, environments, cultures, catered for specific sectors, to choose from - you can easily find one that suits you and your business.?

Made the category of flexible workspace mainstream

Flexible workspace in London has grown from 0.5% to around 10% of total office in the past 10 years. It’s set to grow to 30% of all office space in the next 10yrs.?

Of course, WeWork’s own footprint was a big driver here. However, what most people don’t realise is that most of the growth has come from other brands. London itself now has around 500 flexible workspace brands, in over 1,500 buildings - up from less than 50 brands and 150 buildings 10yrs ago, when Regus was the only game in town.

Why does this matter? Well, have you ever tried to rent an office on a traditional lease? Your average lease is around 10yrs, you need a minimum 1yr deposit, you get a blank white box, so it’s your responsibility to fit the space out yourself, sort the utilities, day to day management, it takes about 4-12 weeks to sign a deal, and potentially another 4-12 weeks to be able to move in - and at the end of the 10yrs, you have (to pay) to return the space as you found it.

Flexible workspaces are now so mainstream, that we take the ability to find, move-in and move-out of a fully fitted office, with excellent amenities, in a desirable location, almost for granted.?

WeWork’s ambitions were to be as ubiquitous as a McDonalds or Starbucks, and that ambition led to the rapid growth of this product that nearly all businesses have benefited from.?

Of course, props to Regus (IWG) who did indeed create the category in the 1990s and have remained highly disciplined during the WeWork era, and are now the strongest and biggest flex workspace provider globally.??

Even more props to the other 1000s of flexible workspace brands created in the past 10yrs, and provide excellent places to work, whilst making the model financially viable.

Made desirable central city locations accessible to the average business

Do you remember trying to find an office for your business 10 years ago? Really your only choice, if you weren’t rolling in cash, was to take a leased office on the outskirts of London or in a business park in a place like Slough (no offence to Slough, I grew up there!)

The growth of the flexible workspace sector has meant that the most central and desirable locations in the biggest cities in the world are now an affordable and easy location for you to base your business.?

WeWork improved the baseline service levels across flexible workspace brands

Again, the smiling, enthusiastic, t-shirt & jeans wearing WeWork staff member has also become a trope. But, don’t you prefer that to an uninterested, unavailable, “computer says no” staff member speaking to you at the reception desk?

Again, we take it for granted now, but the entire flexible workspace sector has changed drastically over the past 10 years and now prides itself on its hospitality.?

Brands compete directly with other brands on their service level, and the #1 reason for customer retention in these spaces is due to the helpfulness and friendliness of the staff that are on the ground. Huge swathes of flexible workspace staff have been hired from the top hotel brands across the world, to ensure your day to day experience is pleasant and excellent.

Another trope has been how WeWork marketed itself as a tech company to investors, when in fact it clearly wasn’t. However, WeWork did indeed pioneer most of the technology - and set a high baseline expectation of in-building experience - one, we now take for granted across the flexible workspace sector.?

From seamless card entry, meeting room booking, employee mobile apps, online payments and contracting etc - hardly any of these existed as a standard before WeWork set the baseline.?

>70% of space within WeWork of buildings are actually private offices for teams

A huge myth about flexible workspace is that it’s all “coworking and hot desking”.?

This is, of course, informed by a lot of marketing WeWork did in the early days, but also the fact that most non WeWork customers only experience the communal areas. This is similar to judging a hotel by its hotel lobby, but never staying in an actual hotel room, or one of the fancy suites.

In fact, for most of the flexible office brands, over 70% of space is actually high quality, fully specced private offices for teams all the way from 5 to 500.

Some companies like IBM, have taken entire buildings for 1000s of employees, managed by WeWork in New York. And HSBC did something in similar in London. IBM occupied their New York WeWork building for 3yrs, whilst the average initial contract between businesses and flex office providers is typically 12 months+

WeWork didn’t pioneer this, however, the global brand recognition that it received meant that stories like HSBC and IBM’s were seen by the mainstream, making the entire flexible workspace sector a viable alternative for SMEs and Fortune 500 companies alike.

Many of WeWork’s sites are actually profitable and will survive (and thrive) beyond this process

WeWork’s founding team was very ambitious, overextended and had their Icarus moment.?

As well as trying to build a multifaceted conglomerate that extended way beyond workspace - a huge component of the trouble WeWork is in at the moment has been caused by losing discipline and taking on way too many locations, paying top of market prices for buildings and those locations being heavily loss-making. This issue then starts to impact the entire portfolio, as they all operate under the WeWork umbrella.

However, many of WeWork’s sites, especially in Europe, are profitable on a standalone basis.?

We’re all still waiting to hear what happens over the coming weeks, but it is likely that, especially in Europe, WeWork will continue to be able to operate those buildings, and if not, the landlords themselves either bring in another fantastic workspace brand or let out the building themselves on a flexible basis.

Look, I’m not some WeWork fanboy

In fact, my business Hubble directly benefits from WeWork shrinking and having less market share. We’re an aggregator, so the more fragmented the sector, the more useful our product, so people can search, compare and make the best decision on their workspace, for a happy and productive team.

None of this is to deny what has happened at WeWork. Yes, they overextended. Yes, they took on way too many leases at the top of the market. Yes, Adam Neumann had his Icarus moment. Yes, there were unsavoury tactics employed against competitors. Yes, they benefited from a ZIRP era of cheap capital. Yes, they had almost no Board Governance. Yes, I really feel for the WeWork employees, many of whom contributed immensely to the impact that it has and have been devastatingly affected by the downfall in recent years. Yes, yes, yes. All of that is categorically, undeniably true.?

However, it’s difficult to deny that they made flexible workspace mainstream for small & large businesses, a product that is far superior to taking on 10 year leases for expensive, empty white boxes.?

The flexible workspace sector has evolved like the hotel industry, with each brand bringing their own unique take to workspace, whether it’s the aesthetics, the sectors they target, the environment they want to create or the locations and buildings they’re in.?

Whilst WeWork has been the poster-boy for the sector for the past 10yrs, whatever happens, it has made an undeniable impact on how we will all work for the next 10yrs - with plenty of incredible workspace brands ready to take the torch.?

Quick plug

If you’re considering flexible workspace for your business, whether that’s:

• A full-time office for your entire team
• A part-time office (1-3 days a week) for hybrid working,
• Bringing your team together IRL in on-demand workspaces (day offices, meeting rooms, coworking spaces)

Drop me a DM or head to HubbleHQ.com.?

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