The Cult of We – Book Review

If you want a good read over Christmas, I can highly recommend the book “The Cult of We” by Eliot Brown and Maureen Farrell. It covers the history of the WeWork company (later renamed the We Company) and its founder Adam Neumann.

WeWork was valued at over $50 billion at the peak of euphoria and received many billions of dollars in venture capital funding from Softbank and other private equity investors. It eventually ran into difficulties as the funding failed to keep pace with mounting losses. Indeed apart from it’s very early years it is doubtful it ever made a profit.

This was a company that pretended to be a technology business but in reality was simply leasing large office space and sub-letting it to small businesses and start-ups. One might say it was leasing long and letting short as there was a high churn of customers.

Adam Neumann was a messianic character who promoted the idea that he and his wife were inventing a new social order with a focus on “we” not “me” where small business could share resources and build a social network. In reality they barely talked to each other.

It’s a great example of how investors can be fooled by a glib and charismatic personality. Investors jumped in for fear of missing out (FOMO) in the boom years of venture capital funding without doing proper due diligence or standing back and looking at the reality of the business model.

There was certainly a demand for these kinds of “serviced” offices for small businesses or large ones that urgently needed more space. But it was an easy concept to copy with many imitators quickly springing up. No barriers to entry is the key phrase!

The story of wasted cash with non-existent corporate governance takes some beating. A private jet purchased, big parties with free booze for staff, pot smoking by Adam, and other uncontrolled excesses make for amusing reading. Diversifications into schools for kids (WeGrow) and other unrelated ventures followed.

But it’s not only a good story about the growth and collapse of a company but a good overview of the US venture capital industry in the last 15 years and some of the personalities involved. We may not see the like again I suspect.

I won’t tell you how the story ends so as to avoid spoiling your enjoyment of the book, but there is certainly much to be learned from it. One is beware of charismatic founders/CEOs. They are not all as visionary as Steve Jobs and can easily become megalomaniacs.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

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