At Allwork.Space, we recently wrote about WeWork’s questionable (and potentially illegal) strategy to attract new members to its workspace locations. We have heard from various operators about how WeWork employees are reaching out to their members, luring them to break contracts and offering up to 50% discount on a WeWork membership.
You can find the articles in the links below:
In life, as in business, there is a fine line between that which is acceptable and that which isn’t. Many believe WeWork has overstepped that line and coworking operators are seeking ways in which to take action and defend the true coworking values: that of community and collaboration.
Shortly after publishing the articles mentioned above, I received correspondence from several individuals sharing their experiences, worries, and indignation.
One particular story that stood out to me was that of Wolf Bielas, Founder and Owner of Downtown Works, a coworking space based in San Diego, California. Bielas established Downtown Works in January, 2016, with the mission “to add real value” to his local San Diego community.
“My co-founders and I own and operate the building we are in, so we are truly locally owned. Downtown Works is a passion project for us. We are not just a coworking space; we feature an accelerator program focused on urban development, in-house mentors and investors.
“Downtown Works is a curated coworking community, and we carefully select and welcome businesses that take pride in helping San Diego thrive.”
With this spirit of true collaboration and helping a local community thrive, it’s no surprise that Bielas was highly upset and frustrated when WeWork employees set up shop in front of his building to try and poach Downtown Works members by offering highly attractive discounts.
Maybe WeWork would benefit from a True Sportsmanship 101 Class.
But, let’s get back to the topic at hand. WeWork reaching out to other workspace members. Old story, we know this. Here is the twist though. They didn’t just reach out to Downtown Works members… they personally approached Downtown Works’ owner and founder.
Let’s just say, WeWork employees did not see that one coming.
“WeWork initially approached our members, including myself, with a sales marketing email the last week of September 2017. Thereafter, they contacted our members via phone with incentives to join WeWork. Some of the information WeWork obtained to target my members could have only been gathered on site at Downtown Works,” Bielas shares.
The image below is the email Bielas and Downtown Works members received.
Shortly after the email blast, WeWork employees set up shop in front of Downtown Works buildings during Food Truck Wednesdays.
“They set up a pop-up sales station with their signage, living room furniture and games to promote their services,” Bielas added.
“I approached the WeWork employees in person and directly asked them why they decided to set up camp in front of my place of business, which is a coworking community. My signage is very prominent and extremely visible to where they set up. They knew what they were doing.
“I wanted to understand what they were doing. I snapped some photos and asked questions on video and they simply responded ‘we are spreading the love’ and ‘any questions can be addressed to [email protected]’. When they saw me recording, they tried to avoid the camera.”
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The video above was recorded by Wolf Bielas himself and shared with Allwork.Space.
“I believe WeWork’s attempt to poach our members is due to high vacancy rates and possibly empty floors in their San Diego location. They need help justifying their current valuation and believe increased membership can help. Because their vacancy rates are so high, each member is worth over $100,000 which simply isn’t sustainable,” Bielas continued.
Various industry experts share Bielas’ belief that WeWork’s model isn’t sustainable, especially not in the long-run. Many, in fact, believe that WeWork is creating a bubble, and their recent actions are driving them to believe that the bubble is starting to slowly burst.
WeWork’s MO isn’t much appreciated by workspace operators. It also isn’t appreciated by members and users of coworking spaces.
Sarah Hernholm, Founder and President of WIT and member of Downtown Works, spoke with Allwork.Space regarding her experience with WeWork.
WeWork employees reached out to her about a month ago (mid September) via an email which was the same as the one sent to Bileas and pictured above in this article.
“I thought it was an overreach. It just felt like they already knew I was at DW and wanted to get me out of there. It felt a little off because of the language around getting me out of my current contract. I wasn’t sure how they knew I was already in a contract.”
Especially, Hernholm mentions how she found the postscript in the email off-putting.
“P.S: Stuck in a current contract? No worries, we’ll work with you to find a solution so that you can take advantage of this offer. It’s our friendly way of welcoming you into the WeWork community.”
When asked about whether or not she would consider joining WeWork, Hernholm said the following: “Nope. And I travel all around the country and could potentially benefit from their locations, but they don’t have a culture that resonates with me.”
We have heard from others in the industry who share Hernhole’s feelings regarding the WeWork community. Coworking values and integrity are centered on collaboration and community, and actions and attacks like the ones WeWork has been carrying out represent the exact opposite of what coworking stands for.
“If WeWork was true to the values of coworking, they would be trying to grow the startup ecosystem instead of trying to poach members from other communities,” Bielas stated.
As stated in a previous article, it’s not just about the questionable and potentially unethical approach. It’s about how WeWork’s so called discount can potentially harm the workspace-as-a-service market by lowering prices to a point in which they aren’t sustainable in the long-run. Not for WeWork and not for any other operator out there.
Closing the conversation with Bielas, we asked about whether or not he is considering legal action against WeWork.
“Legal action is no good use of our resources. However, we are seeking other San Diego based coworking operators to see if there is something we can do as a group.”
Again, this begs several questions regarding WeWork and its billion dollar valuation: is WeWork’s product unique as it’s made out to be? Is WeWork as profitable as they claim? Are the projections pitched to investors so far below the line that they’ve been forced to resort to this type of client acquisition?
We believe WeWork is not only going through a rough patch, like we said above; WeWork’s bubble is slowly beginning to burst, and this is only the beginning. Adam Neumann, WeWork’s CEO, might be aware of this, as it was recently reported that he sold over US$100 million dollars in shares. But more on this in the coming days.
If you or your members have been a victim of WeWork’s poaching mechanism, feel free to reach out to us to share your story.