Thread: WeWork is imploding. This is a case in point about the problems of relying on venture-capital financing for everything...
The point of WeWork is to facilitate access to reasonably priced, convivial office space. It has sought to apply the logic of a tech startup to the hard-to-scale dynamics of in-person communities. Its problems were exacerbated by the pandemic, but they started long before that.
This is so fundamentally a category error. Probably nobody familiar with my work will be surprised to hear me say: WeWork would have worked much better as a co-op. It is a shame that we live in an economy that lacks the capacity for co-ops to access capital to do this right.
If WeWork were a co-op, the point wouldn't be to deliver outsized returns to investors, it would be to meet member needs. The greatest benefits of the company would go outward to the world through its members rather than being organized for investor capture.
If WeWork were a co-op, the priority could be less on making everything streamlined and uniform, but on building economies of scale where they're needed, plus local control where it is needed.
Think Ace Hardware (a co-op), not Home Depot (a big-box chain).
The tragedy was particularly poignant a few years ago when WeWork was shedding Meetup.com—a company it had acquired and then needed to sell off. A few of us at Zebras Unite, plus Meetup founder @heif, got together to see if we could make Meetup the co-op that it should have been all along: https://medium.com/zebras-unite/meetup-to-the-people-how-a-zebra-could-rise-from-a-unicorns-fall-cfa93d83bcdc
@heif The model made sense. Meetup gets revenue from its users. It is in the business of communities. A co-op model, accountable to fee-paying members, made perfect sense.
But of course potential investors just didn't know how that would work. It isn't done. There isn't policy infrastructure for that kind of conversion, that kind of #exittocommunity. Meetup got bought by an investment fund.
@ntnsndr @heif My understanding of traditional funding is that investors expect a return on investment (on average) due to hyper growth building out something that can be highly valued by acquiring companies. The acquiring entities then expect to get a return on *their* investment by wringing every last cent of perceived value out of their acquisition. Such a model seems fundamentally at odds with co-ops… How would investing work with co-ops?
@ntnsndr How would that model be more attractive than business as usual for investors?
@dx Because the policy arrangements make it an appealing investment—just as the 1974 tax treatment for ESOPs made it an appealing option for many business owners.