The Musings Of An Opinionated Sod [Help Me Grow!]

Timing Is Everything …

A while back, I wrote about WeWork.

Or more specifically, how the Messiah complex of one of the founders led to him ultimately screwing the company up with an ill-advised planned IPO.

Of course, as is the way with corporate-insanity – especially when you label your company a ‘tech’ company, even if it isn’t – he walked away for failure with a huge pay-cheque, which means being a start-up founder is even more lucrative after the job than it is for a football manager, which blows my mind.

[Though apparently it was not enough, because one of the founders, Adam Neumann, is suing Softbank for ‘abuse of power’ … when in reality, the only case they really have is Softbank giving them so much cash and praise, it led to Adam gaining a Messiah-complex]

Full disclosure, I did some work for WeWork when they first started.

I met Miguel – one of the ‘normal’ founders – and found him, and his ideas for the company both interesting and exciting.

And for a while it was.

They were tapping into a need that wasn’t being met by traditional office lease companies.

They invested in building a WeWork community because they recognised the commercial attraction of it.

They identified ways to profit from giving ‘start ups’ and ‘independent workers’ the sorts of benefits only people in more traditional employment enjoyed.
But then three things happened:

+ They realised the flaw in their business model because they signed long term property leases but had short term tenants.

+ To get long term tenants, they had to appeal to corporates who could screw them down on price, adding further pressure to their position.

+ To counter corporate price negotiation, they re-positioned themselves as ‘masters of igniting corporate culture and efficiency’ – which, at best, was marginally true and at worst, was plainly rubbish … because ultimately they were a contemporary office space leasing company.

Sure they offered more than some of their competitors.

Sure they were incorporating logistics into their offering.

But fundamentally, they sold space in buildings for others to work in.

I’m not knocking that, there’s a lot of very successful businesses who do it.

And I genuinely think the original WeWork idea was a good one – albeit with commercial flaws – but when ego, ambition and cash-flow pressure come together, they can make a pretty deadly combination, which the World – and employees of WeWork – discovered when the IPO forced them to open their books to the World.

However, I can’t help but think if Adam Neumann had waited just 6 months longer before announcing the IPO, he may have discovered WeWork was so in demand by companies wanting to reimagine their office approach post COVID-19, that investors may have overlooked all of his blatant exploitation and delusion.

I’m so glad he didn’t.

24 Comments so far
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Oh you bitch. But I agree with you.

Comment by Bazza

Didn’t know he was suing Softbank. He owes everything he’s got to them so that act is a level of ego rarely seen.

Comment by Bazza

Incredible. Especially for abuse of power when he was renting property he owned back to Wework to rent and somehow registered the word “we” and charged the business $5 million to use it.

Comment by George

How do you register a word like we?

Comment by Pete

I was wrong. It was $5.9 million.

Comment by George

It feels Gwyneth Paltrow and her Goop enterprise is similar to Adam Neumann and WeWork. Both sell a hippy style approach to successful living while being happy to peddle half truths and outright lies to line their own pockets.

Comment by Pete

Well, he is married to Paltrow’s cousin.

Comment by Rob

thats some satan shit right there.

Comment by andy@cynic

The obsession with scaling business means many good ideas get killed in the process. Many assume this pressure only comes from investors but founders are equally as guilty. Wework’s other problem was they tried to present themselves as a tech company to increase their valuation. That should have confirmed what many already assumed, but instead they waited until they could see the details contained within their IPO prospectus to let Wework hang themselves.
The last line of this post is irresistibly good.

Comment by George

Yes to all this.

Comment by Pete

Yep … great points George.

As much as investors think a great idea is all about its scale, great ideas can exist in much smaller forms. Yes, that might limit income potential but it doesn’t mean it can’t still be a huge amount of money to a lot of people with an incredible amount of influence on a global scale.

But in the investment world, size matters … mainly because that’s how they can justify all the losses they make on the other companies they invest in. Which highlights many venture capitalists are just winging it too. For more evidence, read Dan Lyon’s book: Distupted. It’s very funny but also very enlightening.

Comment by Rob

The Valley has this strange view that you need VC cash to be seen as credible. Even when the terms for investment are far worse than other options available to raise capital.

Comment by Pete

the valley needs fucking flooding.

Comment by andy@cynic

I remember Lee once told me the one of the biggest mistakes a company makes is not knowing the business they’re in. Maybe WeWork knew this in the beginning, but they definitely forgot it within a few years.

Comment by Pete

Yes … funnily enough, that’s one of the lessons in the book I’ve just mentioned above.

Comment by Rob

The great irony of Wework is they became the beast they were created to slay.

Comment by Rob

Yes they did.

Comment by George

Great burn on that last line Rob.

Comment by Wayne Green

It may have seemed that they were meeting a need by filling a gap in the market, but there was never a market in the gap.

An idea with commercial flaws is not a good idea and this was just a reminder that tall fratboys can spin a yarn and raise ludicrous money from delusional financiers (notably not Silicon Valley VC funds). Enron 2.0.

Comment by John

Explains why there is such importance placed to their ‘heritage story’, which is different to their actual story.

Comment by Rob

Authenticity theatre.

Comment by John

capitalism is giving a billion fucking dollars to a prick who should be locked up.

Comment by andy@cynic

If you have a billion dollars, you’re not clean.

Comment by DH

The more you’re paid off, the more you failed. That is how messed up the world we live in is.

Comment by Pete

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