We didn’t have to wait long after Elizabeth Holmes’s Theranos story became famous, then infamous, around the world before watching another unicorn leader soar like a phoenix and then turn to ash. Here are the bright and dark sides of the leader behind WeWork’s spectacular fall.
Exactly one year ago, in October 2019, Adam Neumann, WeWork’s founder and CEO, was forced to step down. The buildings—the walls of the New York-based coworking empire’s fortress—are still standing, but the IPO was called off. Adam Neumann left the empire he had built with his head hanging low, and may yet face further legal harassment.
The recently published Billion Dollar Loser: The Epic Rise and Spectacular Fall of Adam Neumann and WeWork, a book about Neumann’s adventurous life story, gives an excellent account of how this startup saga began. It would be easy, though, simply to join the loudly booing crowd who—like the bearded women in Monty Python’s Life of Brian—are hurling stones at the former wunderkind. It is also worth examining and learning from
the steps that made WeWork one of the world’s greatest startup successes, and how that success evaporated within a few months.
In other words: how do you reach the top, attract crowds of investors and thousands of employees with the simple idea of creating a cool office building, adding free coffee and beer taps, throwing in plenty of parties—and voilà, the “unicorn roast” is ready? What can we learn from Adam Neumann? Let’s look at five standout factors every team- and business-builder should consider.
Network
There is no question that Adam Neumann’s rise to the top depended on his outstanding use of both his own and other people’s relationship capital. His sister’s modeling career took him to New York, where he entered the city’s elite circles and approached his future partners.
The WeWork founder masterfully harnessed the abilities of ambitious, sociable people. “You just have to ask,” say many management gurus, and people really are happy to give when you deliver your message in the right way. Simply being part of a network is not enough:
when we are in the right network, we must remember to use it as effectively as possible—in other words, to ask for something at the right time.
Understanding what drives our colleagues
Neumann recognized the motivations of his own generation early on and understood how to build on them when hiring. The “We” concept could compete in this category from the outset, since a sense of belonging is important to the average member of Generation Y. Creating a community—the central element of the business—strongly appealed to potential employees. They applied to the company and stayed even through difficult times.
Another common feature among colleagues born after 1979 is hedonism. Alongside a love of life, the “work hard, play hard” attitude also played a role, and WeWork made thorough use of it: huge company parties, star performers at summer and winter camps, all the way to the day of one winter party when Adam disappeared and checked in by video while being towed on a surfboard through the freshly snow-covered streets of New York. Anyone who understands exactly what motivates their people and focuses on meeting those motivations can do a great deal to build engagement.
HWAPO—as Katinka says
Let’s not forget: however much their intentions and behavior may leave to be desired, successful startup founders share one thing—they work like animals. There is no substitute for long, hard work, whatever the industry. Adam Neumann himself was never reluctant to pick up a hammer and assemble hundreds of pieces of furniture. Think about that the next time you tackle even a single kitchen-cabinet box from that famous Swedish store. He demanded the same of his employees. The bad news for the lazier among us is that
whenever we look for a pattern in the personality profiles of successful people, the ability and willingness to work hard are always there.
What is the industry’s success criterion?
I’m sure that whenever we have even a small renovation job done, it finishes at least a few days—and sometimes several months—late, with an unforeseen increase in costs, not to mention frustration. Adam Neumann recognized that a property handed over on time—even if it wasn’t truly finished—was worth its weight in gold in the real-estate industry, alongside the expectations expressed by tenants.
Opening a building at any cost naturally has its downsides, but if customers consider it important and it sets you apart, it becomes a genuine success criterion.
Charisma sells
At conferences around the world, I have spoken countless times about the harmful effects of charisma and its high correlation with narcissism. Even so, I have to place charisma in the category of extremely important qualities: constant visibility, standing out from the crowd, stage presence—that “animal magnetism” charismatic people possess.
Adam Neumann could be the logo for charisma itself. In a healthy quantity, and when paired with effectiveness, it is an important force for progress in sales, leadership, and marketing. Neumann delegated real leadership functions to the team members he selected around him, while focusing his own energy primarily on “drawing in” the next round of investors and major clients. It should be added that
investors also seek out these kinds of people because their main concern is not whether the business is successful, but whether it looks successful—especially to the next funding round…
The dark side of charisma is the arrogant, bulldozing, risk-taking personality forever pushing boundaries. If we recognize where “enough” lies and do not push situations too far, many similar stories will be more likely to end happily.
In just ten years, under Adam Neumann’s leadership, WeWork went from nothing to a valuation of nearly 50 billion dollars. Neumann was extraordinarily eccentric, unpredictable, and driven by wild ideas. He not only failed to control himself; according to feedback from the people around him, he pushed himself to exploit these competencies even further.
When Masayoshi Son, the head of SoftBank—the engine behind WeWork’s valuation—asked Neumann whether the smart person or the crazy person wins a battle, Adam unequivocally chose the crazy one.
Madness can take you a certain distance, but as we see at countless other companies, only so far. You need to recognize the moment when power should be handed over to the “grey eminences”
—see Eric Schmidt at Google or Tim Cook at Apple.
WeWork’s IPO at an unrealistic valuation failed spectacularly, and the business slid back to a valuation closer to its real worth: 5 billion dollars, far below the figures used by its earlier investors. Over the past year, WeWork has let many employees go and faced numerous lawsuits challenging its former management’s conduct.
Many aspects of Neumann’s behavior are open to question: his extravagant spending, the office buildings he leased to the company from himself, and share packages exercised at the wrong time and against the company’s interests. SoftBank’s role in supporting these irresponsible decisions is also beyond dispute.
Industry players say they learned a great deal from the story: a super-charismatic leader is not everything, and the numbers deserve more weight. Well, as evidence of how successfully that lesson has really been absorbed in a growth-focused world, consider this: in October 2020, the number of companies reaching unicorn status set a record at fourteen.
Zsolt Fehér
International HR expert and European Managing Director of Hogan Assessments
Guest authors are external experts rather than members of the Forbes editorial team, and their opinions do not necessarily reflect those of Forbes.