Book Review: The Cult of We: WeWork, Adam Neumann, and the Great Startup Delusion by Eliot Brown and Maureen Farrell
It’s a strange experience to read a non-fiction book and not be able to relate to a single thing that’s going on in it. This feeling begins with the premise of the company itself, a odd fantasy based on the idea that every office job is full-time work and a part-time party where the phrase “Thank God it’s Monday” is said with not a hint of irony, a place where people would happily pay for the privilege of going to hang out with extroverted weirdos, while somehow trying to get an actual job done.
Then there’s the corporate culture of WeWork itself. I don’t consider myself a prude and I know all industries are different and even a few decades ago some things that would be considered normal then are now verboten, but I couldn’t get over the amount of alcohol they seemed to be consuming at work during normal business operations. It felt like every few pages there was another event or incident where multiple tequila shots were handed out, even at something as seemingly serious as a job interview.
The undue deference paid to founder Adam Neumann both within the company and from outsiders is certainly in retrospect something that stands out as baffling. But it’s a great demonstration of how certain personality types seem to get away with outrageous and frankly unacceptable behavior that the vast majority of us couldn’t.
Every few pages we’re introduced to someone at the head of a company or fund or bank (including names like JPMorgan Chase’s Jamie Dimon) who absolutely should have known better than to get involved. And more frustrating is that not only should they have known better, in many cases they did know better. A recurring theme in this book is teams of accountants running the numbers on WeWork’s business, telling their bosses that the financials don’t make any sense and those bosses going right on with the deal anyway. Managers ignoring their subordinate experts at least was as close to being a relatable experience that I could find.
Eliot Brown and Maureen Farrell’s deep dive into WeWork, The Cult of We: WeWork, Adam Neumann, and the Great Startup Delusion, is a fascinating look at the culture and business “strategy” of this wild organization. I put “strategy” in quotations as it’s obvious that virtually everyone at the top was clearly just winging it. I often assume that people at the upper echelons are not always working from a formal plan but seeing the details of how these people were throwing stuff at the wall to see what would stick is still astounding. WeWork bought smaller companies not after a careful look at their assets or their business plans or revenues, but simply because Adam Neumann had a good feeling that they could help make WeWork more of a “tech” company, even though it clearly wasn’t.
The book starts with a brief introduction to Adam Neumann’s early life. We get broad strokes about his early business ventures (including selling infant’s pants with built in knee pads to protect the knees of crawling toddlers). We move into his initial creation of what would become WeWork, a simple company with an easy-to-understand business model. Rent a large office building in a big city, build small offices, conference rooms and/or open office floor plans inside and then sublet those spaces, collectively for more money than they pay to lease the building.
The authors do a great job of explaining the reasoning behind Neumann’s insistence that WeWork be seen as a tech company rather than a real estate company, as well as everyone else’s desire for that to actually be true. Tech companies can have large initial costs developing infrastructure, but the idea is that once they have that base established they can scale up and start selling software and services to many more people with little additional expenditure and the profits increase exponentially.
Real estate, of course, doesn’t work like this. In order to expand, you need to buy or rent property. Those initial costs of expanding never go away, so the profits grow linearly. Good for what it is, but not the massive exponential increases than a tech company can generate. It was in everyone’s interest for WeWork to be a tech company, even if nothing about it was particularly techy, new or innovative.
The book then spends a lot of time on the various ways Neumann was able to raise private money in order to supercharge the company’s expansion. Remember, this was the early to mid-2010s where companies like Uber and MoviePass were embracing the idea of expansion over profits with the idea being that if these companies got big enough, their sheer size would be sufficient to overcome any deficiencies in their business model. The fact that these companies were losing venture capitalists’ money hand over fist didn’t seem to bother anyone.
We then meet Masayoshi Son and his SoftBank. His habit of giving startup companies he liked more money than they actually asked for fueled the worst of Adam Nuemann’s instincts, leading him on the roller coaster and unhinged path he and WeWork took until their disastrous and failed IPO attempt in late 2019.
The book’s narrative goes a little bit into the post-Neumann WeWork as it tried to navigate without its founder but moving into the COVID-19 pandemic where shared office space was suddenly one of the least desirable commodities imaginable. But the book doesn’t stay away from its main character for long; we also give some short updates on how Adam Neumann sees his post-WeWork life.
Another thing that was hard for me to wrap my head around was the various actors throwing around dollar amounts with absolutely no math or research behind the figures. “We’ll give you a loan of X billion dollars. If that isn’t enough, Y billion is another arbitrary number that we’ll add to X, so you’ll get X + Y billion. How does that sound?” There seemed to be no reasoning or strategy behind these sessions other than an understanding that if funding was secure, surely SOMEONE would know what to do with it.
It’s astounding that Neumann’s breezy insistence that WeWork was a tech company rather than a simple real estate company was taken at face value by so many “smart” investors. One can claim this only became clear in retrospect, except that there were people at the time who figured out very quickly what was hiding behind the Wizard of Oz’s curtain. The book spends time discussing Mark Dixon, the head of Regus (later rebranded IWG), a business that sublets office space — virtually the identical business model to WeWork. After spending time researching the business (which included temporarily renting some WeWork space), he concluded the company was ridiculously overvalued and was doing very little that was particularly earth shattering.
But the book keeps coming back to the staggering arrogance and self-assuredness of Adam Neumann, a man who would surely benefit from a healthy dose of imposter syndrome. The displays of opulence are outrageous. Personal jets, massive mansions, incredibly huge personal loans. And the megalomania is really incredible. Adam and his wife Rebekah seemed to genuinely believe that a simple office space/desk subletting business was the stepping stone to redefining the way humanity works, the way we educate our children, the way we live. There didn’t seem to be a limit to how much they thought they could transform the lives and institutions of everything on the planet. I stress again, this is a company that slapped paint and glass partitions onto existing structures, handed out free booze to workers and called it a new philosophy of employment.
Towards the end, as the planned WeWork IPO has crashed and burned the authors draw parallels to the other big players in the “tech” industry at this time who were suddenly plummeting back to Earth:
“A similar if less dramatic realization was sweeping staff at other companies fueled on the same high-octane Silicon Valley hype. Even Uber zealots who believed they were working for a life-changing Amazon of transportation were now forced to look at the stock price and conclude that the public markets saw it less like the new Google or Amazon and more like the car service app company it was, albeit one growing fast. Mattress companies were becoming mattress companies, not mission-driven, tech-fueled future-of-sleep companies. Scooter companies were just offering scooters, not disrupting walking. Billions on paper were being lost across Silicon Valley — a trend driven in large part by the WeWork disaster.”
One can’t help but get the conclusion that nobody in the upper echelons of the WeWork org chart (or indeed many of the banks involved) had ever had a boss. They couldn’t comprehend people wanting just a simple office or desk and not being involved in a cult-like structure of “Thank God it’s Monday”. As they jetted around the world, bought themselves private jets, mansions and indulged every major or minor whim they ever had, they simply had no idea how the other half works.
