WeWork: More Than Just a Workspace

Traditional Office Work Model Is Dead": Inside the WeWork Phenomenon

“The traditional office work model is dead.” These are the words of Gary Mendel, one of the founders of the service Yopine and a client of WeWork.

hen Adam Neumann founded the coworking network WeWork in 2010, few believed in the project. The business model did not seem innovative or impressive at all. Essentially, it offered to rent affordable office spaces, customize them, divide them into small zones, and sublease them to startups. Mortimer Zuckerman, one of the largest real estate owners in the US and Canada, and the founder of the popular Daily News media outlet, initially did not take Adam’s proposal seriously. Fortunately, Adam’s persuasive skills prevailed, and WeWork became successful.

The Network's Concept

ut what were Adam's key arguments? Certainly not in the worn-out business model! It was quite simple. Neumann managed to sense what is known as the "spirit of the times." He somehow understood that modern startups needed more than just workspace. They needed energetic neighbors whose ideas overflowed. Close and constant contact with each other, exchanging opinions, getting project feedback - these opportunities are simply unavailable in a regular office. Startups hadn't realized this yet, but Neumann had foreseen it.

he atmosphere at WeWork's coworking spaces also plays a crucial role. Regular public appearances by well-known entrepreneurs, hosting 'demo days' with workspace partners, and simply weekly parties all contribute to communication and sharing valuable knowledge.

n addition to the atmosphere and creative neighbors, WeWork also offers its clients other more obvious advantages. These include 24/7 office security, unlimited hot beverages, and stable internet access. Today, these amenities are considered standard in any respectable coworking space. However, the importance lies in the fact that clients don't have to deal with any extra issues related to their workspace. They simply come in and focus on their work without distractions.

nother plus point of WeWork is its convenient locations. All network coworking spaces (there were around 40 by the end of 2015) are situated in areas with developed infrastructure. Moreover, Adam Neumann is currently collaborating with local authorities in several metropolises like Chicago or Boston to improve conditions for attracting startups to these cities. Consequently, the infrastructure will be intentionally enhanced for this purpose.

espite relatively high prices - according to many - the occupancy rates at WeWork's coworking spaces remain staggering. In some cases, clients have to wait for several months to secure the desired workspace! This is while the prices at WeWork are not low: the cost of a month's work at a dedicated desk exceeds $300, and it's twice as much in a private office. Nonetheless, in 2014, the company boasted over 15,000 clients, a number that more than tripled in 2015.

Our story about WeWork wouldn't be complete without briefly delving into the life stories of Adam Neumann and his constant business partner, Miguel McKelvey. Let's fill in this gap!

Interesting Facts about Neumann and McKelvey

lthough Adam was born and raised in Indianapolis, he and his family moved to Israel when he was young. He grew up there and served in the local armed forces for 5 years. His sister became a successful model, and when she was returning to America, Adam decided to follow her. There, he worked as her financial agent while simultaneously attending various courses, primarily focusing on business.

In the States, he met McKelvey. Miguel, an architect by profession, was hired by Adam to design his own office. During the economic crisis that began in 2008, Adam's financial situation was tough, expenses were high, and to save money, he started leasing part of his office space. This act marked the start of their own project.

uickly, the friends found a suitable space that could be leased entirely and, when divided into zones, subleased for a fixed fee. All they had to do was convince the skeptical landlord of the prospects of this venture. Strangely enough, the business plan presented by the friends turned out to be a compelling argument for the landlord, who provided Adam and McKelvey with an entire building for their project (which eventually became known as Green Desk and was the precursor to WeWork).

uring this time, Adam's main profitable venture was trading children's goods. He continued this business while McKelvey managed the leased space. This all happened in late 2008, at the onset of the financial crisis. The landlord's skepticism soared as he rightly believed that no one would be leasing office spaces during such times. However, the friends weren't planning to lease traditional offices! In the end, everything worked out even better than they had expected.

They were literally swamped with clients. Young entrepreneurs were willing to pay relatively affordable amounts for small spaces rather than renting large offices. After a couple of years, Adam and Miguel sold Green Desk to their own landlord for almost $3.5 million. It's worth noting that the landlord also found success in this field, and currently, he owns several workspaces in New York. Meanwhile, the friends went on to establish WeWork, as mentioned earlier.

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