The Apple TV+ series WeCrashed recently aired and we watched with hands in front of our eyes as the maverick entrepreneur Adam Neumann became increasingly more erratic while building his empire, WeWork.
I went into the series thinking I knew pretty much everything about WeWork and its flawed co-working space model. What is there to learn from this spectacular car crash of a business?
It turns out there were plenty of great insights into business shown throughout the series.
Adam Neumann is the most enthusiastic person in the world. His straight-up passion for his business and desire to succeed made him tenacious and difficult to avoid. It made him difficult to dismiss and inspired others.
We admired his passion for his business and everyone could bring some of this to their workplace to make it a more enjoyable place to work.
Motivating your workforce
This is tricky to write as we’ve since found out that many of the work practices at WeWork headquarters were just plain wrong or illegal. However, as CEO he sure did know how to motivate a team with endless partying, which often came at the expense of actually paying workers properly. The mythical “Thank God It’s Monday” and his call and response “We …Work!” chants seemed to fire up workers to push themselves further and further. No doubt the promise of more shares in the company helped too.
Plenty of this backfired when the IPO was delayed in 2018 and workers felt they had been massively conned. So here’s the lesson from this, motivate your workforce with honesty.
The four Ps of Marketing
Adam is a relentless marketer, constantly self-promoting his business and entrepreneurial aims to anyone who will listen (and plenty who don’t want to). We see him use all of the traditional Four Ps to market WeWork.
Price – consistently undercutting prices of competitors’ co-working spaces and luring new ‘members’ with free and discounted offers. Their overuse of this tactic would ultimately cause a lot of issues as they were unable to earn enough money to cover costs. This has become a tactic of VC-backed companies around the world who burn through cash in the pursuit of quick growth with the plan to build scale and then move into profit at a later stage.
Place – WeWork is shown in the series as always looking for the next glamourous location that will lure members to join. They open locations in downtown Manhattan (traditionally too expensive for shared space), London, Shanghai, Tokyo, Paris, etc all in desirable streets.
Product – Adam and Miguel believe they have created a unique product for a new way of working, an office that is fun, vibrant, and interesting, that inspires new ideas and collaborative opportunities. They definitely do execute on this and their offices are indeed uniquely fun and inspirational – so they did have a product that members wanted to be part of.
Promotion – Adam continually tries new ideas for promoting WeWork, from setting up guerilla stunts outside competitor locations to his relentless media promotion on any tv programme that would have him. He may well be the greatest storyteller the world has ever seen and much like Elon Musk never turned down the opportunity to create a headline. Any PR is good PR….
A bad business deal is always a bad business deal
WeWork crashed in the end as it became clear that under Adam’s management profits would never be realised. Costs were simply too great for the revenue being brought in.
Their pursuit of growth at an irrational speed and perfect locations led them to make terrible deals – high priced long-term leases, new member discounts, and worse Adam’s propensity for a dodgy deal (including copyrighting WeWork and buying offices then leasing them to the company). The programme looks at this from several angles; Adam’s continuous dream to be a billionaire, a desire to create perfection at speed in the design and location of offices, SoftBank and Benchmark’s need for growth at all costs, and lastly Rebekah’s outsized influence on Adam.
All contributed to bad deals and expensive mistakes being made.
Importance of a narrative – storytelling is paramount
If you’re going to create a business from scratch and you need capital to do it, then having a story you can tell at the drop of a hat becomes incredibly important. Adam never missed the opportunity to tell his story of creating a new work utopia in minutes, a perfect elevator pitch. He appears on any media channel and conference that would have him – pushing his WeWork story and creating a buzz that would encourage investors and members to part with their cash.
Stay on track and stick to your knitting
Adam becomes distracted easily and rather than cement his current business, he funds and diverts attention to multiple other projects – the extension of WeWork into We the brand is some of the funniest television you’ll ever watch. Especially Rebekah’s WeGrow ‘school’, a place so full of mayhem that it could be the basis for a brilliant dystopian novel.
Venture capital and growth idiots
While few in the tv series come out looking good, it is easy to point fingers at the venture capital people and their pursuit of growth at all costs that feed Adam’s need to be a billionaire.
Not everything is tech, even though they wanted it to be!
The bottom line
if there’s one thing that comes out of WeCrashed, it’s that although everything looks great from the outside, internally there is great turmoil. The business is constantly under pressure for money and this drives Adam to desperate acts.
As Warren Buffet famously said, “Only when the tide goes out do you discover who’s been swimming naked.” When the pressure comes on from analysts as WeWork attempts to IPO, the fanciful numbers Rebekah and Adam pluck out of the air just don’t cut it. They’re forced to abandon plans to float and ultimately Adam loses his company.
Ultimately Adam did well at the expense of others and there is a major lesson to be learned from this. The employees at these types of firms should not sell their labour cheaply and venture capital should do a lot more due diligence early on. Nor should they believe the prophetic words of charismatic founders that they’ll get a payday soon. It could all be over in days, especially if it’s being built on a house of cards.