The Cult of We

The Cult of We Plot Summary

Introduction

In January 2019, Adam Neumann stood triumphantly before thousands of cheering WeWork employees, announcing a new $1 billion investment from SoftBank that valued the company at $47 billion. "That makes us the second-highest-valued private company on the planet," he proclaimed, thrusting his finger skyward as the crowd erupted. Just eight months later, this same company would implode spectacularly, losing nearly $40 billion in value virtually overnight in one of the most dramatic corporate collapses in modern history. The meteoric rise and catastrophic fall of WeWork represents a perfect case study of the dangerous cocktail that defined the 2010s startup ecosystem: unlimited capital, unchecked founder worship, and the suspension of basic business principles in pursuit of growth at all costs. This saga illuminates how capitalism can contort to view something inherently simple—a company leasing office space—as a revolutionary tech platform valued higher than established Fortune 500 companies. For investors, entrepreneurs, and business leaders, this cautionary tale offers profound insights into the perils of hype, the importance of sustainable business models, and the inevitable reckoning when reality finally catches up with fantasy.

Chapter 1: The Vision: Creating a Physical Social Network (2010-2012)

In the aftermath of the 2008 financial crisis, as New York City's real estate market struggled, two unlikely entrepreneurs spotted an opportunity. Adam Neumann, a charismatic Israeli immigrant who had failed at selling baby clothes, and Miguel McKelvey, a soft-spoken architect, shared unconventional communal upbringings—Neumann on a kibbutz in Israel and McKelvey in a collective in Oregon. This shared background informed their vision for a new kind of workspace that would combine physical office space with community. Their first venture together came in 2008 when they convinced a Brooklyn landlord to let them divide an empty floor into small offices for entrepreneurs. They called it Green Desk, emphasizing sustainability. The concept was simple but powerful: divide large office spaces into smaller units, add shared amenities like coffee and internet, and charge a premium for flexibility and community. When Green Desk quickly filled with freelancers and startups, the pair recognized they had tapped into an unmet need in the market. Selling their stake in Green Desk for about $500,000 each, Neumann and McKelvey launched WeWork in February 2010 with their first location in Manhattan's SoHo neighborhood. Despite the building's shortcomings—a painfully slow elevator and uneven stairs—the offices filled quickly with lawyers, designers, and small businesses drawn to the hip, collaborative environment. McKelvey's design aesthetic became a signature: glass dividers between offices allowing natural light to flow through, exposed brick, subway tile, and communal areas resembling Brooklyn coffee shops. This aesthetic perfectly captured the millennial zeitgeist just as young professionals were seeking alternatives to traditional corporate environments. WeWork's timing was impeccable. The economy was beginning to recover from the financial crisis, creating a new generation of entrepreneurs and freelancers. Meanwhile, technology was making remote work increasingly viable. WeWork positioned itself at the intersection of these trends, offering not just physical space but a sense of belonging and purpose. Neumann began describing WeWork not as a real estate company but as a "physical social network" that would revolutionize how people worked and lived. By 2012, WeWork had expanded to multiple locations in New York and was planning offices in San Francisco and Los Angeles. The company caught the attention of Benchmark, a prestigious Silicon Valley venture capital firm that had backed eBay and Twitter. Despite concerns that WeWork was essentially a real estate business—not typically the kind of company VCs invest in—Benchmark partner Bruce Dunlevie was impressed by Neumann's charisma and vision. Benchmark invested $15 million at a valuation of just over $100 million, giving WeWork the Silicon Valley stamp of approval that would fuel its extraordinary growth in the years to come. This early period established both the promise and the potential pitfalls of WeWork. The company had identified a genuine market need and created a compelling brand. However, Neumann was already showing signs of the grandiosity that would later prove problematic, telling employees they would become millionaires and comparing WeWork to world-changing companies like Facebook and Amazon. The seeds of both WeWork's meteoric rise and its eventual downfall were planted in these formative years.

Chapter 2: From Coworking to Unicorn: WeWork's Meteoric Rise (2013-2015)

Benchmark's $15 million investment in 2012 transformed WeWork from a promising startup into a Silicon Valley darling. With this prestigious backing, Neumann began pitching WeWork not as a real estate company but as something far more revolutionary—a technology platform that would change how people worked, lived, and thought. This narrative shift was crucial for attracting the sky-high valuations typically reserved for software companies, despite WeWork's fundamentally brick-and-mortar business model. Throughout 2013 and 2014, WeWork expanded rapidly, adding locations across the United States and venturing internationally to London. Neumann perfected his pitch to potential investors and landlords, instructing staff to "activate the space" before tours—ensuring offices appeared bustling with activity, playing carefully selected music, and staging impromptu parties with free food and drinks. This theatrical approach created an impression of unstoppable momentum that helped secure increasingly favorable lease terms from landlords eager to have WeWork as a tenant. The company's culture increasingly reflected Neumann's larger-than-life personality. WeWork's annual "Summer Camp," a retreat for employees featuring music performances and inspirational talks, epitomized this culture. Alcohol flowed freely at company events, with tequila shots a regular feature of meetings. Neumann cultivated a messianic image, speaking about changing the world and creating a community that transcended mere office space. His wife, Rebekah Neumann (cousin of actress Gwyneth Paltrow), brought spiritual elements from Kabbalah into the company's ethos, speaking about "elevating the world's consciousness." By 2014, WeWork had achieved "unicorn" status when JPMorgan led an investment round valuing the company at $1.5 billion. But this was just the beginning of a remarkable valuation climb. Between late 2014 and late 2015, WeWork's valuation ballooned from $1.5 billion to $10 billion, fueled by investments from mutual funds like T. Rowe Price and Fidelity. These traditional investors, facing pressure from index funds and seeking higher returns, were pushing into private markets. For them, WeWork represented a rare opportunity to invest in a company growing as rapidly as a tech startup. The influx of mutual fund money enabled Neumann to cash out personally for the first time. Between the T. Rowe Price and Fidelity deals, Neumann sold $120 million of his own shares. He also secured enhanced voting rights that gave him firm control over the company. When Benchmark's Bruce Dunlevie warned him that "absolute power corrupts absolutely," Neumann pointed out that founders at Snapchat and Uber had similar arrangements. The board relented, surrendering their power and giving the ambitious founder free rein. By the end of 2015, WeWork's $10 billion valuation had left many industry observers bewildered, particularly Mark Dixon, CEO of Regus (now IWG), the world's dominant provider of serviced office space. Regus had been in business since 1989, had 14 times more customers than WeWork, and was actually profitable. Yet WeWork was valued at four times more than Regus. The fundamental disconnect was that WeWork's investors weren't comparing it to real estate companies; they were measuring it against tech startups. This valuation disconnect would only grow more extreme in the years ahead, setting the stage for an eventual reckoning when public markets would demand evidence that WeWork could actually generate profits to justify its astronomical valuation.

Chapter 3: SoftBank's Billions: Fueling Unchecked Expansion (2016-2017)

In December 2016, a pivotal meeting took place that would forever alter WeWork's trajectory. Masayoshi Son, the enigmatic founder of Japanese conglomerate SoftBank, visited WeWork's headquarters in New York. After a mere twelve-minute tour, Son made an extraordinary offer in his car ride with Adam Neumann: he wanted to invest over $4 billion in WeWork. This seemingly impulsive decision would supercharge WeWork's already ambitious growth plans and reinforce Neumann's most grandiose tendencies. Son had recently secured $45 billion from Saudi Arabia's Public Investment Fund for his $100 billion Vision Fund, the largest private investment fund in history. He boasted of receiving "$45 billion in forty-five minutes" from Crown Prince Mohammed bin Salman, or "one billion dollars per minute." With this unprecedented war chest, Son was hunting for "unicorns" that could dominate their industries, and he saw in Neumann a kindred spirit with boundless ambition. During a subsequent meeting in Tokyo, Son told Neumann that to win in business, one needed to be "crazy," not just smart. "You're not crazy enough," he told the already audacious Neumann. The deal that eventually materialized was for $4.4 billion, split between $3.1 billion in new funding for WeWork and $1.3 billion to buy shares from existing investors and employees. Neumann himself would sell $361 million of his shares, an enormous personal windfall. The investment valued WeWork at $20 billion and gave SoftBank two board seats, though Neumann retained full control. Many at SoftBank were skeptical of the deal—the company had previously looked at WeWork and passed—but Son was determined to move forward based largely on his personal connection with Neumann. With this massive capital infusion, WeWork's expansion accelerated dramatically. The company began opening locations at a breakneck pace around the world, often in expensive prime real estate areas. WeWork expanded into 37 countries and 123 cities, growing from 186 locations at the end of 2017 to 425 by the end of 2018. This rapid expansion required enormous upfront costs for construction and renovation, with each new location taking months to fill with paying members. Meanwhile, Neumann began diversifying beyond office space, launching WeLive (residential apartments), WeGrow (an elementary school overseen by Rebekah), and acquiring companies with questionable strategic fit, including Meetup.com for $156 million. Behind the scenes, WeWork's losses were spiraling out of control. Despite growing revenue, the company was spending $2 for every $1 it took in. In 2017, WeWork lost $933 million on $886 million of revenue. Neumann assured investors that these losses were simply the cost of rapid growth, pointing to other money-losing darlings like Uber and Lyft as examples. The company invented a metric called "community-adjusted EBITDA" that excluded fundamental costs like marketing, administration, and most importantly, the massive expenses associated with building out new locations. Using this creative accounting, WeWork claimed to be "profitable" even as it burned through billions. Son's influence pushed WeWork to think even bigger. During one meeting in Tokyo in 2018, Son sketched out a vision for WeWork becoming a $10 trillion company—a valuation that would have made it the most valuable enterprise in human history. Rather than questioning such absurd projections, Neumann incorporated them into his own pitches to other investors and employees. The relationship between Son and Neumann created a dangerous feedback loop of ever-more-fantastical expectations, untethered from economic reality. This period of unchecked expansion, fueled by SoftBank's billions, set WeWork on a collision course with market reality that would ultimately lead to its spectacular downfall.

Chapter 4: Peak Excess: When Real Estate Masqueraded as Tech (2018)

By 2018, WeWork had reached a state of peak excess that reflected both its astronomical valuation and Adam Neumann's increasingly unrestrained leadership style. Perhaps nothing symbolized this era better than the company's purchase of a $60 million Gulfstream G650ER private jet for Neumann's personal use. The luxurious aircraft became a flying party venue where Neumann and his entourage would smoke marijuana and drink tequila on international flights—a far cry from the company's humble beginnings in a single SoHo building. WeWork's annual Summer Camp event epitomized the company's lavish culture. In August 2018, the company flew thousands of employees to England for a festival-like retreat featuring performances by Florence and the Machine and Lorde. Employees were housed in luxury tents, alcohol flowed freely, and Neumann held court like a rock star, delivering rambling speeches about changing the world. During one such address, he impulsively announced that WeWork was banning meat from company events and would no longer reimburse employees for meat-containing meals—a decision made without consulting his executive team. The company's ambitions expanded far beyond office space. WeGrow, a private elementary school championed by Rebekah Neumann, charged up to $42,000 per year and promised to develop "conscious entrepreneurs." WeLive offered fully furnished apartments with community managers organizing social events. The company acquired businesses with tenuous connections to its core model, including Meetup.com (a platform for organizing in-person gatherings) and Conductor (a digital marketing platform). Neumann even directed WeWork to invest in a wave pool company and an artificial wave startup, reflecting his personal passion for surfing. Behind this façade of success and expansion, WeWork's fundamental business model remained problematic. The company was essentially engaged in a form of real estate arbitrage—signing long-term leases and then subletting the space on shorter terms at a premium. This model had inherent risks: WeWork was taking on long-term financial obligations while its revenue could fluctuate with economic conditions. Traditional real estate companies typically maintained debt-to-earnings ratios of around 4:1 or 5:1; WeWork's ratio was closer to 15:1, creating enormous financial leverage that would become dangerous in a downturn. The disconnect between WeWork's valuation and its economic reality reached absurd proportions. By late 2018, WeWork was valued at $47 billion—more than twice the value of commercial real estate giant Boston Properties, which owned rather than leased its buildings and generated actual profits. WeWork was worth more than FedEx, a global logistics company with 425,000 employees and $17 billion in annual profit. The company was being valued at roughly $500,000 per customer, while IWG (formerly Regus), its closest competitor with a nearly identical business model, was valued at about $11,000 per customer. This valuation bubble was sustained by the narrative that WeWork was a technology company rather than a real estate business. Neumann insisted that WeWork was part of the "sharing economy" alongside Uber and Airbnb, despite the fact that WeWork didn't actually share anything—it owned nothing and merely subleased space. The company claimed its technology created network effects and community value, but its actual technology was relatively basic—an app for booking conference rooms and messaging other members. When stories referred to WeWork as a "real estate company," PR representatives would call reporters asking them to change the description. As 2018 drew to a close, SoftBank was preparing to double down on its WeWork bet with a planned $16 billion investment that would have given it majority control. This deal, dubbed "Project Fortitude," would have valued WeWork at $47 billion and provided enough capital to fund years of continued losses. However, when SoftBank's own stock price faltered amid market turbulence, Son abruptly scaled back the deal to just $2 billion in January 2019, leaving WeWork in a precarious financial position that would soon force it toward a public offering—and the reckoning that would follow.

Chapter 5: The Reckoning: IPO Filing Exposes Fatal Flaws (2019)

In April 2019, WeWork confidentially filed for an initial public offering, setting in motion a chain of events that would lead to one of the most spectacular corporate implosions in recent memory. With SoftBank's promised mega-investment reduced to a trickle, WeWork faced a stark reality: it needed billions more to sustain its cash-burning growth model. The company was spending $3.5 billion annually while generating only $1.8 billion in revenue. Despite Adam Neumann's aversion to public markets scrutiny, an IPO became inevitable. Throughout the spring and summer, WeWork prepared to go public, with JPMorgan and Goldman Sachs competing fiercely to lead the offering. Investment banks initially fed Neumann's delusions, with Goldman Sachs suggesting the company could be worth up to $96 billion. JPMorgan, led by CEO Jamie Dimon who had cultivated a relationship with Neumann for years, offered a more conservative but still optimistic range of $46-63 billion. These projections encouraged Neumann to push forward despite mounting concerns about the company's governance and finances. The IPO preparation process exposed WeWork's fundamental contradictions. The company struggled to define itself—was it a real estate company, a technology platform, or something entirely new? The draft prospectus went through countless revisions as Neumann, his wife Rebekah, and executives battled over how to present WeWork to public investors. Rebekah insisted on spiritual language, including a dedication "to the energy of We—greater than any one of us but inside each of us." When WeWork's S-1 registration statement became public on August 14, 2019, the reaction was swift and brutal. The document revealed staggering losses ($1.9 billion in 2018), bizarre corporate governance (including Neumann's 20-to-1 voting power), and numerous conflicts of interest. Perhaps most damaging was the revelation that Neumann had been paid $5.9 million for the trademark to the word "We" when the company rebranded as "The We Company." The Securities and Exchange Commission had forced WeWork to abandon its misleading financial metric "community-adjusted EBITDA," revealing the true state of the company's finances. Financial analysts and media outlets savaged the filing. NYU Professor Scott Galloway penned a viral critique titled "WeWTF," calling the company's proposed valuation "insane." As public sentiment turned against WeWork, potential investors began to balk, forcing bankers to drastically reduce their valuation expectations to below $20 billion, then $15 billion, and eventually even lower. The Wall Street Journal published a devastating profile of Neumann on September 18, detailing his eccentric management style, drug use on the company jet, and messianic self-image. Within days, WeWork's board members, including early backers like Bruce Dunlevie who had long enabled Neumann's excesses, turned against him. On September 24, 2019, Neumann resigned as CEO, though he negotiated to remain as non-executive chairman. The IPO was indefinitely postponed, and WeWork's valuation imploded. The company that had been valued at $47 billion in January was now worth a fraction of that amount. In the aftermath, WeWork entered crisis mode. The company, which had been burning through $700 million per quarter, was on track to run out of money within weeks. SoftBank stepped in with a rescue package in October 2019, injecting $5 billion in new funding and buying up to $3 billion in existing shares, valuing WeWork at just $8 billion—an 83% drop from its peak valuation. As part of the deal, Neumann received an extraordinary exit package worth nearly $1.7 billion, including a $185 million consulting fee and the ability to sell $970 million of his shares, while thousands of employees faced layoffs and worthless stock options. The WeWork saga represented one of the most dramatic falls from grace in corporate history. A company once heralded as revolutionary was exposed as fundamentally unsound, built on charismatic leadership, easy money, and minimal accountability rather than sustainable business practices. The public market's rejection of WeWork marked the beginning of a broader reckoning for the startup ecosystem and the end of an era characterized by "growth at all costs" and unchecked founder worship.

Chapter 6: Aftermath: Market Correction and Silicon Valley's Soul-Searching

In the wake of WeWork's implosion, the company entered a painful period of restructuring. New leadership, installed by SoftBank, immediately began dismantling Neumann's empire. They put the $60 million jet up for sale, closed non-core businesses like WeGrow, and prepared for massive layoffs. In November 2019, the company laid off 2,400 employees—nearly 20% of its workforce—with thousands more cuts to follow. Many had joined WeWork believing in its mission and expecting their stock options to make them wealthy. Instead, they found themselves unemployed, their paper fortunes evaporated. The human toll extended beyond employees to investors at all levels. SoftBank recorded a $4.6 billion writedown on its WeWork investment, contributing to the Vision Fund's first-ever quarterly loss. Benchmark, once Neumann's biggest champion, saw the value of its WeWork stake plummet. Small investors who had bought WeWork bonds or invested in funds with WeWork exposure also suffered losses. The only person who seemed to emerge financially unscathed was Neumann himself, who retreated to his multiple luxury properties with hundreds of millions in exit payments. WeWork's collapse sent shockwaves through Silicon Valley and Wall Street, marking the end of an era characterized by "growth at all costs" and founder worship. Investors who had poured billions into money-losing startups with questionable business models suddenly became more discerning. Other highly valued companies like Uber, Lyft, and Peloton saw their public market valuations fall well below private market expectations. The Vision Fund, Son's ambitious vehicle for reshaping the tech landscape, struggled to raise capital for a sequel fund as investors questioned his judgment. The pandemic that struck in early 2020 posed an existential threat to WeWork's business model. With offices empty worldwide, the company's occupancy rates plummeted. Under new CEO Sandeep Mathrani, WeWork pivoted to a more conventional real estate approach, breaking leases, cutting costs, and focusing on profitability rather than growth. By mid-2020, WeWork's headcount had fallen from over 14,000 to 5,600, and the company was forced to renegotiate leases and close underperforming locations. In a remarkable twist of fate, WeWork eventually did go public in October 2021 through a SPAC merger, at a valuation of about $9 billion—less than 20% of its peak private valuation. The company that had once aspired to revolutionize work worldwide had been humbled, forced to adopt the very business principles that Neumann had dismissed as outdated: fiscal discipline, transparent governance, and a focus on profitability. The WeWork saga exposed deep flaws in the startup ecosystem: the dangers of unchecked founder control, the distorting effects of too much capital, and the willingness of sophisticated investors to suspend disbelief in the face of charismatic leadership. It revealed how the cult of the visionary founder, combined with fear of missing out on the next big thing, could override basic business principles and common sense. As venture capitalist Bill Gurley noted, the WeWork debacle represented "an entire industry that was complicit in this and let it happen." The reckoning that followed has led to a healthier, more disciplined approach to startup investing—one where sustainable business models matter more than growth metrics, proper corporate governance is essential, and capital efficiency is valued over mere expansion.

Summary

The WeWork saga encapsulates a pivotal moment in modern capitalism when the traditional rules of business seemed temporarily suspended. At its core, this was a story about the collision between narrative and reality—how a charismatic storyteller like Adam Neumann could convince sophisticated investors to value a money-losing real estate company as if it were a revolutionary tech platform. The fundamental tension throughout WeWork's rise and fall was between the mundane reality of its business model (leasing long-term and subletting short-term) and the extraordinary valuation it achieved through positioning itself as something far more transformative. This cautionary tale offers several crucial lessons for today's business world. First, sustainable business models matter more than growth metrics; companies that consistently lose money while expanding rapidly are building houses of cards, not enduring enterprises. Second, proper corporate governance is essential; when founders are given unchecked control and boards fail to provide oversight, self-dealing and poor decision-making inevitably follow. Finally, we must recognize that capital abundance can be as dangerous as capital scarcity; when too much money chases too few good ideas, valuations become detached from reality and entrepreneurs are incentivized to prioritize expansion over efficiency. As new investment bubbles form in areas like artificial intelligence and climate tech, the WeWork story reminds us that no amount of visionary rhetoric can ultimately overcome the fundamental laws of economics.

About Author

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Eliot Brown

Eliot Brown covers startups and venture capital for The Wall Street Journal. He joined the Journal in 2010 to cover real estate, and previously worked at The New York Observer. A graduate of Macalester College, he lives in San Francisco.

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