Adam Neumann left WeWork in disgrace. His next start will show us if he has learned anything

Adam Neumann, the former CEO of WeWork, is making headlines once again with another billion-dollar startup — this time, a real estate venture. Venture capital firm Andreessen Horowitz has pledged around $350 million to Neumann, and seems convinced that he is the right man for the job.

Yet all of this comes just three years after his less-than-graceful exit from WeWork, a downfall so disastrous it has 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

It is clear that Adam Neumann is very good at securing financing for his companies. In 2019, he was able to lead WeWork to a valuation of $47 billion and convince Softbank, the largest venture capital fund in the world, to invest $9 billion in the company. I think we all know what happened next.

So how did he do it? In the words of Seth Godin, “People don’t buy goods and services. They buy relationships, stories, and magic”—and boy, did Neumann have stories and magic. He made ridiculous claims and people just believed him. He convinced investors that WeWork could double the rent of their coworking spaces through AI, which no sane person would believe. But it worked.

Unfortunately for his investors, the reality was quite different. Neumann didn’t have the numbers to back up his claims, instead relying on his ultra-charismatic personality to convince investors that he and his company were going to revolutionize the commercial real estate space. In the end, his greatest strength proved to be his undoing.

Interestingly, these situations happen all the time – just on a much smaller scale. They can even happen in your business.

The one thing that matters

In remote work pioneers Liam Martin and Rob Rawnson’s recent book, Runs remote control, they constitute the idea that personal work environments are subject to a number of biases that external environments are largely able to avoid. And they happen to use the rise and fall of WeWork to show what can happen in extreme cases.

Here’s 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 colleagues and by extension change your decision making.

These factors are not always important, but they can cause problems. They can allow people to slip up on performance reviews or trick their managers into thinking they are performing well when the reality is quite different.

Even something as simple as being late to the office can make it look like someone is doing a good job. But really, there’s no way to know without numbers to back up their performance.

In a remote environment, these biases are not completely eliminated, but they are much less of a factor. That’s because in an external environment, you’re practically forced to rely on metrics to determine whether people are performing (or not) at the level required of them. In an external environment, there are results or there aren’t – it’s that simple.

In most personal workplaces, these personal biases can result in favoritism, underperformance, 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 portray himself as the ultimate business visionary, tricking investors into throwing billions of dollars at an underperforming company and ultimately impacting thousands of lives. In the words of Martin and Rawnson, “The sad truth was that Neumann was not a visionary as much as he was an incredibly charismatic cult leader.”

So, has he learned his lesson?

Measure performance

I think there’s an important lesson here for entrepreneurs, investors, and I guess Adam Neumann, if this gets on his radar.

Whether you are external or not, business and individual performance should always be backed up with metrics. Martin and Rawnson suggest choosing one metric for each person in your company. It’s a good strategy, and if you choose to implement it, start by having an honest conversation with each one.

Ask your employees how they want their progress to be measured. Not only do they know the intricacies of their role, but giving them the ability to choose how they are 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 find new ways to achieve better results.

This helps managers measure progress, but it also provides a clear opportunity for employees to show their strengths and climb the ranks based on merit. Whether you’re asking for a raise or millions of dollars in funding for your next startup, it’s a lot easier when you have metrics to back you up.

The opinions expressed here by Inc.com columnists are their own, not Inc.com’s.

Leave a Reply

Your email address will not be published.