- It’s been a whirlwind month for WeWork. Following the disastrous release of its S1, the IPO has been postponed and its CEO has stepped down.
- For a potentially new member, how many organizations would sign an agreement with a WeWork space, knowing its future is uncertain?
- For digital nomad Robert Kropp, the WeWork debacle isn’t about the finances, “It is about the people, businesses, and industry that will, and have been, fundamentally impacted”
WeWork has forgotten the human impact of what they set out to do. They neglected the basics of what a coworking and shared workspace should provide for its members. Didn’t they know that running a workspace is not about buying a wave generator company?
Unless you’ve been living under a rock these past few weeks, you would have seen the countless articles about WeWork.
WeWork has been facing a rapid increase in criticism after releasing financial documents (S1) as part of the process of taking the company public before the end of the year.
“I don’t want to see WeWork fail. Its success helps the industry succeed. However, it has had every opportunity to be a good company and provide a great solution”
– Robert Kropp, Cowork22
After seeing their S1, many institutions and investors believe that their financial statements are a joke or even fraudulent. The IPO is now on hold. The CEO is out or has ‘stepped down’. I feel like this will be spun to be a ‘win’ somehow.
However, what we have forgotten is the human impact of WeWork.
I am a digital nomad, a remote worker, and a business owner.
I love exploring the world. No matter where I am, during business hours I am often found in a coworking or shared workspace so I can be productive, meet people and get a vibe for what it’s like to truly work in that specific city.
I have had the pleasure of exploring well over 100 workspaces including a few different WeWork locations.
Whether you love or hate the brand, WeWork has succeeded in bringing the idea of coworking and shared workspaces to many more people than without it. I thank them for that.
But at what cost?
WeWork has failed to deliver on the most basic industry brand promise which will not only impact their company and each location’s members, but also that of the entire industry.
What is the Coworking and Shared Workspace Industry Promise?
- Provide the basics of a workspace such as a place to work, desks, chairs, WIFI, and maybe coffee.
- Create and run a profitable or sustainable organization. A space needs to be around long enough to continue to support the growth and development of its members and businesses.
Not only does providing the above items allow members to work but it also helps to eliminate uncertainty. A business has enough other things to deal with.
Today, WeWork financially looks like the package holiday company, Thomas Cook, with heavy liabilities, growing losses, and issues raising money to keep going.
(Thomas Cook just went under)
The past few years, WeWork’s decisions around pricing, sales, lease agreements, incentives, and more, have dramatically impacted what the world thinks is normal for coworking and shared workspaces while never turning a profit.
Suggested Reading: WeWork Doubles Down On Its Poaching Strategy
It could handle the losses until now.
WeWork is at best an unknown variable right now and the news around the brand is primarily negative.
What is Going to Happen?
The worrying question is, what are WeWork’s members going to do?
For members working today at a WeWork location: work is being done, business cards and marketing materials have been printed, routines have been developed, and communities are growing.
Right now, the news about WeWork has brought a massive level of uncertainty and potential costs to these members.
Will the company need to be restructured? Will lease agreements be cancelled or changed? Will certain locations go away overnight?
One thing is clear, there are really only 2 options right now for a specific WeWork location: either a space will continue to exist, or it will be closed in the near future.
I believe that as part of all the discussions happening right now, WeWork at best will return to its roots and focus on profitability of each location, which would mean some spaces will stay open and some will not.
As a business owner, I would probably consider moving just so I don’t have a forced move as a potential issue in the coming months or years. I tend to plan for the worst while hoping for the best-case scenario to occur.
For a potentially new member, how many organizations would sign an agreement and make a move to a WeWork location, knowing it might not be there in 6 months or a year or two?
This is not how it should be. Sometimes businesses fail and don’t deliver on what they promise. I understand this. However, WeWork had enough resources and money to succeed and build something that would last not only for itself but its members.
What is the economic impact to a business that needs to find a new workspace?
Both small and larger teams will have expenses for moving, notifying clients, printing marketing materials again, setting up new phone lines or other specific needs, and much more. There could also be impacts on members if they need to work further from clients, or their expenses go way up because of a new location.
I do believe that many businesses, teams, and individuals will continue to use coworking and shared workspaces – but how many won’t? What about those organizations that have been considering using flexible workspace options in the future? Will they delay or cancel the initiative?
The ripples of this impact seem to be endless.
I don’t want to see WeWork fail. Its success helps the industry succeed.
However, it has had every opportunity to be a good company providing a great solution from within the industry.
Impact on Employees of WeWork
Among the many different questions that I have, we absolutely can’t forget about the employees of WeWork. There are thousands of employees that are now at risk.
How great of a community manager would you be if you didn’t think your job would be there much longer?
What services will be eliminated and what staff will be let go?
For me, the WeWork debacle isn’t about the dollars raised and valuation. It is about the people, businesses, and industry that will, and have been, fundamentally impacted.
We are just at the beginning.
The stepping down of the CEO, to me, seems to be a way to just slow the hemorrhaging and try to build confidence that the brand will change. Unfortunately, a lot of damage has been done and further changes, however painful, will need to happen.
I wish WeWork the best of luck but now I think it is time to prepare for the worst.
What do you think? Tell me about it. Can WeWork turn it around?