Real estate executives had their doubts about WeWork, but many weren’t willing to risk missing out on its success. They and others who kept their criticism to themselves helped enable and then felled the co-working giant once it became clear that its crash would be just as extraordinary as its ascent.
“They couldn’t explain WeWork’s valuation, but they were fearful that Adam [Neumann] might achieve his ambitions — nothing had stopped him thus far — and become more powerful,” journalist Reeves Wiedeman writes in “Billion Dollar Loser,” his new book about WeWork’s rise and fall. “No one wanted to be on his bad side.”
“Billion Dollar Loser” is more recap than a revelation, a breezy blow-by-blow of how WeWork grew from a business plan thrown together in one night to a juggernaut valued at $47 billion. The book is rich with details that help paint a fuller picture of ousted CEO Adam Neumann and those who surrounded — and enabled — him.
It also provides the kinds of colorful scenes we’ve come to expect from WeWork: Deals finalized with tequila shots, a questionable investment in a wave pool company, corporate retreats featuring Super Soakers filled with vodka. Wiedeman details how the company cycled through young employees, at first thrilled by WeWork’s energy but gradually disillusioned by its culture, lack of commitment to diversity and aversion to work-life balance. “Many of those who left described their departure as if they escaped Jonestown or Waco,” Wiedeman writes.
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The landlords that partnered with WeWork — as well as its naysayers — are largely on the periphery of “Billion Dollar Loser.” Wiedeman recounts how Brooklyn developer Joel Schreiber helped introduce Neumann to New York City landlords, and lent credibility to WeWork’s early business propositions by being an early investor. It notes that Bill Rudin reached out to Neumann after Hurricane Sandy devastated 110 Wall Street, which ultimately sparked a major partnership. And Vornado Realty Trust’s Steve Roth makes a brief cameo to jokingly call Neumann an asshole.
Aside from some early-days negotiations, the book lacks behind-the-scenes conversations or details on how WeWork won over some landlords, but failed to do so with others. The “cult of personality” surrounding Neumann is fascinating, but the real estate industry’s role in WeWork’s rise, and how its fall might shape commercial real estate going forward, is largely missing.
“The real estate world had grown fat and lazy and was upset that WeWork had disrupted a comfortable system,” Wiedeman writes, referring to how Neumann framed the public reaction to his company’s planned IPO. “They were happy to take WeWork’s money when the company was riding high, but now that everyone smelled blood, they were on the attack, hoping things would go back to the way they were.”
Stories of the failed unicorn share a similar slow-burning horror film quality. You find yourself thinking: Don’t go in there! Can’t you see that there is no tech?! Watch out, that charming character pledging to save the world is actually a megalomaniac!
What makes these tales truly terrifying is as cautionary as they may seem, they inspire little confidence that they won’t be replicated. As recently noted by The Atlantic, entrepreneurs are bound to follow in Neumann’s (bare) footsteps. “The most important lesson in the rise and fall of WeWork has less to do with Neumann than with the ecosystem that nurtured him,” Vauhini Vara wrote in her review of the book.
There were so many red flags leading up to WeWork’s failed IPO: rapid growth, rising costs, a lack of meaningful tech and no clear plan for future profitability. Yet investors kept throwing money at the company, eager to collect another unicorn. Even Fidelity and SoftBank, which had initially dismissed WeWork, were won over after others bet on the company, ultimately dazzled by a big number and Neumann’s outsized personality.
Roughly one year after WeWork announced that it was backing out of going public, the company is now embarking on a new chapter. Neumann once presciently told an audience at a coworking conference, “If WeWork, God forbid, wouldn’t work out, I’m holding leases that are worth tens of millions,” Wiedeman writes. Neumann’s vision of WeWork didn’t pan out, and so with new leaders at the helm, the company is doubling down on its core business: Office leasing.
Last week, the company changed its name from the We Company back to WeWork. The former signaled the startup’s entanglement in various business ventures, as well as a lofty worldview that, at times, directly clashed with the company’s actions. Having weathered a crisis of its own making, WeWork is now tested by a global economic disaster, one in which the future of its core business is uncertain.
But Neumann, though “temporarily neutralized” by a pandemic that prevents him from holding court with a captivated audience, will almost certainly return. He’s already dipped his toes back in the water with a $30 million investment in a startup that provides services in apartment buildings. Wiedman writes that “unless the ironclad forces of capitalism had truly been broken,” someone will likely be willing to bet on Neumann once again.