TERMINATED

WeWork evicted a startup after it published a negative blog post about WeWork, and allegedly violated its membership terms

Obsession
The Office
Obsession
The Office

Justin Zhen was in his WeWork office in midtown Manhattan on July 19 when he published the blog post that would result in his startup, Thinknum, being removed from the co-working space three days later.

The post, “Deep Dive into WeWork’s User Base as Hundreds of Members Cancel,” was an analysis that suggested customers of the trendy rental office-space company are increasingly canceling their memberships. The post also noted that the community events and “meaningful connections, both business and personal” that WeWork advertises to members “have not been well received.”

“WeWork’s all-important churn rate (number of cancellations divided by number of total members) historically has been around 1.2% on an annualized basis,” Zhen, a co-founder of Thinknum, wrote. “This churn rate has increased five times to over 6% in recent months.”

WeWork responded to Zhen with a cease-and-desist letter demanding that he remove the blog post from online publishing platform Medium and delete all the WeWork data that his fledging financial analysis company had collected. The letter stated that Thinknum had violated the terms of its WeWork membership, which forbid “scraping, spidering, crawling” or using “other technology or software” to access WeWork data, according to a copy viewed by Quartz.

Zhen told Reuters on July 21 that he did not believe Thinknum had violated the terms of membership because the team collected data using WeWork’s application programming interface, or API. But at 10:30am today (July 22), WeWork informed Thinknum via email that its membership had been terminated, “effective immediately.” Zhen told Quartz his firm was given 30 minutes to vacate the workspace.

WeWork is the world’s ninth-richest startup, valued at $16 billion. It runs a network of co-working offices in 23 cities spread across seven countries and is also building out a new line of co-living spaces, branded as “WeLive.” WeWork outfits its offices with Silicon Valley-esque amenities such as arcade games and beer-on-tap, selling the promise that work can be at once productive, social, and fun. Its co-founder, Adam Neumann, attempting to describe what makes WeWork special, has called it “a feeling.”

But that valuation—like that of many other so-called unicorns—has recently come into question. Last week, Bloomberg reported that WeWork had in late April slashed its 2016 profit forecast by 78% and its revenue estimate by 14%. Bloomberg said the lower revenue projection was the result of building openings that had been delayed, at times for more than six months.

WeWork said in response to the Bloomberg story that the April document “does not reflect our robust operating momentum.” It also said the April document had been stolen and late last week sued an ex-employee, Joanna Strange, for the alleged theft.

As for Thinknum, it packed up with plans to decamp for another co-working space, potentially one without the social aspects of a WeWork property.

Thinknum co-founder Greg Ugwi said the firm stands by the numbers in its blog post and “did not violate” WeWork’s terms.

“My view is that it touches a nerve,” Ugwi says. “A lot of private unicorns they are determined to control the narrative … It’s people who get extremely vigilant about maintaining one glossy story, so anything that contradicts that, they react in irrational ways.”

A spokesman for WeWork told Quartz that Thinknum’s findings were not true, and its methods of data collection were flawed. For example, WeWork said that Thinknum’s analysis of the usage of WeWork’s member network doesn’t take into account that some of the office space company’s largest members either do not allow their employees to access that network, or restrict access to it.

“This company scraped incomplete data from our member network, which violated the rules of our community,” the spokesman said in a statement. “The data they published and their associated conclusions are factually inaccurate and do not reflect our thriving business.”

This story was updated to include additional information from WeWork.

Photo by Payton Chung on Flickr, licensed under CC BY 2.0.

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