This is how the WeWork story ends—for now. The high-flying office-sharing startup, which introduced itself to the world as “a community company” with a mission to “to elevate the world’s consciousness,” is paying its founder, Adam Neumann, more than $1 billion to go away. Meanwhile, the company is so cash-poor that it cannot afford to pay the severances of the 4,000 workers it intends to cut.
WeWork’s free fall from a projected valuation of nearly $50 billion to just $5 billion will likely be taught in business school, immortalized in best-selling books, and debated among analysts for years. But one thing’s for sure: It has established Adam Neumann, who escaped from the wreckage a billionaire, as a figure of almost mythical monstrousness—like some capitalist chimera of Midas and Houdini.
Neumann spent several years of his childhood living on Kibbutz Nir Am, a communitarian settlement near the Gaza Strip. And he has spent much of the rest of his life telling people about it. Just about every profile of Neumann mentions his childhood on the kibbutz—including write-ups in Vanity Fair, Fast Company, Business Insider, and The New York Times. He told Haaretz that his kibbutz upbringing molded his vision of WeWork. He has compared the office-sharing company, with its common areas and communal beer, to a “Kibbutz 2.0” and “a capitalist kibbutz.”
Neumann proposed that office space could play the kibbutz’s role of fostering community, empathy, and serendipitous creation. “If you understand that being part of something greater than yourself is meaningful,” he said, “and if you’re not driven just by material goods, then you’re part of the We Generation.”
Rather than treat WeWork like a community farm, however, Neumann used the company like a personal ATM.
The most egregious example might be from earlier this year. In January, WeWork announced that it would change its name to the We Company to reflect the fact that its ambitions had grown from office-sharing to every facet of the collective human experience. Under this new umbrella company, the firm would revolutionize living space (WeLive), school (WeGrow), and retail (WeMRKT).
But the name We Company had already been trademarked—by Neumann. And Neumann insisted that his company pay him $6 million for the privilege of using it.
Even though Neumann was eventually goaded into giving back the fee, this gambit was ludicrous, audacious—and telling. Corporate renaming falls squarely in the job description of the founder and chief executive. Neumann easily could have taken no payment at all; instead he tried to extract a $6 million bonus for less than a day’s work.
It is not unusual for founders of billion-dollar enterprises to get rich. What’s deeply unusual, however, is the way Neumann wrapped himself around WeWork’s business to squeeze profit from its every pore, even as he proclaimed his firm’s spirit of generosity.
In 2013, Neumann tried to buy a small stake in a Chicago building that was in talks to lease space to WeWork. The board pushed back against Neumann, pointing out that it was a conflict of interest for Neumann to stand on both sides of a lease agreement. The next year, Neumann gained control of WeWork and proceeded with his plan of buying up several properties to lease back to his company for millions of dollars. In documents filed with the Securities and Exchange Commission in anticipation of a public offering, WeWork announced that the company had lease agreements with four buildings in which Neumann had an ownership interest. Since 2016, WeWork has paid nearly $17 million to Neumann-owned buildings. Dick Costolo, the former CEO of Twitter, called this level of self-dealing “egregious.”
Within the company, there were other signs that Neumann’s “spirit of we” rhetoric was a cover for “lucre for me” behavior. In 2015, Neumann made tens of millions of dollars selling shares during an investment round. Soon after, the company offered to buy back ordinary employees’ shares, but it offered a much lower “payout per share” than what Neumann had received. Many of Neumann’s kibbutzniks didn’t even know they had been shafted. “Neumann’s sale wasn’t publicized within the company,” according to Wall Street Journal reports.
As Neumann was becoming fantastically rich—by running WeWork, by buying stakes in buildings that he could urge WeWork to lease, and by selling WeWork stock for hundreds of millions of dollars—his tastes grew dear. He developed a thirst for private air travel, which he slaked with the acquisition of a $60 million private jet. He and his wife reportedly spent more than $80 million on “at least five” homes, including a 60-acre estate north of New York City and a 13,000-square-foot house in the Bay Area. Net worth and self-admiration increased in lockstep. By 2016, Neumann was telling friends that he was intent on becoming the first trillionaire. Perhaps, he said, somewhere along the way to eternity, he might become the “president of the world.”
With his ignominious departure from WeWork this week, Neumann’s Earth-emperor ambitions may have taken a blow. But he can find solace in suddenly becoming one of the richest people on the planet. On Tuesday, Softbank offered to pay him a king-size ransom in exchange for wresting control of the company. The Japanese conglomerate offered to buy up to $1 billion worth of Neumann’s WeWork shares in addition to giving him a short-term loan of $500 million to pay off a credit line from several banks. Finally, Neumann will receive $185 million over the next four years in exchange for his advice.
At $46 million a year, Neumann’s annual “consulting” fee alone is higher than the total compensation of all but nine public CEOs in the United States.
Isn’t this whole thing mostly Softbank’s fault?
Softbank almost single-handedly transformed WeWork—a perhaps workable real-estate concept—into a disastrously overpriced Goliath. The firm has invested or loaned more than $14 billion to WeWork, which it now values at less than $10 billion. You don’t need an M.B.A. to know that’s very bad. Softbank’s $100 billion Vision Fund, which was laced with Saudi moolah, was perhaps too big to succeed in the first place—a mountain of money chasing molehill start-up ideas that it would inevitably overvalue.
But Neumann’s shtick wasn’t lapped up just by one Japanese firm. He dazzled journalists, celebrities, and investment banks. And he did it, in large part, with a story that, like all good bullshit, contained a truth exquisitely tailored to its time.
This is an age of anxiety about work, overwork, and the way modern identities are bound up in people’s jobs. Unlike the manual toil of the traditional kibbutz, most white-collar labor makes things you can’t see. Rather than extract elements from the earth or manufacture them into products, most modern workers deal with the supply, transport, marketing, sale, or investment of stuff. (Or they just write.) This involves a lot of sitting and thinking and key-tapping—the sort of activity that can be done anywhere and that is easily interchangeable with not working. As a result, modern white-collar work is “leaky”: Work hours can consume a weekend on a laptop, but gossiping on Slack (and watching the occasional YouTube video) can consume much of a workday. And so work, once bounded in a 9-to-5 (or 9-to-9) day, has come to be a bit like nitrogen: a less visible element that is eerily insinuated into everything.
This is also a time of anxiety about global capitalism and the responsibilities of for-profit companies. The rise of a young socialist-friendly generation and the lofty prospects of Senator Elizabeth Warren both speak to a deep skepticism about corporate America. And corporate America is listening, kind of. On August 19, the Business Roundtable, a lobbying group that represents hundreds of the largest U.S. corporations, issued a statement proclaiming that the “purpose” of a business was no longer to maximize profit but rather to maximize a vague sort of goodness—to look out for employees, partners, and the world itself. It is not enough for today’s companies to be mere companies. They must be values-driven movements.
WeWork’s answer to the work-life-capitalism conundrum is a breezy: Why not all of it? Live through work, work through life, we're all in this together, but first get filthy rich yourself. Neumann secured billions of dollars from Softbank with a plan for global domination. But he burnished his company’s reputation by telling employees and members that, by doing normal jobs in a place that set its ambitions at the level of human consciousness, they could be participants in a grand fusion of profit and purpose. A capitalist kibbutz.
Half a century, ago, Scientology’s founder, L. Ron Hubbard—grappling with the failure of his self-help system Dianetics—told his wife that the best way to make real money in America wasn’t to start to start a business but rather “to have a religion.” That is not only a lesson of Adam Neumann’s ludicrously profitable shtick; it is equally the moral of this strange moment where so many U.S. businesses are looking for a New Age facelift to hide the old bones of their traditional commercial interests. By harnessing the language of uplift and spirituality, American capitalism isn’t reforming itself. It’s just claimed another commodity to be possessed, marketed, and sold.