#12: What I Wanted from WeWork

I’m traveling and working from a WeWork today. It’s a nice space: two floors, well-designed, skyline views. It’s prime real estate. And I’ve got a great choice of where to sit, because there are maybe five people here.

Things aren’t looking great for WeWork: from $22B raised and a $47B valuation down to a ~$230M market cap.¹ Perhaps most remarkably, WeWork was present and well-resourced during the largest and fastest shift in workplace culture — from in-person to remote during Covid — but failed to capitalize on that opportunity. One would expect that businesses going remote and giving up their expensive office leases would create demand for exactly WeWork’s casual, flexible, on-demand workspace solution, but that has not happened.

So, what’s up? Many commentators have taken a hand-waving, pro-and-con position: “good product, bad economics.” But I don’t think that’s it. The product sucks. That might not be obvious, because the workspaces are beautiful, clean, and well-stocked, but they are always terrible environments for actually getting work done.

Product Problems

Whenever I go to a WeWork, I feel like I’m entering a space designed by someone who knows everything about aesthetics and nothing about doing work. Everything about the design of these spaces — especially post-Covid — seems to ape an imaginary concept of how “creative” work is done, and has zero empathy for normal people trying to perform normal, white-collar jobs (which you’d think would comprise the majority of the addressable market).

Let me elaborate. Most days, I work remotely. But I often want to use a WeWork:

• When I’m traveling, or want to work out of my house for the day;

• When I have meetings in the city, and need a desk for a few hours of work in-between meetings;

• When I want to work in-person with a few of my co-workers (“let’s get a WeWork for the day”).

On average, that’s probably one or two days a week. There are three types of things I do at work, which I want my workspace to facilitate:

• On calls/zooms: average 3 hours a day

• Thinking/planning, no devices: 1 hour a day

• On my laptop: the remainder of the day. Mostly email/chat, but I’m in other applications all the time, too.

Therefore, here’s what I want from my workspace:

• Walk in and out with no fuss

• Quiet so I can take calls and concentrate

• One or two 1080p external monitors that I can plug into

• Ample desk space, preferably sit-stand

• Ergonomic office chair

• Ability to lock my belongings

• Simple amenities: coffee, water, clean bathrooms

Not crazy, right? Maybe not too dissimilar from what you want from a workspace? But WeWork couldn’t be further away:

• App booking or front-desk check-in required²

• Common spaces are loud and inappropriate for calls

• Phone booths are few in number, poorly insulated, and deliberately user-hostile³ so you don’t stay too long

• Desk spaces are small/awkward and unadjustable

• No office chairs⁴ or otherwise ergonomic seating

• No external monitors

• No ability to lock belongings — even the $1000/day private meeting rooms don’t have (keycard) locks

Seriously, has the WeWork interior designer ever worked an 8-hour-a-day desk job in their life? I want to walk in, set up for high productivity, take a few calls, concentrate for a few hours, and head back out. Or I want to bring a few folks from my team, rent a room for the day, and pop out for lunch together without having to worry that we’ve left $10,000 of electronics unsecured in a space that is almost free to access.

Whatever goes on here, it isn’t serious work. It might be pretty, but couches and bar stools just aren’t productive environments. I would rather work from an airplane seat; at least that has a little folding table for my laptop.

The WeWork space design merits serious discussion, because it’s clearly very deliberate. My read is that they tried to steer far away from anything that might be perceived as corporate: that’s why there are no office chairs, monitors, or real desks, and it’s mostly couches, lounge chairs, barstools and diner booths. There are posters and mailing lists and events for the WeWork Community, and the spaces feel like hotel lobbies rather than offices. They tried to reimagine the open office to counter the cubicle-land of the 90s, vigorously ignoring the fact that open offices are deeply unpopular, and the one thing that workers hate more than open offices with colleagues in chairs are open offices with random people on couches.⁵ But after a few years of running this experiment, the numbers speak for themselves: WeWork’s space design didn’t work. It doesn’t meet the needs of the users. Fundamentally, that is why they do not have enough customers.⁶

A Better Way

None of this is to say that the model itself can’t work. WeWork scaled up too fast, as there are now too many WeWork spaces with too few users. And their product is bad.

But there’s still a need in the market to be met: there are lots of people who are working from home or remotely and do not have good work setups. They don’t have monitors. There’s noise. They might not have a good desk or chair. Or maybe they’re on the road every now and again and need a proper workspace for a few hours here and there. Their jobs heavily involve taking calls, and they do not have a good place to take calls. They might pay a few hundred dollars a month for the same thing that I would pay for: access to a space designed for high productivity, rather than lounging.

Imagine a floor filled with office pods:⁷ well-ventilated, appropriately lit, soundproofed, with monitors and ergonomic setups inside. Available first-come-first-serve, and all you need to do is bring your laptop and plug in. If you can engineer the right usage per square foot and daily usage percentages, I can imagine a variant of a pitch that would be attractive to me both as a customer and as an investor.

This brings us back to the hand-wavy commentary from earlier: thinking of WeWork as a “good product with bad economics”. The economics are not necessarily bad. Maybe the WeWork people went after the economics in a particularly boneheaded way, but there are many businesses, from gyms to Regus, that pursue similar economic models of taking out long commercial/office leases and then selling subdivided access, and they make it work pretty well.

WeWork got a lot of things right: they built a huge brand. They made their spaces ubiquitous and accessible. They were the go-to solution. The only issue was that the spaces themselves were designed adversely to the customers’ needs. The world’s best and most expensive marketing and brand-building cannot rescue a grating product. And that made WeWork a bad product with bad economics. There may be space in the market for a good product with good economics. And I really wish it existed.

1. Right now, some sources report WeWork as having an ~$8B market cap, but that’s because they just did a 40:1 reverse stock split and some data feeds need to update. A few days before the split, their valuation was in the ~$200-300M ballpark.

2. Unless you have a particular membership configured for a particular location.

3. The dead giveaway is the seating: cushions that slope downwards as they compress.

4. If you do the monthly private office rental, they will supply office chairs, so clearly the WeWork people are aware that these things exist, they have just decided not to have such chairs in the main areas.

5. The WeWork aesthetic is so deeply baked into the company — and I have been to many dozens of them over the past five years — that I suspect it came all the way from Adam Neumann. He certainly did not have middle-America-style visions of how work is done.

6. Note that under their current open-plan model, the number of customers is self-limiting: the more people in a space, the more unpleasant it is to use.

7. I’m specifically mentioning these pods, rather than suggesting full-on construction with walls, etc. because the latter is usually subject to all sorts of legal approvals with the building (and possibly local government), which could be prohibitively costly in terms of time and money.