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The WeWork Con

The $47 billion WeWork implosion is proof that the rich are the biggest suckers of all.

Adam Neumann speaks onstage during WeWork Presents Second Annual Creator Global Finals at Microsoft Theater on January 9, 2019 in Los Angeles, California. Michael Kovac / Getty Images

During the so-called golden age of The Simpsons, the town of Springfield had three distinct faces, each of which is a beautifully complex and ambivalent take on populism. Most ugly and misanthropic is Springfield the Mob, a suspicious, bloodthirsty hoard of angry villagers driven collectively and primarily by their own conformity, rage, and libidinal cruelty. This is the Springfield that drives snakes into the center of town just to beat them to death for sport, or that gets swept into vicious sanctimony by media sensationalism to stalk and pillory an innocent man.

More social and humanist is Springfield the Good, a more or less righteous town of merciful egalitarians who unionize and strike to fight capitalists, or even march as one toward certain death rather than sacrifice a single member of their community (not even the most obnoxious one).

The most narratively rich iteration, though, is Springfield the Suckers. These are bumpkins, rubes, marks. They are impulsive fools, and all it takes is one charismatic huckster like Lyle Lanley (voiced by the late, great Phil Hartman) for them to invest in a costly (and deadly) monorail. In the classic episode “Marge vs. the Monorail,” Sucker Springfield is a cautionary tale against the dangers of unchecked populism as much as it is a warning against scams, but are the raucous masses really the easiest marks for would-be scammers?

In the recent spate of high-profile American scams, it’s the ultra-wealthy who have been most easily (and egregiously) swindled, and often by the most obvious of swindlers. There was Elizabeth Holmes, a bellowing weirdo and genuine monster who bilked millionaires and billionaires like the Waltons, Betsy DeVos, Carlos Slim, and Rupert Murdoch into investing in her company, Theranos. In 2015, she was celebrated as the youngest “self-made” woman billionaire (girl power!), just before a Wall Street Journal exposé revealed that her blood-testing “technology” was medically impossible, and that it very well could have endangered lives with false results.

Then there was Billy McFarland, who got a boatload of money from the likes of fashion executive Carola Jain, wife of Credit Suisse managing director Robert Jain, and then got a bevy of fashion models like Bella Hadid, Kendall Jenner, and Emily Ratajkowski to promote his disastrous Fyre Festival on Instagram. Most morally defensible was phony heiress Anna Delvey, who managed to achieve near-folk-hero status, mainly because she lived large, tipped well, and refused to apologize during her trial (a woman after my own heart). Also, almost poetically, she only ripped off the stupid and wealthy to fund the sort of high-concept “private club” that only makes sense to rich socialites.

WeWork, though . . . WeWork has to be the biggest, dumbest scam in American history.

CEO Adam Neumann tried a few things before getting into real estate, including a “collapsible woman’s shoe” (I have no idea) and baby clothes with padded knees (don’t babies already have padded knees?). Eventually, though, he was struck by genius; what if (bear with me now) he purchased some real estate, then actually broke it up into smaller spaces, and then rented out those spaces, at a profit. After selling his first company based on this groundbreaking model, Neumann launched WeWork in 2010 in Manhattan. With initial investments from commercial real estate and venture capital, the company blew up . . . and up . . . and up.

The idea was relatively simple — what if offices, but disruption? Essentially the company bought up some of the most expensive real estate in the world — in some of the most expensive cities in the world — and gave them a nice millennial once-over. You know the look: mid-century modern furniture, clean lines, blinding white natural night, hardwood, open floor plan, succulents, kombucha, revolting neoliberal work ethic sloganeering like “Rise and Grind” and “Do What You Love” everywhere. Then they spent a ton on marketing, believing they were destined to rake in a rentier’s ransom from freelancers, gig workers, and “small business owners” with a keen eye for start-ups — hey, why not build your tenuous bubble on a whole bunch of other smaller, even more tenuous bubbles? (To that point, Billy McFarland of Fyre Festival infamy was a one-time WeWork tenant.) And keep in mind, all of this was primarily targeting a generation of people who don’t have any goddamn money.

As an added bonus, WeWork tracked their tenant’s data (the profit potential of which isn’t terribly clear), allowing them the dubious self-identification of “tech company,” despite the entire thing hinging on a massively speculative and costly real estate venture.

If this business “concept” seems like thin gruel, it didn’t stop them from spreading themselves even thinner, and SoftBank, their biggest investor, couldn’t be stopped from throwing money at them.

SoftBank’s initial investments totaling $8 billion in 2017 sent WeWork global, and another $2 billion in 2019 doubled their valuation to $47 billion, a number that the absolute bare minimum of bar-napkin math would have exposed as wildly overvalued. For their part, Financial Times had been sounding the alarm well before they hit $47 billion, but by August of this year, even Forbes was declaring WeWork “the Most Ridiculous IPO of 2019.”

By this point, a few people had the bright idea of comparing WeWork to its closest competitor, another (profitable) workspace realtor called IWG. Take a gander at these numbers:

(Source: Bloomberg)

In less than ten years, WeWork spaces covered the entire globe; and despite hemorrhaging money, their valuation soared. Meanwhile, WeWork CEO Adam Neumann had been busy trying to build a literal empire so decadent that it makes Wolf of Wall Street antics look like a two-martini business lunch.

Neumann became famous for demanding his employees do shots of $140-a-bottle Don Julio tequila with him during interviews, staff meetings, and at the mandatory, hours-long team-building exercises (called, of course, “Thank God It’s Monday”). He boasted that he worked twenty-hour days and hid employees during public appearances so the company looked “leaner.” He would insist he needed no support staff for overseas work, change his mind, then fly out assistants to London for six hours of work before sending them right back to New York. He walked around barefoot, not just in the office, but on the streets of New York City. During office hours, he drank and smoked weed constantly; after office hours, he trashed his own coworking spaces.

Meanwhile the company was expanding into gyms (Rise by We) and apartments (WeLive) — a fully furnished studio near Wall Street would run you $3,050. Neumann envisioned a WeBank, a sea-steading WeWork called WeSail, and insisted that “WeWork Mars is in our pipeline,” (though by his own account, he failed to woo fellow intergalactic space god Elon Musk into a business partnership). He would jump on furniture and desks. His office had a private sauna. He screamed if he was angry; he screamed if he was happy. Turnover was high.

WeWork’s corporate events became infamous for debauchery and hedonism. At an early company retreat, they ran out of wood for the bonfire, so Neumann fed the flames with picnic furniture. As the company grew, so did the bacchanalia. In addition to drum circles, leaf printing, guided meditation, and yoga, WeWork “summer camps” included concerts featuring such banal, high-priced acts as the Chainsmokers, the Weeknd, Florence and the Machine, and Lorde. Employees stayed in accommodations of varying quality, depending on what they were willing to pay out of pocket: one might enjoy a luxury yurt; another remembers hoping the canvas of her teepee could withstand the piss of a colleague urinating on it just over her head. There was sex and drugs and human waste everywhere; plastic straws and meat were banned.

The cult of WeWork was an intimate one; at one point, Neumann formally employed at least twenty friends and family members and surrounded himself with many others in less formal capacities. His father sat in on meetings, despite not working at the company. His sister wasn’t a WeWork employee either, but she did the same, and reportedly ordered WeWork staff to watch her young children, who Neumann preemptively secured work emails for. His brother-in-law was appointed head of WeWork’s gym venture. His experience? Fifteen years as a professional soccer player.

Neumann’s wife, Rebekah Paltrow Neumann (cousin of Gwyneth), was given the title of his “strategic thought partner.” Ivanka Trump and Jared Kushner came to her birthday in Italy. Rebekah opened a private, “conscious, entrepreneurial” elementary school in New York, with tuition ranging from $22,000 to $42,000 a year, hoping to attract parents with this terrifyingly messianic mission statement: “We are committed to elevating the collective consciousness of the world by expanding happiness and unleashing every human’s superpowers.” They are closing after their first year.

The Neumanns’ friend Eitan Yardeni — an infamously shady Kabbalah rabbi who has been under intense scrutiny for his emotionally manipulative fundraising tactics — not only sat in on meetings, he brokered at least one business deal and was introduced to the entire company as WeWork’s “spiritual counselor” at a conference.

To say that Neumann has a god complex is almost underselling him; this is a man who was so sure of his genetic dynasty that he believed his “generationally controlled” company would pass down that absolute control to his descendants in perpetuity. In a leaked video at an “all-hands” staff meeting, he frothed in his megalomania:

It’s important that one day, maybe in one hundred years, maybe in three hundred years, a great-great-granddaughter of mine will walk into that room and say, “Hey, you don’t know me; I actually control the place.”

Only on his way out did Neumann finally get nailed, but even then, only on one of his smaller grifts; in 2019, he trademarked the word “we,” changed the name of the company to “The We Company,” and then sold the rights to use it back to his own company for $5.9 million. His punishment? After some understandable ethical scrutiny, Neumann gave the money back. Three weeks later, the board voted on his position of CEO; along with others, Neumann voted himself out, scot-free.

Former WeWork employees seem to have trouble understanding how they even convinced themselves of Neumann’s vision, with one software engineer confessing to the New Yorker, “In retrospect, there’s no way this could have worked.” His only explanation was that “people were high” off of all the money being pumped in, adding, “There’s not a human being in America who doesn’t look at the number forty-seven billion dollars and not get goosebumps. It seems insane now, but at the time it made so much sense.”

So, how does one get scammed by this Ma Anand Sheela of the Instagrammable Office Space? Tons and tons of money, all to be spent completely at the discretion of a few unaccountable elites.

It’s true that there are no clean hands in a dirty world, but WeWork has been exceptionally dirty from the get-go, even for tech, even for real estate. It’s an American company, but it was funded primarily by SoftBank’s $97 billion “Vision Fund,” the largest private pool of money ever raised, nearly half of which was bankrolled by the Saudi sovereign wealth fund.

SoftBank famously secured this cash after its CEO, Masayoshi Son, had a quiet little meeting with the crown prince to let him know that the recent dismemberment of Jamal Khashoggi hadn’t shaken his faith in the royal family. And, of course, Neumann strove to maintain that relationship. One WeWork employee claims to have accompanied Neumann to a Saudi royal’s Los Angeles mansion, where he witnessed a live tiger loose on the grounds (which kind of puts vomiting in a field to Florence and the Machine in perspective).

No, the WeWork implosion isn’t some simple failure of any one country, or even international regulations, it is the direct result of a distinctly bourgeois hubris, the Dutch courage of “clever” and “successful” entrepreneurs who are too money-drunk to even think straight. It’s a classic intra-bourgeois grift; a megalomaniac so high on his own supply that he doesn’t even realize he’s scamming anymore, and the sitting ducks who follow his mad vision because they believe their wealth is evidence that they are too shrewd, too experienced, and too learned to get taken by some naked emperor.

In reality, every good huckster knows there’s no easier mark than the smartest person in the room. It’s true that the humble and provident Simpson matriarch is the hero of “Marge vs. the Monorail,” but it’s precocious Lisa who initially confronts Lanley about the feasibility of the monorail when he visits her class. After initially being patronized by Lanley, who asks her if she wonders if her dolly can ride the monorail for free, Lisa retorts: “Hardly. I’d like you explain why we should build a mass transit system in a small town with a centralized population.”

Lanley replies, “Young lady, that’s the most intelligent question I’ve ever been asked.”

“Really?” she replies, immediately flattered out of her scrutiny. Lanley continues with, “Oh, I could give you an answer, but the only ones who’d understand it would be you and me (and that includes your teacher).”

She giggles conspiratorially. And so, like so many “smart” people, her ego is her folly, and Lisa is quickly and easily placated. Masayoshi Son? Classic Lisa.

Whether consciously conniving, mad as a hatter, or merely a world-class chump, these Money Men are so dangerous because they are rarely accountable to anyone, and they rarely face repercussions. Unlike Lanley, Neumann — with his Adderall Tevas energy — has already gotten away with it. No, his bloodline will not rule an empire of precarious young “innovators” for a million years like vassal lords, but SoftBank bought him out for $1.7 billion, and they’re left holding the bag.

$47 billion later, it should be clear to anyone who isn’t money-drunk how obscenely irresponsible (not to mention immoral) it is to allow anyone to control this much cash, and I find it hard to imagine the masses could do a worse job.

The idea that the common people are stupid is a smug, liberal one. The idea that they are mean is a self-righteous, conservative one. As a socialist, I lean more toward Springfield the Good. Of course, the masses contain the potential to be any and all Springfields, but the elite technocracy based on a disdain or even fear of The People runs counter to the socialist vision of collective self-interest, that if we create a new, collective “self,” it gives society our best shot at being both benevolent and rational.

A democratically controlled economy does not promise merely a more egalitarian world, but a more prudent and stable one. The masses couldn’t possibly be more reckless with money than the capitalists are, and they certainly don’t get scammed as readily as those ultra-wealthy dupes. That said . . . any brilliant Hollywood producers want to finance my script about WeWork?