WeWork's Questionable Sales Techniques

What kind of sales and marketing practices did you see from WeWork?

It was hard. It’s been a challenge because, to give an example, you have a competitor that has huge brand awareness—positive brand awareness—and then has the ability to basically financially do whatever they want.

And we had that experience mostly in Miami and when WeWork came to the market, it literally doubled the amount of coworking space that was available to people overnight. All of a sudden you don’t necessarily have the uptick in demand, but you’ve got double the supply. That posed a challenge to begin with. Then you have Miami where everyone wants to experience what’s new and shiny, and they’re drawn to that. So we had that challenge. And then there was a period of time where they literally just went after every other coworking client tenant in other spaces and offered them half-rent for the first year and offered the brokers a 50% commission.

Imagine how motivated the brokers were. ‘If I put someone in a location, I could earn a 50% commission on a large’. A massive commission. And I’m sitting there going, How do you compete with a company that’s willing to say, “we don’t need to make any income for a year?’’ If you think about it, 50% for customer, and the other 50% is going straight to the brokers, so they’re literally not collecting any income for a year. So this is what we were up against in terms of competing with them. So I guess your next question is how did you deal with that?

Yes.

Here’s the first thing, is that instead of trying to be WeWork, we felt our differentiator as a company were that we were not WeWork and we had to constantly communicate that, strengthen the brand, and be able to demonstrate that. And we realized that not everyone is going to want to have that experience, so let’s focus on what is that experience? What do we have to offer? And make sure that we do that really, really, really well. And that’s where we really, really, really created a program and a plan around how we illustrate the fact that we are a boutique company where you have direct access to the founder and the CEO in terms of ideas, people, anything. We have one client in Miami that’s literally trying to build his own little network —he has financial firm—and everyone that he does business with, he wants in the space and he wants to create his network within. We’ve made a concerted effort to reach out and help him do that and create that.

Whatever they need for their business, at any level, if it’s something really small or something really large, we work with the clients to make that happen. And you can’t get that in a large company like WeWork. So everything from that to even the design of the space, to having private offices that are really private but yet modern and welcoming, but a different feel than the Regus, very stodgy, stale look and then the super funky look. We met in the middle somewhere, where it’s not the kind of large, chaotic space of a WeWork that people find can be very disruptive, but more of a high-quality, high-service experience, and with private offices that are really private with other spaces that allow people to work the way they want as well.

And then the other part of it is, how you combat the situation where they’re literally trying to pillage and purge your location? And that really comes down to relationships. I actually got involved with one situation where, WeWork was trying to pull a large law firm out of our space and the broker that we’d worked with for years and years and years as their representative basically said, ‘I have to present options, and these guys are going to get half-rent, and I’m going to get a 50% commission. It’s pretty enticing. What can you do for us?’ And I had to talk him through it and explain that—he actually owned his own brokerage firm—and I was trying to explain to him that it’s not even sustainable for WeWork and they’ll get it back at some point through a huge rate increase in your rate. You just can’t operate a business like that long-term and be sustainable.