Wasted Wealth

Listen to Your Gut

I became aware of WeWork sometime in 2018. My memory of hearing about it is fuzzy. However, I do remember my initial thoughts on the concept. “How is it a tech company? It sounds like it leases offices to companies. Doesn’t that make it a real estate company?” The buzz around this office space provider didn’t add up. At least to me. 

At the time, I reasoned it as beyond my knowledge set. What do I know about startups and valuations and IPOs? I’m a stay-at-home mother of two with a  background in writing and publishing. Tackling The Wealth of Nations by Adam Smith as an undergrad landed me one of my lowest grades in college, so I didn’t trust my judgment about this “tech startup.”

 Therefore, I didn’t give WeWork another thought until the fall of 2019, when its IPO was on the horizon. Then my phone blew up with headlines from The Washington Post, Wall Street Journal, and The New York Times chronicling its demise.

Turns out my high school English class covering logical fallacies trained me well.

As the world now knows, WeWork and its visionary founder, Adam Neumann, were full of shit. And while the venture capitalists and bigwigs in finance were willing to buy into this delusion, the peons in the public wanted no part of it. 

The Cult of We by Eliot Brown and Maureen Farrell looks at the rise and fall of the company once worth more than $47 billion on paper. 

Unicorn Graveyard

My interest in WeWork didn’t increase any after I first heard of it or after its downfall. The book came on my radar thanks to my best friend, who lives and works in Silicon Valley. Her excitement and anticipation of the book automatically made it a must-read on my shelf. I redeemed my rewards points from Penguin Random House to get it. (If you haven’t taken advantage of this program, check it out! For every 12 Penguin-published books you buy, you can get one free.)

The parallels between WeWork and Theranos’ downfalls also piqued my interest in the read. For those unfamiliar with the now-defunct company, Theranos was a blood-testing startup helmed by Elizabeth Holmes. She and her company were held up as a bastion of hope for women in tech and the future of healthcare. Now that Holmes’ fraud trial started, “The Daily” podcast recently aired an episode summing up the saga. 

A profile on Holmes in early 2015 introduced me to her mission. Featured in Glamour magazine and written by one of my idols, Cindi Leive, the interview made me excited to be female. I believed in her ability to not only revolutionize healthcare, but to prove that women belong in leadership positions. Even in male-dominant fields like tech and startups. 

So when John Carreyrou began reporting a short time later that the $9 billion company was a sham, I took it hard. Mentally, I put so much belief and faith in a woman I didn’t know and felt betrayed. Wrapping my head around the deceit and lies became a mission of sorts. I devoured the HBO documentary and subsequently Carreyrou’s book . How could I be duped by a Stanford dropout? Why was it hitting me so hard? 

I didn’t understand until I started to read The Cult of We.

Rewarding Idiocy

On the most basic levels, it appears that Adam Neumann and Elizabeth Holmes accomplished the same things. They got got enough important people to believe in their idea and give them tons of money to bring it to fruition. At some point, things went off the rails. The founders surrounded themselves with too many “yes” people. Billions of dollars were involved, and their egos got too big to pump the brakes at signs of trouble. Finally, the SEC stepped in. Only then did the world learn the emperor and empress had no clothes. 

Yet Elizabeth is on trial for fraud. She lost her company and reputation. Meanwhile, Adam received over a billion-dollar payout for leaving the mess he made at his company. Which still exists. Elizabeth should be held accountable for her actions; her faulty product put people’s health in jeopardy. 

But Adam should be too. 

Autopsy of an Empire

The authors do a great job from beginning to end of exposing how this most recent startup failure happened. No heroes or good guys make an appearance in this book. Unsurprisingly to this reader, it seems both Silicon Valley and Wall Street teem with narcissistic egomaniacs who use the facade of “saving the world” to rake in money for themselves. 

My blood boiled reading about these people surrounding Adam. They all bought into his vision in the hopes of making themselves millionaires. Even though WeWork never really has a clear vision and keeps growing by buying random businesses in the hope to make money off of those companies’ ideas.  

His biggest cheerleader and benefactor of the WeWork mania is his wife, Rebekah. She creates her own pet project, WeGrow, to provide a school that meets their high academic standards for their five children. A Hebrew/Montessori hybrid costing $22-42k in annual tuition, the school had more money invested in picking out the rugs for circle time than the teacher’s salaries. Rebekah pushed back at raises for the teachers she struggled to find. Isn’t being a part of WeGrow’s mission enough of an honor?

The whole situation involves throwing money after the problem and hoping down the line more money would be reaped to everyone who invested. Valuation is more important than the product. It’s not until they need to go public (in order to save their own investment) that people around Adam start to question his agenda and rein him in, to no avail.

Once the Securities and Exchange Commission (SEC) gets involved, then banks and board members start to realize maybe they’ve let things go too far. It turns out market investors have higher standards than venture capitalists. Spending company money on private planes and booze won’t cut it for the little people. Funding Adam and Rebekah’s lifestyle might be enough for Ashton Kutcher and T Rowe Price and Softbank, but Robinhood users expect more. 

This self-delusion proves to be the saving grace for WeWork and its cronies. Because they did have desks and office space to rent out, the company didn’t actually commit fraud, the SEC decided. They just believed their own hype and got enough rich people to believe in it too. 

In the case of Theranos, they claimed to have a technology and product that didn’t actually work. Thus, why Elizabeth Holmes lost everything and is on trial and Adam Neumann walked away with a slap on the wrist. 

Protecting the Patriarchy

Through no fault of the authors, I had a hard time finishing this book at a decent pace. So many names pop up it’s hard to keep track. No one is a redeeming character. We know going in how the whole thing ends, so it wasn’t a page-turner in that sense. What kept me going was wondering how on earth that many educated and wealthy people bought into this idea. 

And to be honest, I still haven’t figured it out, and I probably never will. With Theranos, it was easy to buy into the mission. Make healthcare accessible to everyone! It will be less harrowing with only one needle draw! But with WeWork, I just don’t understand how renting workspaces equates to changing the world. 

The amount of money invested in this endeavor could have done a lot of actual good. Had he not spent it on private jets, multiple luxury homes, and pet projects, Adam and the people who bought what he sold could have used their billions to help hungry kids. Sick veterans. Homeless families. Or any number of worthy causes. 

On one front, Elizabeth Holmes did make a statement on gender equality. She proved a woman can defraud investors, just like a man.