WeWork: Or the Making and Destroying of a $47 Billion Unicorn – The ‘Kibbutz Capitalism’ Fantasy
Written and directed by Jed Rothstein
The documentary We work: Or the making and breaking of a $47 billion unicorn, available on Hulu, is about the meteoric rise and mind-blowing collapse of a real estate startup in six weeks. A “unicorn” is a private company valued at over $1 billion.
Written and directed by Jed Rothstein, the film covers the period from 2008 – in the aftermath of the stock market crash – to 2019, and chronicles the operations of Adam Neumann’s WeWork, essentially an office rental business. Billing itself as a revolutionary high-tech company, the company signed long-term leases on office space, subdivided it into smaller areas, and then rented it out on a short-term basis. Born in Israel, Neumann professed a desire to create a more communal business world, which he envisioned as a kind of “capitalist kibbutz.”
The years following the 2008 global financial crisis were marked by speculative free riding reaching stratospheric heights. Neumann’s grotesque New Age company, which he founded with Miguel McKelvey in Soho, New York in 2010, was born under these conditions. Neumann eventually walked away with a $1.7 billion severance package after a failed initial public offering [IPO] in 2019, when the company’s actual financial situation was revealed.
“In retrospect”, the New Republic The magazine suggested in a November 2020 article, “Neumann’s knack for raising billions of dollars in venture capital without a viable business model was one of the biggest scams of the 21st century.”
WeWork grew from two locations in New York and 450 tenants in 2010 to 800 locations in 111 cities in 29 countries, with 527,000 tenants, in the second quarter of 2019. The workforce nearly quadrupled, from 4,000 employees at the end of 2017 to 15 000.
Rothstein’s documentary interviews a phalanx of former employees, journalists and clients, also drawing on extensive Neumann video footage. His pretentious, pie-in-the-sky marketing concepts were crucial in rebranding his company as a pioneering technology company as opposed to a mundane but risky real estate venture. What stands out is how effectively Neumann was able to manipulate people who thought they were following a prophet, not a garden variety peddler.
He tapped into the fact that millennials, many of whom were economically struggling, weren’t just looking for “a job or a career, they wanted a calling.” His over-the-top sales pitches were tied to a lenient “do what you love” philosophy that appealed not only to employees and potential customers, but also to wealthy investors, such as Jamie Dimon of JPMorgan Chase. Other investors included Goldman Sachs, Benchmark Capital, Saudi Arabia’s Public Investment Fund (PIF), Harvard Management Co. (the company that manages Harvard’s endowment funds) and Legend Holdings (the Chinese holding company and majority shareholder of Lenovo Group), among others.
The We work The documentary contains footage from the company’s annual summer camp, a booze and rave-filled event, which was mandatory for employees, who were then monitored with wrist trackers. The company moved to WeLive, in which members were invited to live in dormitory-style accommodations. Plans were underway for schools (WeGrow), gymnasiums (WeWork Wellness) and even a colony on Mars.
Neumann even trademarked the word “We”. WeWork paid him $5.9 million for the license. The the wall street journal reported that he withdrew $700 million from the company before the failed IPO.
En route to the top of the dunghill, Neumann had failed with various lucrative projects, such as retractable heels for women’s shoes and baby clothes with knee pads. (“My generation will not accept our babies crawling on the floor with their aching knees!”)
Rebekah Neumann, Adam’s wife, certified Jivamukti yoga instructor and cousin of actress and professional confusionist Gwyneth Paltrow, guided the company in the mystical realm, saying the mission was “to raise the consciousness of the world “.
According to Equilar, Inc., an executive compensation analysis firm, the 200 highest-paid CEOs of public companies had a median salary of $18.6 million in 2018. Neumann’s consulting fees alone accounted for about ten times that amount.
While lavishing wealth on Neumann, the company demanded cash injections from SoftBank, a Japan-based conglomerate and WeWork’s biggest investor. According to the filmmakers, its founder Masayoshi Son encouraged Neumann’s extravagant behavior. But in 2019, when the cult real estate company filed for an IPO, all the pixie dust disappeared.
What emerged was one bizarre account after another of the executive guru’s extravagant spending on homes and jets, as well as his abuse of employees. A believer in Neumann’s pabulum tearfully tells the filmmakers that she needed therapy to “warp” her mind. Specifically, the S-1 filing, the documents needed to be made public, revealed massive losses and unethical business practices.
The valuation of WeWork’s “unicorn” fell from $47 billion to just $8 billion as the balloon deflated.
But despite the job massacre, the Neumanns received their golden parachutes and, according to the documentary, planned to open a private school, Students Of Life For Life, or SOLFL (pronounced “soulful”), albeit with a fee of soul destroyers tuition of $42,000. a year. In addition to the layoff of some 3,000 employees, the company had to remove more than 2,000 telephone booths in North American locations contaminated with formaldehyde.
The blame for this sinking, says director Jed Rothstein in an interview, is “this incentive structure where you just sign as many deals as you can and grow as fast as you can, and it’s like building a rocket while it’s Fly”.
Unfortunately, Rothstein’s documentary never looks behind this “incentive structure”, or more generally, into the character of recent times.
“The persistent tendency towards the creation of speculative bubbles stems from deeply rooted contradictions in the development of the global capitalist system, in particular linked to the historic decline of the global position of American capitalism,” commented the chairman of the international editorial board of the WSWS, David North. in January 2008.
Trillions have been pumped into the financial system by the world’s central banks since 2008. Stock markets have risen and risen, and increasingly obscure forms of speculation (and scam) have emerged. What has this seemingly unlimited supply of liquidity produced? The result has been an almost unimaginable concentration of wealth, an explosion of imperialist militarism and violence, the re-emergence of fascism, ferocious attacks on democratic rights and a relentless increase in the exploitation of the working class – in short, the opposite. kinder, the “kibbutz capitalism” promoted by Neumann and company.