Reeves Wiedeman’s Billion Dollar Loser is the story of Adam Neumann and his startup WeWork. As I write this review, SoftBank’s Masayoshi Son – the false prophet of the venture capital world who bamboozles his way into industries with his Vision Fund, and one of WeWork’s biggest investors – has reported a $23B loss. Incidentally, it also comes as Ruki and I are finishing The Dropout, a series on Elizabeth Holmes, the disgraced founder of Theranos and one of Adam Neumann’s contemporaries.
Reality distortion field is a derivative term, first used to describe the effect that Steve Jobs would have on people around him. It also perfectly captures how Neumann was able to faff his way to a $47B valuation – getting investors and employees to believe that his real-estate company had a larger purpose, “to elevate the world’s consciousness,” whatever that meant. Neumann positioned his company as a tech platform with a network effect, similar to the internet and social media giants out in Silicon Valley, masking the fact that it was nothing more than an office-rental business. With cheap liquidity and marquee investors willing to pander to and amp up Neumann’s reality distortion, his company ended up commanding revenue multiples typically reserved for tech companies. A real-estate company commanding a valuation of 20x revenue… Phew! The book provides a fascinating insight into the logic behind valuations of private companies – big surprise, there is none. The numbers are not subject to the kind of scrutiny and diligence in place for publicly listed companies, and are based on the whims and fancies of founders and investors, keen to sell to the next greater fool.
Neumann’s antics are many: smoking pot in his private offices, retrofitted with exhausts and vents; tequila shots before, during and after meetings; spraying a potential investor with a fire extinguisher; threatening landlords and competitors to submit and acquiesce; leasing the buildings he bought back to WeWork; selling the We-related trademarks he owned to his own company; profligate investments in startups that made wave pools and coffee creamers and had nothing to do with WeWork’s core business by any stretch of the imagination. Adam Neumann and his wife leave behind a complicated and troubled legacy, defined by a culture of nepotism and casual sexism they created, one that glorified long hours and poor pay and sacrificed corporate governance at the altar of growth.
The book is based on articles that Reeves Wiedeman wrote for the New York Magazine; with a rating of 4.4, Billion Dollar Loser is a gripping and highly-recommended read, my first full one after a few tumultuous months. There’s also a Jared Leto and Ann Hathaway miniseries on Apple TV+, WeCrashed, with a rating of 7.3 on IMDb and 65% on Rotten Tomatoes. Happy reading!