Why Abu Dhabi is the right place for WeWork's fresh start
The co-working giant's 1,200 desks on Al Maryah Island represent a new future for the company and the emirate
Miguel McKelvey stood on a small stage in the newly opened, Instagram-ready Abu Dhabi location of WeWork – the embattled co-working company he helped found – and offered less of a triumphant ribbon-cutting speech than a brief, off-the-cuff reflection.
As he spoke, I found myself nodding along.
“It can be hard to feel that spark, of it all feeling new again,” he said. ”I feel potential that there's something new here in Abu Dhabi. That energy brings me back to 10 years ago when [WeWork] started.”
If he is feeling nostalgic for the halcyon days of WeWork’s founding, it is no wonder.
Mr McKelvey's co-founder and the former face of the company, Adam Neumann, was forced out last September after the company’s pre-IPO prospectus went, for lack of a better term, viral. Twitter users, commentators and – most importantly – investors were not feeling ‘the power of We’ that was outlined in the company's documents.
WeWork’s value plummeted by as much as 85 per cent and its lead investor, SoftBank, threw it a $9.5 billion (Dh34.8bn) lifeline to try to turn it all around in exchange for an 80 per cent stake when the IPO was scrapped.
Amid the turmoil, Mr McKelvey, who is also the company's chief culture officer, has emerged from the background.
He is credited with creating the WeWork aesthetic, an iteration of the millennial look ubiquitous in cities around the world. It is difficult to determine who – the millennials themselves or the companies employing them – came up with the style first. Suffice to say, it involves a lot of natural light, raw wood, fiddle-leaf figs and neon signage. But that is all window dressing to what Mr McKelvey has really aimed to cultivate.
In a mea culpa titled Why I’m Here that he published on LinkedIn late last year, he said that during WeWork's inception he “imagined a world in which everyone would have the chance to walk into a work space every morning that uplifted and inspired them, one that helped them do great work and make meaningful connections”.
If that sounds like airy-fairy fluff, maybe it is. But such places are in short supply in Abu Dhabi, and given that the city is committed to building a robust environment for start-ups and SMEs, they are sorely needed.
The 1,200 desks at Abu Dhabi’s new WeWork location represent the future for both the company and the emirate's economy.
For Abu Dhabi, those desks will be a place for start-ups and established companies to work side by side. Already, 39 early-stage ventures have set up shop there, and they are working alongside three venture capital firms, three accelerator programmes and teams from corporate partners like Microsoft.
The start-ups are doing things like cultivating a bacteria that can eat plastic, which is one of the world’s biggest polluters. They are developing AI algorithms that can predict dangerous flash points in troubled areas like the Gaza Strip. And they are creating chatbots that speak Arabic.
I am not saying the world needs an Arabic-speaking bacteria that can predict street protests, but the people creating these solutions should certainly know each other.
For WeWork, the Abu Dhabi location marks a return to what Mr McKelvey and the leadership team have been promising for the last six months and the core mission of WeWork: to offer space as a service.
Two days before Mr McKelvey stood on the little stage in Abu Dhabi, WeWork named real estate veteran Sandeep Mathrani its new chief executive, effective February 18. Softbank’s Marcelo Claure, WeWork’s executive chairman, said at the time that there is a re-capitalisation plan in development that will provide WeWork with access to over $2.5 billion in liquidity and a new five-year plan to bring it back to growth.
WeWork was never a tech company. Having an app does not make anyone a tech company. But by marketing itself as such it was able to achieve a very tech-sector valuation of $47bn. Its pre-IPO prospectus revealed the extent to which WeWork is a real estate company – one with a large, expensive and unprofitable portfolio, at that.
But in Abu Dhabi, the structure of WeWork's presence is lighter-touch. It operates under a management agreement with Hub71, Abu Dhabi’s start-up incubator. The model is a departure from the long-term lease agreements or convoluted, ethically tenuous tenant agreements previously forged under the leadership of Mr Neumann.
The Hub71 agreement is perhaps what WeWork should have stuck to all along.
There is one point Mr McKelvey made at the Abu Dhabi ribbon-cutting with which I disagree. “There's no way you can help someone too much,” he said, when discussing the values from which his company sprang.
WeWork's troubled history points to a company that developed a habit of taking on too much liability. It received far too much help from others in doing so.
But the help WeWork is getting in Abu Dhabi could be, for once, just enough.
Updated: February 8, 2020 06:12 PM