Business 14 January 2021 How WeWork foresaw the end of the conventional office Beyond the wild expansion and sudden downfall of the company under Adam Neumann, there remains the fundamental issue of an industry still waiting for change. JP Yim / Getty images Smarten up your weekGet the New Statesman's Business email. SIGN UP In 2010, Campbell McKellar co-founded a company called Loosecubes, a business built partly on the belief that the traditional office was on the path to extinction. The evidence was there to support her business plan: back then, there were 42 million freelancers and contract workers in the United States, and more than 60 per cent of American companies were allowing employees to work remotely some of the time. Loosecubes launched shortly after Airbnb and Uber, and it applied the same principle – monetising other people’s under-used property – to desk space. Like other “sharing economy” companies, Loosecubes could grow quickly because it didn’t take on those workspaces as assets, and like those other companies it grew rapidly: by 2011, it was world’s largest community marketplace for shared workspaces, with almost 1,700 spaces in 350 cities and 60 countries around the globe. City Monitor: The city that solved remote work Part of New Statesman Media Group As McKellar saw it, people poised for success are those most capable of forging their own path. “The office is necessary but it’s up to the individual to choose their right environment,” she said in 2011. “Competitive advantage comes from individuals and it comes from individuals connected in some way.” But then, almost as quickly as it had grown, Loosecubes shut down. The company had fulfilled its promise of social connection, but it hadn’t figured out how to monetise it. As one strategist and blogger said of Loosecubes shortly after it shut down: “[It] was never about the physical features of the facilities. All that stuff is irrelevant now. The name of the game in the workspace-sharing world is the people you have a chance to meet. Nobody ever said they loved co-working because they got to sit in a fancy chair.” A couple of years before Loosecubes launched, another co-working company called GreenDesk was beginning to offer organic, fairtrade coffee, green office supplies and sustainable furniture to members who could rent a desk or an office by the month. Its sustainable approach was ultimately abandoned after the founders realised workers didn’t really care about that; what they wanted was community. So GreenDesk became WeWork. In his new book, What Tech Calls Thinking: An Inquiry into the Intellectual Bedrock of Silicon Valley, Adrian Daub argues that Silicon Valley’s ubiquitous talk of “disruption” is more about “rearrang[ing] what already exists”. That was certainly the case with WeWork. It didn’t disrupt office space so much as disrupt the idea of how – and for how long – office space was occupied. And, perhaps most importantly, how that space was paid for. City Monitor: A future without parking spaces Part of New Statesman Media Group WeWork was able to bankrupt its competitors not because it had a completely different idea, but because its co-founder, Adam Neumann, had an insatiable desire to acquire more buildings, more locations, more power – basically just more – that was highly attractive to venture capital investors. In early 2009, when a potential new investor asked what WeWork was worth, Neumann threw out a value of $45m. The investor put in $15m. When Masayoshi Son visited the company in 2017, he reportedly told Neumann he was “not crazy enough”, before offering to invest $3bn. What might Loosecubes, or any of the many other co-working spaces operating in the early 2000s, have become with a fraction of that financing? Eventually, Neumann’s drive for ever faster scale led WeWork to commit exactly the mistakes the company had set out to fix. WeWork’s big idea was to question whether every company even needed its own space, and yet the company itself got greedy, acquiring every building in its path, quashing competitors and its own future along the way. In nine years, it went from one city to more than 100. For a company that was innovating by offering other businesses an alternative to the burden of a long-term lease or building ownership, this was an irrational path. As WeWork gobbled up the competition, it also gobbled up risk and obligation on a huge scale. When the company announced plans to list on the stock market, it was this risk and obligation that came under scrutiny, and its perceived value dropped from $47bn to $2.9bn in less than a year. The things WeWork was perhaps best well known for – fancy office interiors, lavish events, bespoke coffee – were touted as being unique. But were they? The attempt to make work seem like a lifestyle choice, to supply reasons for workers to stay in the building, is nothing new. (Just check out this 1963 film heralding the opening of the new amenity-laden Shell Centre in London.) What was, and still is, innovative about WeWork is the understanding that office space needs to be flexible and adaptable, from the lease agreement to the desk arrangement; that there is no real reason why headquarters can’t be temporary, and many reasons why they should be. City Monitor: Why Covid-19 is a threat to affordable housing Part of New Statesman Media Group WeWork offered short-term flexible lease terms. This may sound boring but it set many developers and commercial real estate businesses on edge. More than anything, it disrupted their business model. It’s really difficult – and really, really expensive – to get out of an office lease. And it can be even harder to transform a company headquarters into something else. Imagine, for example, a new tenant inside the Apple donut. Yet it is just that disruption that today, in the age of Covid-19, remains as difficult to, well, disrupt. I recently spoke to the director of one of the world’s largest architecture firms, who told me that “the pendulum already seems to be swinging back towards a future of in-person work” and all that it entails. “I still believe we will now have more flexibility and individual agency in when and where we work,” he continued. “But I still think the office will regain its primary role by next summer.” All the elements of a WeWork-style workplace – flexibility, adaptability, changeability – run counter to an incredibly conservative consortium of industries (architecture, real estate, development, construction, contract furniture). Just as residential developers tend to balk at more inventive architecture or non-nuclear family housing types because it’s so much easier to sell what has sold in the past, the majority of those involved in the corporate HQ sector love the familiar. Even the most bleeding-edge companies do. While they may be building some unusual-looking buildings, they’re still committing to large car parks, giant floorplates and sizable, long-term economic commitments. The opportunity that Loosecubes saw is still there, however. This week, WeWork’s CEO Sandeep Mathrani (who took over after Neumann was ousted in February) told Reuters that its locations in China have returned to virtually 90 per cent of pre-Covid occupancy, and that he expects the company to turn a profit by the end of the year. The fight for the future of the office – and WeWork’s quest for world domination – is not over yet. › How Boris Johnson’s government “took a wrecking ball” to the music industry Allison Arieff is senior editor at City Monitor. More from New Statesman Media Group City Monitor: The future of transport is small and electric Energy Monitor: Climate change is already keeping people out of the office Investment Monitor: How Brexit is affecting the City This article was co-commissioned with Data-led analysis, original reporting and insights from the world’s leading urban policy journalists and experts. visit site Part of New Statesman Media Group Subscribe For more great writing from our award-winning journalists subscribe for just £1 per month!