Profit is important
by Eduard Schaepman, on 14 Nov 2019
Obviously, I also follow the news around WeWork. Sometimes with absolute amazement, but also with some respect. Not because of the tricks. Not because of the tricks Neumann played, but because WeWorks put coworking on the map. It’s thanks to the enormous efforts of this global competitor, that many self-employed persons, entrepreneurs and corporates know that we’re also a solution for their office needs.
The American operator's valuation dropped from 47 billion to 8 billion dollars in two months' time, the IPO was cancelled and now the control lies with major shareholder Softbank - which previously announced that it had written off 4.5 billion dollars on WeWork. The flexible market seems to be turned upside down with this decline of one of the biggest players worldwide, and I'm regularly asked if that doesn't worry me.
I'll answer: ‘not at all'. I feel terrible for the 13,500 WeWork employees, who thought they had a bright future ahead of them, in one of the highest-rated American unicorns (young companies worth more than $1 billion), but for the market it's another opportunity. Partly thanks to the efforts of WeWork, and yes, including Neumann, the phenomenon of 'co-working' has become known. You can no longer call yourself a young entrepreneur, especially in America, when you've never been to a co-working place with a good latté macchiato in your hand. There is sufficient demand for the flexible working concept, which we like to offer with a number of large players. At the moment, 5% of all leases are flexible, and according to market research by Colliers, this number will grow to 35% in 2035. So, the market is here to stay.
I sometimes compare it with Napster; someone who still remember that name? Napster was founded in 1999 to exchange online music and other files and ushered in a new era for the music world. Although Napster didn't make it all by itself (taken over several times, but of course not equal to the Spotify's and iTunes), it's impossible to imagine the market without it, it even replaced an entire market (or are there still people here who ever buy a cd?).
So now there are alternatives for a nice co-working place, like Tribes. And we distinguish ourselves by the following: we do not focus on growth, but on making a profit. Because nothing is more unwise than not to look at profit, like we’ve learned with WeWork. If only Neumann had made profit, he could have continued with ‘elevating the world’s consciousness’ (WeWorks mission statement in the IPO). In my opinion, we all offer a desk, chair and WiFi to our target group, but I may have misunderstood that.
Making a profit is important, even if the outside world may think that nothing is happening with the organization. You have to become 'healthy' first, because a company that only grows, goes down once, no matter how beautiful your mission may be.