“Billion Dollar Loser” by Reeves Wiederman

I have not been reading any non-fiction for a while and “Billion Dollar Loser: The Epic Rise and Spectacular Fall of Adam Neumann and WeWork” was the first pick in a while. I just recently added it to my list on Goodreads and when I was loading books on my Kindle, it came to my attention so I decided to give it a go to take a break from fiction.

One of the reasons why I really enjoyed this book is because I learned so much about the start-up culture in the United States and in the broader world in general from the beginning of 2010 and forward. Although the book focuses on WeWork specifically, it also covers a broader context in which a plethora of “unicorn” startups got developed and strived.

For the background information, unicorn startups are the ones that are able to get a huge evaluation for what they are worth from private investors to get more investments through a series of funding rounds. Secondly, they first focus on expansion without worrying about profit, compared to older business models where profit would play an important role early on in business development until they start making money. A well-known example of a unicorn startup would be Uber or Slack, for instance. Or WeWork as in the book by Reeves Wiederman.

The idea was not too worry too much about risks and costs that might bother a traditional businessperson. The goal was “lightning” growth… iN A PERFECT WORLD, YOU BECAME TOO BIG TO FAIL.

Originally, Reeves Wiederman was writing an article about WeWork for the New York Times but it eventually grew into a whole book through extensive research. Also, the book focused not only on the company itself but also extensively on its founder Adam Neumann – an Israeli graduate in the US with a dream to “elevate the consciousness of the world”. So what did actually happen to WeWork and why the fuss?

WeWork was a startup that raised billions in funding rounds to do the rapid expansion to be too big to fail, in big part due to the charisma of one of its founders. Adam Neumann was a visionary who was great at wooing investors but mostly had a little strategy in leading a huge company – for instance, the company was reported were having little to no women CEOs on the board or not hire female employees if they planned to have children or having no strategy for onboarding hundreds of employees it was hiring every week (and these are minor compared to other issues that happened internally). One of Neumann’s ideas was also to present WeWork as a tech company to gain access to even bigger capital, however, he was not able to succeed in Silicon Valley. Once WeWork ran out of private investors and had to keep the cash flow in, they decided to go public and in preparation to do so, failed to secure any further investments to keep the company growth going at the same level. They then had to fire Neumann from being CEO and place someone with a steadier approach. The end.

There are a few reasons why the company failed – among them is having no long-term strategy, overspending, not focusing enough on profit along with a lack of structure, organization, and a bigger concrete vision. Wiederman goes into all these details in the book and gives a deep dive into how the company failed.

One specific part that I also found interesting was the original idea of WeWork being inspired by the founders’ upbringing. Neumann spent a lot of time as a kid in a kibbutz which is an international community in Israel that is in a way utopian in how labor and pay are shared. Miguel, another co-founder, grew up without a father and lived with his mum and her two friends who also were single mothers and had in a way communal upbringing. WeWork’s initial goal was to build a “physical social network, the biggest networking community in the world”. Whether they succeeded or failed, the time has answered.

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“He had long resisted the obvious – that WeWork was a real estate leasing company – insisting that it was anything but: it was a tech start-up, a social network, a “community company”, an organization bent on reshaping society. “We are here in order to change the world”, Neumann once said. “Nothing less than that interest me.”

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“WeWork would present an alternative to the American dream, which no longer meant decades spent climbing a corporate ladder. The post-recession path to riches involved founding a start-up and disrupting the way things had been done.”

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“The very act of dumping hundreds of millions of dollars into an immature private company can also have perverse effects on a company’s operating discipline,” Gurley wrote. Investors were pushing profitability further into future while avoiding a test of whether any given company’s business model “actually works”. They suffered from a fear of missing out on the next Facebook or Uber or Netflix. “There is a fool in every market”, Gurley wrote, quoting Warren Buffet. “If you don’t know who it is, it is probably you.”

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Sometimes you have to make it before you can fake it.