Build a Culture of Performance, Not WeWork’s Performative Culture

At its zenith, WeWork was the sparkling crown jewel of the startup world. With a valuation of $47 billion, the flexible workspace provider co-founded by Adam Neumann and Miguel McKelvey in 2010 courted investments from prestigious names like SoftBank, Benchmark, and JPMorgan Chase, reflecting widespread enthusiasm for a new vision of workspaces. But WeWork’s meteoric rise was soon eclipsed by a series of financial woes that brought it crashing down to earth.

The company’s over-ambitious growth and the shifting landscape of remote work left WeWork with dwindling demand for its services. The company’s troubles culminated in 2019 when its attempt to go public revealed deeply concerning financials and corporate governance issues. Now, with mounting losses and a burden of debt, WeWork is doing what was once unimaginable: seeking bankruptcy protection.

The saga of this high-profile startup has triggered important conversations about the landscape of company culture, in a world where work paradigms are undergoing a dramatic transformation. CEO Adam Neumann’s leadership style and the organization’s distinct corporate culture have been subjected to widespread criticism, leading to Neumann’s resignation.

WeWork claimed this culture to be based on collaboration, authenticity, and a community that celebrated each individual’s talents and backgrounds. It promoted a no-holds-barred “hustle” vibe. The work environment included tequila shots in meetings and upscale company retreats. They believed in boosting employee happiness to attract top talent. They celebrated trends in contemporary white-collar life, with chic shanty offices resembling today’s best modish eateries. 

If SoftBank brought gold to the enterprise, so did its 14,500 employees. But the company laid off 2,400 people in November 2019 and another 250 in March 2020. Their most recent layoff in 2023 released 300 employees, who represented 7% of the company’s workforce. Meanwhile, Adam Neumann’s estimated net worth is approximately $2.2 billion. His new residential real estate startup, Flow, was valued at more than $1 billion.

There is nothing inherently wrong with a focus on company culture; in fact, a true sense of purpose engages employees. But the company-culture reality is closer to Peter Drucker’s notion that “Culture eats strategy for breakfast.” “Layoffs eat culture for breakfast” might ring just as true for the employees on the chopping block, not to mention those left behind.

Layoffs leave cultural collateral damage. One of my brightest friends was hired earlier this year at an innovative biotech startup. Its leadership had lured her with a hip company culture, complete with a rock-climbing wall in the office. “We’re like a fun family,” they’d told her. A few months later, she was saying goodbye to half her team. As the founder abandoned ship, he broke the news in nautical metaphors: “You’re sailing toward a new horizon,” he said. “Now, you’re going to do more with less.” As she logged off, my friend had one thought. Here she’d been giving the company her all–now she only wanted to give the bare minimum. That’s one sure way to sink a business.

Over the last twenty years, my brother, an MD, has started 3 companies in succession, and I’ve served on the board of all three. None have boasted flashy mission statements. In each case, my brother was clear with the employees first and foremost about the revenue model and how much cash we had to work with. Next, he was clear about what he expected from each of them. It was the most valuable thing he could offer someone coming aboard: here’s how I’m going to partner with you to take care of business, to take care of both of us.

In a working relationship, what could be richer than a profitable partnership?

Two of the companies have celebrated the good times and endured the hard times without a single layoff. At the first company, every investor made roughly thirty times their investment. All employees owned stock and participated in the sale proceeds. There was quite a party. Talent started coming to us–we grew the team with the best employees we could hope for.

Founding a company is hard. Things can go the wrong way. There is always risk, particularly early on. But without a real strategy to perform brilliantly, the brilliance of culture feels false. Treating employees like partners, on the other hand, always pays off. It is possible and profitable to “Run Your Business So You’ll Never Need Layoffs.” It’s a great way to build wealth. And sleeping well at night is as good as gold.