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WeWork in our world

Lessons learnt from the highs and lows of the office-sharing business

We’ve rented plenty of offices - as well as hiring people - in our time.

Starting out with one in 1988, we’re now in 15 across the country.

I know. It’s not the most gripping subject, is it? The economics of office space.

What prompted me to start tapping away at the keyboard was the kerfuffle from an American “tech” (I’ll come to that) start-up which was, at one point, valued at $47bn and beyond.

Same same but different?

WeWork hires out office space. It buys long leases (say ten years) then splits up the space into shorter-term leases. In essence, that’s it. It looks funky but the concept is nothing new.

So why the stratospheric valuation and drumbeat of hype?

WeWork spluttered as it was being prepared to float. That valuation is now down to a third of what it was and the flotation has been formally withdrawn.

The company’s mission statement says: “create a world where people work to make a life, not just a living.”

Call me old-fashioned but renting out office space is well established (our leases, past and present, would fill a couple of filing cabinets which, I expect, WeWork does not possess).

And I’m not saying that there’s no scope for doing things differently in mature markets. After all, that’s where we came in.

But we didn’t claim to be anything other than we were. Actuarial, investment and financial management expertise, wrapped up in commercial know-how. Always with an eye on how we could improve the way things are done.

WeWork calls itself a tech company, which is puzzling but not when it might be behind the effort to stoke an enormous valuation. And sounds funkier than “space for hire”?

Analysts are unmoved. It was their valuation that partly sunk the bid to go public.

But I continue to be surprised by the fact that a company losing $2 for every $1 it makes built up so much excitement.

It just leaves me bemused that it was ever identified as anything more than its core function.

Beyond the hype

Many of us spend most of our lives at work (and that’s still me!) but few of us wish we’d spent more time at the office (rented or otherwise) when we reach old age. Working for a living is one of life’s central pursuits, especially, in our case, when you’ve helped thousands make a life after work.

To succeed, pragmatism allied with scepticism are essential qualities. In these times of increased public distrust in how markets operate, WeWork’s woes are an example of when they do work by peering beyond the hype.

London is currently bursting with tech start-ups. Indeed, we have invested in an insurance disruptor.

It would be a shame if this latest high-profile example were to deter investors. It’s vital to assess the risks but you also require a dash of bravery and conviction.

But to do that, you need to see the wood for the trees. People bring ideas to us all the time because they know we have spent decades identifying opportunities and nurturing successful, long-term businesses. That’s how we work.

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Working for a living is one of life’s central pursuits, especially, in our case, when you’ve helped thousands make a life after work.

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After 40 years of experience in the pensions world, I'm sharing my insights.