Even the most casual follower of business and tech news knows that Adam Neumann, the co-founder and ex-CEO of the We Company, has thrown the future of his global co-working company into doubt. Its planned IPO has been postponed; its value has been slashed from $47 billion to as little as $10 billion; some are forecasting layoffs as deep as one-third of its employees. Some observers are wondering if We's troubles could sink the economy as a whole, which would make the company's ambition to reshape the world a reality, but not in the way anyone had hoped.
Things have gotten so bad that Neumann was recently spotted walking the streets of Manhattan barefoot, raising concerns that the father of five may be down and out with only the $700 million he's drawn from the company, his two Manhattan residences, two Hamptons homes, the Westchester County place, and his Bay Area pad the only things between his family and the coming winter chill.
All jokes aside, despite some critics hinting at bankruptcy, the company is still here. Newly installed co-CEOs Artie Minson and Sebastian Gunningham need to keep running the show with thousands of employees doing their jobs and nearly 600 locations worldwide keeping the lights on and the Kombucha taps filled.
If it's going to survive, the We Company needs to start operating differently. Here's what We with some much-needed humility might look like.
One of the things that characterized We during its rise was levels of hype and self-regard rarely seen outside of early rap lyrics. Neumann, who was known to wear a T-shirt that read CREATOR, mused about being "president of the world." He wanted his company to "encompass all aspects of people's lives" (per Fast Company), expanding from hot desk rentals into housing, fitness, and even education. "If you really want to change the world, change kids when they're two," he humbly told The New York Times in 2018. Oh, and he wanted to expand to Mars and, um, live forever.
So, yeah, the next version of We is going to have to be far less hyped. It's going to have to do what it does well--rent desks and well-appointed small offices to individuals and businesses while keeping overhead low--and stop telling itself and the world a fairytale. Maybe there will be We-sponsored Friday afternoon networking drinks on Mars some day, but Minson and Gunningham should under no circumstances talk about it as a possibility. And if they plan to live forever, they should only talk about it with their loved ones and closest friends.
Also Less Interesting
Along with losing the hype, We is going to lose a lot of what made it special to employees, investors, and customers: Adam Neumann's charisma. During its rise, the thing that set We apart from profitable but drab competitors in the short-term and efficiency office rental business like IWG (formerly Regus) was its Silicon Valley buccaneering. Like Steve Jobs, Elon Musk,Travis Kalanick, and other unicorn-riding founders before him, Neumann had a knack for rallying his troops. Sure, that very often involved copious amounts of tequila and promises unfulfilled and unfulfillable (see "Hype," above), but that's what made employees and investors want to throw in with a swashbuckling CEO no matter what he did.
Of course, for everyone who finds that exciting, many find it off-putting. One employee on Glassdoor called it "VERY cult-y" and joked, "This place is like drinking from one continuous Kool-Aid jug." (Another review echoed the Kool-Aid theme and called We "Jonestown." Yikes!)
Minson and Gunningham are going to have to remove and replace Neumann's rock star charisma with ... well, whatever they've got. (As long as it's not tequila shots.)
As Bradley Tusk, a venture capitalist and political strategist who started Tusk Holdings, told me, "They've got to rid themselves of the sins of Neumann but not be so anodyne that they're not interesting. WeWork has to walk a very tight line here and show they've changed and have remorse but at the same time inspire people to want to invest."
This one is going to hurt. We is going to have to shrink a lot, especially if the company ever intends to go public. As The Wall Street Journal's Eliot Brown (who has already signed a deal to co-write a book about We with his colleague Maureen Farrell) reported (see "president of the world," above), the company is spending about $700 million a quarter and could conceivably run out of money next year. That's quite a dramatic reversal of fortune.
This is going to mean layoffs. And possible closures of WeWork spaces--maybe even the WeLive housing business in New York City and Washington, D.C. Some are speculating the company could sell its stake in the Wing. It might also mean selling off some of its decor, including its lavishly praised desk ("The desk Steve Jobs wished he designed," according to angel investor Jason Calacanis). For some of us, this may call to mind the great Aeron chair sell-off that followed the bursting of the early 2000s dot-com bubble, when the pricey startup office accessories were "piled up in a corner as a kind of corporate graveyard after they laid off 95 percent of the staff," as one survivor of those dark days recalled in 2006.
Expect We merch to take on an ironic sheen, with folks smirking as they sip water from We metal cups that read "Always Half Full" in much the same way Kozmo.com messenger bags were once (very) briefly a hipster must-have.
If Minson and Gunningham and the backers of We (most especially SoftBank, which alone invested about $7.5 billion in the company) truly want to keep We alive, they need to show that it can still function as a business even when the smaller companies that rent its Steve Jobs-like desks start faltering. It's (relatively) easy to make money servicing startups and small businesses when everyone is doing well, but it's another thing entirely to keep momentum when the market is tanking. As many have pointed out, IWG has managed to do this since its IPO in 2000, which coincided with a serious recession.
A New, More Disciplined Neumann
This is a weird one, but the future of We might look like a company run by ... Adam Neumann.
It's not entirely unheard of, as admirers of Steve Jobs will tell you, for a visionary CEO to be ousted, spend some time in the wilderness, then return to the company. Twitter's Jack Dorsey did this as well, and that boomerang narrative has also been floated for Uber's Kalanick.
Sure, it's something of a fantasy for a founder to be fired, wander the streets barefoot for a while, and then return to their sick office (with ice spa) and go on to restore the company to some kind of glory, this time with a stronger board and way more constraints, but it does happen.
The question for We and Neumann, however, is if a less-hyped, less-interesting, rightsized, and recession-proof company is something anyone wants. Only time, and the market, will tell.