An Early Investor's Postmortem of The Wing

No, I don't know how you can buy the furniture.

A DALL-E VARIATION ON A VARIATION ON A VARIATION OF AN IMAGE OF THE WING, WARPED WITH THE CANVA WOBBLE FILTER

“I remember you mentioning The Wing before it opened, and I am right now enjoying my first morning working there (I never want to work anywhere else). It makes me feel productive, self-assured, and feminine all in a way I didn't expect. Thought I'd share...”

That was a note that I got from a friend back in September of 2018. She knew I was a seed investor in the company.

For a good long while, it seemed like a fund-returning investment. I wasn’t privy to the financials at the time, but by the end of 2019, I had penciled out a guess that they were at a $50 million run rate—or at least on a clear path to it. Audrey Gelman was on the cover of Inc magazine, visibly pregnant. Sequoia, the top venture capital firm on the face of the earth, put in a growth round that valued the company at close to half a unicorn.

Things looked more than great. It looked like I had invested in a company making a generational impact. I imagined a future Wing media arm with a TV channel, a venture capital fund…

…and then it all came crashing down.

So, what happened? And why am I writing about it?

I’m writing because a lot of how the story played out obscures real lessons to be learned here, oversimplifies the issues, and scapegoats just one person—all while holding investors pretty blameless.

Plus, it bothers me that it gives the impression that, if you’re a female founder and you become the face of your company, you’ll inevitably get taken down—that anything short of unimpeachable success means becoming a target and getting kicked to the curb in a spectacularly disastrous fashion.

The double standard in Startupland around how female founders get treated is something I’ve written about before. When I see a female founder get dragged, my first instinct is to try to look at her performance in a more objective light—or at least acknowledge her attempt and her effort.

Ambition should get rewarded if you’re trying hard to innovate in difficult areas—and gender equality is certainly one of the most difficult problems we have.

To me, one of the most fascinating aspects of the Wing story is that the visibility of the company and its ability to ride prevailing narratives hurt it as much as it helped—while also hiding what was really going on.

On one hand, it benefited tremendously from the Trump backlash after the 2016 election and society’s focus on women. The timing couldn’t have been more perfect—just as being a venture-backed hospitality company claiming some sort of moral high ground doing inevitable mass layoffs when the pandemic hit couldn’t have made it more of a target of racial reckoning issues in 2020.

I find it almost universally true that the inevitable narrative is the one that will get the most clicks. Someone ought to coin what that phenomenon should be called.

What stood out to me during that time period and about the companies that got spotlighted was how they were singled out—as if racial inequality and injustice isn’t pervasive in our entire society. It wasn’t just this company or that company—it’s every company.

The Wing wasn’t alone.

I found it very hard to believe that any of the problems The Wing faced in 2020 and its lead up were dramatically different from anything going on in any brand name hotel, restaurant group, or any other hospitality business.

Hospitality is a difficult and emotionally draining business for employees—and many of those frontline workers have a very different racial and economic profile than the folks who own and lead those businesses. Does it excuse the fact that they aren’t the best environments they can be? No, not at all—it is just to say that these issues weren’t unique to The Wing. Singling out one company provides cover to every other company lucky enough not to have the spotlight shone on them—cover not to make systematic change because they went unnoticed.

The Wing imagined itself to be different and promoted itself to be. This drew the attention away from companies in the space that weren’t trying to be anything but what they are—cultures that employees have very low expectations of.

Despite the media narrative, this isn’t what killed The Wing.

The simple truth that isn’t particularly sexy is that, regardless of anything else, The Wing probably couldn’t have survived the pandemic. It dragged on far longer than expected and drastically changed our relationship with workspaces.

Amid of the controversy, dunking, and tearing of robes around this company, the simple explanation behind its failure is that COVID-19 killed pretty much everyone in the “people gathering to work in physical spaces'“ space. WeWork needed billions in a cap table crushing lifeline and Knotel went bankrupt as well.

At some point, when you’re in a real estate model locked into commercial real estate leases, something’s gotta give—especially when your landlords are all pretty unrealistic about the current environment. There’s a metric fuck ton of empty commercial real estate out there—yet landlords continue to try to squeeze existing tenants for every last dime. They do this even if it means tenants going out of business and even if it means they have no viable alternative occupant for the space.

They’d rather you bleed you dry today and then let the space stay vacant, sometimes for years, instead of finding a way to help keep you open so they have a stable tenant for the long term. I think the assumption is that when cycles snap back they come back so strong that future rental streams are likely to make up for missed near to medium-term revenue.

I don’t think that’s happening this time.

I think The Wing going out of business says something really interesting about an individual’s relationship to workplaces. In a world where companies are abandoning their offices, the desire for flexible workspace in some ways could be increasing, but The Wing wasn’t quite a workspace. Sure, you could set up on a couch for an afternoon, but you couldn’t necessarily count on there being an open spot near a plug, but also a place to take your phone calls, have all your client meetings, a door to close, etc.

It wasn’t priced to be such a thing either. It always made more sense as a way to mix it up away from another workspace you were more anchored to—the “third place”. It wasn’t a place for a team to work and do standups, etc.

On the other hand, it wasn’t a purely social club either. One of the reasons why Soho House seems to be weathering the storm is that it fits more into people’s entertainment life more than it’s a place to get real work done—and while your home may have sufficed as an office, it really doesn’t work as a nightclub. Soho House fits in this new physical space landscape better than something that tries to be a place for work but really isn’t.

But all this isn’t why you started reading this article, is it?

An article on the failure of The Wing analyzed through the lens of changes in the commercial real estate market brought on by a global pandemic isn’t why you came.

It doesn’t drive the clicks.

You want to hear juicy gossip about Audrey Gelman. You want to hear more about how awful a place it was and how terrible all the people involved in it were, especially the members—the rich, white, racist members. You want screenshots of Slack channels and off-the-record comments on background from insiders.

But why?

In 2015, a female founder to a huge risk and put herself out there in an attempt to create a space that solved a real need—to create a professional space where women could feel safe and empowered.

Did it solve gender equality? Did it meet everyone’s expectations?

No.

It didn’t.

Audrey Gelman tried to create a space that was part of a solution around gender equality and empowerment—and yet it has been mostly women who lined up to criticize the company and her personally from the beginning and who couldn’t wait to dunk on the company one last time in the end.

While fears of “cancel culture” are overblown and it has become a right-wing boogeyman, I do think the “criticism industrial complex” is a serious issue—where you can get way more clicks and attention for hating on something than you can for highlighting the good in something, and certainly way more than you can by providing any nuanced critique.

Did The Wing have enough senior leaders who were people of color?

No.

Did they create enough rules and guidelines around values and culture that were informed from the perspective of women of color?

Also no.

Did any company?

And did any company really make serious change since 2020?

You’d really have to try hard to convince me that any of the hotel or restaurant companies are much more progressive, inclusive environments and that somehow they’ve turned dealing with travelers at front desks, cleaning up their rooms, or talking to diners trying to score a table and serving them food into a stress-free, spiritually enriching, positive experience for their employees. I’d be hard-pressed to imagine that any other of these companies and their spaces is an absolutely wonderful place to work for Black employees, free of structural bias, and that they feel like they have the growth opportunities they want.

I suspect and what I’ve heard the difference was at other places was that they never positioned themselves as anything but a crappy—er, basic—hospitality job. What compounded The Wing’s pandemic woes wasn’t so much being a terrible employer or community steward as much as it was promising it wouldn’t ever be terrible.

Hospitality is just a really rough job that enforces class structures and often brings out the worst in customers. Community building isn’t much easier, especially in progressive circles. In hindsight, I don’t think you can use a hospitality business to promote feminism unless you know you’re going to have so solve hospitality’s problems first—and I don’t think the team at The Wing realized how much that was part of the challenge until it was too late.

I certainly didn’t… and I take responsibility for never having asked those questions myself as an early investor.

In some ways, it’s a bit like VC funds that are setup to empower certain groups through investing that don’t actually acknowledge the structures and impact of venture capital itself on different populations.

The Wing, by trying to describe the job differently, telling prospective employees that they’d be able to connect with members and join a community, created false hope, which legitimately angered marginalized populations who are tired of getting sold a bill of goods.

It’s hard to blame them.

They thought the company could float above the realities of class and make everyone more equal by, for example, not making it explicit that staff would have to clean up after members—perhaps in an attempt to convince their employees and themselves that working at The Wing was “more” and that they were “all in this together”.

Instead, it created resentment by reinforcing the notion that Wing members thought cleaning up to be beneath them when it wasn’t stated that anyone was going to do it for them. Soho House, on the other hand, doesn’t create that impression because that’s a stated part of the job.

There’s no confusion and no animosity when you know you’re on a wait staff and what your role is.

The job is nothing more, nothing less.

I also believe that Audrey Gelman, for better or worse, was the heart of The Wing. Parting ways with her killed any shot of it returning.

I don’t like Steve Jobs comparisons because they’re so overdone—and The Wing didn’t become a trillion dollar market cap company—so it’s no Apple. Yet, I can’t help but overlap the narratives and see a lot of similarities.

Steve Jobs sought to create something different than the status quo—and he just wasn’t a very good person to other people. He lacked kindness and empathy and was singularly motivated by a vision. He created a lot of the problems that caused Apple’s near-death experience—but, at the same time, was the only person who cared enough about the vision to save and revive it.

I like Audrey. She’s smart, highly motivated, and a fellow long-suffering Mets fan. I also found it super difficult to work with her while she was at The Wing. I felt like our interactions at the time were transactional—like she was happy to connect with me when she needed something from me but then when she got bigger checks, she had better things to do with her time. It didn’t help that her and her co-founder cashed out a pile of money during one of their fundraising rounds without saying anything to early investors—who, at that valuation, could have gotten something like a 15x+ return if I recall correctly.

There are lots of reasons why it better aligns founders to be focused on building a big company rather than their near term financial picture—so cash outs before an exit aren’t all bad. They do, however, will come back to bite you from an optics perspective if things go south—like if you need to do layoffs or if you lose your investors’ capital.

I wouldn’t have minded it so much if anyone had actually discussed it with me, nor would I have sold—but that was part of the difficulty of being an early investor in this company.

No one ever did.

Do I use the word “difficult” because I’m generally more used to this behavior in men? Do I have the expectation that she should have been “nicer” to me because I wrote a check?

I’d have to be pretty blind to gender biases to assume that wasn’t part of it. At the same time, Audrey and I have talked about how it was a mistake for her not to maintain better relationships with her early backers as the company grew—and she could have done some more listening and seeking out others’ counsel on the way up.

Both things can be true.

When Audrey left/was booted, she became the story. In a way, she had always been the story—because, really, what was The Wing but just four walls, couches, and a particular color palette of paint that the media Twitterati of a certain age loved to rail on?

She was the brand. She was the person people joined The Wing to become—connected, in the flow, making a name for themselves and seemingly having it all. That’s why she was the story when her tenure ended. If Audrey couldn’t be Audrey anymore, could any woman be that Audrey type—a visible female leader, achieving success on her own terms, balancing career and family?

Like her or hate her, she manifested the phenomenon of The Wing out of a Powerpoint, raising a couple of million dollars for it on her own—before Lauren joined as co-founder. Frankly, it’s the kind of narrative that had normally been reserved for men in the startup world—pitch a dream on a piece of paper, raise tens of millions from the likes of Sequoia, embody the visible visionary leader, grace the magazine cover.

There’s probably a whole cross-listed graduate-level Media and Gender Studies course to be taught on whether the “Girlboss” phenomenon was a personality promoted by the founders themselves or whether it was a virtuous cycle invented by the reporters who were all too happy to cover these executives both on the way up and on the way down.

They didn’t care to write much about female leaders until they could identify a specific type of print-worthy female leader that fit a trend.

Either way, was she the best boss? I doubt it—she wasn’t great to me while I was her investor.

The funny thing is we have a better relationship now than when I was an investor and she was still there. She’s learned a lot of lessons and has regrets—but the thing she doesn’t regret is the attempt.

I respect her for that—immensely.

That’s something that gets lost in all this. Workplaces and the world, in general, are still not particularly safe spaces for women—and she made a bold attempt to fix that. Had it not been for the pandemic, I think The Wing could still have succeeded, granted, with a lot of much-needed iteration and work on creating a work environment that better embodied its values.

To lay that problem solely on her, however, is unfair.

I don’t think Audrey was particularly well supported by her high-profile board members. A great board member helps you catch your blind spots.

I doubt that these top-tier VCs ever asked about what it felt like to be a Black food preparer at The Wing or inquired about the relationship between members and front desk staff. The nature of the VC pipeline is such that I don’t think most investors have the life experience to really empathize much in that regard—regardless of their ethnicity and gender. These are mostly rich people who don’t think about the various staff that services them. These aren’t people well suited to spend working sessions reviewing codes of conduct or vision and values statements about membership in the community—and that’s something that needs to change in venture.

Community is one of the most overused terms these days—and I don’t think most investors or founders even know what it means. They mistake it for audience and fandom. They don’t understand what it means to create groups of people who care for each other just because of their shared membership in a collective.

And no, chatting about the price of your NFT doesn’t make you a community.

Even if these investors were skilled in such things, I’m not sure how much Audrey would have paid attention to their advice anyway. She thought of investors with a Don Draper “That’s what the money is for!” approach where they should be thanking her for the opportunity to be an investor in a company that was going to make them all this money.

Should we be surprised? That’s exactly the approach we teach founders to raise money in VC.

The more confident you are, and the more you act like you don’t need the help, the more eager most of the top names in the industry are to write you a check. That’s how the game works.

Do you seriously think women would raise more money by opening their pitch with, “Do you have any advice for me on how to run my business?”

Not that any of her non-Black board members (i.e. all of them) were going to give her the foresight to head off the racial dynamics at the company before the reckoning of the Summer of 2020. Even if they had, it’s kind of their M.O. to screen out the kind of founder who listens to others before their own gut anyway.

I mean, she had this… until she didn’t. We’ve seen that story before—and it never seems to end with supportive investors actually helping founders turn something around.

I wish I had been in that board room in the Summer of 2020. I wish I could have told everyone to stop managing to the Instagram comments. There were problems in the work environment in The Wing that employees had the right to call out just as they should be doing at any company where these problems exist—which is pretty much all of them.

But canning Audrey made the company into even more of a soap opera right at the moment they were paralyzed by the pandemic and unable to really fix anything.

People were pulling up popcorn in the middle of the work at home in your PJ’s pandemic to watch—and watch they did, watching it all burn to the ground. Unfortunately, there wasn’t actually much to burn during that summer. The Wing had already been mothballed.

The last major issue with The Wing I want to explore was that, for whatever reason, The Wing, unlike everyone else in 2020, never pivoted to a digital community. When members needed it most—for connection, for comfort, for career counseling—the “hear me roar” company was eerily silent.

I could never quite understand the lack of urgency around tying its members together online in the way it had IRL. Sure, they did a few Zoom events like everyone else, but digital proved to be a serious missed opportunity—at the worst moment in history to be lacking in a digital presence.

That misstep left The Wing with no active community to defend it when it was under siege and no digital asset to pivot to or to sell when it ran out of cash.

That’s why it got sold for scrap to IWG—the creative innovators behind Regus, the world’s blandest co-working space. If you were baking cookies and someone took out the chocolate chips and sugar and replaced them with corporate and beige, that’s what Regus cookies would taste like.

Lastly, in the end, The Wing had no one left in a leadership role who was going to stand up for the company.

What followed for The Wing was just a sad, slow death devoid of any real energy.

Audrey’s co-founder Lauren, who had by then been made CEO or a member of “The Office of CEO” or some such corporate groupthink, bailed in December of 2021—just as it became obvious that another bad COVID winter caused membership growth to be way off target to the point where the company wouldn’t recover or get to breakeven on its own.

When Lauren e-mailed in February of 2022 to share that she was leaving, she said she was, “happy to report that we have emerged a stronger company with the acquisition by IWG as well as new and enhanced policies and procedures… have an incredible team in place, and are now moving towards international growth for later this year.”

Lauren had always been very nice to me, but as a shareholder, I didn’t really need anyone to be nice to me.

In these moments, I might have preferred Audrey treating me like an annoyance while lashing herself to the mast of the ship while it was going down. Had she still been at the company, I doubt Audrey would have left until the very last day.

To fill the leadership void after Audrey was gone, they brought on Sheila Marcelo, the former Care.com founder who left her company after it was discovered that the marketplace of caregivers wasn’t actually properly vetting the people it sent to people’s homes to care for kids and seniors.

Sheila was given the title of Executive Chairwoman of The Wing, but you wouldn’t know it from her LinkedIn profile—which has no mention of this chapter of her professional career. How committed was someone to the job if they’re too embarrassed to admit they worked there when it didn’t work out in the end?

Sheila is a master at crisis PR, turning her profile around after the WSJ reported that, at the company she founded, “nine caregivers with police records were listed on Care.com and were later accused of crimes while having children or elderly relatives in their care—including “theft, child abuse, sexual assault and murder.” The newspaper also found hundreds of day-care centers that falsely claimed to be state licensed on the website.”

Eventually, she got glowing press like this that complimented her “authentic approach” and “perseverance”—a masterstroke of personal narrative reinvention.

Hiring a PR expert during the company’s crisis, however, was just a continuation of a key misstep the company had been making for quite some time:

Instead of actually tackling the hard problems like the inherent culture issues of the hospitality businesses, it tried hard to look like it was tackling hard problems.

As a generally active board member when I invest, I lay a lot of this blame on the board. The board chose Sheila, which meant it saw The Wing’s issue as just a PR problem—probably similar to how they saw an early but important racial incident at the company’s West Hollywood location.

Sheila, too, left before it was over with a similar “Mission Accomplished” e-mail. I was angry that no one admitted the reality to me—that there simply wasn’t enough money left to see the tepid return to this kind of space through. I don’t know if Jen Cho, The Wing’s last (Interim) CEO was made aware of this or expected to be able to raise capital, but again, she was a marketing pro in a situation when a turnaround specialist was needed. Her tenure was over as soon as it started.

When something like that gets treated just as bad press, you don’t see the problem as endemic. You won’t seek out the root causes—the power dynamics and nature of the hospitality business, the lack of clarity around who played what roles in the “community” and the responsibilities to other members that it came with, and the lack of diversity among the senior team responsible for the culture. It’s not clear that anyone at the company was really equipped to handle these issues, or really to adequately build a culture able to head them off at the pass before they started—certainly not the company’s first time founder and certainly not the board of rich venture capitalists.

Regardless, none of that culture building was going to fix the business of owning a co-working club during a pandemic. In the end, we can talk founders, VCs, race and gender all we want, but much like the travel startup that I invested in that was crushed by COVID, The Wing was never going to make it through the pandemic anyway.

I’d hate for The Wing to be the last attempt to build safe, empowering spaces for women in the workplace—and more than that, I’d hate for the story of The Wing and companies like it to make female founders feel like they can’t be a highly visible, public face of their company. I’d also hate for founders to feel like they can’t build companies that make attempts to tackle the very hard problem of inequality, race, and gender—because there is no American Exceptionalism unless we fix these types of problems that seem to be worse here than in other “first world” countries.