Sunday, March 20, 2016

Sunday Long Read: Working Out

If you're not familiar with Adam Neumann and his company, WeWork, you very soon will be. Neumann is on a multi-billion dollar quest to reinvent the American workplace for the era of internet automation and the 24/7 contractor job, where everyone lives, works, and plays together in the same place, the ultimate extension of urban planning.

Neumann and his cofounder, Miguel McKelvey, founded WeWork in 2010 with a simple business model: The company rents office space from landlords wholesale, breaks it into smaller units, and subleases it at a profit. WeWork, which now has 77 locations and more than 50,000 members, says its ultimate potential is much bigger—and investors agree. In February 2014, WeWork’s backers valued the company at $1.5 billion; by last week, its valuation had jumped to $16 billion, making WeWork, on paper, the world’s 6th most valuable private startup.

Every modern generation has sought to remake the workplace, from the introduction of the cubicle in the 1960s to the 1990s’ foosball tables and flexible hours. Now members of the generation that would rather make a job than take a job are embracing coworking environments where they can operate independently while still drawing support and networking opportunities from peers. Neumann calls these people the We Generation, which, he says, "cares about the world, actually wants to do cool things, and loves working."

Critics look at WeWork’s business model of trading spaces and shrug, That’s it? Its high valuation has made it a staple of lists predicting which unicorn startups will fail. "Their multiples are more like a tech company than what a real estate company would get," says Charles Clinton, who runs a real-estate-funding platform called EquityMultiple. "There’s a feeling that that doesn’t really make sense." If the economy wobbles, skeptics contend, WeWork’s customers will scurry back to caf├ęs with free Wi-Fi.

Neumann, who was envisioning WeWork with 100 buildings when he had only two, sees his company as an operating system that brings real estate to life in the same way that Android is an operating system that makes a smartphone more than mere glass and metal. As more spaces open and members join the network, WeWork will have increasing power to offer such services as shipping, software, credit cards, travel, payroll, banking, and training. Eventually, members might join for these benefits alone, without any physical access whatsoever. Neumann also envisions WeWork managing offices on behalf of corporations (which are cutting down on square footage per employee). WeWork will connect them all through an app-based network. "Real estate," according to Neumann, "is just a tool."

He isn’t content simply to remake the modern office; he also wants to change how millennials think about home. WeLive, his new "co-living" residences, is a bet that they’ll value access over ownership. Just like they’re choosing Uber or Lyft rather than buying a car or subscribing to Spotify rather than having a record collection, they will be happy to share their living space, too. The first WeLive, which features common amenities with modest personal spaces, opened in New York City in January. According to leaked financial documents, the company plans to open 68 more in the next two years, the first step toward WeWork creating entire neighborhoods. "It’s a when, not an if," Neumann says of  WeCities.

Of course, in order to follow through on any of these plans, WeWork needs to convince young, urban professionals to buy into its philosophy of living and working together. Which is why, in addition to square footage, WeWork runs on something that doesn’t easily fit on a term sheet. You can call it a mission, a vibe, or culture. Neumann calls it "energy." If anyone can create energy, it’s him. But is it enough to power WeWorld?

On one hand, this is where the corporate workplace is going in the United States, global companies with a majority of contractors, work-at-home options and the 24/7 work schedule.  On the other hand, all of that is just there to create "productivity" by enslaving us.

But Neumann sure as hell is going to get rich off this.  You?  Not so much.

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