WeWork and the temporary end of history

Francis Fukuyama famously predicted the end of history with the fall of the Soviet Union. Many others have famously made fun of him for this, as Fukuyama has futilely protested that, if they read his book, The End of History and the Last Man, they’d realize he just meant that liberal, capitalist democracy had proven itself to be the best form of government, not that history would actually end. I, for one, blame Fukuyama for his deliberately misleading title. You can’t write a title like that and not expect people to latch onto it.

But I’m not here to relitigate this tired issue. Instead, I’d like to propose an addendum. History did end, but not in 1992, and not globally. It ended in 2010 locally in America, but then restarted again in March 2020, with the advent of the coronavirus. Since then, history has been going in all sorts of directions: it’s surged forward with technology, regressed with the reappearance of mercantilism, and gone in circles with identity politics.

For my evidence for the first part of this hypothesis, that history ended in 2010, I’d like to submit the history The Cult of We, the defining account of the rise and fall of WeWork, from its beginning in 2008 to its end as an independent company in 2021. WeWork, in case you weren’t in America during the 2010s, was/is a coworking company.

For a brief time, WeWork was one of the most valuable companies in the world. It also lost more money than any other company in history. The founder, Adam Neumann, walked away a billionaire when his company went up in flames and eventually slid into bankruptcy, and, as of the time of this writing, has raised money to do it all over again. This is very weird, and I’d argue, can only be understood in history ending between 2010 and 2020. I’ll get to that in a bit, though. First, let’s talk about WeWork.

If you want to imagine the future of the 2010s, just imagine WeWork plastering its logo on every single billboard that’s in proximity to exposed brick…forever.

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The coworking business model is this: WeWork rents out an office space, either a few floors of a building or an entire building. They pay a long term lease for the space, spruce it up and add coffee machines and WiFi, and subdivide the space into small offices and desks. Customers rent these offices and desks on a short-term basis. WeWork’s profit comes from all the customer’s rents added up, minus the cost of the lease, minus the costs of the staff for the building. As long as the cumulative rent is more than the lease and the staff costs, WeWork makes money.

When I describe it that way, it sounds simple. That’s because it is. This business model, with slight variations, has been around for millenia. Ea-Nasir, in Mesopotamia, was probably renting short-term warehouse space for his substandard copper on this exact model. Needing short-term space to do your work is one of the primary human economic needs, and renting out that space is one of the primary ways that people in a city can make money.

There’s nothing wrong with this business model. It’s useful and economically productive, and anyone who does it well will make money and deserves to do so. In this way, it’s no different from a restaurant serving quick, tasty food. WeWork did this business model well, and they were always going to make money doing so. And, they did, in the brief periods of time where they weren’t wasting ungodly sums of investor money.

WeWork lost investor money in ways both quotidian and extraordinary. Pushed to get revenue at all costs, they expanded way too fast, hired way too many people, and lost their financial discipline. In this way, they were much like other hot companies which flamed out. However, they also lost money by providing lavish perks to Adam Neumann and his family, like private jets, surf instructors, and fancy offices and sinecures for his wife, friends, and family members; and by doing really stupid things, like throwing elaborate, alcohol-soaked parties for his employees which were mandatory to attend. Although I’m not going to say other businesses have not done similar things, the scale of this waste for WeWork was unprecedented, as well as how open Adam Neumann was with his investors about doing so.

And that starts to get to why this decade was a temporary end of history, from my perspective. Every decade, every year in America has brought about charismatic, selfish businessmen who achieve great personal wealth at the expense of others. That’s not new. What was weird about the 2010s was not that these people existed, or that, in this case, they came from the office rental space. What was weird about the 2010s is how the world warped around them. The entire world’s financial system conspired to allow these people, like Adam Neumann, to do whatever they wanted with billions of dollars. Why?

I mean, let’s take a specific example, so you can see what I’m talking about. In 2018, Adam Neumann gave millions of investor money to his wife, a failed actress, so she could open a Montessori-inspired school. She used this money to hire spiritual gurus and star architects (“starchitects”) to bring 100 or so upper class elementary school students to an “elevated state of consciousness”, before the school shuttered in 2020. The money that Adam Neumann used to do this came from the sovereign investment fund of Saudi Arabia, the operating capital of Japan’s largest telecom, and the pension funds of American teachers, among other sources. All of the investor representatives of these varied sources knew about this use of their money. WeWork issued press releases about it. Why didn’t they object?

I believe it was because they well and truly believed, somehow, that this was the best use of their money. That even though they had made this money by digging up and refining the liquified bones of dinosaurs, or by putting up wireless towers in Japan, or by taking bits off the top of American teachers’ paychecks, that was part of the old world. In the new world, money would be needed for, well, uh… renovating office space, mostly in America? Black cabs, mostly in America? Cable on demand, but in a single package over the Internet, mostly in America?

There was a real stagnancy to people’s imaginations and visions of the future. The world seemed weirdly solved. No radically new business models or technologies would develop, America would remain on top economically and politically for the foreseeable future with the same political system as it had currently (and this was good for Saudis and Japanese alike), and the most profound social problem that was not currently being worked on was that American kindergarteners were not Zen enough. The only people who loudly questioned this order in the world were, frankly, barbarians, like ISIS.

***

The past is a foreign land. I lived through this era as a young adult in Princeton and Boston. In fact, I rented office space from WeWork for a good chunk of the 2010s, partaking of their fruit water, cold brew, and beer on tap. I remember how nonchalant everyone was. Obama, who miraculously combined both impeccable Harvard credentials and being a cool black guy, was president of a strong, relatively united America. My college friends were getting well-paid programming jobs where they barely worked at all, and every barista in Cambridge was trying to do the same.

We knew what the future would hold. It held, well, this, forever and ever, until global warming melted the ice caps and killed us all (we did have some worries). In 50 years, we’d have yet another Harvard-educated, preferably minority President. We’d still be drinking cold brew coffee and working 10 hours a week in our office jobs. The rest of the world would slowly become more like America, as it already had. Moscow, Beijing, Paris: they’d all just be cities with a few pretty old buildings and, yes, quite a few WeWorks.

So, while we made fun of venture capitalists for subsidizing our office space, Uber rides, and food delivery, it didn’t seem that crazy to us. That was just life. Life was about things getting a little more convenient, a little more progressive, and a little more expensive (not counting promotions), year by year. Our iPhones would get smaller, another state would allow retail sale of marijuana, and one more celebrity would come out of the closet, each and every year. And yes, there were some signs of faults in this progression (e.g. Trump), but they seemed unimportant against the arc of history.

Then…COVID happened, and the rise of wokeness, and January 6, and the rise of AI, and the rise of a YIMBY movement, and Trump part 2 starting with two assassination attempts, and the emergence of China as a credible rival to the US, and a new land war in Europe, and new nuclear plants, and fentanyl, and suddenly it became very clear that history had not ended after all. And that, in fact, the Saudis should not spend their billions on yoga classes for American office workers, and that Google should not pay programmers $300k/year to play arcade games at the office, and that we’d all be better off if the factory workers in Detroit got back to making stuff instead of trying to teach them to code web apps.

And the world in which somehow, the whole world was briefly convinced that giving a tall, charismatic Israeli guy billions of dollars to unite white collar workers around pizza parties and yoga was the best possible use of the capital that came from irreplaceable natural resources, thousands of years of technical development, and millions of manhours disappeared. We had more important things to do. The future remained to be built.