WeWork’s ability to build community has made it one of the world’s biggest startups. But is the company’s purpose inflating its actual worth?
Walk into any one of WeWork’s more than 200 offices around the world and you get exactly what you expect: trendy, techy spaces serving a new generation of business. WeWork’s co-working spaces offer “design for deep thinking” and are located in everything from derelict opium factories to historic buildings. And their growing popularity has earned WeWork a $20 billion valuation, making the company one of the most successful startups in existence.
But the spaces are just a front. According to CEO Adam Neumann, WeWork is neither a tech nor real estate company. Instead, the chief executive says it is a community business bent on putting passion, people, product and purpose before profit. The company’s ultimate mission is “to create a world where people work to make a life, not just a living.”
The executive is set on proving that purpose through a series of programs. In 2017, WeWork announced it would launch WeGrow, a private grade school where the goal is to “mold the next generation of entrepreneurs,” according to Business Insider. WeWork has already launched Rise by We—a facility that features gym equipment, saunas and yoga classes that connect wellness and spirituality with entrepreneurialism. The company has also made big commitments to aid military veterans and refugees.
“By focusing on the people who share the same space every day, we can create a sense of community,” Mr. Neumann told young entrepreneurs during a visit to India, reported The Business Standard. “Relationships forged [here] lead to a happier, more stable workplace.”
Is WeWork’s buzzworthy purpose inflating the company’s true worth? Click To Tweet Some critics say yes.
“WeWork is nothing but Regus with a paint job—it’s newer, cooler,” Frank Cottle, chairman of Alliance Business Centers, a large network of serviced offices, told The Wall Street Journal. The newspaper also reported that “IWG PLC, an office-leasing company with a business model similar to WeWork’s, manages five times the square footage and has about one-eighth the market value.”
“WeWork is arguably the most overvalued company in the world,” Scott Galloway, a marketing professor at the NYU Stern School of Business and founder of business intelligence firm L2, told Business Insider. “WeWork is now getting a valuation equivalent of $550,000 per customer. So it’s hard to imagine how they can monetize consumers to the extent that warrants a $550,000 evaluation per consumer. I bet if you look at a Regus or another co-working space, you’d find that they’re worth kind of single-digit thousands. WeWork makes absolutely no sense. [It] is the perfect example of this frothy market of consensual hallucination between the company and its investors.”