The spectacular rise, and even more spectacular fall, of WeWork and its CEO Adam Neuman is rapidly becoming the stuff of legend, but to me, it was all so predictable.
About two years ago, I was asked by WeWork to attend its Creator Awards in New York. It was a crazy night; unlike anything I had ever seen, financially.
Rather than try to explain what happened that night, and why it was a canary in the coal mine of what would become of WeWork, read the top of my story from that night:
What would you do if you were awarded $1 million? Most people say they would go on a trip or pay off debts, help family, maybe save some money.
But entrepreneurs aren’t most people. And the creators and entrepreneurs who were global finalists at the WeWork Creator Awards at Madison Square Garden on Wednesday night aren’t even most entrepreneurs.
In fact, the 13 finalists were so impressive . . . that WeWork and the judges (including WeWork CEO Adam Neumann . . . ) couldn’t pick just one winner. So WeWork, already committed to awarding the winner $1 million, decided that each impressive runner-up would also get between $180,000 and $500,000 — and that there really needed to be two grand-prize winners, awarding two $1 million prizes to two different companies.
And that all happened spur-of-the-moment.
So flush with cash was Neumann, that he spontaneously decided to turn his already incredibly generous $1 million award into something like an extra $4 million (an extra $1 million prize + 11 $250,000 prizes.)
That, kids, is how not to run a business.
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But before that became so obvious, we all were amazed and enamored of WeWork (your author included, suggesting — to no avail — that I would be happy to help judge a later Creators Awards.)
It is true that Neumann and WeWork had a great idea — workplaces needed to be transformed as work has decidedly changed recently, what with the advent of remote working, mobile ubiquity, casual everyday, digital, flextime, side gigs, etc.
The workplace was ripe for a workover.
And WeWork delivered (sort of.)
WeWork bought and leased cool commercial offices and transformed them into a neo-workplace utopia: Espresso machines, cozy couches, fast free wifi, shared work benches and spaces, and much more. WeWork spaces catered to not only the young, hip, gig-economy crowd, but also to more established mainstream businesses. Microsoft, for example, was a corporate client.
Eventually though, Neumann became a victim of his own success, declaring, inter alia, that he wanted to live forever and become the planet’s first trillionaire.
So what went wrong? Plenty, of course, and therein lies a few lessons for us mere mortals.
Branding is not enough.
How enamored was Adam Neuman of the brand he created? In the documents filed for its IPO, it was disclosed that Neumann sold the “We” brand/trademark to his business for $5.9 million.
Sure “We” working together sounds better than me working alone, but a cool brand is not enough. A business has to have solid fundamentals underlying it. Numbers that crunch. Contracts that make sense.
Enthusiasm will only take you so far.
When I speak to new startups and founders, one thing I always mention is that being an entrepreneur is not enough. Sure, excitement and vision are great, necessary even, but that will only take you so far.
At some point, you have to become a businessperson too. To succeed long term, you need to master hiring and firing and numbers and finances and contracts and marketing and advertising and all the rest of the mundane stuff that makes a business a business.
If you don’t, you will go from WeWork to NoWork in a flash.
Steve Strauss is an attorney, popular speaker and the bestselling author of 17 books, including “The Small Business Bible.” You can learn more about Steve at MrAllBiz.com, get even more tips at his site TheSelfEmployed, and connect with him on Twitter at @SteveStrauss and on Facebook at TheSelfEmployed.