I don’t know much about Reeves Wiedeman other than he’s a contributing editor at New York magazine and has the perfect name for a New York butler. But having inhaled his Wall Street Journal bestseller Billion Dollar Loser, it’s clear ol’ Reeves doesn’t suffer fools gladly and there is no shortage of dullards throughout the book. The only way his subject, the execrable Adam Neumann who co-founded the house of cards WeWork, built his coworking company and ill-gotten wealth was by continually bullshitting the gullible. That includes staff which was lousy with “post-recession Millennials entering the workforce with Obama-era ideals,” recent yes-we-can grads who’d been convinced they were boarding a rocket ship (to where exactly later becoming an inside joke). Neumann was ruthless from the start in his demands of grunts and executives alike with everyone expected to paint walls and push brooms to keep the breathless pace of growth – which only accelerated staggering losses – on the supposed path to going public.
The key here is value or rather the shaky perception thereof. Having proven the flexible space rental concept in Brooklyn, Neumann started slithering his way through lower Manhattan, borrowing heavily ideas from up-start operators in the nascent industry. Embarking on a charm offensive, he got an otherwise savvy real estate developer to whom it seemed “there wasn’t much harm in throwing out an outrageous number” to take a stake at a $45 million level. That a real estate business without a single operating location was worth anything is of course beyond silly and yet it worked. Wiedeman calls this the original sin as every subsequent funding round was built upon (and further caused) an ever-rising valuation that made zero sense. To further justify itself as a so-called unicorn and continue to raise enormous amounts of capital, Neumann positioned it as a tech company of all things. While it had nothing innovative to offer outside of glass cubes and a hip vibe, WeWork focused on having its small team of engineers attempt to present “space as a service” because, well, SaaS businesses command the highest valuation metrics. Software, space… what’s the diff, really? Call it a platform, the cloud. Why not?
Welcome to the downside of a decade-plus bull market. Investors – most notably the SoftBank and Vision Fund founder Masayoshi Son, who it seems divides time between Japan and Pluto – wander farther & farther away from core fundamentals while falling prey to cults of personality. That combined with a fragmented industry like real estate where even the largest firms control only a tiny fraction of the market will lead many to forget their times tables. As growth continued at breakneck speed, most WeWorkers were counting on a successful IPO for the make-good on promised stock options. Whoops. If not for the pesky SEC and its insistence on a clean S-1 filing with generally accepted financial metrics and the elimination of conflicts of interest, loyal team members may have been able to cash out. Wiedeman skillfully builds to a crescendo at this point in the absurd tale with Neumann’s daft wife Rebekah at the center of it all, stuffing corny photos alongside disclosure documents. When the IPO was pulled in autumn 2019, the power couple was kicked to the curb by the board (with their riches intact, naturally). At present, WeWork is viewed no differently than other staid public competitors like IWG: flex space with copiers & coffee, only now run by the accountable adults in the room. Go figure.
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