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Book Review: Billion Dollar Loser_The Epic Rise and Fall of WeWork

Updated: Jan 4

“The Best Business Book of 2020” — The Sunday Times Best Book of the Year
“It’s a story of 21st-century boom and bust…a satisfying ticktock.” ― The New York Times, “17 New Books to Watch For in October”
“Batshit, unsettling, and wholly satisfying.” ― Anna Wiener, author of Uncanny Valley
“A vivid, carefully reported drama that readers will gulp down as if it were a fast-paced novel.” ― Ken Auletta

4.4/5 amazon

4.2/5 Goodreads

4.6/5 audible


Hardcover- 352 pages


About the author

Reeves Wiedeman is a Contributing Editor at New York magazine. He has written for The New Yorker, The New York Times Magazine, Rolling Stone, Harper's, Men’s Journal, and other publications. Billion Dollar Loser, about the rise and fall of WeWork, is his first book.




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About the book

The book is about the full inside story of last decade’s hot startup ‘WeWork’ and its CEO Adam Neumann. How WeWork made its fastest way to billions in Neumann’s leadership and dropped down even faster.

WeWork was based on a straightforward model ‘leasing spaces for co-working’ but on a larger scale. “leased space, cut it up, and rented out each slice with an upcharge for hip design, flexibility, and regular happy hours,” Wiedeman writes. WeWork shows how pouring investments into a hollow startup can trick the world into seeing it as an immensely valuable, society-shifting tech unicorn.


Index

1. Capitalist Kibbutz

2. Green Desk

3. 154 Grand Street

4. “I Am WeWork”

5. Sex, Coworking, and Rock ’n’ Roll

6. Change The Way You See Everything

7. The Physical Social Network

8. Reality Distortion Field

9. Greater Fools

10. WeLive

11. Manage the Nickel

12. Mr. Ten Times

13. Me Over We

14. Blitzscaling

15. The Holy Grail

16. WeGrow

17. Game of Thrones

18. Operationalize Love

19. A WeWork Wedding

20. Fortitude

21. The I in We

22. Wingspan

23. Always Half Full

24. The Sun Never Sets on We

25. Brave New World

From left: Miguel, Adam and Rebekah, Image Source:TheTimes.Co.Uk
“Adam is WeWork,” Francis Lobo, the former chief revenue officer, said. “He’s one-quarter crazy, one-quarter brilliant, and the other half is a fight between his ego and genuinely caring for people. If Adam were hit by a bus tomorrow, I would look to sell my equity.”


In 1990 when Adam was settling in town called Nir Am in Israel, Adam observed that one man worked grueling sixteen-hour days running the factory that kept the kibbutz afloat while another man only had to spend half as much time taking care of the kibbutz garden. (The kibbutz is usually a small community that comprises several hundred residents, and its income, at least traditionally, comes from agriculture and industry. Kibbutzniks, as residents are called, work on dairy farms, in orchard and even outside their compounds, putting their full paychecks into the communal pot.)

The Neumanns spent just a few years at Nir Am, but when Adam began building WeWork, he said that he had learned some foundational lessons from his time there.

WeWork would be “a capitalist kibbutz,” he said. “On the one hand, community. On the other hand, you eat what you kill.”

Miguel McKelvey, a graduate from University of Oregon with an architecture degree always had itch for business and wanted to go to New York. Instead he followed his friend John Hayden to Tokyo where they started a website to help people learn colloquial English called ‘English, baby!’ By 2003 it was profitable, but “In retrospect, it didn’t go far enough into becoming a social network, and we missed out,” McKelvey said later.


Miguel came back to Brooklyn and took a architecture job at Jordan Parnass Digital Architecture in a beaten-up building. And soon found out this is not what he wanted to do in life. Once he went from Brooklyn to Tribeca to hang out with Gil Haklay, an Israeli architect who also worked at JPDA where he met Adam and soon became friends.


Adam proposed an idea to Miguel & Haklay about slicing up a big office space into smaller units and renting out the individual parts to small companies. They pitched their plan to real estate person Guttman and he liked it. They called it ‘Green Desk’. Even though they started it in 2008’s economic crisis still it became a hit. In 2009 they sold Green Desk to Guttman.


Adam and Miguel were ready to put their money in their next adventure. Now their plans were big so they started to pitch them to investors and landlords but no one was interested. Joel Schreiber, a young real estate developer agreed to invest $15 million in exchange for partnership.


They were searching to take a whole building on lease. A friend suggested a building at 154 Grand Street in SoHo. It sat across from a vacant lot and had a single cramped elevator that took fifty-six seconds to get to the top floor. There were only six floors. After lots of renovation they opened for business in Feb 2010 naming ‘WeWork’. WeWork wasn’t the cheapest office in New York, but people were willing to pay for the thoughtful design, the flexible lease terms, and a sense of community.


As 154 Grand filled up, they expanded at another location across the Empire State Building, 349 Fifth Avenue. They leased it from Zars an Iranian-American family. At a public event, Adam pulled David Zar in for a hug and thanked him—less for the space itself than the publicity that came with it. “You put us on the map,” he told Zar. “You made us real.”


From early 2000, WeWork was growing and so was the no. of employees. Slowly it started to show the hierarchy, Miguel became the chief creative officer, Adam was handling role of CEO. Employees were working day & night, some were rejected the maternity leaves, they thought they’re part of something big, as Adam said, ‘We’re next Google’. The company was growing very fast but their pays not. Adam did not care about the efforts they were putting.


In 2011 Josh Simmons joined as community manager thinking it wasn’t about the money, more about the people. When Adam asked the employees how old they were, Simmons and his colleague both replied that they were in their twenties.

“See?” Adam said. “I can hire a bunch of young people and pay them nothing.” _He said to an investor.


When Simmons got another job offer with doubled salary. In the meeting, Adam made a decree that lodged itself into Simmons’s brain as he left Neumann’s company to join the church.

“I,” Adam said, “am WeWork.”

Yerushalmi, an Israeli entrepreneur running an office-space company called Sunshine Suites taught Adam a lot about co-working business. Rebekah, Adam’s wife had entrepreneurs background who invested part of a $1 million nest egg into her husband—the man she believed would save the world—and his company. By 2012, Adam had raised nearly $7 million from friends and family alone.


As a condition of their engagement, Rebekah insisted that Adam work on his spiritual life. So she started taking Adam to classes at the Kabbalah Centre in Manhattan. Kabbalah offered structure, meaning, and a way of seeing the world.


Kabbalah changed the way Adam saw his professional life. The WeWork executive who knew Adam from the Kabbalah Centre said, “Through Kabbalah, Adam became like a prophet. It was like putting a basketball in Michael Jordan’s hands.”


Alex Hillman, who ran co-working spaces in Philadelphia heard about WeWork, Neumann and the next Google, Starbucks, or Facebook Will Start out of a co-working space. He watched Adam giving speech to two hundred Europeans raptly in November of 2011 as Adam appeared on a large projector screen. After returning to home he wrote blog post titling “Sex, Coworking, and Rock ’n’ Roll.”


When Neumann attended GCUC—the Global Coworking Unconference Conference in Austin, Texas, he said “I was asking myself, Why am I coming to a place where I’m gonna talk to all my potential competitors?”…his company was “about ‘We’ and about collaboration, we’re planning to be all over the country very, very soon. Instead of us opening all the locations, we would love to partner with some of you… Together, we can build a community that can change the world.”


WeWork was bringing in millions, and by the end of 2012, it made a tidy $1.7 million profit—the last profitable year in the company’s history, according to the Wall Street Journal. Bruce Dunlevie, who cofounded Benchmark in 1995 and quickly turned a $6.7 million investment in eBay into a $5 billion stake, was initially uninterested. But invested $16.5 million in WeWork’s Series A round of venture capital funding alongside $1 million from Rhône, a private equity firm run by Steven Langman, whom Adam knew through the Kabbalah Centre.

WeWork’s engineers grew to live by what they called the BASS rule—Because Adam Said So.


In 2014, Adam intended to open more locations than previous years combined. WeWork raised $40 million from investors, led by DAG Ventures, a private equity firm that often invested bigger checks into companies that Benchmark had already backed. The Series B round valued WeWork at $440 million. In February of 2014, less than a year after WeWork was valued at $440 million, JPMorgan Asset Management and several other investors put an additional $150 million into the company at a valuation of $1.5 billion.


Founders of WeWork living their dream life years, Adam flew with friends and family to Turks and Caicos for a three-day thirty-fifth birthday party. Miguel had moved into a nice apartment in Manhattan with a great view, fulfilling his childhood dream of being able to see the New York City skyline from his home.


After $10 billion Series E round, Adam told the Wall Street Journal that WeWork was profitable, that it wouldn’t need any additional funding before an IPO, and that it had met or exceeded all its growth projections. But Adam had little interest in going public, fearing that doing so would mean losing control and limiting the scope of its ambition.


“Adam is a gifted salesperson,” an Executive said. “There’s a cult of personality around him, and the cult factor is what keeps the machine going. It’s what keeps everyone quiet.”

SoftBank’s Masayoshi Son was favouring WeWork as potential investment. Adam described the connection with Masa as a “special relationship,” and Masa proudly told Adam that “the last person I felt this with was Jack Ma,” the Alibaba founder. Of the $2 billion Masa had agreed to invest in Maui, half was marked at the $47 billion figure, while the other half went toward buying out existing shareholders at a much lower price: $23 billion, only a slight increase over the price SoftBank paid in 2017.


Both stock exchanges had made pitches to the company earlier in the summer at the Neumanns’ house in Amagansett, and Nasdaq offered to create a new index of companies committed to sustainability: the We 50. Adam was not ready for company to go public but he was at the point where he could not stop anything he wanted without board’s approval. Still Adam has control of the company so he was able to postpone the same for long time.


Finally Adam’s time came and with board’s pressure he resigned from WeWork. Artie Minson and Sebastian Gunningham became the new co-CEOs of WeWork. They decided to postpone the IPO till they didn’t know when. At the end of 2019, Adam, Rebekah, and their kids went to Israel with no plan to come back. But in 2020 when world was is in lockdown due to Covid-19, WeWork’s IPO was launched by the SEC, the Justice Department, and several state attorneys general.


SoftBank posted an operating loss more than its 15 years of history that is of more than $12 billion. WeWork did not seem likely to take flight. SoftBank was marking down its investment to a new low—$2.9 billion, or just 6 percent of its valuation a year earlier.



After Neumann’s fall certainly entrepreneurs tried to imitate him. This is a clear example of how to get rich by losing money. Like John Carreyrou's Bad Blood and Mike Isaac's Super Pumped before it, Billion Dollar Loser traces the turmoil at a startup driven by a charismatic, arrogant founder.


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