By effectively renting the same square foot of space to five different office workers for way more than it was worth, WeWork put itself at the mercy of any economic downturn. iStock photo

The end may finally be near for WeWork. And to that, I say: Good riddance.

Hemorrhaging cash, the workspace-sharing company is now warning investors that there is “substantial doubt” that it will be able to stay in business over the next year.

WeWork, which counts Greater Boston as one of its three major U.S. markets, lost a whopping $349 million in the second quarter. The company has total remaining liquidity of $680 million. You do the math.

WeWork’s biggest sin in my book was pretending to be something that it was most definitely not, a tech startup, in order to obscure what it really was, a real estate operator with a clever – and ultimately highly risky scheme – for squeezing high rents out of small tenants.

WeWork played its tech startup con to the hilt during its early days, with its market valuation at one point rocketing to $47 billion.

Adam Neumann, the company’s long-since-ousted CEO and erstwhile founder, played a key role in crafting this fiction.

All decked out in a WeWork t-shirt with silly sayings like “Made by We,” Neumann liked to make big public presentations full of tech babble. With his dark, shoulder-length hair and surfer dude looks, he looked like a stereotypical tech genius.

Back during the company’s glory days, if they can be called that, Neumann claimed WeWork’s rapid growth was due more to “energy and spirituality” than it was to a “multiple of revenue.”

Those were pretty big words from the guy who was essentially trying to get you to rent overpriced, over-amenitized office space, but for a time it worked like a charm.

But the roof collapsed in September 2019. In the run-up to what was to have been WeWork’s blockbuster IPO, investors got a look at the details of WeWork’s business plan, finally saw through the tech talk nonsense and revolted, forcing the IPO’s cancellation and Neumann’s ouster.

You Heard It Here First

Of course, the truth about WeWork was there for the taking for anyone willing to look beyond the BS and examine just how the company was hoping, someday anyway, to make a boatload of money.

Several months before the 2019 IPO disaster, I did just that in this space, noting that WeWork was paying hundreds of millions of dollars to office tower owners in order to take on large blocks of space in Boston.

And to make the numbers work, WeWork was then turning around and, as I put it at the time, “charging astronomical rates for office space – albeit very well designed with perks like coffee – that are two or even three times those levied by owners of the city’s priciest office towers.”

How? WeWork was effectively cramming five office workers into the same amount of space normally reserved for a single renter while giving it a cool, tech-startup look.

However, what was working in the relatively hot real estate market of 2019 would not work when the next downturn hit, my piece warned.

“As the freelancers, entrepreneurs, solo practitioners and other assorted small businesses renting WeWork space lose contracts and revenue, they may very well decide their garage, their home office or their local Starbucks is suddenly a more appealing option than spending thousands of dollars a month on fancy downtown digs,” I wrote.

Of course, the rest is history.

Scott Van Voorhis

Under new leadership, WeWork finally managed to go public in 2021. But it has been all downhill since then for this erstwhile tech unicorn, with the pandemic and the acceleration remote work’s adoption putting the final nails in its coffin.

WeWork built a business effectively speculating on office rents, snapping up high-priced office space on the premise that prices would keep going up, just as they had done for years.

It did this betting it could squeeze more dollars out of small firms and individual renters relatively unsophisticated in the ways of the office market.

And with WeWork’s impending demise, maybe we can look forward to a little less bunkum in a business world that at times seems full of it.

Scott Van Voorhis is Banker & Tradesman’s columnist; opinions expressed are his own. He may be reached at sbvanvoorhis@hotmail.com.