The “Billion Dollar Loser” chronicles the history of WeWork and its founder, Adam Neumann, mainly from the beginnings of WeWork to the failed IPO. While Wiedeman acknowledges Adam’s ambitious persona and the possibility that he may be back sometime in the future, the book largely focuses on his hubris that eventually led to the collapse of the IPO process and to his sacking from the company he founded, poking fun at Neumann and his wife, Rebekah, along the way.
While following the WeWork story as it unfolded, I was amazed at the strategy of venture capital investors such as SoftBank and the book reinforces that feeling tremendously. While I can understand how early investors were willing to take a bet that a simple real-estate leasing model can become a “physical social network” (in Adam’s words), it’s mind boggling that an investor could pump in $10 billion at a later stage, especially when the founder spouted inanities such as “we used the work mission to enter into the larger category of life”, had a mission statement “to elevate the world’s consciousness” and pointed to financial parameters such as “return on community” and valuations based on the company’s energy and spirituality rather than on revenue (my favourite was the concept of “community-adjusted EBITDA)! Also, a part of SoftBank’s investment gave Adam a sizeable exit for himself.
The WeWork story highlights the many issues with modern-day venture capital investing, which appears to be based on the “greater fool theory of finance”, as Wiedeman points out. There is too much money to be deployed rationally (SoftBank had raised $100 bn in its Vision Fund). The entrepreneurs with the most chutzpah and ambitions, however impossible the ambitions may be, are preferred to their more solid but conservative peers, and in the process, the latter’s genuine business models are often wiped out. Unlike a traditional model where valuations follow the success of a business model, companies such as WeWork have had to pivot their model often to justify the lofty valuations that they commanded early on. And venture capitalists are willing to turn a blind eye to serious governance issues such as conflicts of interest or blatant nepotism. This issue was best summarised by Jake Schwartz, one of of Adam’s early competitors: “the reason I care is that if the most successful companies are the ones that just drive really hard, and play fast and loose with the truth, then maybe the whole idea that capitalism is great, or even useful, is really challenging to uphold.”
My benchmark for a great biography is Walter Isaacson’s one on Steve Jobs (on a separate note, I can’t wait for him to finish the one on Elon Musk). Jobs was a multi-faceted character and the biography brings out the various nuances of his life — the good ones and the bad ones. On the other hand, Adam comes out as a unidimensional person in this book, all bombast and hubris, and that was a slight disappointment.
Pros: Details the rise and fall of WeWork well, gripping especially towards the latter part of the book
Cons: A uni-dimensional portrait
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