Editor: The failure of WeWork, wounded by the hubris of its co-founder Adam Neumann and propped up by SoftBank until its losses were unsupportable, was entirely predictable to those of us old enough to recall Mark Dixon in his heyday building his vehicle, Regus.
Both companies had the same business model, taking long leases on entire office buildings and granting short ones to companies requiring flexible terms and space.
When finance is cheap and economies are growing, this model works well. But when debt becomes expensive and economies turn down, the short-term tenants disappear, leaving these workspace companies with unsustainable rent and lease commitments to their landlords.
Dixon founded Regus in 1989. By 2001, its value was £2bn and his 63% stake made him a billionaire.
In 2002, after the dotcom crash, his stake had shrunk to £80m, but he obtained refinancing in 2002 by selling a majority stake to his new backers, rebuilt the business, bought back the stake he had had to sell in 2005 and in 2016 renamed the company International Workplace Group, or IWG.
His business now operates in more than 100 countries, with Dixon’s billionaire status more than restored and sheltered by his Monaco residency.
Neumann didn’t learn that hubris is no substitute for disciplined focus and hard work.
Anthony H Ratcliffe, managing partner, Ratcliffes
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