24 ms·

WeWork documentary explores a decade of delusion

98 points by irtefa 6y ago

AlexandrB 6y ago
> The story of WeWork’s rise and fall is the story of the past decade: a strange time when greed, technology worship, and low interest rates combined to produce throngs of supposedly billion-dollar startups, known as “unicorns.” I think the use of past tense here is unwarranted. I'm sure there are many WeWorks and Theranoses still out there right now.
- burnte 6y ago
  I don't think the article disagrees, it wasys the past decade created them, not uncovered them all.
- jankyxenon 6y ago
  Don't you have to have these sort of losses for the thinking to progress? If we don't have examples of WeWorks, it's not built into the process to sus them out. Something built on sand will ultimately collapse - and smart money shouldn't build on that particular patch of sand again (it'll find other ones).
- mrkramer 6y ago
  >I think the use of past tense here is unwarranted. I'm sure there are many WeWorks and Theranoses still out there right now. Many of whom are SaaS companies and who receive hundreds of millions of dollars of investment on what merit? Good story? Sexy products? Expensive growth? Look at us we are next Oracle or Salesforce.
VBprogrammer 6y ago
The most bizarre twist in this whole tale would be if the rise of flexible working post covid-19 did actually create a gap in the market for a company to come along and provide flexible office space with short notice and minimal commitment: A real Uber for office space.
- bilbo0s 6y ago
  I'm thinking post-covid, with the glut of vacant spaces in the coming quarters, there will be many commercial real estate companies offering "flexible office space with short notice and minimal commitment". It quite probably will become one of the standard contracts in the "new normal".
- andrewfromx 6y ago
  i want a place to go M, W, F from 11am to 2pm with great food, wifi, places to sit with my laptop, bathrooms... I want a tech conference (no speakers or agenda, just normal work-day) hosted and paid for by my company at various hotels around my city 3 times a week. Best of both worlds. Still get to see my co-workers and eat with them often, but never feel trapped in an office or commute.
- paxys 6y ago
  The underlying problem hasn't gone away though. A company which gets into long-term corporate leases in the most expensive real estate markets in the world and rents out the space by the day (or with a monthly subscription) exposes itself to too much risk due to market fluctuations and economic downturns. Plus, the level of service people expect out of these spaces is just unrealistic for the price they are willing to pay. A quiet working space in a fancy office building in the most upscale commercial area of the city with tech company amenities included is going to realistically cost a lot more than $200/month. There is a reason WeWork set billions of dollars on fire.
  - VBprogrammer 6y ago
    Yeah, for what it's worth I'm sure you are right. At the moment the company I work for is talking about reducing its office space by almost 2/3. If that is representative then the cost of office space is about to take a nose dive.
- duxup 6y ago
  I'd be open to that... but the pricing on these things are sometimes absurd. Unless my employer were to pay for it, I'm not paying for it, I'll hack it out at home. One company tried to open a space like that for individual office rentals out in suburbia where I am. Monthly price was more than half my monthly mortgage payment, I'm not going to do that for a tiny bit of office space. I suspect that unless employers are happy pay for it the price I'm willing to pay wouldn't float these companies...
rainyMammoth 6y ago
edit: deleted to not start an unrelated discussion on HN
- igorkraw 6y ago
  It's not unrelated until systemic racism is gone
  - Moodles 6y ago
    Have we tried not bringing up race for unrelated reasons like articles about WeWork though? That might help a bit.
    - luckylion 6y ago
      No, that would "solidify the status quo" and be a sign of white supremacy. You don't want to be a white supremacist, do you, citizen?
  - ipaddr 6y ago
    You may be confusing systemic racism with simple population density. Systemic racism is an existing system in place that acts on racial data. Simple population density is you noticing that the majority of people around you are one color.
- Moodles 6y ago
  Most people in the US are literally white men and women, lol. Oh, journalists...
  - xnyan 6y ago
    You’re being purposely obtuse. 13.4% of Americans are black, in a just and equitable society I would expect somewhere around 13% of founders to be black.
    - WrtCdEvrydy 6y ago
raunak 6y ago
https://archive.is/Z2Oj2 https://archive.is/Z2Oj2
- tom_mellior 6y ago
  Thanks. What is it with the New Yorker page flashing up the whole article, then truncating it to two paragraphs, without any indication how one might continue reading?
s3r3nity 6y ago
As long as I keep hearing the BS line from VC's and similar communities that "we're investing in the TEAM, not the Product or idea," we will continue seeing WeWorks / Theranos(es) of the world, with little to learn. Rather than doing the fundamental analysis, investing without emotions, etc. - the market will keep rewarding "charismatic" and well-connected individuals with shitty-ideas and/or no business sense. It's easy to scapegoat Adam Neumann or Elizabeth Holmes, and say they were sociopathic liars or the like - but these cases read like a market inefficiency in venture capital, rather than one-offs.
- mdoms 6y ago
  I think you need to do some reading about Theranos because it wasn't a matter of investing in a charismatic leader. There was outright fraud.
  - dralley 6y ago
    There was outright fraud, however, all the warnings were there, and they were ignored partially because of her charisma and the gravitas of the board she assembled. Walgreens straight up fired the investigator who was telling them it was hot air.
    - whatshisface 6y ago
      One of these days, people will realize that the only thing that you can do with gravitas that you can't do without it is sell a bad idea. When that happens, gravitas will cease to exist. Maybe in a couple millennia.
  - 908B64B197 6y ago
    That's not new. Anyone remembers Nortel? Enron?
- EGreg 6y ago
  The BS line is just one part of it The VC and to some extent the Private Equity industry can subsidize money hemmoraging business models and fuel massive growth of bad unit economics until they dump them on the public. Uber and WeWork are just two high profile examples. In fact, then openly admit they stay away from sustainable and profitable businesses in favor of massive subsidized “traction”. That’s the loophole - same as colleges can jack up prices on liberal arts degrees and then student loans get bought by Freddie and Fannie.
cactus2093 6y ago
I know it's fun to laugh at how kooky Adam Neumann is and how comically grandiose The We Company's vision became over time as they raised more and more money. But one thing that still bothers me about this documentary (and now the newyorker's review of it) is that it doesn't make even the slightest attempt at telling both sides of the story. The most glaring omission is that it doesn't stop to acknowledge at all the impressive growth that WeWork saw. Yes, there were all kinds of problems with the way they managed their growth, and some major challenges with the basic fundamentals of their model. But there were many (hundreds of thousands?) of real users in many cities paying them money for office space. To just write that off as "lol, you re-invented the office" is a little ridiculous. They made a product people loved, and that IMO genuinely was an order of magnitude better in user experience than most other short-term office space that existed at the time. It saved time on all kinds of things, from basic cleaning, coffee and tea, flexible meeting rooms and private phone booths, and a generally comfortable space to work in. Those are things that have real value to anyone who is busy working on their company and just wants a productive turnkey place to work. It's weird to write all that off as just shallow millenials being too vain to work out of a Regus (which is a company I had never even heard of before the documentary, despite having been in this position of needing a small short-term office space for my startup in the past). Maybe I'm just a crazy, biased shill and a sucker for any startup story, but IMO it would have been a much better documentary if they delved into this side of the narrative - how did such an out of touch, seemingly crazy person manage to build an actually good product that found quick product market fit in the crowded real estate space?
- Judgmentality 6y ago
  > The most glaring omission is that it doesn't stop to acknowledge at all the impressive growth that WeWork saw. WeWork would rent the office space, and then rent it out for less money than they were renting it. It's not hard to grow when you can raise billions to sell dollars for pennies. I'm pretty sure I could sell millions of phones a year, just give me billions to buy those phones and then I'll sell them at a 90% discount and I'll dominate the phone market!
  - tshaddox 6y ago
eweise 6y ago
I had to work in one of those shitty wework offices at my last job. desk was so small I couldn't even fit the monitor on it correctly.
Aea 6y ago
If the financials worked out nobody would care about how delusional the story of "We" was. I'd wager that the vast majority of people using WeWork Spaces didn't care about the fluff or the community or social events. They had a desirable product for a reasonable price, and I enjoyed working out of WeWork spaces. It seems like the only truly delusional party was well-capitalized investors throwing money at an (poorly executed) old-school business model with a thin veneer of innovation.
lacker 6y ago
Everyone thinks of WeWork as this huge failure, but WeWork is still worth 8 billion dollars! https://www.nytimes.com/2021/03/26/business/WeWork-Spac-ipo.html https://www.nytimes.com/2021/03/26/business/WeWork-Spac-ipo.... Yeah, their valuation is down a lot from what they were going for with the initial IPO, but it is still providing a very valuable service. This isn’t like Enron or Theranos where the company is fraudulent, it’s a real, valuable business that was overvalued for a while. Overall, WeWork is a success, not a failure. If it were in Europe, it would be one of the most successful European startups in years.
- CalChris 6y ago
  8 billion dollars! from a Total Funding Amount of $20.6B [1]. Such a success. [1] https://www.crunchbase.com/organization/wework https://www.crunchbase.com/organization/wework
  - listenallyall 6y ago
    But it was OPM. That's the bargain of venture capital, they take a giant portion of your company, but it's their money on the line, not yours. Just getting meetings, and then funding in the billions, is a massive win. And really it was only at the end that valuation did not exceed funding... And yet, even when that was clear and obvious, the investors STILL wrote a $500 million check (or was it a $billion, I forget the details) to make him step aside. If that isn't success, what is?
- ebiester 6y ago
  Wework has received 20 billion dollars of funding. It will take a long time for that money to be recouped, if it ever is at all. Source: https://www.crunchbase.com/organization/wework/investor_financials https://www.crunchbase.com/organization/wework/investor_fina...
  - titanomachy 6y ago
    Hilarious! Neumann turns $21 billion into $8 billion and gets paid $500 million to do it. Definitely a success for him. Not so much his investors. But it was obviously money they could afford to lose, so I guess I don't feel too bad for them.
polygotdomain 6y ago
WeWork's "delusion", in my view, was the amount of value they perceived themselves to add to the equation. On the consumer facing side, they were billing their space as some mass facilitator, incubator, and inspiration for startups, freelancers, and what-not. On the business side, it was that WeWork would be beneficial to landlords, as they'd snatch up large swaths of space, drive businesses desire to "colocate", and offer flexibility to tenants that didn't have things in place to deal with the expanding real estate needs of their business. Fundamentally though, WeWork was a middle man, and one that shifted as much liability towards the landlords as possible. While you can debate how much value they added, I don't think it's a stretch to say that their valuation far exceeded the actual value they brought to the table. Fundamentally though, space is far more of a commodity than WeWork would have you believe, and in an economy situation where people aren't co-working or that there's a lot of unleased space on the market, WeWork's proposition is certainly depleted. Combine the inflated view of their value with feel-good marketing about changing the world, unrealistic valuations and shadiness from the founders and ownership, and you get a company that went far beyond where they should have and duped a number of investors along the way.
- mrkramer 6y ago
  WeWork branded itself as a "tech company" but it doesn't mean if you have a website or a mobile app that you are tech company. I think naive investors propelled the failure of WeWork in a way that throwing cash at the company made them think they are going to succeed. It is akin to a teacher telling a bad student "don't worry you are not that bad" or "don't worry you are good" just to make him or her feel better or to incentivize them to work harder.
fireeyed 6y ago
Isn't 80% of startup world delusional, Empirically speaking ? WeWork, Nikola, Theranos, Blue Apron, Grubhub (walking dead),Uber Autonomous, could go on and on. We have been told these companies have the best and brightest board members.
- BlueTemplar 6y ago
  I think that the death rate of startups is a lot higher than 80% ?
- oceanghost 6y ago
  Can you elaborate on the GrubHub thing? I had a really funky experience with them a few weeks ago.
- Cd00d 6y ago
  Actually, I think Blue Apron has been posting promising revenue numbers since covid hit. The post-IPO year-on-year revenue charts looked like a water slide, but they've been maintaining a consistent client base for the last year. That one, at least, isn't built on a lie.
jelling 6y ago
What I saw in the documentary were a lot of hard-working, non-technical people that were offered the chance to work in a "tech" startup. Without knowing it explicitly, they were betting on WeWork having a moat like Facebook, Google, etc... Real estate has no such moat. If you are a young founder or startup employee,I recommend learning every type of business moat there is and using that as a key criteria for evaluating opportunities. It won't guarantee success but it will filter out so much garbage.
- titanomachy 6y ago
  Not to mention all the "founders" who got to spend their days in a cool exciting office, and feel like they themselves were working at the next Facebook or Google. I don't know much about the WeWork demographics. I wonder how many of these companies were venture-funded, self-funded... and how many were just elaborate schemes for burning through trust funds. I'm sure many of them were hardworking people with legit businesses, and just saw this as a convenient and cool way to solve the problem of where to get their work done.
silent_cal 6y ago
Reminds me of Elon Musk.
- BlueTemplar 6y ago
  Come on, he did a lot of actually innovative things !
  - valeness 6y ago
    What innovative things did he do?
    - BlueTemplar 6y ago
      Landing back that spent rocket stage is perhaps the most impressive.
      - silent_cal 6y ago
        That would be great if he was in NASA, but he pretends to be a businessman.
        BlueTemplar 6y ago
        And this is an issue... how exactly ? (Remember who one of his companies named after ?)
reggieband 6y ago
Totally tangental, but I recalled while reading this a documentary I saw on some African tribe. It was years ago so this is a pretty loose description. The tribe was a late discovered tribe that until shortly before the documentaries filming had been hunting and gathering in some remote jungle. Recently some industry expansion into their territory had forced modern life onto them and the government had moved them to a new location. This new environment lacked pretty much everything they needed to maintain their old life, so they had become completely destitute and reliant on the government. Their chief was a rain maker shaman kind of character. His job was to do a literal rain dance, which in their old lives would have been to water crops. This dance would involve the entire tribe when times were tough. When the chief was interviewed he was sober about their situation. The new life they were forced into lead to depression for many of the young men in the tribe. He felt that his responsibility was to keep the young men dancing. This was better than them sitting around taking handouts from the government. They interspersed snippets of the young men talking about their chief and they all were positive, giving him much praise. The chief never missed a day of dancing, always had a positive attitude and this seemed to give them some hope. The chief mentioned that his father had been the rain man before him, and his grandfather before that. He said that the secret of the rain dance was that no matter how long it takes, it will rain again. And what can you do until it rains? You might as well dance. I often think of some forms of entrepreneurs/founders in this context. They are just like tribal rain men. If they dance long enough, it rains. They aren't really responsible for the rain but they keep everyone hopeful and around long enough that when it finally does rain everyone is ready.
- curiousllama 6y ago
  This is a remarkably good metaphor for what executives actually do all day
- elliekelly 6y ago
  I had no idea where you were going with this comment but I'm very glad I read until the end.
  - Tostino 6y ago
TheMagicHorsey 6y ago
When Theranos was still a popular golden child company, I went to a party in SF thrown by a partner at a prominent local law firm. At the party a husband of one of the lawyers happened to be a lab worker at a biotech startup. He and I ended up chatting in a small group of spouses while the firm lawyers were clustered in another part of the house gossipping about work. Over the next 30 minutes or so this guy explained to us non-scientists why he thought Theranos might very likely be a fraud. People nodded their heads and said "interesting" but I don't think anyone really took the guy very seriously. It's easy to dismiss such concerns from people in parallel startups as jealousy or misguided. But the thing that has stuck with me since is that if a relatively junior guy working as in a startup lab had this insight about Theranos, why didn't all these major investors with world class experts know any better? It seems to me the more interesting story in regards to WeWork and Theranos is why are the incentives in these investment funds not aligned with the purpose of rooting out such fraudulent or overblown claims. I honestly could care less about the flamboyant personalities involved. The system failures are more interesting to me.
- paxys 6y ago
  > But the thing that has stuck with me since is that if a relatively junior guy working as in a startup lab had this insight about Theranos, why didn't all these major investors with world class experts know any better? Theranos didn't really have any major Silicon Valley investors backing it. The usual VC firms stayed a mile away from day 1. It raised money instead from The Walton Family, Rupert Murdoch, Betsy DeVos, Walgreens, the Cox family, Carlos Slim and other random well-connected and influential personalities. Few people will say this, but Theranos was actually a massive success for the Silicon Valley venture ecosystem. It proved that outsiders can't simply throw money at new startups and replicate their results. There is institutional knowledge, in-house teams (including top engineers) doing due diligence, mountains of data, trade secrets, IP, network effects and a lot more needed to be able to compete in that world. There's a reason why a16z, Sequoia, Khosla, Accel, KP, Greylock, Google all passed on it, despite the fact that Theranos and Holmes checked all the boxes for a no-brainer investment (Stanford-educated female founder, bio/health tech space, "changing the world" ambition, immense preexisting buzz).
kgin 6y ago
Among the companies WeWork bought during its acquisition spree: Meetup Flatiron School Wavegarden (Surfing Wave Pools)
xyzzy21 6y ago
Yep. WeWork was always a non-tech real estate play with some very bad finance built into it; it was NEVER a tech company in any way shape or form simply because it had a web site! But that was the lie told - "We will have double-digit tech growth rates and market domination!" Nope!
mimixco 6y ago
One thing I haven't seen mentioned in this thread that definitely played a part in WeWork's explosive growth is the cult-like religious aspect of it. Adam wasn't just selling office space. He was selling a philosophy of working together as inexperienced entrepreneurs to perhaps create better companies. Whether you believe in this model or not (I don't), it is appealing to young professionals without much traditional business experience. The summer camp, "let's help everyone and have fun" environment was more valuable (and played a bigger role in the strategy and market fit) than the office space itself. Regus, as pointed out, sold co-working space before WeWork and still does. They don't, however, sell religion and it's likely that any future co-working brand will forego that aspect, too. Of course, cult-like attraction does work for some companies... if you can get enough believers.

98 points by irtefa 6y ago

> The story of WeWork’s rise and fall is the story of the past decade: a strange time when greed, technology worship, and low interest rates combined to produce throngs of supposedly billion-dollar startups, known as “unicorns.” I think the use of past tense here is unwarranted. I'm sure there are many WeWorks and Theranoses still out there right now.

burnte 6y ago
I don't think the article disagrees, it wasys the past decade created them, not uncovered them all.
jankyxenon 6y ago
Don't you have to have these sort of losses for the thinking to progress? If we don't have examples of WeWorks, it's not built into the process to sus them out. Something built on sand will ultimately collapse - and smart money shouldn't build on that particular patch of sand again (it'll find other ones).
mrkramer 6y ago
>I think the use of past tense here is unwarranted. I'm sure there are many WeWorks and Theranoses still out there right now. Many of whom are SaaS companies and who receive hundreds of millions of dollars of investment on what merit? Good story? Sexy products? Expensive growth? Look at us we are next Oracle or Salesforce.

VBprogrammer 6y ago

The most bizarre twist in this whole tale would be if the rise of flexible working post covid-19 did actually create a gap in the market for a company to come along and provide flexible office space with short notice and minimal commitment: A real Uber for office space.

bilbo0s 6y ago
I'm thinking post-covid, with the glut of vacant spaces in the coming quarters, there will be many commercial real estate companies offering "flexible office space with short notice and minimal commitment". It quite probably will become one of the standard contracts in the "new normal".
andrewfromx 6y ago
i want a place to go M, W, F from 11am to 2pm with great food, wifi, places to sit with my laptop, bathrooms... I want a tech conference (no speakers or agenda, just normal work-day) hosted and paid for by my company at various hotels around my city 3 times a week. Best of both worlds. Still get to see my co-workers and eat with them often, but never feel trapped in an office or commute.
paxys 6y ago
The underlying problem hasn't gone away though. A company which gets into long-term corporate leases in the most expensive real estate markets in the world and rents out the space by the day (or with a monthly subscription) exposes itself to too much risk due to market fluctuations and economic downturns. Plus, the level of service people expect out of these spaces is just unrealistic for the price they are willing to pay. A quiet working space in a fancy office building in the most upscale commercial area of the city with tech company amenities included is going to realistically cost a lot more than $200/month. There is a reason WeWork set billions of dollars on fire.
- VBprogrammer 6y ago
  Yeah, for what it's worth I'm sure you are right. At the moment the company I work for is talking about reducing its office space by almost 2/3. If that is representative then the cost of office space is about to take a nose dive.
duxup 6y ago
I'd be open to that... but the pricing on these things are sometimes absurd. Unless my employer were to pay for it, I'm not paying for it, I'll hack it out at home. One company tried to open a space like that for individual office rentals out in suburbia where I am. Monthly price was more than half my monthly mortgage payment, I'm not going to do that for a tiny bit of office space. I suspect that unless employers are happy pay for it the price I'm willing to pay wouldn't float these companies...

rainyMammoth 6y ago

edit: deleted to not start an unrelated discussion on HN

igorkraw 6y ago
It's not unrelated until systemic racism is gone
- Moodles 6y ago
  Have we tried not bringing up race for unrelated reasons like articles about WeWork though? That might help a bit.
  - luckylion 6y ago
    No, that would "solidify the status quo" and be a sign of white supremacy. You don't want to be a white supremacist, do you, citizen?
- ipaddr 6y ago
  You may be confusing systemic racism with simple population density. Systemic racism is an existing system in place that acts on racial data. Simple population density is you noticing that the majority of people around you are one color.
Moodles 6y ago
Most people in the US are literally white men and women, lol. Oh, journalists...
- xnyan 6y ago
  You’re being purposely obtuse. 13.4% of Americans are black, in a just and equitable society I would expect somewhere around 13% of founders to be black.
  - WrtCdEvrydy 6y ago

raunak 6y ago

https://archive.is/Z2Oj2 https://archive.is/Z2Oj2

tom_mellior 6y ago
Thanks. What is it with the New Yorker page flashing up the whole article, then truncating it to two paragraphs, without any indication how one might continue reading?

s3r3nity 6y ago

As long as I keep hearing the BS line from VC's and similar communities that "we're investing in the TEAM, not the Product or idea," we will continue seeing WeWorks / Theranos(es) of the world, with little to learn. Rather than doing the fundamental analysis, investing without emotions, etc. - the market will keep rewarding "charismatic" and well-connected individuals with shitty-ideas and/or no business sense. It's easy to scapegoat Adam Neumann or Elizabeth Holmes, and say they were sociopathic liars or the like - but these cases read like a market inefficiency in venture capital, rather than one-offs.

mdoms 6y ago
I think you need to do some reading about Theranos because it wasn't a matter of investing in a charismatic leader. There was outright fraud.
- dralley 6y ago
  There was outright fraud, however, all the warnings were there, and they were ignored partially because of her charisma and the gravitas of the board she assembled. Walgreens straight up fired the investigator who was telling them it was hot air.
  - whatshisface 6y ago
    One of these days, people will realize that the only thing that you can do with gravitas that you can't do without it is sell a bad idea. When that happens, gravitas will cease to exist. Maybe in a couple millennia.
- 908B64B197 6y ago
  That's not new. Anyone remembers Nortel? Enron?
EGreg 6y ago
The BS line is just one part of it The VC and to some extent the Private Equity industry can subsidize money hemmoraging business models and fuel massive growth of bad unit economics until they dump them on the public. Uber and WeWork are just two high profile examples. In fact, then openly admit they stay away from sustainable and profitable businesses in favor of massive subsidized “traction”. That’s the loophole - same as colleges can jack up prices on liberal arts degrees and then student loans get bought by Freddie and Fannie.

cactus2093 6y ago

I know it's fun to laugh at how kooky Adam Neumann is and how comically grandiose The We Company's vision became over time as they raised more and more money. But one thing that still bothers me about this documentary (and now the newyorker's review of it) is that it doesn't make even the slightest attempt at telling both sides of the story. The most glaring omission is that it doesn't stop to acknowledge at all the impressive growth that WeWork saw. Yes, there were all kinds of problems with the way they managed their growth, and some major challenges with the basic fundamentals of their model. But there were many (hundreds of thousands?) of real users in many cities paying them money for office space. To just write that off as "lol, you re-invented the office" is a little ridiculous. They made a product people loved, and that IMO genuinely was an order of magnitude better in user experience than most other short-term office space that existed at the time. It saved time on all kinds of things, from basic cleaning, coffee and tea, flexible meeting rooms and private phone booths, and a generally comfortable space to work in. Those are things that have real value to anyone who is busy working on their company and just wants a productive turnkey place to work. It's weird to write all that off as just shallow millenials being too vain to work out of a Regus (which is a company I had never even heard of before the documentary, despite having been in this position of needing a small short-term office space for my startup in the past). Maybe I'm just a crazy, biased shill and a sucker for any startup story, but IMO it would have been a much better documentary if they delved into this side of the narrative - how did such an out of touch, seemingly crazy person manage to build an actually good product that found quick product market fit in the crowded real estate space?

Judgmentality 6y ago
> The most glaring omission is that it doesn't stop to acknowledge at all the impressive growth that WeWork saw. WeWork would rent the office space, and then rent it out for less money than they were renting it. It's not hard to grow when you can raise billions to sell dollars for pennies. I'm pretty sure I could sell millions of phones a year, just give me billions to buy those phones and then I'll sell them at a 90% discount and I'll dominate the phone market!
- tshaddox 6y ago

eweise 6y ago

I had to work in one of those shitty wework offices at my last job. desk was so small I couldn't even fit the monitor on it correctly.

Aea 6y ago

If the financials worked out nobody would care about how delusional the story of "We" was. I'd wager that the vast majority of people using WeWork Spaces didn't care about the fluff or the community or social events. They had a desirable product for a reasonable price, and I enjoyed working out of WeWork spaces. It seems like the only truly delusional party was well-capitalized investors throwing money at an (poorly executed) old-school business model with a thin veneer of innovation.

lacker 6y ago

Everyone thinks of WeWork as this huge failure, but WeWork is still worth 8 billion dollars! https://www.nytimes.com/2021/03/26/business/WeWork-Spac-ipo.html https://www.nytimes.com/2021/03/26/business/WeWork-Spac-ipo.... Yeah, their valuation is down a lot from what they were going for with the initial IPO, but it is still providing a very valuable service. This isn’t like Enron or Theranos where the company is fraudulent, it’s a real, valuable business that was overvalued for a while. Overall, WeWork is a success, not a failure. If it were in Europe, it would be one of the most successful European startups in years.

CalChris 6y ago
8 billion dollars! from a Total Funding Amount of $20.6B [1]. Such a success. [1] https://www.crunchbase.com/organization/wework https://www.crunchbase.com/organization/wework
- listenallyall 6y ago
  But it was OPM. That's the bargain of venture capital, they take a giant portion of your company, but it's their money on the line, not yours. Just getting meetings, and then funding in the billions, is a massive win. And really it was only at the end that valuation did not exceed funding... And yet, even when that was clear and obvious, the investors STILL wrote a $500 million check (or was it a $billion, I forget the details) to make him step aside. If that isn't success, what is?
ebiester 6y ago
Wework has received 20 billion dollars of funding. It will take a long time for that money to be recouped, if it ever is at all. Source: https://www.crunchbase.com/organization/wework/investor_financials https://www.crunchbase.com/organization/wework/investor_fina...
- titanomachy 6y ago
  Hilarious! Neumann turns $21 billion into $8 billion and gets paid $500 million to do it. Definitely a success for him. Not so much his investors. But it was obviously money they could afford to lose, so I guess I don't feel too bad for them.

polygotdomain 6y ago

WeWork's "delusion", in my view, was the amount of value they perceived themselves to add to the equation. On the consumer facing side, they were billing their space as some mass facilitator, incubator, and inspiration for startups, freelancers, and what-not. On the business side, it was that WeWork would be beneficial to landlords, as they'd snatch up large swaths of space, drive businesses desire to "colocate", and offer flexibility to tenants that didn't have things in place to deal with the expanding real estate needs of their business. Fundamentally though, WeWork was a middle man, and one that shifted as much liability towards the landlords as possible. While you can debate how much value they added, I don't think it's a stretch to say that their valuation far exceeded the actual value they brought to the table. Fundamentally though, space is far more of a commodity than WeWork would have you believe, and in an economy situation where people aren't co-working or that there's a lot of unleased space on the market, WeWork's proposition is certainly depleted. Combine the inflated view of their value with feel-good marketing about changing the world, unrealistic valuations and shadiness from the founders and ownership, and you get a company that went far beyond where they should have and duped a number of investors along the way.

mrkramer 6y ago
WeWork branded itself as a "tech company" but it doesn't mean if you have a website or a mobile app that you are tech company. I think naive investors propelled the failure of WeWork in a way that throwing cash at the company made them think they are going to succeed. It is akin to a teacher telling a bad student "don't worry you are not that bad" or "don't worry you are good" just to make him or her feel better or to incentivize them to work harder.

fireeyed 6y ago

Isn't 80% of startup world delusional, Empirically speaking ? WeWork, Nikola, Theranos, Blue Apron, Grubhub (walking dead),Uber Autonomous, could go on and on. We have been told these companies have the best and brightest board members.

BlueTemplar 6y ago
I think that the death rate of startups is a lot higher than 80% ?
oceanghost 6y ago
Can you elaborate on the GrubHub thing? I had a really funky experience with them a few weeks ago.
Cd00d 6y ago
Actually, I think Blue Apron has been posting promising revenue numbers since covid hit. The post-IPO year-on-year revenue charts looked like a water slide, but they've been maintaining a consistent client base for the last year. That one, at least, isn't built on a lie.

jelling 6y ago

What I saw in the documentary were a lot of hard-working, non-technical people that were offered the chance to work in a "tech" startup. Without knowing it explicitly, they were betting on WeWork having a moat like Facebook, Google, etc... Real estate has no such moat. If you are a young founder or startup employee,I recommend learning every type of business moat there is and using that as a key criteria for evaluating opportunities. It won't guarantee success but it will filter out so much garbage.

titanomachy 6y ago
Not to mention all the "founders" who got to spend their days in a cool exciting office, and feel like they themselves were working at the next Facebook or Google. I don't know much about the WeWork demographics. I wonder how many of these companies were venture-funded, self-funded... and how many were just elaborate schemes for burning through trust funds. I'm sure many of them were hardworking people with legit businesses, and just saw this as a convenient and cool way to solve the problem of where to get their work done.

silent_cal 6y ago

Reminds me of Elon Musk.

BlueTemplar 6y ago
Come on, he did a lot of actually innovative things !
- valeness 6y ago
  What innovative things did he do?
  - BlueTemplar 6y ago
    Landing back that spent rocket stage is perhaps the most impressive.
    - silent_cal 6y ago
      That would be great if he was in NASA, but he pretends to be a businessman.
      - BlueTemplar 6y ago
        And this is an issue... how exactly ? (Remember who one of his companies named after ?)

reggieband 6y ago

Totally tangental, but I recalled while reading this a documentary I saw on some African tribe. It was years ago so this is a pretty loose description. The tribe was a late discovered tribe that until shortly before the documentaries filming had been hunting and gathering in some remote jungle. Recently some industry expansion into their territory had forced modern life onto them and the government had moved them to a new location. This new environment lacked pretty much everything they needed to maintain their old life, so they had become completely destitute and reliant on the government. Their chief was a rain maker shaman kind of character. His job was to do a literal rain dance, which in their old lives would have been to water crops. This dance would involve the entire tribe when times were tough. When the chief was interviewed he was sober about their situation. The new life they were forced into lead to depression for many of the young men in the tribe. He felt that his responsibility was to keep the young men dancing. This was better than them sitting around taking handouts from the government. They interspersed snippets of the young men talking about their chief and they all were positive, giving him much praise. The chief never missed a day of dancing, always had a positive attitude and this seemed to give them some hope. The chief mentioned that his father had been the rain man before him, and his grandfather before that. He said that the secret of the rain dance was that no matter how long it takes, it will rain again. And what can you do until it rains? You might as well dance. I often think of some forms of entrepreneurs/founders in this context. They are just like tribal rain men. If they dance long enough, it rains. They aren't really responsible for the rain but they keep everyone hopeful and around long enough that when it finally does rain everyone is ready.

curiousllama 6y ago
This is a remarkably good metaphor for what executives actually do all day
elliekelly 6y ago
I had no idea where you were going with this comment but I'm very glad I read until the end.
- Tostino 6y ago

TheMagicHorsey 6y ago

When Theranos was still a popular golden child company, I went to a party in SF thrown by a partner at a prominent local law firm. At the party a husband of one of the lawyers happened to be a lab worker at a biotech startup. He and I ended up chatting in a small group of spouses while the firm lawyers were clustered in another part of the house gossipping about work. Over the next 30 minutes or so this guy explained to us non-scientists why he thought Theranos might very likely be a fraud. People nodded their heads and said "interesting" but I don't think anyone really took the guy very seriously. It's easy to dismiss such concerns from people in parallel startups as jealousy or misguided. But the thing that has stuck with me since is that if a relatively junior guy working as in a startup lab had this insight about Theranos, why didn't all these major investors with world class experts know any better? It seems to me the more interesting story in regards to WeWork and Theranos is why are the incentives in these investment funds not aligned with the purpose of rooting out such fraudulent or overblown claims. I honestly could care less about the flamboyant personalities involved. The system failures are more interesting to me.

paxys 6y ago
> But the thing that has stuck with me since is that if a relatively junior guy working as in a startup lab had this insight about Theranos, why didn't all these major investors with world class experts know any better? Theranos didn't really have any major Silicon Valley investors backing it. The usual VC firms stayed a mile away from day 1. It raised money instead from The Walton Family, Rupert Murdoch, Betsy DeVos, Walgreens, the Cox family, Carlos Slim and other random well-connected and influential personalities. Few people will say this, but Theranos was actually a massive success for the Silicon Valley venture ecosystem. It proved that outsiders can't simply throw money at new startups and replicate their results. There is institutional knowledge, in-house teams (including top engineers) doing due diligence, mountains of data, trade secrets, IP, network effects and a lot more needed to be able to compete in that world. There's a reason why a16z, Sequoia, Khosla, Accel, KP, Greylock, Google all passed on it, despite the fact that Theranos and Holmes checked all the boxes for a no-brainer investment (Stanford-educated female founder, bio/health tech space, "changing the world" ambition, immense preexisting buzz).

kgin 6y ago

Among the companies WeWork bought during its acquisition spree: Meetup Flatiron School Wavegarden (Surfing Wave Pools)

xyzzy21 6y ago

Yep. WeWork was always a non-tech real estate play with some very bad finance built into it; it was NEVER a tech company in any way shape or form simply because it had a web site! But that was the lie told - "We will have double-digit tech growth rates and market domination!" Nope!

mimixco 6y ago

One thing I haven't seen mentioned in this thread that definitely played a part in WeWork's explosive growth is the cult-like religious aspect of it. Adam wasn't just selling office space. He was selling a philosophy of working together as inexperienced entrepreneurs to perhaps create better companies. Whether you believe in this model or not (I don't), it is appealing to young professionals without much traditional business experience. The summer camp, "let's help everyone and have fun" environment was more valuable (and played a bigger role in the strategy and market fit) than the office space itself. Regus, as pointed out, sold co-working space before WeWork and still does. They don't, however, sell religion and it's likely that any future co-working brand will forego that aspect, too. Of course, cult-like attraction does work for some companies... if you can get enough believers.