WeWork’s Bankruptcy: Lessons from Latin Roots and Cultural Shifts

Gillian Tett’s insightful article in the Financial Times sheds light on the dramatic rise and fall of WeWork, examining it through the lens of cultural and linguistic evolution. The story of WeWork, co-founded by Adam Neumann and backed by Masayoshi Son of SoftBank, serves as a profound example of the changing dynamics in the world of work and office culture.

The Rise and Fall of WeWork

WeWork’s initial success in transforming traditional office spaces into vibrant, shared environments led to a valuation of $47 billion. However, the company’s downfall was as swift as its rise, with its valuation plummeting to almost nothing. This decline exposed the fragility of its business model and the over-optimism of its backers, particularly SoftBank.

The Latin Lesson: Officium

Tett emphasizes the importance of understanding the original Latin meaning of “office,” which is officium, signifying “task,” “service,” or “[divine] position.” This concept contrasts starkly with the 20th-century interpretation of an office as a physical space. WeWork’s model, focused on trendy physical office spaces, missed the evolving nature of work, which is returning to its Latin roots: centered around tasks and people rather than a fixed location.

The Impact of the Pandemic and Digitization

The COVID-19 pandemic and the rise of digitization have accelerated the shift towards remote and hybrid work models. Surveys by the US Federal Reserve and Gallup indicate a significant increase in remote and hybrid working arrangements. This cultural shift blurs the traditional boundaries of work, challenging the norms of office culture that dominated the 20th century.

WeWork’s Miscalculation

WeWork’s model, offering flexible spaces for gig workers, seemed attuned to these cultural shifts. However, the mismatch between long-term leases and short-term customer agreements, coupled with high leverage, led to its downfall. This miscalculation was a result of an outdated belief that the new generation would seek office spaces similar to their predecessors.

Lessons for Commercial Real Estate Investors

The WeWork debacle serves as a warning for commercial real estate investors and entrepreneurs. It underscores the dangers of basing future projections on recent past experiences, especially during times of cultural and economic flux. Investors need to recognize the evolving nature of work and the increasing demand for flexibility and customization in workspaces.

Conclusion

The collapse of WeWork highlights the need for a reimagined understanding of the “office,” aligning more with its Latin origin. Tett suggests that there is an opportunity for innovative entrepreneurs to develop solutions that resonate with the modern conception of work – perhaps an “officium app.” This shift represents not just a linguistic return but a cultural adaptation to the ever-evolving world of work.