HIBT Lab! WeWork: Miguel McKelvey

Hello and welcome to how I built this lab. I'm Guy Raz. This is the place where we break format and experiment with ideas and stories that you might not hear on our Monday episode. It's also a chance to find out what happened to some of the founders that I've interviewed on the show in the past. And of all the founders we've had on the show. The one our listeners have most asked to hear from again?

is today's guest. Miguel McKelvey co-founder of WeWork. Back in February of 2017, when I featured Miguel on the show, WeWork looked like an undeniable success story. And if you haven't heard that episode of How I Built This, please do go and listen. Miguel was trained as an architect at the University of Oregon, where

He was also a walk-on basketball player. and eventually worked with American Apparel to help open their brick and mortar stores. It was in New York where he met his We Work co-founder, Adam Newman. Miguel and Adam grew WeWork into a global empire of cool, well-designed co-working spaces where you'd find good coffee, ping pong tables, epic work parties, and free beer. It was the unicorn of unicorns.

But not long after we talked. the wheels started to fall off the We work bus. In 2019, the company tried to go public. with a value estimated at$47 billion. But public filings showed major losses, and soon

Adam Newman was accused of mismanagement and forced to step down. The IPO was postponed, and WeWork became a cultural phenomenon and cautionary tale in the world of startups. And that was all before the pandemic changed the world of work for everyone. The story of WeWork's rise and fall has inspired a popular podcast, a Hulu documentary. and now an Apple TV series.

Miguel McKelvey. Thanks so much for coming back to talk to us again. I'm happy to be here. Thank you for having me. Um, so of course a lot has happened s since we last spoke in in February of twenty seventeen. Um I went back and listened to that interview. And and a couple of things that you said at that time really stood out to me. Um

Understandably you were feeling really confident. about we work. I mean I think everybody was. Um and and you said something like this is a one hundred year challenge. That this is something that you wanted to keep up you know, working on forever. So I I wonder a at what point did you start to see signs that things were maybe starting to change.

That's a great question, and I'm glad you brought that up because I do still feel at that time that that was absolutely true. I mean, I have no question in my mind that I was committed For it being you know, the rest of my life. And um so It does

come as sort of an emotional shock to even Remember that. uh that that happened, that that changed, that I did end up Leaving the company. So In terms of signs of change,

I think there was definitely something that happened when we raised the multi-billion dollar investment round. Where You know, our ambition Shifted in a pretty Massive way. Uh

it was a four billion dollar investment that they made. in twenty seventeen. Yeah, when SouthBank made that investment Yeah. opened us up to a new way of thinking about how do you build a company and the way that

Yeah, I would say they prescribed and we agreed to was that capturing as much market share as possible was the way to go. Yeah. And I think that was something you saw a lot in companies was it's not about profitability. It's about capture massive market share as fast as you can and keep competitors out. So that clearly was I mean that started to feel like a turning point. because with that injection of cash the s the sort of the approach changed and the approach was just acquire as much You know.

property as possible and expand as quickly globally. Yeah, and also build the internal machine in order to execute on that really quickly. And that's something which Um, we were always really good at was executing on our on our vision and on our numbers in terms of the number of buildings, the number of deaths, the number of members. And so We built that internal system and with you know thousands of people and technology and just ways of doing things. In a way that doesn't come quite as simple as maybe other um industries. You know, it it wasn't

just copy paste repeat for us. We are building buildings in far off lands all around the world. And that takes a lot of resources. And I mean that expansion Right. It went beyond just co working spaces. There was like a there was a housing community called We Live Um uh you guys began to acquire

a bunch of other companies even started an elementary school called We Grow. I mean that that must have Felt really exciting, but was there a m any moment in in all of that where you I don't know, from your vantage point thought maybe this is not actually the right

Way to be doing things. Well, in the case of the things you talked about in terms of we live and we grow, I actually think both of those were really good experiments, you know, for us to be looking at other ways to build our our company, you know, with a more diversified offering. I think those things actually had potential and they weren't too far away from what we knew how to do well. But there was a lot more than that.

Um, I would say for us a lot of it was some of the technology acquisitions. They're not at all things that I think were damaging necessarily to our financial position, but they were potentially a distraction. Acquiring meetup, for example I think conceptually There was a lot of alignment and it made sense. But in terms of actually integrating and getting the benefit from these two communities that we believed was possible, it proved to be quite a bit harder than we expected.

Miguel, you I mean w we work, right? You you guys Or expanding so fast. into so many different areas, into so many different cities. With some distance and perspective now, do you think there could have been a more

sustainable way to grow the company? I actually think that You know, we were Riding uh You know a tide of success and

When it comes to actually opening buildings and members moving in at the time, that really wasn't where we were failing. It wasn't like we were overextended, at least the way I see it. It wasn't like we were overextended in our ability to execute on the business model. I think what we were overextended in was the ability that we could get the continuous capital we would need to continue that expansion, you know, and those are two completely different things. So Um, what was our failure? Like was it on execution? I don't think so, but it was more so on the belief that we could continue to grow this massive machine uh without ever hitting a a wall in terms of availability of capital.

We're gonna take a quick break and we come back more from Miguel McKelvey about WeWork. We'll be right back. Stay with us. Welcome back to how I built this. we're talking with we were co-founder Miguel. Um, Miguel, in in January of twenty nineteen, WeWork's valuation peaked at

something like forty seven billion dollars. Um and that that ended up being Some somewhat of a of an inf let an inflated number, right? in part because we were later that that year filed for an IPO and all Financials became public.

And they you know, we saw Pretty massive losses. Um that that began to kinda change the narrative. around WeWork and and ultimately the company had to withdraw the IPO filing. What was your reaction to what was going on at the time? Well, first I would say the valuation itself is something that

You know, was that beneficial in any way? And had that remained lower. would that have changed the public perception? Because as soon as you put numbers out like that, you know, people Their eyes go wide and they say Wow, it is this real? Is this something that we should look at? Now if that valuation would have been twenty, twenty billion dollars is still a huge company and you know an incredible valuation. Forty seven takes it to a place that causes a lot more skepticism. Now when you get later on into the story

The challenge that we are facing is that It's not that those losses were Um a surprise They were by design. You know, w again, we are a fast growing company and we were investing in our growth. And so we were making the decision to lose money. It wasn't so much that like Oh my God, all of a sudden we opened our eyes and we were losing more money than we thought. It's just that the market perception changed. I mean, if you look about

What did the market want? It completely changed After Uber's IPO. And all of a sudden there was a shift in terms of the market narrative. So We were in a way subject to obviously our own decision making about how to build the business, but also to you know the winds of change in the public markets, which affected us a lot.

Yeah, so so began to kind of unravel. And and as the media scrutiny became super intense. There was a a lot of focus on on your co founder, Adam Newman. And his charisma.

described as a cult of personality, you were attracted to his charisma. I remember you talking about first meeting Adam and And that was one of the things that really made you want to work with him. But I wonder when when when things start to unravel Um How did that affect your relationship with Adam?

I was with Adam, you know, through the whole process of Approaching the IPO and then You know, through his exit. Uh and No, I saw him trying to reconcile a lot of different things that were coming

At him. And I feel like the decisions that he made through that process were truly, you know, for the benefit of the company. And you know, he's received a lot of backlash and criticism for sure. Um But what I saw him trying to do through that process was save the company.

you know, in every step of the way, his goal was to preserve we work and to preserve what we had built. And so You know, I came away from that experience with a lot of respect for him through that process because No, it was incredibly difficult to be you know, at the center of so much controversy and so much criticism. So

You know, I was trying to be Both. A partner to him through the process and then also be loyal to the company and loyal to all the thousands of people who were a part of the We Work journey. And so I was, you know, walking a line between those things and when he decided to leave the company

My priority. was showing up for all of the rest of the team members through that entire transition process and really remaining sort of hopefully a kind of spiritual center. Of the company. through what was a really, really painful process. There was a a a lot of anger you you know directed towards Adam and and and some towards you, um, in part because

he, you know, was able to walk away with a lot of money. Um, do you think that criticism was Entirely unfair or was there any Any You know, was was there any legitimacy to it?

I think a lot of the complexity in that kind of situation and Is that a lot of the narrative doesn't reflect the exact technical reality. And so I think one of the difficulties is that It's easy to count.

The numbers When you're looking at you know, uh ownership of stock which May or may not be liquid. may or may not be able to be sold at any time um in the in the near future. And so I think what happened was a lot of people were

Associating Like value. With Um, with actual assets, with actual cash. And so then those numbers look quite inflated. And Um, look, for anyone who starts a a company like that, there's a simple reality that you own shares.

in that company. And when you walk away from the company, whether you're fired, whether you resign, you keep those shares. There isn't really a mechanism for any founder and that I've experienced it's not like you just give'em back. So there's this weird idea that like Yeah, you walk away with millions or billions of dollars. Well sure, because

That's in the shares that you got when you founded the company. W what about um what about the this sort of perception that Adam's leadership style created a kind of a cult of personality, you know. um d did you recognize the the accuracy of those reports? I mean do you think they're completely off base or do you think that maybe You know, despite your friendship with Adam and and

and and having some some time, you know, some distance Uh do you know, do you think that maybe his style Probably wasn't. Wasn't the right fit. Wasn't wasn't the right style.

Well, first I think you have to go back to the beginning and the two of us being partners, you know, we're quite different, as I said the first time we spoke. And I think you're like an introvert. I mean, you're you're quiet and You know, right? And you're more of a background person. Well, actually it's interesting. I wouldn't say I'm an introvert. I actually get energy from being amongst people. So I think, you know, for me it's actually the most comfortable place for me is to be out with a lot of people amongst them all the time. And it's um it's interesting in that definition,'cause I think a lot of people would imagine Adam Because he's

known to be so, you know, um external in his In his narrative. Um, but Adam spent a lot of time away from people where he wasn't, you know, he might be in his own office behind closed doors, where I was almost always amongst people because that's Um the way I most enjoyed my my experience. So

But I think That mix of our two personalities was something that when we were together and when we were aligned, I think was quite powerful. And I and I actually believe that we created a work culture that was extraordinary. And I think if you go on LinkedIn and you look at former you know, we work team members, you'll see time and time and time again when people leave We Work, they say this was the greatest work experience of my life. You know, I'm so sad to leave. It was I made the best friends. I've experienced incredible things. So I think there are many people who love their We Work experience. And yes, there were others who didn't, but I mean for me I think the balance

is toward the people who who love their experience. So Was his style wrong or right? I think that's a question which It's very hard to judge because his style helped us build You know, a great company which still exists now, you know, and still um exists around the world as a great brand that represents a new style of working which didn't exist before. So

I'm not trying to defend him because there are a lot of things which I do think that he, you know Perhaps. Did In ways that could have been better. But I also think we have to put it into the context of like

Building a multi billion dollar company is super hard and it takes It takes some pretty unique. People to be able to do it. It's not like a

your regular old person is able to like go into the world and do these incredible difficult things. So You know I'm trying to look at him with In complexity. That's been my process at least. Do you

Do you consider Adam? To be a friend. Um That's a good question. I mean I I consider him to be a business partner.

You know, it's not we don't live in the same place. We don't like hang out together socially. right now, but I'm happy to to know him, I'm happy to be connected to him. You know, we're brothers in sort of Trial by fire.

More than just friends. Would you I know we' we we'll talk about this in a bit, uh about what you're working on now, but would you ever Start an another business with Adam? I don't

Think that I would primarily because it doesn't support my own Journey. I put myself into that second position because of a lot of insecurity and things that I thought I couldn't do. And so being around a person who's very much an alpha, you know, is very much like um

the person who wants to be at the center, wants to be in control. I don't think that would be the right fit for me for my own growth and my own potential learning. But if I was just looking to like I don't know, make money, which is not what I care about, um, then I would say Probably he's gonna continue to be quite successful. Alright, we're gonna take another quick break. We'll be back in a moment with more from Miguel McKelvey, his decision to leave the company he helped found and what he's working on today. Stay with us. You're listening to how I built this lab.

Hey welcome back to How I Built the Slab, Miguel McKelvey. Co founder of We Work is our guest. So Miguel you And you stayed on until I think June of twenty twenty. Um, when you announced your decision to leave we work that was like

Right at the thick of the pandemic, right? I mean that you were in New York I I think and I mean First of all. You You had six months as sort of

you know, the six month period after Adam left, kind of staying at the helm of the company in in the leadership position Massive downsizing already. And then Covid happens. How did it affect The business.

That entire process. Uh Downsizing. Um was incredibly difficult and painful and My heart.

Goes out to every single We work team member who left the company at that time because It's just incredibly hard to go from the optimism and the and the view of the future that we held at the time. Two

You know. Um being out of a job and and I can't discount in any way, any factors that that affected people like that. So

Then add covet to that. I mean, we were an incredibly social company. I mean, our business was to build these communities of members and so many of our team members were people who love to be surrounded by people. I love being surrounded by people all day. Like That's just my way of being. So yeah, for all of us who were like that. It was just crazy hard. And then of course it also affected the business because people weren't coming in and

And I think the hardest part for us was that um We're a we're a little bit different than say a big company with their HQ where they could just say, Okay, well, we're gonna shut down our HQ, all of our workers will be distributed and we'll figure it out. The position that we were in was that if we have one member who needs to come into the building to get something, whether that's um, who knows what, a FedEx delivery or a hard drive that they left in their office, like we absolutely have to be there for them because we can't lock them out of their place of work. And so it put us in a very complex position where it's like, well, the world is saying shut down, the world is saying don't be open, you know, if you're non essential, you should be closed. And we're actually facing like this position where we're the empowerment to all of these small businesses and, you know, entrepreneurs and

It was very tough, very tough. Miguel the the story of We Works. uh rise and and then troubles. has obviously it was been something of a cultural obsession, right? Um there's been a podcast, uh there's been documentaries, um there's now an Apple T V series Have you been involved directly or indirectly with any of those projects?

No, I haven't. Uh and I think a lot of the reason for that was that I was Always trying to make sense of it. myself and I don't really feel like participating in someone else's agenda. was helpful to me in in any way.

So I really wanted to do a really, I guess, deep and thorough process of trying to understand, you know, what happened to me and what happened to those around me. And so, you know, rather than working on or with those projects, I actually went into like my own way, which was working with, you know, multiple therapists and other practitioners to really figure out like what happened here and you know, what role did I play in it. And Um, how do I learn from it? And that's

That's the way I engaged um during that time, rather than participating in all of that other craziness. How do you feel about I mean about being portrayed in in a traumatization uh of your of your life. Well, the first thing I noticed is like the guy they have playing me is wearing a striped T shirt and I've never worn a striped T shirt like that in my life. So I'm a bit like well, they got that part wrong, you know. Um It's weird. It's super weird.

At first I was like, I'm not gonna watch that show. What's the point? It's all been said before. Um when I saw the trailer It flipped for me a little bit and I said, You know what? Instead of, you know, brushing it off, I said, I'm gonna watch it and and I'm gonna see what it feels like. And the thing for me is that, you know, what really hooked me was that I saw the things that I created and that our team created on screen. And When I saw like the logo that I made, you know, wherever way back in 2011, you know, on this incredibly high production show. Um I said you know, I said, there's something to that, to my work, to these things that I actually, you know, design myself being portrayed in this way. And it made me curious, you know, to see how that's gonna feel.

You were the architect. I mean you were the guy who was building out American apparel shops and and and that's how you eventually met Adam and I mean Y you're you're not a tech person you're an architect. That's your background.

Yeah, and it's really what I love. You know, it's actually that's part of the the discovery through this time is that I did evolve, you know, in my role that we work from being very product focused and brand focused in the early days to being more of a a leader and I was, you know, running culture and HR and stuff like that. So Um In a way, that's been a lot of my own self discovery to say, like, what do I really love about Um like in terms of the the abilities that I have and what I can bring to the world. And design is something I haven't done much of in the past um few years. So it's a place that I'm going into now and and getting deeper into like

W what do I have to offer? What have I learned and what what what else could that transfer to? You know, where could I bring that um that sort of possibility that comes from great experience. All right, let's talk about your post We Work life. Um, because you of course you left in in June of twenty twenty and and I know you've been open about, you know working with therapists and and talking through that time. Um but you're also working on a couple of new projects, um, and one is a A platform.

A financial platform called Known. that you've been involved with. I guess it it's around supporting businesses and entrepreneurs. of color. Um, tell me about that project and and and what what you're doing with it. The team that formed to create known, they're working to build something that can create really create the financial foundations, the financial infrastructure to support communities which have been

historically excluded from participation. So That's a place where I can't claim any expertise, but where I got interested is really how does that extend to the entrepreneurial? Because A lot of times what you hear is From this. sort of financial world is that you hit walls that sometimes you don't even understand, you know, where is the bias here or what's blocking me from getting what I need. And so known as looking to address um a lot of those things. And with my entrepreneurial experience, I feel like

I'm able to sort of add a level of of awareness or coaching to people who are in that process. So Um that's known. And then In a and I would say a a a similar but more direct way. I'm building a a company called Naya Studio.

And N Is similar, but we're actually like building the companies ourselves. And so our Our goal is to um figure out You know, where can we find entrepreneurs who have been traditionally historically excluded, who do have really great ideas? How can we partner with them to build great companies? And really in the space of of again physical locations, and because that's what, you know, we just touched on, which I know. So for example, we just opened uh A shoot three sixty, which is a basketball training facility, um in

In Indiana. And you know, basketball training doesn't sound like a big deal, but the entrepreneur Fred Jones, who I'm working with, is a former basketball player at the University of Oregon. And for him to be able to go through this um entrepreneurial journey to open this location is really transformative for him and his family and his future. And me being able to partner with him has allowed him to go through this process. And now, you know, we can build multiple locations on on this foundation. So That's an example where You know, it may not necessarily be a world changing

business idea, but we believe that the actual process and the outcome can be positive for the entrepreneur, for the team, and for the local community. Hm. I know you're still in the process of kind of reflecting on and processing your time at We Work. Um

But as you as you go through that that period, I'm sure you're drawing a lot of really important lessons for yourself. And maybe for other other people, other entrepreneurs that you know that That's Could use that. could use those lessons.

What are some of the most important ones that That's the same. stick with you that that you are really Thinking a lot about it. You know, I think when you go through something that's traumatic

You have a choice to bury your feelings and move on to what's next. Or you can you know, work through them and try to figure out what have you learned and I've um Been sharing.

Yeah. Really? publicly in my little community, my process and part of what I'm Again, I would say curious about and working on is perhaps sharing that with more people. And I don't know the exact format of that. I but I'm I I do want to figure out how can I share what I've learned in a broader way.

Um but I would say one of the things that has come up for me is really this idea Of integration. Because I think we live in a

in a society that's been very much shifted towards like crime and punishment, you know, you see people who might say something on Twitter and all of a sudden they're canceled, you know, and it from one day to the next, all of a sudden a person's whole life has changed because of one tweet that they made in I don't know that that's actually serving us, you know. And I I mean you can look at Adam as an example of a person who did A bunch of things and was attacked and vilified and sort of canceled. There was some shadow in him and there's some shadow in me, there's some shadow in all of us. And what's the best thing is for us to bring that forward and try to bring awareness to it. Not

Like punish people who who make mistakes, I don't think that really serves us. I think when you look in a context of more restorative justice, you know, the way that we actually see shadow and pull it forth and integrate it into ourselves rather than othering it. Uh it's not an easy process, but it's an essential one, I think. Miguel McKelvey co-founder of WeWork. Thanks so much for coming back on. Thank you for having me.

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