#83 - In Defence of Adam Neumann
Scandalous, two sides, and Neumann's human
Let’s talk about Adam Neumann.
If the WeWork founder wasn’t infamous enough he certainly is after WeCrashed hit our screens.
I do feel for him.
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Let’s start with some context.
I first learnt about Neumann whilst reading Billion Dollar Loser last year. “The Epic Rise and Spectacular Fall of Adam Neumann and WeWork”. It’s a thrilling read.
For those who don’t know the story, in short:
Neumann founded WeWork, with Miguel McKelvey, in 2008.
He led them through 11 years of blistering growth.
In January 2019 he raised $2bn at a $49bn valuation.
In April 2019 they filled for an IPO. The details disclosed caused a storm.
In September 2019 they withdraw the filling and Neumann was ousted.
The valuation fell from $49bn to $9bn.
The story has been immortalised. Books, documentaries, and now the Hollywood series starring Jared Leto and Anne Hathaway (I’ve heard great reviews).
They’re all scandalous retellings. It’s hard not to judge Neumann. My reaction, I’ll be honest, was: What a bandit.
It’s taken me almost a year to reconsider that. But I have. And I see two problems. Two points that, in hindsight, I missed. We’ll cover both here. They’re important.
First up: There are two sides to every story.
We all know this intellectually. But when we hear a good story about a “villain” that logic goes out the window. Sure, there might usually be two sides to every story but not this one. Clearly just a bandit.
The damning book/documentary/TV series is an opinion. An interpretation of events.
But when that content’s consumed? We don’t take it as an interpretation. We take it as gospel.
The details are shocking:
Neumann took over $1bn off the table whilst thousands of employees saw their equity become worthless. He sold the “We” trademark back to the company for £6m. Four of WeWork’s buildings were leased from him personally. There were stories of drugs and parties. The list goes on.
It all makes great television.
But it’s complex. It dumbs an 11 year journey down to a few headlines. They don’t tell the whole story.
If you’re interested in hearing Neumann’s side he did an interview on the topic in 2021. He addresses every major point and allegation raised.
He makes a compelling case. But if your mind is made up I expect it won’t matter. It’s just the snake oils salesman selling more oil… you might think. Maybe you’re right or maybe you’re not. The truth is probably somewhere in the middle.
The second problem is even more obvious:
Who’d have thought it?
The real issue was the inflated valuation: $49bn. But how does that make him a bad guy?
A valuation comes from what someone will pay for it. Neumann saw WeWork as more than a workspace. He saw it as a movement. As a way of life. But he wasn’t alone.
During the 2010’s they boomed. Thousands bought into his vision. The best investors in the world threw money at him. The world told him he was right.
An entrepreneur is someone who sees a different future. To make it a reality they must convince others that’s where the world should go.
By definition they’re not living in the real. They’re unreasonable. Until they’re not, and drag the world into their vision for the future. That’s the game.
Neumann’s not a crook. He just made mistakes. He got carried away.
Raising at $49bn was a mistake. It was a mistake because they were soon to be public. And Wall Street would weigh things very differently to Softbank.
Neumann’s unquestionable ability magnifies the issue. People cite him as perhaps the greatest salesman alive. It led him to raise money at a crazy valuation, but it also built the rocket ship that got there.
And then there’s the supporting cast…
There’s a wonderful story about a conversation he had with Masayoshi Son, the Softbank founder who fuelled the fire.
Masa: Who wins in a fight: The smart man or the crazy one?
Neumann: The smart man.
Masa: No, it’s the crazy man. Because no one wants to pick a fight with a crazy man.
That’s the context. That’s the world Neumann got himself into.
Well he’s back now.
This week he announced a new startup in the crypto space. Headlines were predictably scathing.
But my money’s on Neumann.
If you read what he’s doing it’s compelling. And it directly addresses climate change- perhaps the big issue of the day.
Plus this Adam Neumann has had time to think. He’ll be wiser than the Adam Neumann who built WeWork. And that will serve him well.
I’ll close with Charlie Munger’s verdict on Elon Musk. It rings true here too:
“Never underestimate the man who overestimates himself.”
Don’t write him off just yet.
My Week in Books📚
The Lonely Century by Noreena Hertz
Wonderful. We’re more connected but lonelier than ever. It’s little talked about but an important topic. Is this just the next step for humanity? I hope not.
The Rebel Book Club book for May.
A Final Thought 💡
“Do not judge others. Be your own judge and you will be truly happy. If you will try to judge others, you are likely to burn your fingers.”