Rebekah Neumann's search for enlightenment fueled WeWork's collapse | Hacker News Reader

Rebekah Neumann's search for enlightenment fueled WeWork's collapse

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108 pointsdanso57 comments

The one thing I don't get about these companies is how all the employees, in particular higher ups and investors buy this stuff.

I mean if you read these articles about Neumann and his wife, elevating the world's conciousness, smoking weed everywhere, buying artificial wave companies for no reason, he doesn't even sound like a real person, he sounds like a Silicon Valley tv show character.

There's a lot of podcasts and articles about the famous people involved in this, but I just would like to hear what regular employees and managers think about this. How are you working at these companies for months and don't think you're in a cult?

The same thing about Theranos, I read the John Carreyrou book and it just sounds insane. How are people at a company for months that sounds like a Kafka novel, I truly don't get it.

The problem here is optics. Let's say you believe the stuff they tell you while they recruit you, you're happy to get a new job, higher salary etc... and join WeWork. Then you walk into the place and it's a total shitshow. Crap. Now you have to decide if you want to take a hit on salary and position to get a job somewhere else and charitably leave WeWork out of your resume, or you try to make it to 1-2 years of tenure when you can actually leave and hope nobody will ever ask too many questions.

The funny thing about this is the incentives in the hiring market compound the problem tremendously, because most recruiters don't care to think about what situation you might be leaving, they only look at tenure and if too short they will immediately think you're a "problem employee".

I've lived your exact scenario. I left the shit show company and it is not listed on my CV. Actually, there are 5 jobs like that which are not on my resume.

I'm fortunate that I freelance and have many things going at once, so was able to "smooth" the dates and avoid having to explain any gaps.

Every company is a gradient scale of a "shit show". Some are just more deep in shit than others.

I totally agree with you, but - I used to know a guy who made the same tough decision when he started with a company called Enron back in the 90's. He decided he should stick it out for a little while for appearances and then, when the company managed to tank the entire world economy, he actually had trouble finding new work because he had that black stain on his resume. I suspect WeWork alumni are having similar problems - it's really a no-win situation for the low-level "grunts".

I just don't believe "low-level grunts" have serious problems that way. It wouldn't be rational.

I mean, isn't that cult-like vibe pretty much par for the course at all unicorny startups, successful or not?

A lot of people that work at these companies totally buy the koolaid. Many of them have no direct access to the underlying fundamentals, if they see anything odd at all, it's easy to write it off with 'Adam knows best'. Many of these folks would never have a chance to work at a regular high-end startup so it was a real 'chance of a lifetime' for them.

And then 'non believers' probably just didn't feel the need to speak up - the business was growing after all, and by most outside measures it seemed legit.

Most folks would not be able to evaluate the quality of acquisitions anyhow - and frankly, many respected CEOs make really bad purchases all the time.

A lot of these companies are filled with young "fresh meat" that just don't know any better. If you're just out of college and get hired at one of these places, why wouldn't you believe the spin? Everything is validating it. The media, the good salaries, the parties, the money is flowing, and your stock options are theoretically making you wealthy...

But there are also people that see through it all, but just don't stay long. This leaves only the people being fooled. A lot of the Theranos book involved people like Tyler Shultz, who saw through the Theranos mess and he left with a lot of drama that included his freaking former secretary of state grandfather trying to convince him otherwise. As for the "higher ups", they just find people who want to drink the kool-aid and are willing to take a salary doing it.

And when you are fresh out of school, finally facing the real world, many folks are in a place where they realize (maybe not consciously, yet) that they don't really have a purpose. No one really intends to create a cult. It just happens.

This essay, my favorite of those I read last year, has a lot of explanatory power for cases like this: https://meltingasphalt.com/crony-beliefs/

TLDR: People (including you and me) will believe false things if it increases or maintains our social status.

The same reasons perfectly intelligent people join and remain in actual cults.

Honestly, there are so many factors involved in it's hard to enumerate them all in an HN post.

For those who are intrigued by actual cults, I strongly recommend the podcast "Cults" on the ParCast network. It can come off as a little dry at first, but stay with it, they not only tell the story of the cults they cover they also reference real, mainstream psychological researching explaining the motivations of the cult leaders and members. It will change the way you think about all organizations, not just fanatical religions.

My partner is in to the things that the Neumann’s are in to. As strange as their beliefs are, they are pretty much harmless. It’s easy to take on this belief system because it doesn’t ask much of you and doesn’t take much.

The emperors new clothes is a real phenomenon. People fear truth telling (look at our president)

I love WeWork collapse porn as much as anyone, but the author of this piece is sloppy with the details.

> All the while, its valuation (as calculated by Goldman Sachs) inflated to $90 billion.

You don't get to count the numbers bankers put in an IPO pitch powerpoint as a "valuation".

> [describing Adam] shamanic figure who wooed so many overconfident white guys in Silicon Valley

Masayoshi Son isn't white and doesn't live in Silicon Valley.

Has anyone else noticed how deceptive the Paltrow family has been?

1. Bob Paltrow - Pleaded guilty to felony tax evasion over his liberal use of the junk mail company to finance his lifestyle. (was sentenced to six months in prison). In March 2019, roughly 700 employees of a company factory in Ciudad Juárez were told to take a three-day weekend, only to return to an empty warehouse

2. Gwyneth Paltrow - GOOP.

3. Rebekah - WeWork.

I find the whole web as a whole extremely fascinating. How it is all connected, how this group of society works and what they all do with their vast amounts of money and connections. It seriously just boggles my mind sometimes. A lot of good can come out of it all, and then you have GOOP. I'd really hope I would act differently but it is impossible to tell.

I find it interesting too and really don't understand it.

I really feel like they learned everything from Bob and the family. He sold junk mail and was able to pay for their great lifestyle. So the kids learned that they can sell junk, but were able to take that to the next level with strong marketing and design.

GOOP is junk with great marketing and design. WeWork is similar, they market it as something that its not.

The marketing idea made me think of the documentary: The Century of the self (https://www.youtube.com/watch?v=eJ3RzGoQC4s)

I feel like the fact that everything they did made no financial sense, and that they embodied the old joke about losing money on every transaction and making it up with volume is probably the main driver of their collapse.

The impact of any of the other bizarre stuff they were doing was probably minimal.

> [They were] buying assets WeWork would in turn lease back from them. But as Rebekah explained in an interview with Fast Company, “We don't have a line at all between work and life. It's not even a blurred line. There is no line.”

There was also no line between business and theft.

That must be hyperbole, I haven't paid much attention, but compare to Carlos Ghosn.

FTA: "giving her titles like “strategic thought partner” and a staff she charged with such inane tasks as disassembling her phone, painting all the pieces white, and reassembling it again."

Boy, if that isn't a red flag, I don't know what is.

What frustrates me to no end is that instead of those billions going towards capital intensive startups that are actual moonshots, it was funneled into some bullshit real estate ponzi scheme.

There are so many big problems that need solving, and also require large up front capital to do so. Think vertically integrated healthcare/hospital systems that remove insurance from the equation, nuclear fusion, new models for higher education, cancer treatments, etc.

Think of how many SpaceX and Tesla-esque startups didn't get off the ground because that money went to a damn coworking space company. Come on.

Funny you write this comment, as I thought about exactly this the other day while out for a jog. These aren't VC problems, these are politics problems ("Think vertically integrated healthcare/hospital systems that remove insurance from the equation [1], nuclear fusion [2], new models for higher education [3], cancer treatments [4], etc."). I want my government funding these ideas, not some VC partner you have to pander to. Have a moonshot idea? DARPA/ARPA-E

Tesla and SpaceX weren't government funded per se (kudos Elon), but they took advantage of US government subsidies/financing (Tesla) and NASA contracts (SpaceX), which I take no issue with. But those are the exceptions, not the rule.

[1] Single payer Medicare For All, with a HHS (Health & Human Services) central EHR/EMR system

[2] US ITER

[3] Khan Academy, Coursea, Udemy (non-profits, not gov)

[4] US NIH (who provided the vast majority of the resources researching treatments for HIV/AIDS)

The problem is that we don't believe in government.

BTW, did you know that government and cybernetics have the same word root? Some how that inspired me to think about creating better feedback loops at a societal scale..

Some may not believe in government. I believe in government, because we are government. Running for office is no different than chasing a round of funding: you're selling an idea. A startup will never be as impactful as public policy with nation state fiscal policy backing it up. Seek office, not funding.

> did you know that government and cybernetics have the same word root?

TIL!

"A startup will never be as impactful as public policy with nation state fiscal policy backing it up"

These involve selling to different sorts of people and different incentives once you get going.

and it's great to encourage government initiatives to tackle those problems, but I'm not implying private startups should replace those initiatives, but rather complement them.

The mighty NASA and Russia's space program hadn't (and still haven't) figured out how to build reusable self-landing rockets (for a # of reasons), and yet a company with startup-level resources like SpaceX did.

Part of it is because startups have to succeed at their goal, or they die. Government entities don't die if they don't pull off medicare for all.

In addition, startups don't have the slow and bulky bureaucracy of government in their way. Think of what those advantages can bring about in healthcare, energy, and other moonshot fields, if they just had the funding.

Hence why it's so important for big funds like SoftBank to invest in those, not nonsense startups with nothing more than a cult leader.

You're not arguing for arrangement of government vs startups though, you're arguing for passion, determination, fortitude, and grit (and domain expertise, of course). The organizational structure (private vs public) is less important. Government can operate as efficiently as some of the leanest, most nimble startups, and private companies can operate as poorly as the worst run parts of government. I too can provide examples of private companies that are enormous, dysfunctional, and yet still lumber on (Boeing) similarly to how some parts of government have operated. The private sector is not a silver bullet for innovation and efficiency.

Regarding SpaceX, Elon Musk is a cult leader, and rightly so; he gets shit done (I have previously said he is our least terrible billionaire). Hire more people into government who get shit done, and get out of their way (see: US Digital Service/18F, for example).

Regarding bureaucracy, some amount of regulation is beneficial. "Most fast, break things" gets old when you're committing fraud like Theranos. If one desires a little less bureaucracy, that is what incubators like DARPA are for. Think of what horrors startups would foist upon us chasing valuations and profits without any regulation whatsoever.

Disclaimer: I am biased. I don't believe in American Exceptionalism, nor rugged individualism.

To take this one step further: How many engineering hours and brain power gets wasted so that 12-year-olds can upload high definition pictures and videos online few seconds faster?

Then again, nothing has "meaning" unless we decide to hand it over.

The money isn't gone. Some bank has Rebekah's billion on its books and can lent it to whoever needs it. Many people have sold their real estate at a profit and now have the money to invest in startups.

The bottleneck are the people who can organize the vertical integrated healthcare system or the higher education. Whoever can organize such an endeavor can convince an angel investor to build a prototype and then expand by getting the VC money.

"The money isn't gone."

I'd suggest...the vaporized market capital isn't the money that is gone. The money that is gone is their cumulative operating losses, right? Not as much but still substantial.

Their losses - somebody else's income. Somebody more competent has the money now and can spend it on startups.

Selling stock is just a transfer of money. But operating a business at a loss is destroying real stuff. When the dream of future profits goes away, you have to face up to that.

If you start a business of digging holes and you manage to get seed funding of $1000, and you pay two persons $500 to dig a hole and to fill up the other hole afterwards, you end up with nothing. But the two persons have $500 each.

For the economy, the money isn't gone. Hopefully the new owners of that money use it to invest in better ventures.

All that was lost was time and energy, but not money.

In that sense, not losing money isn't an achievement, because how could it be lost? If you literally burn your cash, you have just transferred wealth to everyone else.

"All that was lost was time and energy" but that's all that can be lost, so where's the consolation?

Your logic seems to me exactly like justifications I've seen of why bitcoin's proof of work mechanism is worthwhile and sane.

Unlike bitcoins, wework hasn't bought energy and unlike google, they haven't employed many engineers. Actually, they have subsidized engineers by renting out their offices below market value. So it's quite possible that they haven't burned too much energy and time of scarce resources.

I was replying to this comment:

>What frustrates me to no end is that instead of those billions going towards capital intensive startups that are actual moonshots, it was funneled into some bullshit real estate ponzi scheme.

OP was worried about the money and my point is that the money is still there for the moonshots. Now instead of having to convince Softbank or the Saudis, who want to see huge profits, it should actually be easier to get the money. It is spread out and chances are that some of the new owners value human progress over profits.

I guess I agree that the deflation of their market value is a good thing in that it forcibly prevents continued hemorrhaging of capital. That's the point of all the speculative gyrations. It just shouldn't be forgotten that the interval before the market corrected had a substantial cost that didn't get recovered by anyone.

The kind of people investing in WeWork very likely aren't going to invest in the kind of moonshot-type companies you're talking about (minus vertical healthcare, as that exists in various forms like Kaiser Permanente). Nuclear fusion or cancer treatments have even lower chance of success than a startup and much longer timelines. Should they get funded? Yes, of course. But I don't think VC is going to be the route here.

> Today, Rebekah and Adam Neumann are living in temporary social exile in Tel Aviv after starring in the most sensational corporate collapse probably ever.

ha. but not financial exile. ($1.7bn parachute according to TFA.) billion with a `b'. let that sink in.

interesting though that the financiers in this debacle haven't suffered the same fate.

strong article. i do wish they'd talked more about adam.

It's basically the smarter version of what Elizabeth Holmes did. If you're going to grift, play by the rules. It is not illegal to do what the Neumanns did, take dumb money and use it to enrich yourself while the company collapses as long as you don't lie and follow the rules.

If Holmes hadn't made the amateurish mistake of actually lying rather than just handwaving vaporware, and had managed to pull some liquidity out during later rounds into Theranos, she'd be rich and untouchable.

Remember, it's not illegal to be bad at business or technology and it's not illegal to be ridiculously optimistic to the point of delusion about the future. What is illegal is being "optimistic" about events which have already occurred.

As a result, they are smoking weed by the coast of the med and shopping for vineyards and Holmes is going to jail.

yep. in the article they call it a collapse, but i wouldn't dispute it if they argued that it was a success.

The Yoga school sued for sexual harassment and shut down, the Kabbalah sued for illegal labour, parents life long con-artist ... 'never left the East Side bubble'.

These are the same people that excessively promote woke ideals, and they believe their own egos to the core.

It's not the message that's bad, it's the utter 'nice toxicity' of the messengers.

These people are just as bad as Donald Trump, they're the other side of the coin, they deserve the same treatment.

Why don't we see parodies of these people weekly SNL?

I think the 'bubble' has a lot of influence and is protecting their own reputation by not spending a lot of time lingering on the issue.

Did WeWork collapse? They just took an entire new floor over in the building I work. They had 2 floors before. Now have a third. This is in Oakland, CA. In a very expensive, hip locale.

Collapse probably isn't the right word because they are still in business, but they certainly tripped.

They were forced to cancel their IPO, sell their stake in all non-core business, oust their CEO/founder with a billion dollar golden parachute, and lay off like a quarter of its employees.

What collapsed was the cult of personality around Adam Neumann.

Calling it a "victimless grift" as this writer does is just naive and silly. The thousands of people who got laid off while Adam got billions in golden parachute funds is the very definition of the word victim.

Just because we've grown accustomed to decades of golden parachutes and widening income inequality and excessive equity based compensation to dodge taxes at the high end doesn't mean any of this is normal or victimless. The victims are everyone who isn't an executive.

Adam Neumann played SoftBank and gave them what they had coming. We need people like Adam to keep the markets from bubbling too much. It’s part of the checks and balances in a healthy capitalist system.

I love this comment which just straight-up comes out and says that lying sociopaths and narcissists are an integral part of a “healthy capitalist system”.

Tankies couldn’t have written a better indictment.

I’m not a psychopath, but it’s just part of human nature. And softbank just wanted to dump a shitty company on the public markets and rip off retail investors. Neither side is good here.

Lying sociopaths and narcissist are always going to be wrong. What keeps them in check are those who know this and value objective truths or measurable metrics rather than prose and charisma.

There's some truth to the comment. You can't have people become so complacent that they just trust people on their word. You need somebody to actually verify that what they're doing could actually work.

Take Theranos for example. That whole thing is a huge case is scientific illiteracy. What they were suggesting was essentially impossible to achieve, yet people invested in it anyway. Nobody demanded to even see it working properly as a prototype. There are enormous kickstarter campaigns for things like "self-filling water bottles" or "solar roadways" and people fall for them.

> Nobody demanded to even see it working properly as a prototype.

Quite a few people did and recognized the fraud that it was long before it was public. But there were quite a few vested interests in making sure the price the equity would sell at was more than what they purchased at.

There are plenty of businesses with more realistic goals and well-intentioned founders which go under. You don't need people like Adam.

> The thousands of people who got laid off while Adam got billions in golden parachute funds is the very definition of the word victim.

Not in my book. They got a few years of a cushy job and now move on to something else.

Otherwise this sounds like calling the people who were evicted for not paying their mortgages “victims”. Sure they lost their homes, but they also got to live in the house for a while for free.

This is the kind of story that gets weirder the more one reads it, and that's of course because all of it actually happened.

surprising that such a long writeup about the wework debacle doesn't mention Masayoshi Son holding founders at ransom to take his Softbank money.

Why would anyone refuse such money? Not sure what's Rebekah got to do with the WeWork debacle.

(good to know all the star kids connections. IMO, most rich white people in US can do any financial crime and get away with it)

I love how this tries to blame Adams wife. LoLz.

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