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The Cult of We summary

Name: The Cult of We
Rating: 4.2 (123 reviews)
Author: Eliot Brown and Maureen Farrell

Eliot Brown and Maureen Farrell

WeWork, Adam Neumann, and the Great Startup Delusion

4.2 (123 ratings)

20 mins

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The Cult of We
summarized in 6 key ideas

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Key idea 1 of 6

What’s in it for me? Uncover the rise and collapse of a billion-dollar startup.

In 2019, the curtains were pulled back on the most valuable startup in the United States: WeWork. And the truth rocked the investment world. Once valued at $47 billion, WeWork was in fact nothing but a glorified real estate company – one that was losing more than $1.6 billion a year. The question is, how did some of the world’s biggest investors get blindsided by the startup? Why did it take so long for the company to go public? And how did WeWork’s hard-partying CEO, Adam Neumann, get away with it all? In these blinks, we’ll look at the medley of factors that led to the company's astounding rise and fall.

In these blinks, you’ll learn

how a baby-clothes salesman lured the world’s top investors into giving him millions;
why a real estate company was hailed as the world’s most valuable tech startup; and
how startup culture in the 2010s contributed to reckless investment into WeWork.

With nothing more than a pitch, Adam Neumann and Miguel McKelvey created a company worth $45 million.

Architect Miguel McKelvey met Adam Neumann at a rooftop party in New York City in 2006. Shirtless, loud, and speaking in an Israeli accent, Neumann stood out from the crowd, to say the least.

The two men struck up a friendship – and a few months later, Neumann sought McKelvey’s advice on finding an affordable space for his baby-clothes business. McKelvey suggested the building he worked in, 68 Jay Street.

Once Neumann had moved in, it became clear that he wasn’t really interested in children’s clothing. His real mission, above all, was to get rich. Before long, he’d roped McKelvey into his quest.

The key message here is: With nothing more than a pitch, Adam Neumann and Miguel McKelvey created a company worth $45 million.

McKelvey was often a sounding board for Neumann’s business ideas. One of these, while not totally original, had the potential to be very profitable: Neumann wanted to rent ready-to-use office space to technology companies. The kicker was that tenants would pay more for fully equipped, flexible offices than they would for standard office space, and Neumann would pack the offices tightly together to maximize profit. McKelvey was sold – and together, the two men pitched the idea to their landlords at 68 Jay Street.

It wasn’t difficult to convince them. Brooklyn was full of entrepreneurs and small companies looking for flexible office solutions, and the Great Recession of 2008 meant that even big companies like banks were looking to downsize when it came to office space. The landlords joined the scheme as partners, offering Neumann and McKelvey a floor in one of their buildings, a former pipe factory. McKelvey worked on the floor plan, business plan, and website – and in 2008, GreenDesk was born.

Yet Neumann was already looking to the future. In 2009, he and McKelvey sold their stakes in GreenDesk to the landlords for $500,000 each. They then got to work expanding their concept, searching for space they could rent and slice up to create small offices. Before they’d even finished securing the funds for their first building, they were already on the hunt for new investors for further spaces.

This led them to real estate developer Joel Schreiber. Although they didn’t yet have a single customer, Neumann and McKelvey told Schreiber that WeWork was worth $45 million. Incredibly, Schreiber not only decided to invest in the company – he didn’t even bother to negotiate! He agreed to invest $15 million in exchange for a one-third stake in the company.

It was more money than the two entrepreneurs had ever seen.

To achieve higher company valuations, Neumann presented WeWork as a tech startup.

From its early days, WeWork hosted happy hours for its clients – most of whom were tech startups. Even as the world reeled from the 2008 financial crisis, the chatter around WeWork's offices centered around which industry would be disrupted by a tech startup next. Many of these startups were financed by venture capitalists – investors who provided critical early funding, often well before companies showed they could make a profit. Their private money helped launch transformative companies such as Amazon, Apple, Facebook, Google, and Microsoft.

By 2010, most venture capitalists had given up on finding groundbreaking ideas; they wanted to invest in groundbreaking leaders – people like Amazon’s Jeff Bezos or Apple’s Steve Jobs, who weren’t just great salesmen, but also founders. Neumann saw himself among them.

After attracting enormous investment from Softbank, Neumann became increasingly reckless.

Within just a couple of years, WeWork swelled beyond the United States. The company opened spaces in Europe and Israel, and it began to look toward Asian markets. This was a dizzying pace of growth – much faster than the software companies whose success Neumann once aspired to.

As the company expanded, McKelvey retreated into a more supportive role; he was already richer than he’d ever dreamed of being. As he stepped back, he agreed to hand over most of his stake in the company profits to Neumann.

As WeWork expanded at lightning speed, it lost track of its core business.

In 2015, WeWork employees were told to leave their desks and go to 110 Wall Street. Neumann was going to walk into the building with an investor – and when he did, he wanted everyone to act like they were having fun, with the Notorious B.I.G. song “Juicy” blasting in the background.

This wasn’t the only time employees were asked to do this. As they waited for Neumann to show up, they’d often have to play the song on repeat for up to an hour. It was all to model Neumann’s next big idea: a college dorm-style living experiment called WeLive. Just as WeWork had transformed office space, it would now redefine the residential sector.

After Softbank withdrew its deal, WeWork was forced to go public.

In 2019, Adam Neumann burst onto a stage, pumping his fist in front of a crowd of thousands. The crowd was made up of WeWork staff, and the event was a three-day internal conference in Los Angeles dubbed the “Global Summit.”

Most had traveled from New York to the Universal Studios theme park, which WeWork rented out for the corporate retreat. Tequila flowed, bands played, and staff piled into the Harry Potter rides, all to the tune of $10 million.

Adam Neumann’s hard-partying lifestyle and personal greed overshadowed his leadership at WeWork.

Over time, employees and investors worried about more than WeWork's huge losses. They also worried about the founder.

Thanks to the lucrative deals he forged for himself, by 2019 Neumann boasted a personal net worth of $10 billion. Meanwhile, he grew more disconnected from his employees. He developed a reputation for partying hard on his private jets – and traveling everywhere with a trail of aides, including a hairdresser and a surf instructor.

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What is The Cult of We about?

The Cult of We (2021) tells the story of how the office-space company WeWork became the world’s most valued startup – only to come crashing down a few years later. Written by the reporters who broke the story of WeWork’s disastrous downfall in 2019, it explores WeWork's trajectory through a journalistic and financial lens, demonstrating how the most prominent investors in the world were blinded to the company’s risks for nearly a decade.

Who should read The Cult of We?

People interested in economics
Startup and entrepreneurship enthusiasts
Anyone curious about startup financing

About the Author

Eliot Brown joined the Wall Street Journal in 2010 to cover commercial real estate in the wake of the financial crisis. Today he reports on startups and venture capital. He previously covered economic development and local politics at the New York Observer.

Maureen Farrell has been a reporter at the Wall Street Journal since 2013. She previously covered deals, bankruptcy, and startups at Forbes, Debtwire, and Mergermarket. She’s a recipient of the Newswomen's Club of New York's Nellie Bly Award.

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Entrepreneurship Biography & Memoir

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