** 29th book of 2021: 21st Century Economy **

  • He is 1/4 crazy, 1/4 brilliant, and the other half is a fight between his ego and genuinely caring for people. *

While this sentence describes Adam Neumann, it could be said about almost any startup founder or successful venture capitalist. Every startup needs an element of irrationality when salaries of companies like Google and Facebook are enough to surpass even the lofty expectations of ivy-league millennials. The most successful VCs must make contrarian bets to stand out, and the ones who win at the casino table return lauded as geniuses. Players on both side are selected into a system of increasing bravado and ambition. Add in a 20 year bull market for technology companies and a world awash in capital, and nonintuitive results, such as plowing billions of dollars towards nice office space with a great salesman ensue.

*How to summarize the surrealness of a New York real estate leasing company with an elementary school on the side becoming one of the world’s most valuable private companies thanks to a pile of Saudi oil money financed through a man in Japan who was eager to invest even more? The theme for 2018: **What is real? ***

Reading through Billion Dollar Loser, nothing struck me as unique about WeWork compared to other fast growing startups. Like all startups: * [Wework had] three options, fast, right, or cheap. Wework always picked fast and cheap. * And as anybody who has attended a startup demoday can attest: *Hyperbole, autocratic leadership, and a disconnect from reality were suddenly assets on the path to power. * In investor presentations and financial documents, the seeds for WeWork’s collapse were sown in broad daylight, for any who did the diligence. Yet Benchmark chose to believe the vision, knowing that a failed bet was worth the potential for upside. Masa disregarded his own diligence team doubling down with billions on a troubled company. And the whole thing almost worked. If Adam hadn’t forced an IPO, or botched the roadshow, we might be discussing WeWork as a money-losing but promising stock in the same way that we talk about the numerous new SPACs hitting the market.

I wish there was an epilogue to the story, because the unfortunate truth is that WeWork worked, at least for those at the top. Adam Neumann is worth something above $500m, Benchmark’s funds are achieving record returns, even SoftBank’s vision fund has ended up in the black as of late 2020. Valuations for companies with no revenue and barely an idea are reaching above $1b. WeWork may have been the biggest venture bust of the 21st century so far, but with the incentives in place for our economy it certainly won’t be the last.