Following last week’s announcement that global shared office provider WeWork has filed for bankruptcy in the United States, coworking Analysts have given their thoughts on what caused the startup’s real estate empire to fall.
Many highlight the company financial problems. Also cited is the loss of founder and former CEO Adam Neumann, who left the company in disgrace in 2019. Both arguments trace back to an underlying theme in modern workplaces: the backlash against toxic office culture.
WeWork’s early days may have been defined by a meteoric rise in membership and valuation. But after executives faced allegations of a toxic work environment, the startup never recovered from the losses it suffered due to reputational damage.
We explore how the creation of WeWork company valuescreated in 2010, set it up for a crash thirteen years later.
Startup culture
Heralded as “the future of work” when it emerged in 2010, WeWork was part of a cohort of technology and media startups that claimed to revolutionize modern work environments.
In practice, this meant lots of fancy office interiors. Where Buzzfeed had its office puppies and Google its slides, WeWork handed out free beer and ping-pong tables in an effort to bring the comforts of home into an office.
Moving away from rigid processes and a defined management hierarchy, WeWork also popularized the open office which it believed created the ideal atmosphere for innovation and accelerated growth.
With these advantages, the founders claimed, they were selling more than just a desk. They wanted to build a global community of workers empowered to “do what you love.”
This story allowed WeWork to take off. It expanded to almost every major city in the world, growing at a pace that wowed investors and ultimately led to a valuation of $47 billion during the summer of 2019. By August, everything came together for that the company goes public.
Toxic leadership
But it was at this time that the consequences arose. Backlash against WeWork organizational culture began when the darker side effects of his anti-corporate principles were revealed.
WeCrashed, a revealing documentary that traces the WeWork saga from disruption to debt, has revealed a toxic substance. leadership style from CEO Adam Neumann that led his former personal assistant, Megan Mallow, to require therapy.
An annual “WeLive” event, held each year to encourage teams to commit to the company’s vision, also ended in an alcohol-fueled party that led to allegations of sexual assault .
One employee, Ruby Anaya, who started working at WeWork in 2014, sued the company after allegedly being groped at two company events where attendance was mandatory and alcohol was readily available.
To top it off, Neumann was accused of misleading investors regarding WeWork’s valuation. Within a month, the company reduced its valuation to $10 billion and indefinitely delayed its initial public offering (IPO).
David Soffer, founder and editor-in-chief of TechRound commented: “At its peak, WeWork embodied the ‘work hard, play hard’ philosophy, but its so-called brotherhood culture has blurred the lines a little too much.
“This approach to office life, although it initially seemed to foster better relationships, ultimately contributed to a lack of professionalism.”
Cultural change
WeWork executives weren’t completely naive about the impact this toxic work culture was having on the company’s reputation. Neumann was asked to leave the company in 2019, after shares fell following the failed IPO.
After his departure, WeWork could have recovered from the above PR crises. But then came the COVID-19 pandemic, triggering an abrupt transition to remote work and rendering many of WeWork’s perks obsolete.
As the majority of office-based businesses move to a hybrid or remote working model, many UK employees have radically changed their outlook on modern office spaces in 2023.
Noisy office features, like WeWork bars, have since been ditched as workers increasingly prioritize productive environments that allow them to collaborate with team members they might usually chat with over Zoom .
Added to this is the rejection of the so-called “hustle culture” that defined office work in the 2010s. An epidemic of staff burnout in UK workplaces has been revealed, as employees took a break during COVID and reconsidered their personal and professional goals.
As a result, the last two years have been marked by a wave of anti-work trends such as “quiet termination” and “career dampening,” as workers place more emphasis on separating their work and family lives.
Return to bureaucracy
WeWork’s troubled teenage years mark the end of an era. Fleeting office habits of sibling camaraderie and blurred boundaries have given way to a renewed emphasis on the culture that supports mental health and well-being of employees.
“A lesson from WeWork is the importance of investing in strong HR structures,” says Soffer. “Employee satisfaction goes beyond office perks like ping pong and free coffee. This is a real concern for the well-being of employees, by offering them benefits that support life outside of work.
It’s time for entrepreneurs to grow up. This year, coworking spaces have sought to establish themselves as providers of productive workspaces, not just a quirky and fun couch spot.
Many have introduced “boring” human resources (HR) policies, such as sober work events, in recognition of their importance in creating inclusive and professional work environments. Even WeWork has taken steps to “standardize” its commercial offering. In 2020, he ended its free beer policy as part of a series of new internal membership rules.
The move, however, did little to allay members’ concerns. Between the first and second quarters of 2023, the company reported a global decline in physical memberships of approximately 29,000.
New operators are changing the way we work
Alexandra Livesey is CEO of Clockwise, a flexible workspace company based in Europe and the UK. Livesey says WeWork’s demise is not proof of the death of in-person office work.
Instead, he argues, it signals the need for new operators like Clockwise who can embrace a modern work culture.
“People are at the center of our business and well-being is at the center of our brand,” says Livesey. “We cannot, in good conscience, talk about welfare for our members if we do not extend the same to our colleagues. »
Livesey tells Startups that all Clockwise colleagues have access to “wellbeing support, professional therapy and education.” The firm’s HR team also conducts a quarterly survey of colleagues to help understand their thoughts and feelings about working at the company.
“We are a values-driven company,” adds Livesey. “Our goal is to create personal, meaningful and productive work environments and experiences that enable individuals, businesses and communities to thrive. »
For companies still clinging to outdated cultural practices, WeWork’s story is a wake-up call that highlights the importance of adapting to the ever-changing demands of today’s workforce.
WeWork has since moved to reassure its British members that their deals will not be affected after filing for Chapter 11 last week. Yet even if the company manages to turn around financially, its legacy as a toxic employer will pose a much bigger hurdle to overcome.
