Explaining the rise and fall of WeWork

IT was hard to believe, back in 2019 when the We Company pyramid began to publicly crumble, that investors, journalists and consumers had been so hot and heavy for the "innovative" and "disruptive" novelty of WeWork's widget: office space.

Two years later, after a pandemic transformed commercial real estate into dusty time capsules mostly devoid of human beings, it is even harder to grasp. Office space!

But the unbelievability of the rise and fall of a company that marketed itself to investors as a tech enterprise when it actually rented work space to gig-economy freelancers and starry-eyed entrepreneurs is part of the considerable lure of The Cult of We: WeWork, Adam Neumann, and the Great Startup Delusion, a juicy guided tour through the highly leveraged, not-quite-rags-to-billion-dollar-parachute saga of WeWork and its co-founder Adam Neumann, a startup demagogue who aspired to be a demigod, but got hamstrung by his ego and greed.

"The fund-raising conveyor belt had provided Neumann with the money not only for extravagant parties but also for constant, rapid expansion," write the authors, Eliot Brown and Maureen Farrell, both reporters for The Wall Street Journal, in setting the scene for a 2019 three-day "global summit" bacchanal in which Mr Neumann worked to pump up his employees, his own sense of omnipotence and his company's coffers with new investment.

By this time, the company had 425 locations in 27 countries under its shingle, with 400,000 members paying to work and loll at its "instantly recognisable bluish glass-walled offices and common areas that looked like Brooklyn coffee shops", they write. Decor inspired by gentrification should have been a tip-off. "Neumann's obsession was doubling revenue every single year, a breakneck pace of growth that was far faster than the software companies to which Neumann liked to compare WeWork," they write.

But Mr Neumann was also obsessed with his personal enrichment. "His own lifestyle mirrored his rising brand," the authors note, laying out the absurd particulars of that life as he approached the 2019 summit: "A few weeks earlier, he'd taken the company's private jet to Kauai, where he hit the waves with the surf legend Laird Hamilton. Neumann now pegged his personal net worth at US$10 billion. He had seven homes, and a trail of support staff followed him everywhere, including a hairdresser and a stylist who had flown in from New York to Los Angeles especially for the summit."

A NEWSLETTER FOR YOU

Friday, 2 pm

Lifestyle

Our picks of the latest dining, travel and leisure options to treat yourself.

Sign Up

Sign Up

Ripe for telling and retelling

If some of this sounds familiar, it probably is. Since 2020, we have been served a Hulu documentary about Neumann and WeWork, two podcast series and, most notably, a book on the saga, Reeves Wiedeman's Billion Dollar Loser: The Epic Rise and Spectacular Fall of Adam Neumann and WeWork, which was published in October 2020. I listened to an audio version of Wiedeman's book over the course of a few long drives during the pandemic's most isolating days and revelled in every last gasp-out-loud detail.

But clearly my thirst was not quenched, because I guzzled Brown and Farrell's The Cult of We the way Mr Neumann might gulp bottled water after smoking so much pot on a private jet that flight attendants would reach for their air masks. (This was actually reported by Brown and Farrell.)

Why can't I - or we - get enough? The answer may lie in a single example of the excessive greed. Mr Neumann and his founding partner registered a trademark on commercial use of the word "We", and then charged the company US$5.9 million for the word when it was used in the We Company branding.

This in no way represented the only unconventional arrangement between the company and its chief executive officer (CEO). But when the disclosure was included in filings the We Company was required to make as part of a planned public stock offering, the press and potential investors zeroed in. The gig was up. Mr Neumann capitalising on a generic, communal pronoun - and that leading to his comeuppance - is not a mere anecdote. It is an allegory, and thus ripe for telling and retelling. It is also a microcosm of the whole WeWork debacle.

The Cult of We separates itself from Billion Dollar Loser by quickly passing over Mr Neumann's upbringing and experiences on kibbutzim and in the Israeli military, as well as the origins and earliest days of WeWork. (Miguel McKelvey, who founded WeWork with Mr Neumann but stood back as his partner seized control, is almost a forgotten player in Brown and Farrell's telling of the story - though one can imagine Mr McKelvey will not mind being overlooked by history.)

Instead, the book saves its firepower for the cataclysmic combination of Mr Neumann's gift for salesmanship, addiction to fund-raising and focus on his personal wealth. We meet weak venture capitalists who kowtow to charismatic entrepreneurs as well as mutual-fund directors, investment bankers and deep-pocketed benefactors such as SoftBank's Masayoshi Son who enabled Mr Neumann.

Brown and Farrell show an agility for explaining key business dynamics that are crucial both to understanding specific moments in WeWork's trajectory, and also to grasping the role of public and private investors in the company's successes and failures. They do so without slowing down the narrative or overdoing it such that readers well versed in business might find it boring or pedantic.

They lay out a brief history of economic bubbles (tulips, railroads, Beanie Babies). They give a quick primer on earnings before interest, taxes, depreciation and amortisation (Ebitda), which becomes important later in the book as Mr Neumann's posse jimmies this accounting metric to better market the company to investors. One of the most fascinating chapters is called "Mutual Fund FOMO" - in reference to the so-called fear of missing out - a title that connects contemporary pop psychology and vanilla financial vehicles. "The mutual funds were tired of missing out" after decades of watching investors make a killing on privately held tech companies, the authors write. "So numerous mutual funds opened their spigots to startups."

The value of 'we'

The Cult of We is a book that calls for keeping a pen handy so you can write in the margins, giving the Greek chorus in your head a place to pop off. Opening to random pages in my copy, I see my own chicken scratch: "psychotic brilliance" on page 83; "pyramid" on page 182; "THE BOARD IS SO DUMB" on page 237; and "sick burn" next to the last line of the last chapter - spotted at the airport last December, the Neumanns, we're told, "were flying commercial". (Myriad pages are sprinkled with "LOL" (laugh out loud), "ruh-roh" and "This Guy!" I suspect you, like me, will have plenty to margin-scribble about This Guy's Wife too. Oh boy.)

It's also very funny, with Brown and Farrell employing wry juxtaposition and understatement to enjoyable effect. One example among many: Mr Neumann scoffed at suggestions that he hire a more experienced executive to advise him, as Mark Zuckerberg had done in hiring Sheryl Sandberg. The authors write: "He repeatedly told lieutenants, 'I am both Mark and Sheryl.' He wasn't."

The narrative is written straight through, with Brown and Farrell rarely breaking in to attribute their reporting to specific sources. Instead, that information is packed into extensive notes at the end of the book. It may make the nearly 400 pages brisker to read for some, but I was frequently toggling back and forth to try to surmise how the authors knew what they were telling me.

The Cult of We is coming out months after other storytellers have framed the WeWork saga with their own focuses and flourishes. But Brown and Farrell's book may be the most perfectly timed. As much of the white-collar work force enjoys - or tolerates - its final weeks of working from home, we (I think I'm allowed to use "we" in this context without paying anyone) are preparing to re-engage with our crumbs-in-the-keyboard cubicle culture.

As I have been bracing myself for just that, The Cult of We reminded me of the inherent (non-monetisable) value of being one that helps comprise a "we". NYTIMES

THE CULT OF WE WeWork, Adam Neumann, and the Great Startup Delusion By Eliot Brown and Maureen Farrell 446 pp. Crown. Available at amazon.sg for S$32.18 (hardcover)