Have you been standing on the sidelines watching the WeWork debacle?
It’s been an unbelievable meltdown; going from a privately valued company of more than $47BN in January to capitulating on its August IPO, subsequently removing it’s charismatic founder and CEO Adam Neumann and now announcing deep lay-offs of staff.
It’s a cautionary tale for investors who have dodged a bullet. The shady dealings of WeWork’s management have been widely discussed and include ‘self-dealing’ issues such as Adam Neumann copyrighting the use of the word “We” and then selling it’s use back to WeWork for $5.9M! Yep, you can’t make this up!
Many of these conflicts came to light when the company prepared to be listed on the stock exchange. As a requirement the company had to publish a prospectus, or Form S-1, and that disclosure sank the ship.
So how was it that the public market was able to see the glaring holes from WeWork’s conflicts that the great and good of Silicon Valley’s techno venture capital community somehow missed?
I think it simply comes down to the master huckster Adam Neumann. From viewing videos, listening to him on podcasts, reading the S-1 and the WeWork website – I get it.
He was good at selling.
Wow – he was really good!
Let’s not forget that we’re talking about the distinctly un-sexy business of commercial property leasing… however, it’s difficult not to get carried away with his brand of proselytizing fervor laced with a spiritual tilt to world improvement.
It’s cultish. It can’t just be me, there are definite parallels with a cult.
- A leader obsessed with maintaining control.
- Familial ties in the upper-echelons of the organization. (His wife had complete control over any succession planning).
- Bombastic language appealing to a wider calling for their ‘mission’.
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It’s easy with the benefit of hindsight to think that as rational investors we wouldn’t be taken in by this carnival barker. But would you?
Do you think you could see through the fluff and correctly value WeWork?
Well, now is your chance to take my proprietary WeWork or Cult quiz!
WeWork or Cult?
For the following eight statements simply decide whether they are from WeWork (either from Form S-1, their website, or a direct quotation from Adam Neumann) or from L.Ron Hubbard founder of the Scientologists – that apex of cultishness.
Award yourself one point for each correct answer.
Our mission is to elevate the world’s consciousness
We are committed to elevating the collective consciousness of the world by expanding happiness and unleashing every human’s superpowers
Let me clarify this very definitely. This is not an authoritarian organization.
[…] does not teach you. It only reminds you. For the information was yours in the first place.
Create a world where people work to make a life, not just a living
The influence and impact that we are going to have on this Earth is going to be so big
Students will learn about the interconnectivity of the universe. This is a cosmic education!
[…] is used to increase spiritual freedom, intelligence, ability and to produce immortality
- Let’s start with an easy one. On the second line of WeWork’s S-1 they make this extraordinary claim. One point if you guessed WeWork!
- WeWork again! We have Adam’s wife Rebekah to thanks for this one. Not content with simply running a property leasing company their hyperbole unleashed “WeGrow” on the world – a network of schools. This gem is from WeGrow, but honestly I could have chosen any statement connected with this organization that’s now been shuttered. Also bear in mind she is the cousin of Gwyneth Paltrow, and I can’t think of a more cultish pedigree than that.
- This statement is from L.Ron Hubbard trying to convince us that the Scientologists are not authoritarian. This is a softball for you as even Adam Neumann wouldn’t have the audacity to claim WeWork was not authoritarian. Or would he?
- This one is from L.Ron Hubbard. However it’s the kind of drivel that wouldn’t be out of place in WeWork’s Form S-1.
- Another easy one for you – it’s WeWorks’s tagline.
- Pure Adam Neumann from a company event. Tell me that statement is not culty…
- A gem from WeGrow but would not be out of place in any Scientology material. Am I right?
- L.Ron Hubbard. It could easily be from Adam, but to my knowledge not even WeWork has claimed that its tenants can achieve immortality. Perhaps if they had succeeded with their grand deception of an IPO then a proclamation of immortality would have followed.
8 – Founder. You are a master of spotting cultish exaggeration! You should join SoftBank, they need your help.
6-7 Arch-Wizard. You would likely have avoided any investment carnage in a WeWork IPO. Well done!
4-5 Neophyte. Sorry, I think you would have lost your shirt in the implosion.
0-3 Minion. Please don’t invest in new startups. And if you hear anyone talking about elevating your collective consciousness, then walk away!
So how did you do? Let me know your score below and whether you’ve ever invested in a startup or a new public offering. How did your investment do?
Author Bio: I started actuary on FIRE as I did not see any actuaries taking a prominent role in the personal finance area and wanted to remedy a shortage of actuary jokes and write for those that appreciate rigor with fancy charts. In my regular day job I advise corporate US on investment and retirement strategies. I’m a qualified actuary, investment adviser and have a PhD in mathematics and reserve the right to have the occasional math post.