The WeWork Downfall And The Cult-Like Figure At The Center Of It All
A cautionary tale of how charisma and hope can lead many to follow the wrong path.
WeWork Co-Founder Adam Neumann
Jamie Mah @grahammah
“Let me tell you something my friend. Hope is a dangerous thing. Hope can drive a man insane.”
― Red in Shawshank Redemption by Stephen King, Different Seasons
Inthe last few weeks, I’ve read several news stories that have caused me to lament two words I keep hearing over and over: cult or cult-like figure. When pressed to acknowledge these words, names such as Jim Jones, Charles Manson and Keith Raniere first come to mind.
The images of Jim Jones’ Jonestown Massacre figures prominently in my psyche, and it baffles me to this day how one man convinced over 1,000 people to willingly kill themselves. But then, when I do this, stories such as the rise and fall of WeWork and the continued devotion Trump supporters give to their awful President confirm my belief that we humans can, and often do, fall prey to those who inspire us — even if their message is and has been credited as being false or just plain dumb.
Jim Jones represents the worst of what a cult and cult-like figure can be. WeWork’s former CEO, Adam Neumann, presented a more nuanced representation of the concept. His escape from a corporate bonfire (one he created) with a billion dollars baffles me. But then again, that’s why cults and cult-like figures are found to often be such fascinating case studies; they force us ask some obvious questions: how the hell did that happen, and what can we learn from it?
The fall of WeWork, the sexy unicorn startup which at one point had a valuation of $47 billion dollars to one worth less than $8 billion in the span of nine months, should be seen as a cautionary tale of how charisma and hope can lead many down the wrong path. Let’s just say I’d hate to be SoftBank CEO, Masayoshi Son, right now.
As I mentioned at the top of this article, the idea of a cult or cult-like figure has been coming up often as of late. In the last six months alone, Vox Media recently put out a short documentary on Netflix about cults and their prominence within our society.
Quentin Tarantino’s latest film “Once Upon a Time … In Hollywood” is built around the tragic death of actress Sharon Tate in 1969 at the hands of four Charles Manson cult members.
Then there’s the recent conviction of Keith Raniere, the NXIVM leader who used his bullshit self-help organization as a means to exploit over 16,000 paying supporters, many of whom were women he sexual exploited.
This cascade of cult-like news and cultural events went off like a crescendo in my face when I kept reading about WeWork and its charismatic leader. The more I dug into and read about him, and the company’s rise and fall, the more I became transfixed with this coupling. It forced me to ask the obvious: did Adam Neumann use his power and charisma in a cult-like manner to exploit his investors and fuck over his employees?
Yes, I believe he did.
Just in case you’re not familiar with this story, here’s a quick snippet of what transpired in an insanely funny manner by Bloomberg’s Matt Levine.
In their documentary, Vox detailed that social scientists have settled on three prevailing characteristics of cults:
1. The presence of a charismatic leader
2. Mind Control over members
3. Exploitation of members
If I were to examine Adam Neumann, his behaviour reflects these three characteristics in stunning fashion. First, he used his bravado, charisma and “we will change the world” attitude to galvanize a workforce and Silicon Valley into believing that his company was more than an office space rental company. Second, he used this same charisma once again on one Masayoshi Son, the head of Japanese investment group SoftBank, to give WeWork over $18.5 billion dollars, most of which was used recently as a bailout to not only remove Neumann as CEO but to also to pay him a whopping $1.7 billion buyout fee. In Matt Levine’s Bloomberg piece, he describes, in hilarious detail mind you, how he thinks Neumann’s and Son’s first encounter transpired. Here’s what he wrote.
Son: What does your company do?
Neumann: We lease office buildings, spruce up the space and sublet it in small chunks.
Son: Hmm I invest in visionary tech stuff, this doesn’t really sound like my thing.
Neumann: Did I mention we are a state of consciousness. A generation of interconnected emotionally intelligent entrepreneurs.
Son: Okay yeah that’s more like —
Neumann: The world’s first physical social network. We encompass all aspects of people’s lives, in both physical and digital worlds.
Son: You’re crazy! I love it! But could you be, say, ten times crazier?
Neumann: You’re going to invest $10 billion in my company, which I will use as kindling to light the whole edifice on fire, and then when we are both standing in the ashes you will pay me another billion dollars to walk away while I laugh at you.
Son: All my life I have dreamed of meeting someone as crazy as you, but I never really believed this day would come.
Neumann: I’m gonna use your money to buy a mansion with a room shaped like a guitar, where I will play the world’s tiniest violin after all your money is gone.
Son: YES PUNCH ME IN THE FACE.
Neumann: Also I’ll rename the company “We” and charge it $6 million for the name.
Son: RUN ME OVER WITH A TRUCK
If that isn’t exploitation, I’m not sure what is. However, the worst of this whole saga isn’t even this awful scenario. Unfortunately, the lives of those employed with WeWork were being screwed throughout the whole debacle. As described by Ellen Huet and Gillian Tan from Bloomberg:
“A link to a news article about the deal on WeWork’s Slack network Tuesday drew more than 100 “thumbs down” emoji from employees. Several workers noted the irony that WeWork could not afford payroll costs associated with the planned job cuts but that its largest shareholder agreed to pay a hefty fee to Neumann. One post read: “So we’re too broke to pay employees severance, but Adam gets $200m?”
They continue on in their piece with a sentence which aptly confirms my suspicions of Neumann’s cult-like aura.
“Neumann, 40, built WeWork into a global real estate company fueled by relentless optimism and billions of dollars in investment capital and debt. His sermons about community and mission engendered fierce loyalty among staff and investors for years. But his aura vanished over the last couple months when public investors were given a closer look at the business ahead of an initial public offering.”
Did you catch that second sentence?
“His sermons about community and mission engendered fierce loyalty among staff and investors for years.”
Sermons. Community. Mission. Fierce loyalty. Sound familiar Trump supporters?
We’re seeing this type of narcissistic behaviour more and more and it’s downfall’s, including the WeWork story which details how ruinous they can be for those caught at the bottom. I say this with little apathy for Donald Trump, a man who as of today will be facing a very public impeachment inquiry. This comes on the heels of the CBC publishing a video detailing how his supporters will always back him — no matter what. Like really? Come on. No matter what?
The cult of Donald Trump ladies and gentleman. History won’t be kind to this time period. Mark my words.
A word to the wise for anyone grasping for a little hope these days. If someone is presenting big fancy lines like “our mission is to elevate the world’s consciousness,” as Neumann wrote in WeWork’s S-1 filing, or I’m here with “Make America Great Again” bullshit, don’t believe the hype, because as we’ve seen countless times in the past, those who present this preachy sociopathic attitude are often the one’s most likely to be found with their hands in the cookie jar, and in the end, you’ll be the one paying the price.
For Trump it’s his steadfast denial to reveal his tax returns or how he’s used his Presidency to further his own personal business ventures. Do they even care what he did to the Kurds in Syria? Of course they don’t.
As for WeWork, well there might be some hope for redemption after all, as former employee Natalie Sojka is suing the company over its dealings with Neumann and his golden parachute settlement. Her lawsuit concedes as per Theron Mohamed of Markets Insider:
“Despite breaching his fiduciary duties by engaging in self-dealing and mismanaging WeWork so badly that its IPO had to be withdrawn, Neumann is being offered a staggering $185 million consulting fee despite the fact that SoftBank seems to concede Neumann ruined the Company,” the lawsuit said.
“It is beyond comprehension why Neumann would be paid $185 million to provide strategic guidance to the Company when his ‘guidance’ resulted in the virtual destruction of the company,” the lawsuit added. “The fee simply represents self-dealing and improper personal payment to Neumann.”
I hope she wins. I doubt she will. What a mess.
Ten days after Remembrance Day all I can say is this. “Lest we not forget.”