WeWork and Adam Neumann: Scam or Genius? 5 Lessons Learned

I think the article missed the point.

WeWork was following a traditional (and valid) business model, but they managed to get Softbank to value them as a tech company. That valuation was unwarranted, and ended up with Softbank losing a ton of money.

Without Softbank's money, WeWork was nothing, but none of those five lessons relate to how to find a deep-pocketed VC willing to give you billions of dollars to grow a low-margin, capital-intensive, non-tech business.

It seems absurd to suggest any of the lessons are applicable outside the the very specific time and place of WeWork's initial growth. "Just be confident you can raise a billion dollars for a bullshit idea and it'll happen" doesn't work if there's nobody handing out billion dollar investments to people with bullshit ideas.

I don’t think people were overly critical because of the “fake it till you make it” bits. Rather I think they were critical of what appeared to be a serial hypocrisy between what was being preached about “the we generation” and what he was actually doing behind the scenes. That’s what the “Billion Dollar Loser” mostly focuses on. The S1 was also one of the most jaw droppingly bad S1s in the history of IPO attempts, which caused potential investors to flee literally overnight.

I certainly don't get it. You're paying out $X in leases and getting $Y for the sub-leases. Volume doesn't help when you're selling $5 bills for $2.50. And nobody is paying $6 for the $5 bill some time in the future.

I love WeWork (am a happily paying member) because to date it’s mostly been a scam on the rich. Now that they’re public, some less wealthy people will have the opportunity to fall for the grift. But so far it’s been VC bozos footing the bill for really nice buildings for people like me to work in.

It’s not like Theranos, Uber, etc. that were harming normal people.

This article seems to sort of pre-suppose that the target is billion dollar business, and describes Miguel's success at building a small enterprise as a failure. It wasn't. It was much more successful than WeWork.

There's also a lie at the core of most of these - having a grand vision, confidence moving mountains. Wework had a vision that they would deliver more than just office space, but when you have a vision for something you actually need to do it. At no point ever was WeWork delivering anything more than office space, and often it was delivering office space in much less efficient ways than it's competitors. Adam had confidence to move mountains- he told stories of becoming a billion dollar company and sure - he did work hard when he wasn't ripping off his own company or buying surf pools. But he wasn't working on a billion dollar company, he was talking about a billion dollar company, whilst working on a small office rental company.

Again with the blitzscaling point - blitzscaling is about scaling up to a global company so you beat your competitors to market. But office rentals aren't a new market, they're an established market. You can't beat Regus to market, they're already here.

And finally - trying to claim that WeWork raised standards for office rentals is just... bullshit. Yes, WeWork made the standard for office rentals getting $2 worth of office for $1 by burning investor capital. That's not innovation. Innovation is when you actually find an economic value. This is the core of the problem, any company can pursue the silicon valley playbook of bullshit, spending too much, and huge egos. The key point with WeWork is at every step of this they did it with a business that fundamentally didn't match what the founder told you it was. It didn't have market power and never could, it didn't have economies of scale and never could, it didn't innovate in regulatory arbitrage. It just did what its competitors were doing, but for more money.

Being a genius helps when scamming.

I'm discovering via this article that Wework still isn't bankrupt, and I am amazed.

Easy. Scam. At least in the sense that it exposed the scam that you need to have a viable business or even be a competent executive to raise gobs of venture capital.

Without pointing to example companies, what is the definition of a "tech" company. Doubt anyone can define it without using example companies.

AirBnB doesn't own hotel rooms.

Uber/Lyft doesn't own cars.

WeWork didn't own office space. The idea was to build a AirBnB/Uber for office space.

i think it's way too soon to call it a failure. we work is still worth billions. Uber has been losing money forever but the stock is still above IPO price.

Blitzscaling?! What lovely 1940’s terminology!

tldr: "fake it til you make it" — even if you never make it you can still become a billionaire if you fake it charismatically.

You always need a counterparty to back your dreams.

The dreams could be reachable or just a figment of the counterparties imagination.

Softbank happened to be the best counterparty at that time for many outlandish claims and imaginations.

Like the dog walking app. Or the super successful exit of Slack.

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But everyone in tech always knew WeWork was NOT a tech company.

There were comparable publicly listed companies like Regus as compcos.

Softbank is a grown up company with many "successful" MBAs etc.

They all knew what they got into. The greater fool theory always works till you are the greater fool.