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July 27 - August 1, 2022
WeWork’s core business was simple. It leased space, cut it up, and rented out each slice with an upcharge for hip design, flexibility, and regular happy hours. Other companies had risen, and in many cases fallen, by offering more or less the same service, which amounted to a straightforward arbitrage: lease long, rent short, and collect the margin.
He had long resisted the obvious—that WeWork was a real estate leasing company—insisting that it was anything but: it was a tech start-up, a social network, a “community company,” an organization bent on reshaping society.
Eigenfeld declared at the time that he saw only two paths for Neumann. “Either Adam will end up in jail,” Eigenfeld said, “or he’ll become a millionaire.”
As a business proposition, environmentalism didn’t offer much more than a marketing gimmick.
The next day, they told Schreiber that WeWork, which didn’t have a single location, was worth $45 million. Without asking questions or pushing back, Schreiber agreed to commit $15 million to fund the idea in exchange for a third of a company that did not yet exist.
WeWork would present an alternative to the American dream, which no longer meant decades spent climbing a corporate ladder.
Like most young companies of the 2010s, WeWork made use of several unpaid interns, who were tasked with googling “how to fix a pinball machine” when Adam and Miguel didn’t want to pay a professional, and figuring out how to acquire a 212 area code, a rare New York treasure.
Every early WeWork employee joined the company in amorphous roles that invariably required more construction work than their job titles suggested.
“See?” Adam said. “I can hire a bunch of young people and pay them nothing.”
Adam’s focus on growth at the expense of profitability fit with an emerging business theory that it was best to acquire customers by any means necessary and then figure out how to make money later.
Elam couldn’t figure out how WeWork’s numbers could bridge the gap between Adam’s promise of massive profits and the realities of the coworking business she knew so well.
WeWork’s business didn’t seem to share much with the tech companies taking off in the Mission or Menlo Park. The empires of the 2010s—Facebook, Twitter, Uber, Airbnb—were being built on “platforms” with “network effects” that made them more and more valuable with each user that signed up;
The firm looked for businesses that scaled; WeWork had to build new spaces to get more customers, which was a lot more expensive than signing up new users on an app, or convincing people to use their own cars to serve as your taxi drivers.
WeWork’s Series D put it among the world’s dozen most valuable unicorns, ahead of Spotify and just a few spots behind Theranos.
“There is a fool in every market,” Gurley wrote, quoting Warren Buffett. “If you don’t know who it is, it is probably you.”
he says he saw that many people close to Adam were being handsomely rewarded. Meanwhile, the company had forgotten to renew its corporate health-care plan, leaving rank-and-file employees without their insurance for a month.
As Adam tried to placate the crowd of janitorial workers outside WeWork headquarters, he told them that he, too, had come to New York “chasing the American dream” and “wanting to change the world.” He said that “when I was a little kid, me and all my family lived in a house the size of my daughter’s room,” ignoring the fact that most of the cleaners might still be living in similarly cramped situations while the Neumanns chose between their multiple vacation homes.
The disconnect didn’t necessarily come as a surprise to WeWork’s employees, who were already familiar with the company’s disregard for the forty-hour workweek. Adam and other WeWork executives pushed an idea that had become common at most start-ups: your company is your family.
But WeWork had never shown much interest in employees maintaining a life beyond the company. Long hours became a badge of honor, and executives stayed after TGIM for weekly late night meetings with Adam.
Multiple female employees said that when they were interviewing for jobs, Adam asked if they had plans to be pregnant soon—the implication being that this would get in the way of what needed to be done.
“The nature of the private markets is that if nine smart investors pass, it only takes one relatively dumber investor, and suddenly we’re valued at $16 billion,” the finance team member said.
“Adam was always finding ways to force teams, and people within teams, to compete with each other, as if it were all a zero-sum game.”
Since the beginning of time, humans have sought to overcome sorrow. Some have turned to religion. Others have sought solace in philosophy or art.
“Work hard and in silence, then let success make the fucking noise.”
At Summit, Frances Frei, a Harvard Business School professor, gave a talk about her belief that companies often get in trouble when they began to “wobble” in one of three areas: authenticity, logic, and empathy.
“There’s so many little ways that a company like this tells the next generation of entrepreneurs what success looks like. One way to ask this question is, in the system we have set up, do the people who were successful reflect the values we want? Should we care, or not care, if someone makes a lot of money exploiting the system?”
“The reason I care is that if the most successful companies are the ones that just drive really hard, and play fast and loose with the truth,” Schwartz said, “then maybe the whole idea that capitalism is great, or even useful, is really challenging to uphold.”
At just shy of two hundred thousand words, WeWork’s S-1 was more than three times longer than Uber’s and nearly as long as Moby-Dick. Yet it didn’t seem to do a very good job explaining what WeWork actually did and why its business had potential.
When Travis Kalanick was pushed out of Uber, in 2017, his ouster was met with protest from employees who couldn’t imagine the company without him. But Adam had managed to upset practically every person at WeWork, from his executive team down to the new community manager in Johannesburg he never got to meet. In a matter of six weeks, Adam’s bluster, antics, and delusions of grandeur had been revealed as both the reason why he was able to persuade investors and employees that, just maybe, this office-space company could change the world—and the primary reason why things fell apart.
