Adam Neumann, the former CEO of WeWork, is making headlines once again with a new billion-dollar startup, this time a residential real estate company. Venture capital firm Andreessen Horowitz has promised Neumann roughly $350 million and appears confident that he is the right man for the job.
Yet all of this is happening just three years after his inelegant departure from WeWork, a fall so catastrophic it’s been chronicled in podcasts, books, an Apple TV series and a full-length documentary.
The question on everyone’s mind is… Will this be WeWork 2.0?
Neumann’s greatest strength
Clearly, Adam Neumann is very good at securing financing for his companies. In 2019, he was able to take WeWork to a $47 billion valuation and convince Softbank, the world’s largest venture capital fund, to invest $9 billion in the company. I think we all know what happened next.
So how did you do it? In the words of Seth Godin, “People don’t buy goods and services. They buy relationships, stories and magic.” And boy, Neumann had stories and magic. He made ridiculous claims and people just believed him. It convinced investors that WeWork could double down on ownership of its coworking spaces through AI, something no sane person would believe. But it worked.
Unfortunately for his investors, the reality of the situation was quite different. Neumann didn’t have the numbers to back up his claims, instead relying on his ultra-charismatic personality to convince investors to believe that he and his company were going to revolutionize the commercial real estate space. In the end, his greatest strength turned out to be his downfall.
Interestingly, these situations happen all the time, just on a much smaller scale. They may even be happening in your business.
The only thing that matters
In the recent book by remote work pioneers Liam Martin and Rob Rawnson, running away, they raise the idea that in-person work environments are prone to a number of biases that remote environments can largely avoid. And coincidentally, they use the rise and fall of WeWork to show what can happen in extreme cases.
Here is the premise. When you work in an office, there are hundreds of subconscious biases like personality, office politics, appearance, and more that affect the way you think about your co-workers and, by extension, alter your decision-making.
These factors are not always significant, but they can cause problems. They may allow people to bypass performance reviews or mislead their managers into thinking they are performing well when the reality is quite different.
Even something as simple as staying late at the office can make it seem like someone is doing a good job. But really, there’s no way to tell without numbers to back up its performance.
In a remote environment, these biases are not completely eliminated, but they are a much smaller factor. This is because, in a remote environment, you are practically forced to rely on metrics to determine if people are performing (or not) at the required level. In a remote environment, there are results or not, it’s that simple.
In most face-to-face workplaces, these personal biases can lead to favoritism, poor performance, and interpersonal disputes. WeWork is an example of what can happen in an extreme case.
Neumann relied on his charismatic personality, and not much else, to present himself as the ultimate visionary in business, duping investors into wasting billions of dollars on an underperforming company and, ultimately, affecting thousands of lives. In the words of Martin and Rawnson, “The sad truth is that Neumann was not a visionary, but an incredibly charismatic cult leader.”
So, have you learned your lesson?
I think there’s a key lesson here for entrepreneurs, investors and, I guess, Adam Neumann, if this gets on your radar.
Whether you work remotely or not, business and individual performance should always be backed up with metrics. Martin and Rawnson suggest choosing a metric for each person in your company. It’s a good strategy, and if you decide to implement it, start by having an honest conversation with each individual.
Ask your employees how they would like their progress to be measured. Not only do they know the intricacies of their role, but giving them the choice of how they will be measured gives them ownership over their performance. When people own their metrics and feel confident that they can improve them, they will be motivated to perform well and look for new ways to achieve better results.
This helps leaders measure progress, but also provides a clear opportunity for employees to demonstrate their strengths and rise through the ranks based on merit. Whether you’re applying for a raise or millions of dollars in funding for your next startup, it’s so much easier when you have metrics to back it up.