The fourth episode of "WeCrashed," a new Apple+ limited series about coworking startup WeWork, opens as the company is hemorrhaging more than a million dollars a day. It's 2016, and Adam Neumann, portrayed by Jared Leto, is trying to land new investors in his vision to offer workplace flexibility and community to boost happiness and productivity for white-collar workers.
Spoiler alert: Stop reading here if you don't want to know specifics.
For Neumann, the only option for growth seems to be "blitzscaling," or expanding a business as fast as possible. That's even though skeptical landlords seem hesitant about WeWork's business model, as does the company's capital source Benchmark Capital. In this dramatization, when pressured by Neumann for an infusion of more capital, one banking executive says, "We are not Softbank," the investment management company. That gives Neumann the idea to fly immediately to India and crash the Startup India conference to get in front of Softbank Chairman and CEO Masayoshi Son.
Neumann thinks if he can convince Softbank that WeWork is a tech unicorn, WeWork might get funding needed to save the company. Meanwhile, later in the episode, the daily loss of $1.2 million a day reaches upward of $2.4 million.
Called "4.4," the fourth episode kept both me and my watch buddy, Susan Arledge, president of Texas-based ESRP's global site selection services team, on the edge of our seats as we saw an intense real estate meeting play out. Neumann, frustrated by WeWork's pace of growth, gave his leasing team the directive: Do what you have to do to land leases with hesitant landlords, even if that means offering twice as much as the owner's asking price or doubling the length of the lease.
"Are you kidding me?" Arledge exclaimed as we watched the show, unable to hold her commentary until the end of the episode. To willingly offer 10-year leases in lieu of five-year leases, or to pay $130 per square foot instead of $90 per square foot seemed ludicrous to Arledge, who has seen the appeal of WeWork in urban cities after working a deal in a five-floor WeWork in Mexico City that quickly filled its membership to fully occupied.
"I never saw a WeWork as the kind of environment or place for people to go who were lonely or bored," Arledge said, acknowledging Neumann's sales pitch made infamous in the first episode of the series. "I saw it as a landing place for salespeople or regional managers of people who did not need to rent office space but needed a place to be. It was more professional."
Arledge, who has decades of experience negotiating leases and economic incentive packages built on employees being tied to a physical office space, says the role of flexible office workplaces and coworking locations in the commercial real estate industry has never been more important.
The largest "customers are not taking as much office space as they have," Arledge told CoStar News. "They are looking at flexible workspace as a part of the solution to help with hybrid working. To be able to offer employees a choice to work from the office, the home or meeting with your team at a coworking space, is ideal. The hub-and-spoke concept is becoming very popular."
Flexible office space, or a hub for people to come together on an irregular basis, is "going to be huge," said Arledge, who works with national corporate clients on their location decisions, adding, "I don't think we are going to go anytime soon to a full workforce being back in the office."
This was one of the most cringeworthy episodes yet in the series for anyone familiar with the leasing process of a full floor — or even full building — in a responsible manner, Arledge said. Neumann has a tendency to throw money at a problem, whether it's not being able to attend a charity shindig with his wife, played by Anne Hathaway, or to increase the lease terms for skeptical landlords. But, in business, profit matters, and you don't need a Harvard degree to come to that conclusion. (Though some people portrayed in the show did, apparently.)
At the end of the episode, just as WeWork's vision seems to nearly come to a screeching halt, Softbank's Son, a Japanese-Korean billionaire, offers Neumann a $4.4 billion investment to just keep going.
Some takeaways:
- Employees won't work for kombucha alone. During a Saturday night emergency real estate meeting at WeWork, the company's director of leasing told Neumann he can't work for just kombucha and a dream, and he needed to start paying his employees. That move seemingly doubled the executive's salary, but it spoke to a companywide problem at WeWork of underpaying its employees.
- You can't just outgrow Starbucks. In 2016, WeWork had about 1 million square feet in its leased portfolio. Neumann at one point told executives he wanted to have 40 locations spanning 2 million square feet at the end of the year, claiming if Starbucks could open two stores a day, surely WeWork could do better.
- Can job satisfaction be curated? For WeWork, in the series at least, maybe if you're willing to pay. In planning for Son's tour of WeWork in New York City, Neumann gives 100 shares to everyone in the location to help make it seem as a happy, joyous place to work.