In just half a decade, by tapping into the new co-working trend, the start-up WeWork rose from nothing to become a multibillion-dollar company. At its height, WeWork operated in some thirty countries with 400 locations dotted around six continents.
It became the largest office tenant in New York City, and second in London only to the UK Government. Its revenue doubled, give or take, annually over a decade, and it raised over $11 billion of investment capital. Its USP was simple: it leased space, divided it up and then rented out each segment with a premium for hip design, flexibility, and regular happy hours.
Five years later, WeWork underwent ‘the most humiliating attempt at a public offering in American business history’. Its founder and CEO, Adam Neumann, was ousted having squandered a vast investment. It is a story outlined in Reeves Wiedeman’s cracking new book Billion Dollar Loser: The Epic Rise and Spectacular Fall of Adam Neumann and WeWork.
What has this got to do with university?
As I write, job layoffs are ripping through UK Higher Education. The immediate short-term causes are Covid-19 and the lack of international students, the government’s screwup of the A-level results and then its subsequent removal of the cap in order to make up for it.
But the longer-term causes mirror those of WeWork. Lightening rapid expansion and spending went unchecked, often without any revenue to balance it. The company was losing $90m annually and staff were being laid off as a result. In 2018, the losses totaled $2 billion alone.
Problems weren’t solved, instead they intensified. Adam Neumann was advised to slow down not least by Howard Schultz, the former CEO of Starbucks, who himself had overseen the coffee company’s rapid expansion and heard learned from it. Investors grew worried. Adam’s hubristic response? “Fuck that”.
How much this rings true in UK HE. Rapid expansion, often in the form of real estate (if anything WeWork was basically in the market of buying up empty offices), a lack of revenues in form of the projected international students coming in, unserviceable debt, all combined with a refusal to slow down or learn from one’s mistakes or the mistakes of others.
“Fuck that”, we can hear our VCs saying. “It’s not our fault”.
Collectivism and capital
As universities expanded, vice chancellors’ egos – some of which were never small to begin with – ballooned with them (like Adam’s). They paid themselves private sector salaries albeit with public sector money often vastly more than their counterparts in local government who controlled bigger budgets and more personnel.
As with WeWork, the kibbutz like ideals that once underpinned universities’ notion of collegiality were abandoned as they became more capitalist than collectivist. Like Neumann, they have become more adept at squeezing workers into working ever-growing hours.
WeWork’s progressive communitarian rhetoric belied the same hardnosed business tactics as any shyster New York landlord. WeWork underpaid its employees who regularly worked sixty-hour weeks or more and were chastised for leaving at 6:30 p.m.
A key difference between WeWork and our universities is that many forgave the low pay and lousy benefits because of their initial exhilaration and Neumann’s charisma. (The free booze on tap, which has since been ended, also didn’t hurt.) “Excited” was an overused word at WeWork.
How many of us feel exhilarated or excited at work nowadays especially with the impending threat of job cuts hanging over us? (There was never, or at least very rarely, free booze.)
Hard work and precarity
What we do share is the feelings of physically exhaustion, psychological scarring, disillusionment and of being pushed over the edge by another one of our VC’s crazy decisions (at one point, Neumann decided to ban meat at all company locations). The image of the meat grinder in Pink Floyd’s The Wall looms large.
WeWork didn’t care. Those who left were balanced by the new devotees willing to take their place. There was a constant influx to keep the cogs turning. One HR executive commented how it continued to work “From a business perspective”.
And similarly, it can often feel like there is an attitude among our senior managers that they can treat staff how they like because there are no other jobs available anyway and there will be a slew of young ECRs and PhDs who will willing take our place and probably on worse terms and lower pay than we had once enjoyed.
WeWork also avoided unionized labour in order to keep costs low and allow construction to operate around the clock. Consequently, some of the work was very shoddy. The corporate culture was sexist. There was a lack of senior and executive female employees.
Spot the difference
Neumann’s eccentricities were tolerated as long as he made money. As Weideman writes, “Everyone around Adam had been too afraid to challenge him, or had chosen to enable his ambitions so long as the company and the value of their stake in it went up and up.”
Again, this sounds startling familiar to our workplaces. Who challenges our senior managers? More than one colleague has spoken about the cult of silence that surrounds VC decision making. And to whom are they ultimately accountable? WeWork at least had investors to appease and it was them who eventually turned on him and forced him to resign. Who will oust our senior executives when they turn into liabilities rather than assets? Do governors have that power?
In the end, the accountants went through the books in October 2020, and calculated that, without any new funding, WeWork would run out of money before Thanksgiving. Assets were sold and employees laid off as the dream unraveled. Some jobs were saved simply because WeWork couldn’t afford the severance payments.
This sounds uncannily prescient for the culture in our higher education institutions and WeWork poses a stark warning if something isn’t done about it.
Billion Dollar Loser: The Epic Rise and Spectacular Fall of Adam Neumann and WeWork by Reeves Wiedeman is published by Hodder & Stoughton.