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The Cult of We: WeWork, Adam Neumann, and the Great Startup Delusion
The definitive inside story of WeWork, its audacious founder, and what the company's epic unraveling exposes about Silicon Valley's delusions and the financial system's desperate hunger to cash in--from the Wall Street Journal reporters whose scoops hastened the company's downfall.
In 2001, Adam Neumann arrived in New York after five years as a conscript in the Israeli navy. Just over fifteen years later, he had transformed himself into the charismatic CEO of a company worth $47 billion--at least on paper. With his long hair and feel-good mantras, the 6-foot-five Neumann, who grew up in part on a kibbutz, looked the part of a messianic Silicon Valley entrepreneur. The vision he offered was mesmerizing: a radical reimagining of work space for a new generation, with its fluid jobs and lax office culture. He called it WeWork. Though the company was merely subleasing amenity-filled office space to freelancers and small startups, Neumann marketed it like a revolutionary product--and investors swooned.
As billions of funding dollars poured in, Neumann's ambitions grew limitless. WeWork wasn't just an office space provider, he boasted. It would build schools, create WeWork cities, even colonize Mars. Could he, Neumann wondered from the ice bath he'd installed in his office, become the first trillionaire or a world leader? In pursuit of its founder's grandiose vision, the company spent money faster than it could bring it in. From his private jet, sometimes clouded with marijuana smoke, the CEO scoured the globe for more capital. In late 2019, just weeks before WeWork's highly publicized IPO, a Hail Mary effort to raise cash, everything fell apart. Neumann was ousted from his company--but still was poised to walk away a billionaire.
Calling to mind the recent demise of Theranos and the hubris of the dotcom era bust, WeWork's extraordinary rise and staggering implosion were fueled by disparate characters in a financial system blind to its risks, from a Japanese billionaire with designs on becoming the Warren Buffet of tech, to leaders at JPMorgan and Goldman Sachs who seemed intoxicated by a Silicon Valley culture where sensible business models lost out to youthful CEOs who promised disruption. Why did some of the biggest names in banking and venture capital buy the hype? And what does the future hold for Silicon Valley unicorns? Wall Street Journal reporters Eliot Brown and Maureen Farrell explore these questions in this definitive account of WeWork's unraveling.
In 2001, Adam Neumann arrived in New York after five years as a conscript in the Israeli navy. Just over fifteen years later, he had transformed himself into the charismatic CEO of a company worth $47 billion--at least on paper. With his long hair and feel-good mantras, the 6-foot-five Neumann, who grew up in part on a kibbutz, looked the part of a messianic Silicon Valley entrepreneur. The vision he offered was mesmerizing: a radical reimagining of work space for a new generation, with its fluid jobs and lax office culture. He called it WeWork. Though the company was merely subleasing amenity-filled office space to freelancers and small startups, Neumann marketed it like a revolutionary product--and investors swooned.
As billions of funding dollars poured in, Neumann's ambitions grew limitless. WeWork wasn't just an office space provider, he boasted. It would build schools, create WeWork cities, even colonize Mars. Could he, Neumann wondered from the ice bath he'd installed in his office, become the first trillionaire or a world leader? In pursuit of its founder's grandiose vision, the company spent money faster than it could bring it in. From his private jet, sometimes clouded with marijuana smoke, the CEO scoured the globe for more capital. In late 2019, just weeks before WeWork's highly publicized IPO, a Hail Mary effort to raise cash, everything fell apart. Neumann was ousted from his company--but still was poised to walk away a billionaire.
Calling to mind the recent demise of Theranos and the hubris of the dotcom era bust, WeWork's extraordinary rise and staggering implosion were fueled by disparate characters in a financial system blind to its risks, from a Japanese billionaire with designs on becoming the Warren Buffet of tech, to leaders at JPMorgan and Goldman Sachs who seemed intoxicated by a Silicon Valley culture where sensible business models lost out to youthful CEOs who promised disruption. Why did some of the biggest names in banking and venture capital buy the hype? And what does the future hold for Silicon Valley unicorns? Wall Street Journal reporters Eliot Brown and Maureen Farrell explore these questions in this definitive account of WeWork's unraveling.
464 pages, Hardcover
First published July 20, 2021
683 people are currently reading
14658 people want to read
About the author
Eliot Brown
10 books63 followersEliot Brown covers startups and venture capital for The Wall Street Journal. He joined the Journal in 2010 to cover real estate, and previously worked at The New York Observer. A graduate of Macalester College, he lives in San Francisco.
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January 19, 2022
I don't think I have been more furious at a business/group of businessmen since I read Empire of Pain. This book, written by two Wall Street Journal, reporters chronicles the rise and spectacular collapse of WeWork and one of its founders, Adam Neumann. The research and interviews that went into this book are incredible and the delivery of them is very well executed. The book flows so well and it was difficult to put it down (stupid need for sleep).
If you are unfamiliar with WeWork, it started with a pretty simple idea: take existing office space, renovate it to be more friendly to the millennial and small business crowd (lots of natural light, common areas, layout designed to get people to mingle, make rentals flexible), then rent it out at a higher rate than you are renting it from the building owner. By all accounts WeWork was successful in doing this at the start, bringing in as much or more money than they were spending. They expanded rapidly and seemed to have tapped into an underserved market.
But at the end of the day they were just an office rental company. There is nothing sexy about that. They were no Apple or Amazon or Tesla or Uber. That isn't to say the office rental market is for losers, it is just a very staid, conservative, low margins business. It can't scale up the same way a tech company can. For every incremental piece of business they want there is a corresponding increase in costs where a software company, once they develop the product, can scale up infinitely with minimal cost resulting in huge profits.
But one of WeWork's cofounders, Adam Neumann, wasn't going to let a pesky thing like reality stand in the way of becoming a business rockstar on the same level as Elon Musk or Steve Jobs. He wanted WeWork to be big, and I mean BIG. He became obsessed with growing WeWork's valuation, which is the value private investors peg a company at. For public companies it is just stock price multiplied by stock volume. So if a company has 1 million outstanding shares of stock priced at $100 per share, their valuation is $100 million dollars. But for private companies is is just however much the latest round of financing was. So if a company like WeWork got $100 million from a group of investors in exchange for 20% of the company, WeWork would be said to have a valuation of $500 million ($100 million/0.2). Neumann, and Neumann was THE driving force behind WeWork's direction, was obsessed with getting this valuation as high as possible.
(To cut a long story short, WeWork tumbled from a valuation of $47 billion in mid 2019 to $2.9 billion in March of 2021).
How did a company that just repackaged existing office space get one of the highest valuation of any start up ever? Once again the answer is Adam Nuemann. The dude seemed to have this incredible charisma, convincing very rich, typically very smart people, into giving him LOTS of money. Like, BILLIONS of dollars even as WeWork was hemorrhaging money. He was somehow able to convince investors that WeWork was more than an office rental company, but should actually be treated like a tech company because... reasons? It was never clear to me why people believed that WeWork should have been treated like a tech company. In fact plenty of lower level analysts at these investment firms pointed out what a terrible idea it was to invest in WeWork given its underlying structure but the people who made decisions fell in love with Neumann's vision for WeWork.
And none fell harder than Masayoshi Son, the founder of the Japanese company Softbank, with not only billions of dollars to invest, but the goodwill to raise billions more from other deep pocketed investors around the globe. He wanted to be talked about in the same breathe as other tech goliaths and was always on the lookout for that angle to get him into that rarified air. He was smitten with Neumann and proceeded to invest (and convince others to invest) BILLIONS of dollars into WeWork. Its collapse would also significantly tarnish his and his company's reputation
I want to take a moment to explain sort of why this was happening. The book goes into the idea of the Cult of the Founder, which holds that founders of startups should be given a loose rein to run their company as they saw fit. After all, look what Steve Jobs had be able to achieve. The consensus was that founder brought an energy and vision to the company that an outside CEO (which was the standard practice for start ups until recently) would lack. Compound this with the idea that startups don't need to make money, but should instead grow revenue as fast as possible and you have a very dangerous combination.
How this became the basis to invest BILLIONS of dollars, I have no idea. My business classes certainly never extolled the benefit of a company running in the red. And that was what WeWorkwas doing. The rapid expansion Neumann constantly pushed for did boost WeWork revenue immensely. The problem was WeWork's core business could not scale and costs were actually rising faster than revenue, to the tune of 2:1 (as in for every $1 of revenue they generated, they also generated $2 of cost). But as long as investors like Son were dumping billions into WeWork they could just burn that cash to fuel the growth. If either stopped the entire house of cards would collapse.
To add even more straws to the camel's back Neumann began to become erratic and scattershot. He pushed for strange acquisitions (like a company that specialized in building indoor surfing facilities), partied hard (there was SOOOOOOOOOOOOOOO much alcohol consumption at WeWork events led by Neumann himself), became detached from his espoused egalitarian principles (dude had something like nine homes in the eight figure range and made the company buy him a private jet). He was buying into his own hype and no one around him told him no. The WeWork board was useless in curbing his worst excesses, many top executives were either his friend or family, and he was bringing in yacht loads of money for the company.
And with some many employees and executives having stock options which were dependent on WeWork doing well, no one wanted to push back. As the old adage goes: "It is difficult to get a man to understand something, when his salary depends upon his not understanding it" Neumann and WeWork were wrecks, but no one wanted to try and step in to fix the matter. No one wanted to even breathe on the house of cards least to collapse, but the winds of the market were more than sufficient to bring down the shaky edifice that was WeWork. The chapters about the disaster of an IPO WeWork tried to launch more than justify the cost of this book. Seriously, it is a bizarre blend of comedy, tragedy, farce, and schadenfreude.
There are tons of other details I am not outlining here: the many shameless ways Neumann extracted wealth from the company at the expense of the workers and investors (dude walked away from the smoking corpse of WeWork with a BILLION dollar golden parachute), the weird stuff his wife did in the company, the way so many high finance people became transfixed by Neumann even as lower level analysts were raising tons of red flags, the Neumanns's delusions of grandeur, the bonkers amount of alcohol that permeates the story, and the bizarre spell that WeWork cast on the financial community.
This story is fascinating and frustrating and infuriating and I just couldn't look away. If you only read one book about a corporation, you should probably read Empire of Pain. But if you read two, make this book the other one, it is one hell of a doozy.
If you are unfamiliar with WeWork, it started with a pretty simple idea: take existing office space, renovate it to be more friendly to the millennial and small business crowd (lots of natural light, common areas, layout designed to get people to mingle, make rentals flexible), then rent it out at a higher rate than you are renting it from the building owner. By all accounts WeWork was successful in doing this at the start, bringing in as much or more money than they were spending. They expanded rapidly and seemed to have tapped into an underserved market.
But at the end of the day they were just an office rental company. There is nothing sexy about that. They were no Apple or Amazon or Tesla or Uber. That isn't to say the office rental market is for losers, it is just a very staid, conservative, low margins business. It can't scale up the same way a tech company can. For every incremental piece of business they want there is a corresponding increase in costs where a software company, once they develop the product, can scale up infinitely with minimal cost resulting in huge profits.
But one of WeWork's cofounders, Adam Neumann, wasn't going to let a pesky thing like reality stand in the way of becoming a business rockstar on the same level as Elon Musk or Steve Jobs. He wanted WeWork to be big, and I mean BIG. He became obsessed with growing WeWork's valuation, which is the value private investors peg a company at. For public companies it is just stock price multiplied by stock volume. So if a company has 1 million outstanding shares of stock priced at $100 per share, their valuation is $100 million dollars. But for private companies is is just however much the latest round of financing was. So if a company like WeWork got $100 million from a group of investors in exchange for 20% of the company, WeWork would be said to have a valuation of $500 million ($100 million/0.2). Neumann, and Neumann was THE driving force behind WeWork's direction, was obsessed with getting this valuation as high as possible.
(To cut a long story short, WeWork tumbled from a valuation of $47 billion in mid 2019 to $2.9 billion in March of 2021).
How did a company that just repackaged existing office space get one of the highest valuation of any start up ever? Once again the answer is Adam Nuemann. The dude seemed to have this incredible charisma, convincing very rich, typically very smart people, into giving him LOTS of money. Like, BILLIONS of dollars even as WeWork was hemorrhaging money. He was somehow able to convince investors that WeWork was more than an office rental company, but should actually be treated like a tech company because... reasons? It was never clear to me why people believed that WeWork should have been treated like a tech company. In fact plenty of lower level analysts at these investment firms pointed out what a terrible idea it was to invest in WeWork given its underlying structure but the people who made decisions fell in love with Neumann's vision for WeWork.
And none fell harder than Masayoshi Son, the founder of the Japanese company Softbank, with not only billions of dollars to invest, but the goodwill to raise billions more from other deep pocketed investors around the globe. He wanted to be talked about in the same breathe as other tech goliaths and was always on the lookout for that angle to get him into that rarified air. He was smitten with Neumann and proceeded to invest (and convince others to invest) BILLIONS of dollars into WeWork. Its collapse would also significantly tarnish his and his company's reputation
I want to take a moment to explain sort of why this was happening. The book goes into the idea of the Cult of the Founder, which holds that founders of startups should be given a loose rein to run their company as they saw fit. After all, look what Steve Jobs had be able to achieve. The consensus was that founder brought an energy and vision to the company that an outside CEO (which was the standard practice for start ups until recently) would lack. Compound this with the idea that startups don't need to make money, but should instead grow revenue as fast as possible and you have a very dangerous combination.
How this became the basis to invest BILLIONS of dollars, I have no idea. My business classes certainly never extolled the benefit of a company running in the red. And that was what WeWorkwas doing. The rapid expansion Neumann constantly pushed for did boost WeWork revenue immensely. The problem was WeWork's core business could not scale and costs were actually rising faster than revenue, to the tune of 2:1 (as in for every $1 of revenue they generated, they also generated $2 of cost). But as long as investors like Son were dumping billions into WeWork they could just burn that cash to fuel the growth. If either stopped the entire house of cards would collapse.
To add even more straws to the camel's back Neumann began to become erratic and scattershot. He pushed for strange acquisitions (like a company that specialized in building indoor surfing facilities), partied hard (there was SOOOOOOOOOOOOOOO much alcohol consumption at WeWork events led by Neumann himself), became detached from his espoused egalitarian principles (dude had something like nine homes in the eight figure range and made the company buy him a private jet). He was buying into his own hype and no one around him told him no. The WeWork board was useless in curbing his worst excesses, many top executives were either his friend or family, and he was bringing in yacht loads of money for the company.
And with some many employees and executives having stock options which were dependent on WeWork doing well, no one wanted to push back. As the old adage goes: "It is difficult to get a man to understand something, when his salary depends upon his not understanding it" Neumann and WeWork were wrecks, but no one wanted to try and step in to fix the matter. No one wanted to even breathe on the house of cards least to collapse, but the winds of the market were more than sufficient to bring down the shaky edifice that was WeWork. The chapters about the disaster of an IPO WeWork tried to launch more than justify the cost of this book. Seriously, it is a bizarre blend of comedy, tragedy, farce, and schadenfreude.
There are tons of other details I am not outlining here: the many shameless ways Neumann extracted wealth from the company at the expense of the workers and investors (dude walked away from the smoking corpse of WeWork with a BILLION dollar golden parachute), the weird stuff his wife did in the company, the way so many high finance people became transfixed by Neumann even as lower level analysts were raising tons of red flags, the Neumanns's delusions of grandeur, the bonkers amount of alcohol that permeates the story, and the bizarre spell that WeWork cast on the financial community.
This story is fascinating and frustrating and infuriating and I just couldn't look away. If you only read one book about a corporation, you should probably read Empire of Pain. But if you read two, make this book the other one, it is one hell of a doozy.
October 4, 2024
A narrative of hubris, willing blindness and fear of missing out. The WeWork CEO is a veritable character, but the corporate enablement of his greed and bravado is equally shocking
As always, he wanted more
Fascinating tale of spectacular rise and fall of a company dedicated to “raising the world’s consciousness", which lost $1.6b in a year, or $3.000 per minute.
Eliot Brown follows his subject Adam (and to a lesser extent Rebekah) Neumann meticulously. From an upbringing in Israel, with Kibbutz teenage life as a basis to the concept of WeWork, to the first forays into baby clothes (not a success) to renting office space, Neumann held an endless faith in his ability to make people do what he wants him to do.
His career really starts taking off when he is able to tap into a Kabbalah connection in New York (the same temple where Madonna used to go) forming an important source of funding. What also helped was that Rebekah Neumann, wife of the founder, was a niece to Gwyneth Paltrow and friends with Ashton Kutcher, offering another option to obtain seed capital.
Already early on Adam Neumann started taking stakes in buildings where WeWork rented, creating clear conflicts of interest between himself and the company.
Helped further by mutual funds moving with $8b into venture capital to adres the erosion in fees caused from the boom in ETFs, funds pour into the startup, galvanised by the charisma of the founder and the tenuous claims of being a tech company. Also the tapping into millennial culture, by focussing on community and facilitating the gig economy (It was like catnip for millennials), made an attractive pitch for investors. Anyone trying to invest got a curated tour through a bustling WeWork, with employees of the company figuring as customers of the startup.
WeWork valuation being 50 times 2014 revenues, or $300.000 per leased out desk, with the underlying profit margins of 18 month open locations being the same as Regus, the market leading company in office rental. Another sign of literally astronomical ambitions was the pitch "WeWork Mars" that Neumann gave to Elon Musk in 2016:
WeWork founder Adam Neumann once argued to Elon Musk that getting to Mars would be easy but 'building community' there was the hard part
Musk is said to have responded that actually, the getting to Mars was in fact the hard part in his rebuffing of Neumann.
Flush with cash, the company went on spending sprees, including the acquisition for $13.8m for a stake into a surf pool company. The Vision fund of Softbank, being funded by MBS of Saudi Arabia for $45b after a meeting with Satoshi Son of 45 minutes, further fuelled the flames of expansion when Son invested $4b in WeWork after a meeting of 12 minutes with Adam Neumann. All this being based on a personal connection with the founder and a $10 trillion valuation assumed in FY28, based on completely irrational forecasts. In the end it turned out none of the red flags mattered noted an employee tasked with performing due diligence on the investments of the Vision fund.
Spend the story in reality was an adagium of both Son and Neumann.
WeWork remained growing, and was valued at a 20 time revenue multiple, aided by not showing rent holidays impact on EBITDA. A Gulfstream of $63.4m was bought, together with a sauna and ice plunge baths besides the office of Neuman, with the company losing $3.000 per minute in 2018, with revenues of $1.8b versus costs of $3.5b.
WeWork even showed diseconomies of scale, with growing into new markets costing more than rental contracts the company earlier acquired. This was all ignored in a growth plan to add the whole of Manhattan’s office market to the real estate portfolio of WeWork over a period of 5 years.
Rebekah screaming to Adam to skip a meeting with Theresa May, then prime minister of the UK to give a presentation for her WeGrow school, shows further signs of disconnection from reality.
Investing with venture capital money of Vision fund in an own venture capital fund and even funding Ashton Kutcher, a longtime Neuman friend.
Neumann lending $1b against WeWork stocks from underwriting banks and being called by name over 169 times in the prospectus, before the analyst community turned against the shaky fundamentals of the company and the IPO was pulled: It was a complete emperor without clothes moment
Most grating is how Neumann got a golden parachute of SoftBank, amounting to $185m for not being CEO of WeWork, while his employees lost their equity stakes in the company. A gripping pageturner on hubris and greed fuelled by cheap money, and the lack of consequences this brings with it.
As always, he wanted more
Fascinating tale of spectacular rise and fall of a company dedicated to “raising the world’s consciousness", which lost $1.6b in a year, or $3.000 per minute.
Eliot Brown follows his subject Adam (and to a lesser extent Rebekah) Neumann meticulously. From an upbringing in Israel, with Kibbutz teenage life as a basis to the concept of WeWork, to the first forays into baby clothes (not a success) to renting office space, Neumann held an endless faith in his ability to make people do what he wants him to do.
His career really starts taking off when he is able to tap into a Kabbalah connection in New York (the same temple where Madonna used to go) forming an important source of funding. What also helped was that Rebekah Neumann, wife of the founder, was a niece to Gwyneth Paltrow and friends with Ashton Kutcher, offering another option to obtain seed capital.
Already early on Adam Neumann started taking stakes in buildings where WeWork rented, creating clear conflicts of interest between himself and the company.
Helped further by mutual funds moving with $8b into venture capital to adres the erosion in fees caused from the boom in ETFs, funds pour into the startup, galvanised by the charisma of the founder and the tenuous claims of being a tech company. Also the tapping into millennial culture, by focussing on community and facilitating the gig economy (It was like catnip for millennials), made an attractive pitch for investors. Anyone trying to invest got a curated tour through a bustling WeWork, with employees of the company figuring as customers of the startup.
WeWork valuation being 50 times 2014 revenues, or $300.000 per leased out desk, with the underlying profit margins of 18 month open locations being the same as Regus, the market leading company in office rental. Another sign of literally astronomical ambitions was the pitch "WeWork Mars" that Neumann gave to Elon Musk in 2016:
WeWork founder Adam Neumann once argued to Elon Musk that getting to Mars would be easy but 'building community' there was the hard part
Musk is said to have responded that actually, the getting to Mars was in fact the hard part in his rebuffing of Neumann.
Flush with cash, the company went on spending sprees, including the acquisition for $13.8m for a stake into a surf pool company. The Vision fund of Softbank, being funded by MBS of Saudi Arabia for $45b after a meeting with Satoshi Son of 45 minutes, further fuelled the flames of expansion when Son invested $4b in WeWork after a meeting of 12 minutes with Adam Neumann. All this being based on a personal connection with the founder and a $10 trillion valuation assumed in FY28, based on completely irrational forecasts. In the end it turned out none of the red flags mattered noted an employee tasked with performing due diligence on the investments of the Vision fund.
Spend the story in reality was an adagium of both Son and Neumann.
WeWork remained growing, and was valued at a 20 time revenue multiple, aided by not showing rent holidays impact on EBITDA. A Gulfstream of $63.4m was bought, together with a sauna and ice plunge baths besides the office of Neuman, with the company losing $3.000 per minute in 2018, with revenues of $1.8b versus costs of $3.5b.
WeWork even showed diseconomies of scale, with growing into new markets costing more than rental contracts the company earlier acquired. This was all ignored in a growth plan to add the whole of Manhattan’s office market to the real estate portfolio of WeWork over a period of 5 years.
Rebekah screaming to Adam to skip a meeting with Theresa May, then prime minister of the UK to give a presentation for her WeGrow school, shows further signs of disconnection from reality.
Investing with venture capital money of Vision fund in an own venture capital fund and even funding Ashton Kutcher, a longtime Neuman friend.
Neumann lending $1b against WeWork stocks from underwriting banks and being called by name over 169 times in the prospectus, before the analyst community turned against the shaky fundamentals of the company and the IPO was pulled: It was a complete emperor without clothes moment
Most grating is how Neumann got a golden parachute of SoftBank, amounting to $185m for not being CEO of WeWork, while his employees lost their equity stakes in the company. A gripping pageturner on hubris and greed fuelled by cheap money, and the lack of consequences this brings with it.
September 25, 2022
Brown and Farrell report on the wild ride of Adam Neumann, Rebekah Neumann and WeWork. He details this case of another bewildering overvaluation of a modern tech age start up driven by a narcissistic mesmerizing personality. Venture capitalists, Wall Street banks, mutual funds, sovereign funds and the largest global private funds were all chomping at the bit to invest and they did in droves. Yet the secret sauce wasn’t so secret. It wasn’t about a new kind of currency, a dramatic new medical technology, driverless cars or space travel. It wasn’t about tech at all even though co-founder Adam Neumann portrayed it that way. It was real estate, taking on long term leases, subletting spaces for the short term and pocketing the incremental difference. It was not a new idea. It was profitable if done right, but not spectacularly so.
Neumann’s game was different. It was a lot of hype with little substance. His talent was his ability to convince people controlling billions of dollars, that despite what WeWork looked like, it wasn’t a run of the mill real estate business, it was a new concept that would gusher profits. In essence he convinced people who should have known better that the Volkswagen Beetle in front of them was actually a super Ferrari. Neuman was delusional. He apparently believed his own BS. Those who anteed up were more than just greedy. They were awash in a world full of money looking for the next Facebook, Alibaba, Tesla, etc. They were driven by FOMO and Adam new how to play them. After cofounding WeWork in 2010 he gets a few million. He grows more confident, refines his pitch and pulls in hundreds of millions then billions, some of which he uses to build WeWork, some of which he gives to himself and some of which he wastes on numerous extraneous projects.
Egged on by his wife Rebekah, who believed they should do more than make money (although she readily embraced the superrich lifestyle), Adam created the aura of WeWork as a community that will bring people together. He touted side businesses such as WeGrow (education) and WeLive (residences) and of course Wavegarde, a company that built pools that create waves for surfing. Adam loved to surf. He used WeWork money to buy a $63 million-dollar private jet to take him to Hawaii and other surf spots around the world. He bought eight homes, one partially shaped like a guitar near San Francisco and one in the Hamptons where he could surf if stuck in the northeast. He loved downing tequila shots and smoking pot and expected business associates to do the same in meetings or at his wild company events on which WeWork spent millions. Meanwhile WeWork was losing hundreds of millions a year. Amazingly, in spite of that, he got WeWork valued at over $40 billion with billions coming from greater fool Masayoshi Son, founder of SoftBanK. But bad luck finally struck. Son’s other investments were tanking. Son couldn’t come through with more promised billions to keep WeWork afloat and in 2019 everything imploded. Adam was ejected and WeWork became a run of the mill real estate company with huge debts fighting for survival. Adam and Rebekah suffer through with the money and property they had squirreled away from the company, a billion or so. Forbes put his net worth at $750 million in 2021. Still not bad for a decade of disastrous leadership.
I enjoyed the book. It’s a straightforward recording of events written in a journalistic style. I was particularly interested in how Adam was able to continually raise more money despite the company’s lack of performance and his own wild behavior. What it says about the investment community is appalling. Masayoshi Son, leader of Softbank, one of the largest global investment funds, looks like a complete fool. The authors spend some pages on his story and also touch on MBS and his sovereign investment fund, another one with a lot of money looking for the next big thing. I had read about this in Blood and Oil: Mohammed bin Salman's Ruthless Quest for Global Power. Other readers may be more interested in the personal stories of Adam and Rebekah which are also covered well.
Neumann’s game was different. It was a lot of hype with little substance. His talent was his ability to convince people controlling billions of dollars, that despite what WeWork looked like, it wasn’t a run of the mill real estate business, it was a new concept that would gusher profits. In essence he convinced people who should have known better that the Volkswagen Beetle in front of them was actually a super Ferrari. Neuman was delusional. He apparently believed his own BS. Those who anteed up were more than just greedy. They were awash in a world full of money looking for the next Facebook, Alibaba, Tesla, etc. They were driven by FOMO and Adam new how to play them. After cofounding WeWork in 2010 he gets a few million. He grows more confident, refines his pitch and pulls in hundreds of millions then billions, some of which he uses to build WeWork, some of which he gives to himself and some of which he wastes on numerous extraneous projects.
Egged on by his wife Rebekah, who believed they should do more than make money (although she readily embraced the superrich lifestyle), Adam created the aura of WeWork as a community that will bring people together. He touted side businesses such as WeGrow (education) and WeLive (residences) and of course Wavegarde, a company that built pools that create waves for surfing. Adam loved to surf. He used WeWork money to buy a $63 million-dollar private jet to take him to Hawaii and other surf spots around the world. He bought eight homes, one partially shaped like a guitar near San Francisco and one in the Hamptons where he could surf if stuck in the northeast. He loved downing tequila shots and smoking pot and expected business associates to do the same in meetings or at his wild company events on which WeWork spent millions. Meanwhile WeWork was losing hundreds of millions a year. Amazingly, in spite of that, he got WeWork valued at over $40 billion with billions coming from greater fool Masayoshi Son, founder of SoftBanK. But bad luck finally struck. Son’s other investments were tanking. Son couldn’t come through with more promised billions to keep WeWork afloat and in 2019 everything imploded. Adam was ejected and WeWork became a run of the mill real estate company with huge debts fighting for survival. Adam and Rebekah suffer through with the money and property they had squirreled away from the company, a billion or so. Forbes put his net worth at $750 million in 2021. Still not bad for a decade of disastrous leadership.
I enjoyed the book. It’s a straightforward recording of events written in a journalistic style. I was particularly interested in how Adam was able to continually raise more money despite the company’s lack of performance and his own wild behavior. What it says about the investment community is appalling. Masayoshi Son, leader of Softbank, one of the largest global investment funds, looks like a complete fool. The authors spend some pages on his story and also touch on MBS and his sovereign investment fund, another one with a lot of money looking for the next big thing. I had read about this in Blood and Oil: Mohammed bin Salman's Ruthless Quest for Global Power. Other readers may be more interested in the personal stories of Adam and Rebekah which are also covered well.
July 24, 2021
I had been following the death spiral of WeWork with some interest in the fall of 2019, but I had never been able to understand the story (not having a business or finance background). So I welcomed this book, and I was not disappointed. The authors managed to de-mystify some of the business dealings of WeWork and also offered some insight into the "it's who you know" world of venture capitalism, the difference between private and public markets, the disproportionate influence of some big pocket investors in Japan and Saoudi Arabia, and other topics that are totally peripheral to my life, but fascinating (and sometimes horrifying) nevertheless. And yes, I will admit that I did enjoy the scandalous anecdotes of Adam and Rebekah's lifestyle and self-serving New Age gobbledygook. And I was certainly flabbergasted to read how Adam essentially got paid a boatload of money to walk away from the company whose financial future he had blighted.
Still, this is ultimately a cautionary tale and an illustration of just how dangerous too much reliance on charismatic founders or CEOs (Jeff Skilling of Enron, Elizabeth Holmes of Theranos, Adam Neumann) can be. I would also say : cheers for the SEC, which did not cave in to Neumann's pressure to accept a particular (and biased) metric of profitability in their S1 document.
Fascinating read!
Still, this is ultimately a cautionary tale and an illustration of just how dangerous too much reliance on charismatic founders or CEOs (Jeff Skilling of Enron, Elizabeth Holmes of Theranos, Adam Neumann) can be. I would also say : cheers for the SEC, which did not cave in to Neumann's pressure to accept a particular (and biased) metric of profitability in their S1 document.
Fascinating read!
December 3, 2021
As many other reviewers well describe - I thought this was just blindingly good and I think a true comp for anyone who really loved Bad Blood. I’ve been shocked to not see this on more Best Books of the Year lists, as the reporting (by an excellent WSJ team) is stellar. (Note: It was, though, longlisted for the Financial Times/McKinsey Best Business Book of the Year!)
I have a habit of devouring every notable documentary, podcast, long form journalism article, and nonfiction book on certain recent historical and cultural events of interest, and WeWork was one of these recent targets. I found this book (listened on audio) to be the best overall account of WeWork - better than the other major book that came out recently - although the Hulu documentary is definitely worth watching as a companion piece, in particular to get an idea of the behavior of Adam and Rebecca Neumann, two terrifying walking personified red flags, wolves in sheeps’ clothing, and borderline/would-be cult figures if there ever were. (It came close, folks! - these people pretty much talked like fake-woke versions of Trump.) You’ll definitely get all that from this book alone, plentifully, but I think the doc is still worth a watch to just hit the point home.
Man, like Bad Blood, you can’t make this shit up - this story is truly stranger than fiction, and fascinating even if you don’t think you care to hear about business stuff. How can I convince you this book is relevant in addition to entertaining, even if you never thought you’d care about the topic or never set foot inside a WeWork? Just for one, I think it functions as a primer on everything that is wrong with startup, Silicon Valley, and contemporary workplace culture and how these cultures both shaped and exploited millennial identities (especially in terms of professional identity and related self-esteem issues) in particular. It’s also just a fascinating case study to help us better understand a few of the myriad ways that our economic systems and our institutions are in no way here to be reasonable or to protect anyone vulnerable and/or unwary, so we need to do our homework, remain skeptical, and hope enough quality newspapers and journalists like these authors continue to exist!
I have a habit of devouring every notable documentary, podcast, long form journalism article, and nonfiction book on certain recent historical and cultural events of interest, and WeWork was one of these recent targets. I found this book (listened on audio) to be the best overall account of WeWork - better than the other major book that came out recently - although the Hulu documentary is definitely worth watching as a companion piece, in particular to get an idea of the behavior of Adam and Rebecca Neumann, two terrifying walking personified red flags, wolves in sheeps’ clothing, and borderline/would-be cult figures if there ever were. (It came close, folks! - these people pretty much talked like fake-woke versions of Trump.) You’ll definitely get all that from this book alone, plentifully, but I think the doc is still worth a watch to just hit the point home.
Man, like Bad Blood, you can’t make this shit up - this story is truly stranger than fiction, and fascinating even if you don’t think you care to hear about business stuff. How can I convince you this book is relevant in addition to entertaining, even if you never thought you’d care about the topic or never set foot inside a WeWork? Just for one, I think it functions as a primer on everything that is wrong with startup, Silicon Valley, and contemporary workplace culture and how these cultures both shaped and exploited millennial identities (especially in terms of professional identity and related self-esteem issues) in particular. It’s also just a fascinating case study to help us better understand a few of the myriad ways that our economic systems and our institutions are in no way here to be reasonable or to protect anyone vulnerable and/or unwary, so we need to do our homework, remain skeptical, and hope enough quality newspapers and journalists like these authors continue to exist!
November 21, 2021
Oh man did I enjoy this book. It was a wild page-turner about hubris with so many fascinating antidotes. I hope to watch this movie at some point soon
August 1, 2021
Click here to hear my thoughts on this book over on my Booktube channel, abookolive.
The Cult of We is a discussion of the story of the American company WeWork with a decidedly financial focus, considering the authors are two writers for the Wall Street Journal. It's a well-researched and well-written book that delves into, more so than other takes I've seen/read on this story, the reasons why the so-called tech company attracted investment from such high places. However, the book leaned away from the human element (likely because the authors knew Reeves Wiedeman's Billion Dollar Loser: The Epic Rise and Spectacular Fall of Adam Neumann and WeWork was going to be released before their book was), and it's a less entertaining final product because of that fact.
The Cult of We is a discussion of the story of the American company WeWork with a decidedly financial focus, considering the authors are two writers for the Wall Street Journal. It's a well-researched and well-written book that delves into, more so than other takes I've seen/read on this story, the reasons why the so-called tech company attracted investment from such high places. However, the book leaned away from the human element (likely because the authors knew Reeves Wiedeman's Billion Dollar Loser: The Epic Rise and Spectacular Fall of Adam Neumann and WeWork was going to be released before their book was), and it's a less entertaining final product because of that fact.
March 6, 2023
Solid book. Facts presented in such a way it kept you listening. Great narrator.
If I were able to give stars to the subject of the book, I’d give Adam Neumann less than 1. A horrible, selfish, fraudster who raked in billions while the employees who counted on stock options were scr*wed. All while he and his entitled, wealthy wife, Rebekah Paltrow Neuman, spoke in mantras about equality and consciousness yet thought people like the underpaid teachers in their 42k/tuition year for the PRESCHOOL they started were stealing bread from them when they lobbied for raises. All while the Neumann’s purchased 8 million+ dollar homes, owned a private jet, had morning/afternoon/evening nannies….. Ugh. I hate them.
Watching the extreme wealth given to him (1.7 billion dollar golden parachute) for being so bad for the company they paid him out to avoid going out of business …. while the proletariat work 2-3 jobs and gofundme healthcare and funerals….. This world is sad.
If I were able to give stars to the subject of the book, I’d give Adam Neumann less than 1. A horrible, selfish, fraudster who raked in billions while the employees who counted on stock options were scr*wed. All while he and his entitled, wealthy wife, Rebekah Paltrow Neuman, spoke in mantras about equality and consciousness yet thought people like the underpaid teachers in their 42k/tuition year for the PRESCHOOL they started were stealing bread from them when they lobbied for raises. All while the Neumann’s purchased 8 million+ dollar homes, owned a private jet, had morning/afternoon/evening nannies….. Ugh. I hate them.
Watching the extreme wealth given to him (1.7 billion dollar golden parachute) for being so bad for the company they paid him out to avoid going out of business …. while the proletariat work 2-3 jobs and gofundme healthcare and funerals….. This world is sad.
June 21, 2022
Incredible story.
Uncomprehensible recklessness.
Unbelievable bullshit dressed as a tech startup.
Inconceivable balloon inflating.
Unthinkable ending.
Btw. the book itself is great as well :) - a piece of brilliant investigation journalism. A pleasure to read (or listen to).
The scary thing is what happened with Neumann in the end - the aftermath in fact is more than positive for him. The money he has acquired because he was able to bullshit so many smart but greedy people is beyond dreams. And literally a week or so ago I've heard he has managed to fund another startup and convince some investors to fund its Series A. Incredible ...
Uncomprehensible recklessness.
Unbelievable bullshit dressed as a tech startup.
Inconceivable balloon inflating.
Unthinkable ending.
Btw. the book itself is great as well :) - a piece of brilliant investigation journalism. A pleasure to read (or listen to).
The scary thing is what happened with Neumann in the end - the aftermath in fact is more than positive for him. The money he has acquired because he was able to bullshit so many smart but greedy people is beyond dreams. And literally a week or so ago I've heard he has managed to fund another startup and convince some investors to fund its Series A. Incredible ...
March 10, 2023
Recently I was watching a YouTube video about meal prep, my endless battle as someone who wants to eat healthy, but hates diet culture, and who also resents the way we’ve set up our society to leave me two days of the week to cram my life into around work (hello coworkers, I love my job but I am correct in hating the way we do life).
Anyway, the video was sponsored by WeWork. This threw me for such a loop that I listened to a 450+ page nonfiction book about it. My interest in white collar criminals is casual; I watched and liked both The Social Network and The Dropout. And also an Elon Musk documentary about how he’s a cruel liar loser, who would have thought.
What really fascinates me is the psychology and groupthink woven into startup culture. The cult-like frenzy that leads companies lacking substance to skyrocket in relevance and value. The self-righteous fervor around a noble, transcendent mission they can’t even articulate. The pretentious word salad they expect others to not just buy into, but laud.
The hypocrisy of laying off hundreds of people and banning the rest from eating meat while taking your private jets across the globe daily because you’d rather talk in-person than do a video conference call. The party culture that stokes reckless conduct and muddies the waters between the professional and personal until they’re one big blob. How much your work shapes your worldview.
TL;DR— all grifts are one and the same and the worst criminals always have been and always will be rich white people. That’s the conclusion I drew, at least. This is an oddly political Goodreads review.
The audiobook is extremely well done. The narrator is fantastic. The research is so meticulous you feel like a fly on the wall. It’s a horrifying yet somehow entertaining story about rising and falling equally fast. For fans of both The Great Gatsby and Bad Blood.
Anyway, the video was sponsored by WeWork. This threw me for such a loop that I listened to a 450+ page nonfiction book about it. My interest in white collar criminals is casual; I watched and liked both The Social Network and The Dropout. And also an Elon Musk documentary about how he’s a cruel liar loser, who would have thought.
What really fascinates me is the psychology and groupthink woven into startup culture. The cult-like frenzy that leads companies lacking substance to skyrocket in relevance and value. The self-righteous fervor around a noble, transcendent mission they can’t even articulate. The pretentious word salad they expect others to not just buy into, but laud.
The hypocrisy of laying off hundreds of people and banning the rest from eating meat while taking your private jets across the globe daily because you’d rather talk in-person than do a video conference call. The party culture that stokes reckless conduct and muddies the waters between the professional and personal until they’re one big blob. How much your work shapes your worldview.
TL;DR— all grifts are one and the same and the worst criminals always have been and always will be rich white people. That’s the conclusion I drew, at least. This is an oddly political Goodreads review.
The audiobook is extremely well done. The narrator is fantastic. The research is so meticulous you feel like a fly on the wall. It’s a horrifying yet somehow entertaining story about rising and falling equally fast. For fans of both The Great Gatsby and Bad Blood.
August 26, 2021
I found this hard to put down, and as an analysis of everything that is wrong with the investment markets, it is accessible, clear and very well written. The research is through and the explanation of what happened and why is excellent. It’s gripping stuff and the petulant self-importance of some of the key players is not unfamiliar. I kept thinking of Trollope’s The Way We Live Now, and it’s hard to escape the idea that this kind of recklessness, the ‘bubble’ phenomenon is an almost inevitable consequence of the timeless combination of greed, FOMO and BS, as the book itself shows. I teach business law, including the requirements for flotations and quoted companies. WeWork is a cautionary tale that makes it very, very clear why the rules are so strict and why corporate governance, dry though it sometimes is, really does matter. There are some parts of this which make me very angry, such as accounts of Rebekah Neumann’s resistance to paying teachers at her WeGrow school a decent salary because they should be honoured to be involved in a visionary project. Because it’s not like they have bills, or rent or families. The treatment of staff, particularly women is pretty distasteful, too. Maternity leave is a ‘vacation’ apparently, and let’s not even start on the allegations regarding the gender pay gap. If you want to change the world, maybe start small by treating your team properly. Although this is a story which is probably not yet over, this is a great account of where we are now, and I cannot recommend it highly enough.
June 20, 2022
Perfectly solid account of the WeWork fiasco, if a bit dry? But you certainly get all the facts, particularly as they pertain to the money/shenanigans--and because the writers specialize in related subjects at the WSJ, when they get into the weeds in IPOs and the like, it's well explained. If, like me, you watched the documentaries as well as WeCrashed, this is helpful reading.
I did listen to the audiobook while I was cooking, which as always may have contributed to my reading experience. But I do think it would have felt dry even if I'd read it via ebook? Meaning: if you want a juicy, salacious tale with a Bad Blood feel, this isn't quite that book. But it WAS illuminating. Solid middle of the road for me. No regrets reading it, but it wasn't my fave.
I did listen to the audiobook while I was cooking, which as always may have contributed to my reading experience. But I do think it would have felt dry even if I'd read it via ebook? Meaning: if you want a juicy, salacious tale with a Bad Blood feel, this isn't quite that book. But it WAS illuminating. Solid middle of the road for me. No regrets reading it, but it wasn't my fave.
August 2, 2021
In addition to being a thorough recounting of the Wework ascent and fall from grace, this book does an excellent job laying out the basics of public and private financing, corporate governance, and other financial topics for lay readers. The authors provide context and meticulous detail to allow readers to understand the gravity of Wework's failures. As much as this book absolutely rips on the Neumanns, the most searing indictment is reserved for the financial system and its key players, who knowingly abetted greed and megalomania, by blindly funding the hazy false promises of silicon valley startups like Wework.
December 8, 2021
Better than Billion Dollar Loser: The Epic Rise and Spectacular Fall of Adam Neumann and WeWork — it’s like a train wreck you can’t look away from.
Right up there with Elizabeth Holmes and Theranos.
Right up there with Elizabeth Holmes and Theranos.
July 30, 2021
1,000 writers could write for 100 years and not come up with a crazier sotry.
October 13, 2021
This is a story about how the fear of missing out on The Next Big Thing caused smart people with lots of money to ignore flashing warning signs as they threw ungodly sums of money at a real estate company pitching itself as a technology company. The distinction is crucial in the book’s setting and the authors do a very good job of explaining why. They also remind the reader again and again that WeWork is a real estate company. It all sounds very simple, which makes it interesting to see how fear and desire made it so cloudy.
WeWork isn’t based on bogus technology like Theranos and it didn’t rely on accounting trickery to fuel growth like Enron. That its valuation grew into the many billions is due in large part to the investment climate circa 2010-2019 and the company’s co-founder, Adam Neumann. Neumann is the center of gravity for the company and the book. Young, tall, energetic, charismatic and messianic he propels WeWork from a small company leasing office space to a juggernaut on the verge of a massive IPO. As WeWork goes so goes Neumann and his transformation from underdog entrepreneur to megalomaniac over the course of the book is startling.
Here’s a tiny sample of the kind of guy he became:
“Senior executives would be asked to fly to San Francisco with little notice for an in-person meeting with Neumann, only to wait for hours. Sometimes he didn’t meet them at all; on several occasions, he had left the country by the time the staffer arrived, or he was there and simply wouldn’t have time for the person. Other meetings were endless. Midway through some long executive sessions, Neumann’s assistant would walk in and set out silverware and a napkin in front of him, then bring him a meal prepared by his personal chef. As his colleagues continued to talk about the topic at hand without any meals of their own, Neumann would devour his lunch. More than once, co-workers observed him pull his plate up to his mouth and lick it clean.”
WeVomit!
The authors do a great job of telling the tale of Adam Neumann and WeWork. The writing is straightforward and unadorned. The chapters are short. There’s not much, if any, technical jargon and business particulars are helpfully explained without ever bogging the story down. The narrative doesn’t meander. You can read it for the business aspects or for the Adam Neumann story or both. What’s more fun than seeing smart, rich people do really dumb things?
WeWork isn’t based on bogus technology like Theranos and it didn’t rely on accounting trickery to fuel growth like Enron. That its valuation grew into the many billions is due in large part to the investment climate circa 2010-2019 and the company’s co-founder, Adam Neumann. Neumann is the center of gravity for the company and the book. Young, tall, energetic, charismatic and messianic he propels WeWork from a small company leasing office space to a juggernaut on the verge of a massive IPO. As WeWork goes so goes Neumann and his transformation from underdog entrepreneur to megalomaniac over the course of the book is startling.
Here’s a tiny sample of the kind of guy he became:
“Senior executives would be asked to fly to San Francisco with little notice for an in-person meeting with Neumann, only to wait for hours. Sometimes he didn’t meet them at all; on several occasions, he had left the country by the time the staffer arrived, or he was there and simply wouldn’t have time for the person. Other meetings were endless. Midway through some long executive sessions, Neumann’s assistant would walk in and set out silverware and a napkin in front of him, then bring him a meal prepared by his personal chef. As his colleagues continued to talk about the topic at hand without any meals of their own, Neumann would devour his lunch. More than once, co-workers observed him pull his plate up to his mouth and lick it clean.”
WeVomit!
The authors do a great job of telling the tale of Adam Neumann and WeWork. The writing is straightforward and unadorned. The chapters are short. There’s not much, if any, technical jargon and business particulars are helpfully explained without ever bogging the story down. The narrative doesn’t meander. You can read it for the business aspects or for the Adam Neumann story or both. What’s more fun than seeing smart, rich people do really dumb things?
dnf
February 19, 2022DNF @ 17%
I’m sure it eventually gets to the juicy corporate collapse that I was interested in, but I’m bored of reading through economics lectures. Not for me.
I’m sure it eventually gets to the juicy corporate collapse that I was interested in, but I’m bored of reading through economics lectures. Not for me.
June 29, 2025
The various government agencies that investigated the collapse of WeWork's IPO concluded that what happened was the result of short-sighted optimism rather than fraud. I'm not so sure. Through the entire period of Adam Neumann's management of the company, it made ever larger losses, yet he left the company a billionaire. If this was a scheme, it worked.
His fortune had been achieved not by making profits, but by attracting new capital. He did this presenting a fairly pedestrian office sub-leasing business as a disruptor operation with the potential of Amazon or Facebook. This is turn was done by showing extraodrinary revenue growth and adopting the managerial and corporate style of a tech company. But the revenue growth was not organic and corporate styling resulting in massive overheads.
Revenue growth at WeWork depended on rapidly turning new capital into leased property to sub-lease. These leases were not by the standards of the industry particularly profitable. This issue was disguised by creative accounting; the lackluste profitability of the lease's were dressed up in measure, otherwise new to accounting, called "community-EBITDA". As far as I can work out this meant that the full cost of the lease was not amortized over its term, and the rent-free period at the beginning of the lease was presented as profit. Given WeWork's rapidly growing overhead, the business was actually making ever increasing losses, and was entirely dependent on increasingly larger injections of capital to stay solvent. With each injection of capital, Numan sold significant amounts of his orignal shareholding to his new investors, at the latest growth based valuation of the company, thus turning his paper gains into real ones.
This looks like a version of a ponzi scheme. The early investors were paid off not with cash dividends, but with paper profits calculated on the basis of what later investors were prepared to pay for their rapidly growing business. The major difference being the in the usual run of a ponzi scheme, the investors are small retail punters, here the investors were seasoned professionals. In fact the scheme finally unravelled before the whole sorry mess was to be unloaded on ordinary punters through the IPO. I'm suspicious of Adam Neumann because he made early and repeated moves to cash out his position, that's how he became an billionaire long before the business was floated. His victims were primarily the long term employees of WeWork who were left holding valueless stock options. In a ponzi scheme it is usually the later investors who lose most. But its hard to feel sympathy for the bankers and fund managers who either fell for Neumann's scam, or were happy to go along with it. Presumably they also felt they would unload their positions on ordinary punters at the IPO. Anyway none of those involved were disciplined for what obviously a lack of due dilligance. The ordinary punters who who hold the funds and banks stocks ultimately absorbed what the banks and funds squandered on WeWork.
The whole episode highlights the systematic flaw in the financial services industry where people are encouraged to get rich betting with other people's money. Maybe it this was a less familiar srory it would have been a more interesting story.
His fortune had been achieved not by making profits, but by attracting new capital. He did this presenting a fairly pedestrian office sub-leasing business as a disruptor operation with the potential of Amazon or Facebook. This is turn was done by showing extraodrinary revenue growth and adopting the managerial and corporate style of a tech company. But the revenue growth was not organic and corporate styling resulting in massive overheads.
Revenue growth at WeWork depended on rapidly turning new capital into leased property to sub-lease. These leases were not by the standards of the industry particularly profitable. This issue was disguised by creative accounting; the lackluste profitability of the lease's were dressed up in measure, otherwise new to accounting, called "community-EBITDA". As far as I can work out this meant that the full cost of the lease was not amortized over its term, and the rent-free period at the beginning of the lease was presented as profit. Given WeWork's rapidly growing overhead, the business was actually making ever increasing losses, and was entirely dependent on increasingly larger injections of capital to stay solvent. With each injection of capital, Numan sold significant amounts of his orignal shareholding to his new investors, at the latest growth based valuation of the company, thus turning his paper gains into real ones.
This looks like a version of a ponzi scheme. The early investors were paid off not with cash dividends, but with paper profits calculated on the basis of what later investors were prepared to pay for their rapidly growing business. The major difference being the in the usual run of a ponzi scheme, the investors are small retail punters, here the investors were seasoned professionals. In fact the scheme finally unravelled before the whole sorry mess was to be unloaded on ordinary punters through the IPO. I'm suspicious of Adam Neumann because he made early and repeated moves to cash out his position, that's how he became an billionaire long before the business was floated. His victims were primarily the long term employees of WeWork who were left holding valueless stock options. In a ponzi scheme it is usually the later investors who lose most. But its hard to feel sympathy for the bankers and fund managers who either fell for Neumann's scam, or were happy to go along with it. Presumably they also felt they would unload their positions on ordinary punters at the IPO. Anyway none of those involved were disciplined for what obviously a lack of due dilligance. The ordinary punters who who hold the funds and banks stocks ultimately absorbed what the banks and funds squandered on WeWork.
The whole episode highlights the systematic flaw in the financial services industry where people are encouraged to get rich betting with other people's money. Maybe it this was a less familiar srory it would have been a more interesting story.
September 9, 2021
Listened to this...it's enjoyable for sure just considering the sheer scope of the we work delusion bubble, and how lucrative it was. There isn't really a satisfying ending though, since Neumann and family seem to sail off into a bright future on a golden parachute. The writer tries to frame the ending as though the failure of wework heralded a new more grounded climate for start ups, but I can imagine Neumann making a triumphant return with an exciting new project. As far as start up debacles go, I preferred Bad Blood by John Carreyou--I think because there were more accounts by ex staffers which rounded out the story for me. In the Cult of We I felt a little buried in accounts of financial maneuvers that aren't really legible to me.
May 14, 2022
Interesting thread here I noticed in Theranos, War Dogs, and similar. It’s easy to blame just Adam Neumann or SoftBank. But it’s the whole ecosystem that’s complicit. Real Estate landlords, VC investors, bankers, anyone in a position of influence over the rise of the company. If it was just one person, one group of people we work would’ve never grown to the absolutely mind-boggling size it did. Macro factors and dozens of groups of people contributed to this fiasco. And it seems like the system has mostly carried on.
That said, decent book. Reasonably written.
That said, decent book. Reasonably written.
February 18, 2023
4 stars. An excellently written, in-depth look at the rise and fall of WeWork. I think I like Billion Dollar Loser slightly more than this one, but they're pretty similar overall.
August 19, 2021
Well this was quite the trainwreck. What I most liked about this book was everything around WeWork and Adam Neumann: The solid narrative of raising money for a startup, the leadup to IPO (and getting the S1 right [or wrong, in this case]), and so forth.
The story is really quite repetitive: Each chapter is either devoted to raising more money in order to increase revenue; or a story about Neumann's excesses; or the discovery that despite the last round of money, they don't have enough money to proceed. It's that simple. However, the horribleness of the sequence is a narcotic. Can it really be this bad? Can it get worse? Oh yes it can.
A possibly toxic drinking game would be to down a shot every time the authors say that Neumann propagates some new thing that doesn't show a "good look."
I also read Bad Blood: Secrets and Lies in a Silicon Valley Startup and I have to say that Neumann is worse that Elizabeth Holmes, because there was simply nothing there with Neumann except for his charisma. Because of his dyslexia, he never seemed to know the numbers or the putative tech of the company.
On the one hand you think "how could these investors be this stupid?" And then you realize: Oh, because they're dumb. And really, really greedy. You also wonder why so many people stuck with Neumann (particularly Jen Berrent). Could people not have been telling these insiders "get out while you still can?"
I found this whole story so nutty I may need to read the other book on WeWork, Billion Dollar Loser: The Epic Rise and Spectacular Fall of Adam Neumann and WeWork.
The story is really quite repetitive: Each chapter is either devoted to raising more money in order to increase revenue; or a story about Neumann's excesses; or the discovery that despite the last round of money, they don't have enough money to proceed. It's that simple. However, the horribleness of the sequence is a narcotic. Can it really be this bad? Can it get worse? Oh yes it can.
A possibly toxic drinking game would be to down a shot every time the authors say that Neumann propagates some new thing that doesn't show a "good look."
I also read Bad Blood: Secrets and Lies in a Silicon Valley Startup and I have to say that Neumann is worse that Elizabeth Holmes, because there was simply nothing there with Neumann except for his charisma. Because of his dyslexia, he never seemed to know the numbers or the putative tech of the company.
On the one hand you think "how could these investors be this stupid?" And then you realize: Oh, because they're dumb. And really, really greedy. You also wonder why so many people stuck with Neumann (particularly Jen Berrent). Could people not have been telling these insiders "get out while you still can?"
I found this whole story so nutty I may need to read the other book on WeWork, Billion Dollar Loser: The Epic Rise and Spectacular Fall of Adam Neumann and WeWork.
August 21, 2021
I followed the collapse of WeWork as it was happening, but this book still wowed me with its detail. Adam Neumann sold the world on the fanciful notion that his office subleasing business could be a $10 trillion company that would solve global conflict and problems like ... orphans (??) And somehow people said: okay, yes, that seems reasonable, while pushing WeWork's valuation all the way up to $47 billion before reality set in. Along the way WeWork burned through billions in investor money, mostly from SoftBank, which it used to chase nonsensical business lines -- including wave pools and a private school helmed by Neumann's wife Rebekah -- and to throw parties and personally enrich its founder.
Obviously all the material on Neumann lighting money on fire is compelling. He gets high on a private jet. He invites employees to an annual corporate retreat-slash-music festival, which gets increasingly lavish every year and features the acts like Lorde, The Roots and Lin Manuel Miranda. He uses venture capital money to take stakes in two non-dairy coffee creamer companies, for some reason. He drinks tequila. So much tequila. He sends around tequila shots immediately following a round of layoffs at the company. He raises a toast at a work dinner "to nepotism."
Brown and Farrell do a particularly nice job explaining the characters who enabled Neumann, like Masayoshi Son and Jamie Dimon. They tease out the motivations of VCs, mutual fund managers, investment bankers and stock exchange operators chasing IPOs, and show why so many of them played into WeWork's fantasy. It's the emperor's new clothes in real life. Staggering.
Obviously all the material on Neumann lighting money on fire is compelling. He gets high on a private jet. He invites employees to an annual corporate retreat-slash-music festival, which gets increasingly lavish every year and features the acts like Lorde, The Roots and Lin Manuel Miranda. He uses venture capital money to take stakes in two non-dairy coffee creamer companies, for some reason. He drinks tequila. So much tequila. He sends around tequila shots immediately following a round of layoffs at the company. He raises a toast at a work dinner "to nepotism."
Brown and Farrell do a particularly nice job explaining the characters who enabled Neumann, like Masayoshi Son and Jamie Dimon. They tease out the motivations of VCs, mutual fund managers, investment bankers and stock exchange operators chasing IPOs, and show why so many of them played into WeWork's fantasy. It's the emperor's new clothes in real life. Staggering.
July 28, 2021
In the gold rush of start-ups and delusional dreamers, Adam Neumann might take the cake. These two Wall Street Journal reporters covered the story for years and go in-depth on the epic unraveling of a company that, at its essence, was a real estate company cloaked in tech terms with micro-kitchens and kegs that promised to revolutionize everything from work and housing to education. Neumann even dreamed that he could help colonize Mars. Why did so many intelligent people, including SoftBank, venture capitalists and Wall Street elite, fall for the hype? This book colorfully dissects how one long-haired, six-foot-five Israeli transplant bamboozled the world with his messianic truth-telling.
October 11, 2021
Crazy story. Major scam. Is too detailed a thing? I preferred the abridged version via the “We Crashed” podcast. This is a good book but too long by a bit.
March 26, 2022
This is my 4th corporate greed/corruption book in the last 18 months. (Bad Blood-Theranos, The Smartest Guys in the Room-Enron & No One Would Listen-Madoff)
In all four cases the disgusting greed of the villains is limitless and hard to fathom. Elizabeth Holmes, Ken Lay, Jeff Skilling, Bernie Madoff and now Adam Neumann were all snake oil salesman who lit other peoples money on fire as fast as they could while enriching themselves. In the case of Adam Neumann he was buying private jeets and his 8th expensive home as his company lost billions. Neumann believed his own hype, he thought he was the next Jeff Bezos but he's nothing more than a chump who never produced $1 of profit. As with the other high profile business corruption cases where were the accountants and regulators? How is it legal for a CEO to take out 500 million in private loans using his companies stock as collateral which of course became worthless.
The board of WeWork was feckless proving once again that these boards are useless. The only good news in this absurd saga is that most of money lost was from other uber rich people who should have known better like Masayoshi Sun of Softbank. The big problem is that thousands of employees suffered because of Adam Neumann's gluttony and lies and of course tax payers who never approved of these ridiculous investments but were forced to bail out banks who did invest like Chase.
The worst part of this incredible fraud is that Adam Neumann started a company with a failed idea and lost billions and yet somehow walked away a billionaire.
I thought Elliott Brown and Maureen Farrell did a nice job of telling this story in a fast paced enjoyable way.
In all four cases the disgusting greed of the villains is limitless and hard to fathom. Elizabeth Holmes, Ken Lay, Jeff Skilling, Bernie Madoff and now Adam Neumann were all snake oil salesman who lit other peoples money on fire as fast as they could while enriching themselves. In the case of Adam Neumann he was buying private jeets and his 8th expensive home as his company lost billions. Neumann believed his own hype, he thought he was the next Jeff Bezos but he's nothing more than a chump who never produced $1 of profit. As with the other high profile business corruption cases where were the accountants and regulators? How is it legal for a CEO to take out 500 million in private loans using his companies stock as collateral which of course became worthless.
The board of WeWork was feckless proving once again that these boards are useless. The only good news in this absurd saga is that most of money lost was from other uber rich people who should have known better like Masayoshi Sun of Softbank. The big problem is that thousands of employees suffered because of Adam Neumann's gluttony and lies and of course tax payers who never approved of these ridiculous investments but were forced to bail out banks who did invest like Chase.
The worst part of this incredible fraud is that Adam Neumann started a company with a failed idea and lost billions and yet somehow walked away a billionaire.
I thought Elliott Brown and Maureen Farrell did a nice job of telling this story in a fast paced enjoyable way.
July 3, 2022
Still chasing the high of Bad Blood, I was once again let down by a startup exposé. The writing did not do it for me like John Carreyrou's. The Cult of We gets lost in the Adam Neumann circus. I wish they'd focused more on the core question -- who were the victims here? Maybe Theranos is a more compelling subject than WeWork because WeWork only defrauded the big guy (investors), not the little guy (office renters), though Theranos was found not guilty of harming patients in court 👀. Also, unlike Theranos the core business seems to actually be solid, since WeWorks still exist today.
With one home run (Bad Blood) and two strikes (The Cult of We, Super Pumped) will I continue to pick up these books? We'll see. I'm still not interested in any of their corresponding TV shows.
Read with book club!
With one home run (Bad Blood) and two strikes (The Cult of We, Super Pumped) will I continue to pick up these books? We'll see. I'm still not interested in any of their corresponding TV shows.
Read with book club!
August 7, 2021
Really well written, with a bunch of financials and accounts turned into plain english. The story is crazy and there are so many points where I was just wondering is it the *next* page where this is all going to tumble down... but no, it goes and it goes and it goes.
Well written, well researched and a surprisingly easy read.
Well written, well researched and a surprisingly easy read.
January 30, 2023
Things I learned from reading this book:
1. Money is made up
2. Rich people will do literally anything other than be normal
3. It takes a lot of fraud before someone will stop you and go "hey, maybe stop committing fraud"
1. Money is made up
2. Rich people will do literally anything other than be normal
3. It takes a lot of fraud before someone will stop you and go "hey, maybe stop committing fraud"
October 9, 2022
Quick thoughts! I had never heard of WeWork until the tv show based on this book came out.
I find startup culture fascinating and this book was such an interesting look at the genesis and story of this company and it’s founder(s)!
I find startup culture fascinating and this book was such an interesting look at the genesis and story of this company and it’s founder(s)!
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