- Brendan Stec
Adam Neumann's Sly Alchemy
Adam Neumann, co-founder and former CEO of WeWork, has a lot more in common with an infamous 16th century alchemist than you'd expect: they both leveraged big talk and charisma to fail upwards.
Don't fly so high
Your wings might melt
You're much too good to be true
– Kanye West, "Wolves"
In 1589, the city-state of Venice was struggling. (1) The once dominant trading empire could no longer compete with the powerful Spanish and Portuguese, who controlled routes to the lucrative New World. The humbled Venetians had recently lost key territories in the Mediterranean, their economy had stalled, and several of its powerful families had gone bankrupt. Its citizens were now desperately hoping for a change in fortune – anything – that would restore Venice to its prior wealth and power.
Who could save the crumbling Venetian empire?
That’s when the rumors started. A mysterious man named Bragadino from Brescia reportedly had mastered the arcane skill of alchemy – the ability to turn various substances into gold. Curious – and desperate – a group of wealthy Venetians visited his massive palace and watched as he transformed a smattering of worthless minerals into gold dust, right before their eyes. Impressed, the Venetians urged Bragadino to take residence in their city, where they promised him an extravagant palace on the island of Giudecca and a hefty payout in exchange for his prized alchemy services, which could at last dig Venice out of its economic malaise.
The Venetian nobility and senators breathed a tremendous sigh of relief when, in November 1589, the acclaimed Bragadino finally arrived in Venice. He settled right into his luxurious living arrangements, and over the next several months, flocks of pilgrims from all over Europe converged on Venice to meet the purported savior of the city. But after months of praise and gifts for the great Bragadino, the Venetians started to grow impatient; they had invested in Bragadino to quickly multiply gold to replenish the city’s coffers, but he didn’t seem too concerned with kicking off his alchemy gig any time soon. When the Venetians pressed Bragadino for results, he urged them to think of their investment as one for the “long-term.” He could double their gold supply instantly, or, if they allowed his gold-producing mechanism to compound, return thirty-times their gold in seven years.
The Venetians waffled and wavered on what to do. Bragadino, they reasoned, did carry gold coins and he did fill his palace with beautiful furniture and, with his imposing swagger and stratospheric reputation, he did have an air of credibility. But the common citizens were growing increasingly frustrated with this pompous outsider, who was burning through the city’s already depleted cash. And so the impatient Venetians demanded him to at last make some damn gold – now.
Bragadino, always playing hardball, accused the Venetians of betraying him and not trusting in his abilities. He disappeared from Venice in a huff and retreated to the Italian countryside. He would soon be invited by the Duke of Bavaria to save the city of Munich, where the great Bragadino, his reputation larger and more mysterious than ever, would again live luxuriously and again fail to produce gold.
When we read about such a sleazy grifter like Bragadino today, it’s hard to not scoff at the Venetians’ hopeless naiveté. How could the elite of such a renowned city fall prey to someone pawning such an obvious scam? Turning coal into gold? To restore an entire empire?
Bragadino, to his credit, mastered a key weakness of human nature to pull this off. He understood that, caught up in our daily anxieties and problems, we are especially trusting of wild fantasies and spiritual powers that expose us to something bigger than ourselves and relieve us of the plodding routine of everyday life. With his endless confidence, his flashy gold outfits and majestic palaces, Bragadino crafted a reputation throughout Europe as a near-God and a savior. The Venetians, desperate to restore their empire to its former glory, were especially prime targets for this illusion. They were so enthralled with his so-called abilities, so emotionally invested in his potential for saving Venice, that they failed to think clearly and rationally before promising him the city’s riches. None of them even noticed the glass tube he hid up his sleeve to “produce” the gold dust during his original demonstration.
Bragadino achieved peak popularity in the 1580's and 1590's in Europe, before modern scientific experimentation defeated the supernatural appeal of alchemy. But you’d be wrong to assume that the 21st century has fully advanced beyond the witch-hunting hysteria, big-talking showmanship and unsubstantiated Big Ideas of the past. The “Bragadino’s” of our time may no longer promise turning coal into gold, but they are just as cunning and charismatic, starting some of the most infamous organizations today. We have Elizabeth Holmes, the brilliant and articulate Stanford dropout who founded Theranos, a company that promised customers and investors a blood-testing revolution but only delivered a failed product hidden behind clever marketing and outright fraud. We have Billy McFarland, the brainchild of the infamous Fyre Festival, who promised concert-goers an exclusive festival experience but delivered an undersupplied, understaffed, and dangerous fiasco on a remote island in the Bahamas.
And we have Adam Neumann, the co-founder and former CEO of WeWork, who was recently bailed out of his own mismanaged company and will be paid a billion dollars while thousands of his own employees will lose their jobs.
To be clear, unlike Bragadino, Holmes, and McFarland, Neumann did build and run a legitimate business with WeWork, which provides co-working spaces all over the world for companies and individuals. Neumann, a brash, charismatic, and visionary leader, designed and built these trendy, open office spaces with the help of his co-founder Miguel McKelvey. By opening hundreds of community-oriented office spaces, and later apartments and even a school, Neumann hoped to “elevate the world’s consciousness” and radically change how we all live and work. Just like Bragadino and the others, Neumann leveraged big talk, a sweeping vision, and outrageous confidence to seduce investors, customers, and employees to buy into his relatively unsustainable Big Idea.
An example of a WeWork co-working space. WeWork's "members" pay a monthly fee for access to beautifully designed office spaces, where there is Wi-Fi, desks and couches, weekly events, and opportunities to meet other working professionals. "Members" that use WeWork include large corporations, startups, and individuals.
I mean they really let him get away with some fairly ballsy shenanigans. He bought up office space in Manhattan on his personal account and leased it right back to his own company, netting himself millions. After coming up with a new name for the WeWork holding company as CEO, he charged his own company a $6 million fee to use the new trademarked name (he later paid back the fee). Now, as WeWork struggles to remain financially solvent and its investor, SoftBank, has decided Neumann should at last step aside, he has even negotiated an insanely lucrative severance package: a $1.7 billion payout to sell his shares, a $500 million short-term loan, and a four-year contract to remain with WeWork as a “consultant”, for which he will be paid $185 million.
Let’s just keep in mind that WeWork’s current reported valuation is now only $5 billion, down from a recent peak of $47 billion. It’s burning through cash and deathly unprofitable, reporting losses of more than $900 million on revenues of $1.54 billion for the first six months of 2019. After a failed attempt at an IPO, it’s now planning to axe nearly 30% of its global workforce – 4,000 employees – while the ones who remain will endure an understaffed, pressure-cooked turnaround effort. Undoubtedly they will wonder how the hell Neumann, after nearly running WeWork into the ground, arranged such a lopsided deal for himself.
It goes right back to Bragadino: Neumann understood we are enticed by the Big Idea, the sweeping vision, the confidence and charisma, the free beer and weekly happy hours at every WeWork location, the allure of belonging to a radically innovative organization, and the promise of endless gold from just a little bit of coal (read: investor's capital). Compared to the stale image of white collar workers hunched over Dell laptops in gray cubicles, the spiritual, open-air ethos of WeWork, where one could join the “spirit of we”, provided a shiny veneer for Neumann to mask his rather self-motivated intentions.
L. Ron Hubbard once told his wife that the path to wealth in America was to not start a business, but to “have a religion.”
Well, Neumann surely created a religion at WeWork. Inspired by his childhood living in an Israeli kibbutz, or communal settlement, he designed WeWorks with kegs, free snacks, open seating, and weekly events to encourage socialization. He reminded employees that WeWork was for those who wanted to not just earn a living, but who wanted to “create their life’s work” and “be a part of something greater than themselves.”
In a recruiting video promoting WeWork’s culture, he made the following sweeping statement:
“If you believe that community and being part of something greater than yourself is a good thing, and that by leveraging that you personally will be more successful and if you understand that success is not defined just by how much money you have, but how happy you are, how you make other people feel, then you’re part of the We generation and should travel with us to this great journey that we’re on.”
I wonder if the 4,000 recently laid-off WeWork employees agree that success is not defined just by how much money you have?
It’s clear Neumann understood the value of marketing this let’s-hold-hands, money-isn’t-everything mantra to employees, customers, and investors. Today, with organized religion less popular, work has filled the spiritual void for many college-educated young adults, who increasingly search for their “calling” and “passion” and clock excessive hours to get there, a trend writer Derek Thompson calls “workism.” With emails buzzing in our pockets and the laptop always waiting to be tapped awake, work can permeate all times of the day and all days of the week, blurring the once clearer line between life – relationships, religious beliefs, hobbies – and work. Neumann capitalized on this trend, selling the communal, comfortable environment of WeWork as a kind of home away from home, where we could put in our 10 – 12 hours pursuing our calling, our passion, something greater than ourselves, right alongside the next guy.
In 1930, the economist John Maynard Keynes, observing rapid technological change, predicted his grandchildren would only work two days a week, noting "for the first time since his creation man will be faced with his real, his permanent problem: how to occupy the leisure.” (2) Today's reality: we work even more, sitting most of the time, servicing clients, building software, developing strategies, and doing work that is often abstract and divorced from concrete meaning. Just as Bragadino's alchemy catered to a struggling Venice, Neumann's WeWork, refreshing and spiritual, catered to this overworked, over-stimulated modern workforce.
Both Bragadino and Neumann built grandiose reputations that fed off of their audience's curiosity of something refreshingly new and unique. They both over-promised and underdelivered. Today, WeWork is struggling, WeLive, Neumann's communal living idea, is stagnant, and WeGrow, he and his wife's concept of a school, is closing next year. But the stories of Bragadino and Neumann don't quite end the same way.
Bragadino was publicly beheaded in Munich in 1591. The frustrated Bavarians were not so kind to our big-talking, big-headed alchemist. But Neumann, even as his company sheds value, is a newly-minted billionaire with millions more already in the pipeline.
He is the one who truly found gold. For now.
Always changing shape,
disappearing and reappear-
ing. We look at it, imagine,
wonder, and pine – never fa-
miliar, continuous provoker
of dreams. Do not offer
the obvious. Promise
– Robert Greene, The 48 Laws of Power (1998)
(1) The 48 Laws of Power by Robert Greene (1998) (pp. 264-269)
(2) "Economic Possibilities for our Grandchildren" by John Maynard Keynes (1930)