A WeWork Future: Perpetual Hybrid Work

I published my very first post on Interconnected in late February 2020. Back then, the coronavirus in China was in full swing, but the rest of the world has yet to grasp the gravity of this pandemic.

In that post, I talked about a future where remote work and remote consumption will become mainstream due to COVID-19. It was not an uncommon sentiment, especially if you work in tech. It was also a future that was mostly touted with a utopian sheen. Now that this future has largely become reality, it’s time to address some of the darker, more challenging elements of distributed remote work and the next phase of this evolution, which I call “perpetual hybrid work”.

Two years into this pandemic-turned-endemic, addressing these challenges is particularly timely given that multiple tech CEO’s have shared hiring data that validates the increasingly dispersed nature of technology and knowledge workers. This “perpetual hybrid work” future also bodes well for one specific company that has been the laughing stock of tech: WeWork.

Global Tech Talent Dispersion

For anyone who works in tech, especially if you are in charge of recruiting, hiring, and managing people, you have probably intuitively felt the physical dispersion of coworkers in the last two years. Last week, several CEOs voluntarily shared some numbers on Twitter that support this intuition. Here is the comparison of the percentages of hiring done outside the San Francisco/Silicon Valley, pre-pandemic versus the present day, among three top-tier tech companies:

Stripe:

• Q1 2019 (pre-pandemic): 39%
• Q4 2021 (most recent quarter): 74%

Coinbase:

• Q1 2019: 30%
• Q4 2021: 89%

Cloudflare:

• Q1 2019: 48%
• Today: 78%

Now, remote work and global hiring is not necessarily new in tech, especially if you work in pure software. Notable companies like Automattic and GitLab have been remote-first from day one. What is noteworthy with Stripe, Coinbase, and Cloudflare validating the same trend is that all three companies have committed serious commercial real estate investment to the SF/Bay Area. (I have been to all three companies’ offices pre-pandemic; they are nice!) So this transition is more painful and costly to them, which underscores just how real this trend of global tech talent dispersion really is.

San Francisco and Silicon Valley are no longer the default physical center of gravity. But what replaces them is not no physical center of gravity whatsoever, but many smaller physical centers of gravity to alleviate the struggles of distributed remote work.

Remote Work Struggles

I have been working in a distributed remote work setting since 2017, so I’ll share some of the challenges and difficulties that are unique to this way of working.

These are not hypothetical struggles you read about in an MBA case study or HR handbook. These are struggles I have personally seen, felt, and experienced as an operator over the last five years, categorized from the eyes of three common personas:

If you are an employee who is early in your career, you struggle with:

• Receiving quality mentorship and career guidance
• Building a support network with other similar employees
• Managing and balancing workload independently
• Building a professional identity

If you are an employee who has a young family, you struggle with:

• Balancing work and family responsibilities (especially if your school or childcare option is unreliable)
• Concentrating without distractions at home
• Feeling secure that having your child/children appear unexpectedly in your video calls don’t negatively impact your career advancement

If you are a manager, you struggle with:

• Understanding each team member’s goals, aspirations, struggles, and incentives
• Running productive meetings, planning sessions, and brainstorming exercises
• Establishing cross-functional collaborative relationships with other managers
• Balancing meetings across many time zones, oftentimes across many countries

The manager struggles I laid out are especially pronounced if you manage team members with whom you don’t have a previous working relationship with (very likely, given the high level of current turnover and competition over talent in the tech industry).

This list of struggles is by no means exhaustive. Many of them existed pre-pandemic and pre-remote work. Many of them have been exacerbated during the pandemic when distributed remote work became the norm, but new norms have yet to be formed to address these worsening struggles.

Regular (but not daily) in-person work cannot solve all these problems but can alleviate many of them, especially ones that have to do with relationship building, creative collaboration, and knowing your colleagues on a deeper level. They require intuiting people’s emotions via their body language, facial expression, and other observations that are almost impossible to gather over hours of Zoom calls. They are, however, essential to tech and frankly all knowledge work industries.

Knowledge workers are done with 100% remote work from home. People need offices, just not all the time. That’s what “perpetual hybrid work” means.

But with the single corporate headquarters structure becoming obsolete, as Stripe, Coinbase, and Cloudflare’s hiring practice suggests, where can these smaller, dispersed physical centers of gravity pop up?

WeWork.

A WeWork Future

WeWork is still the most recognizable commercial real estate brand in the world and in a largely positive way. Despite its massive and well-documented first attempted IPO failure, most entrepreneurs and operators don’t really care. They just need easily accessible and well-designed office spaces – cheaply and flexibly. Even well before the pandemic, when I had conversations with entrepreneurs who were looking to expand to new markets overseas or set up their first work location somewhere, the solution was not “find an office”, it was “get a WeWork”. When I visited Mexico last February to explore the local tech ecosystem, the WeWork building in Mexico City where Didi’s local office is located was humming with activities.

Although WeWork is definitively not a tech company (it now calls itself “the leading flexible space provider”), it is the most tech-friendly, tech-enabled commercial real estate company.

One case in point is Coinbase, one of our “perpetual hybrid work” protagonists, is a large WeWork customer. Catering to Coinbase and the fast-growing crypto space, WeWork announced in April 2021 that it’ll accept many forms of cryptocurrencies as payment. While there are other smaller, local co-working spaces that also accept crypto, like Primalbase (the Netherlands), Hub Hoi An (Vietnam), Krakow (Poland), WeWork is the only one with a real global footprint that accepts crypto to my knowledge. With offices in literally every city that has a modicum of tech, you can basically visualize where all the smaller centers of gravity are by looking at WeWork’s clusters of office distribution:

Accepting crypto is a shrewd move given that $33 billion of VC money has been poured into the crypto industry in 2021 alone. All of these well-funded crypto startups recruit, hire, and work in a distributed remote work way. All of them will need to get more than a few WeWork’s to build their company. The same goes for most software companies, especially ones that have no large office lease commitments.

Well-designed physical spaces where people can meet, work, collaborate, and create in-person still matter. Whether you call it offices, co-working spaces, hangouts, or whatever is cool and appealing, people still need to see people beyond their screens.

WeWork went public via a SPAC merger last October at a modest valuation of roughly $9 billion. This successful public listing received much less fanfare than its first failed public listing, but the “perpetual hybrid work” macro environment could not have been more favorable for WeWork.

WeWork projects that it will become profitable sometime within 2022. Now, I don’t know enough about the commercial real estate business to say whether this projection is yet another “old WeWork's Adam Neumann puffery” or a different “new WeWork pragmatism” led by Masa Son's lieutenants, Marcelo Claure and Sandeep Mathrani.  But if WeWork does not become profitable, it will not be because of a lack of opportunity or tailwind.

“Perpetual hybrid work” is still in its early days, and globally-available flexible office space is the key to making it all work. It’s a tailwind that will be blowing for a long, long time.