How Purpose Became Toxic at WeWork— and How to Avoid The Trap

Source: Kelly Sikkema, Framework

Of all the lessons to be taken from the rise and fall of WeWork— lavishly documented in Apple TV+’s new limited series, WeCrashed — the most striking may be that corporate purpose can be a double-edged sword. Adam Neumann’s articulation of a bold vision for a relatively dull sector inspired investors to create a record-breaking unicorn. Yet it would also seed the company’s downfall, displacing real strategy, destroying shareholder value, and devastating employees’ lives. Raising a critical question: how much WHY is too much?

WeWork first made its way onto my radar in 2016 when a mutual friend introduced me to one of its senior executives.

The success he described was remarkable, even if the model seemed also-ran. Months later, a multi-billion dollar investment by Softbank would value the company at $20 billion, pushing the brand into the stratosphere.

Like many, I was intrigued by what I read about WeWork’s visionary founder, Adam Neumann — in particular, his refreshing belief that better workspaces could make work and modern life itself richer and more rewarding.

If only he’d stopped there.

WeWork’s Purpose Paradox

We all know how the story unfolded after that — if you’ve been living under a rock, check out the well-crafted WeCrashed limited series now streaming on Apple TV+.

By positioning the rebranded “We Company” as the poster child for corporate purpose — starting with a January 2019 manifesto to “elevate the world’s consciousness” through an entire lifestyle ecosystem— Neumann managed to make WeWork the most richly valued unicorn (on a price-to-revenue basis) of all time. Nine months later, however, following widespread outrage over its zany IPO filing, the board removed Neumann as CEO. Weeks later, it would lay off 20% of its workforce and shelve We’s IPO plans indefinitely.

For a company that’s still alive and kicking — to the point of quietly going public and becoming profitable last year, though reduced to a shadow of Neumann’s grand vision — WeWork has had more than its share of post-mortems. Many have explored what the tale has revealed about the world of venture capital: without the breathless urgings of Softbank’s tellingly named Vision Fund, things would never have got so out of hand.

Others have focused on the company’s inner workings, notably its culture.

Given its lofty ideals to make the modern work experience more humane, exhorting us all to “do what you love”, WeWork’s own track record as an employer was nothing short of dismal. Regular, cult-like chanting sessions (“We! Work!”) were only the beginning. As in many toxic workplaces, workaholism was valued over productivity. Employees were expected to work late into the night and forego any semblance of work-life balance. So was alcohol, with which the company was curiously obsessed. Team achievements — even layoffs — were celebrated with tequila shots. Beer taps, arguably the company’s most widely-adopted innovation in the sector, remained open at all hours. Attendance at “Thank God It’s Monday!” parties and boozy offsites was mandatory. To keep everyone on their toes (read: working in fear) the company even went so far as to adopt a widely-decried Enron practice, firing a portion of its workforce annually, regardless of absolute performance, as a matter of course.

For those of us who have found corporate purpose to be an invaluable antidote to such toxicity in the workplace— a focus on collective impact can go a long way to dispel bullying, cliques, and “work for work’s sake” — the story of Neumann’s WeWork presents a disturbing paradox. How did its compelling vision devolve into a caricature of startup life — with little in the way of redemptive value creation?

Clues can be found in WeCrashed’s excellent companion podcast, which pulls back the curtain on its operations and approach to planning. Particularly striking is the testimonial of a female employee who confronted Neumann’s wife and business partner, Rebekah — the company’s “Chief Brand Officer”, who managed to achieve personal notoriety early on by claiming a woman’s role was to help her man “manifest his calling” — over the company’s claims to be a family (another telltale sign of toxicity). “Stop saying that,” the employee urged. “This place is nothing like a family.”

A more fundamental break appears to have come after Softbank CEO Masayoshi Son urged Adam to take the brakes off as a pre-requisite of further investment. Who would win in a fight, Son asked: the smart guy or the crazy guy? Neumann’s fateful (though since recanted) answer was the latter. With a nod to Apple’s famous “Think Different” campaign, We’s leadership rallying cry became “Think Crazy”.

Peak Crazy

Regardless of what one might think of Son’s advice, it’s hard to argue that the Neumanns didn’t follow through.

The first shoe to drop was Rebekah’s 2017 unveiling of WeGrow — a series of elementary schools that promised turn kids into entrepreneurs. “In my book,” she told Bloomberg, “there’s no reason why children in elementary schools can’t be launching their own businesses.”

Peak Crazy came the following summer at an 8,000-strong employee retreat where the Neumanns took to a stage to talk about plans not just to grow the company, but solve all the world’s problems — starting with abused children and orphans.

“If we do the work right,” said Adam, “we can wake up one day and say we’re going to solve the problem of children without parents in this world, we can win, and do it, within two years.”

Anyone who found that a lot to digest soon learned only the beginning. Barely pausing for breath, Adam continued: “Then we can go to any minority, or anyone who is weaker, who is getting taken advantage of by someone who is more powerful, and from that we can go to world hunger and there’s so many topics we can take one by one and we will be able to tackle anything we set our minds to.”

NYU business prof Scott Galloway was hardly the first to call BS. But his 2019 blog post, “WeWTF”, arguably became the most influential in the genre — enough to warrant his inclusion as a scandalized onlooker in WeCrashed. In addition to ridiculing the S-1’s various invented (and still weak) performance metrics, he also put the “C” word front and centre — as in “Cult”.

Still, WeWork Mark 1 must have got something right to rise above the co-working field as it did. It connected with customers on a level unmatched by competitors — like the fast-growing but style-free Regus — not simply because it had great locations, appealing design, and free beer/kombucha. It connected because, like every great brand, it recognized it was not selling a service — desks and meeting space — but an emotional state: the feeling of community, which so often eludes solopreneurs and early stage companies isolated in basements and garages. Somewhere, emotional marketing legend Seth Godin had to be smiling.

True Purpose

Where things went off the rails was when it departed from what Jim Collins calls “reality-based thinking”. Contrary to certain popular advice, creating a compelling vision for a team or company is rarely about articulating how your product can save the world. To be truly motivating, a vision must be achievable. Certainly, one can seek to push the limits of the likely, even the possible. But even stretch goals must still be grounded in what Collins calls “brutal facts”, accompanied by a realistic scope and time horizon. The so-called “crazy ones” celebrated in Apple’s ads, from Einstein to MLK to Frank Lloyd Wright, still aimed to drive change in a world where the sky is blue and gravity goes down. They were crazy by the standards of their times — not of all time.

The Millenials and Gen-Zs that now represent over 50% of the workforce may aspire to have deeper and broader impact than their parents. But impact means impact, not fairy tales or Jesus complexes. The number one complaint I’ve heard from younger employees in recent years about purpose implementations is how often they amount to “lip service”. “I would rather make a great product that minimizes its footprint than one which claims to save the planet,” said one.

WeWorkers were no stranger to such reservations. The week Neumann stepped down, an insider told the New York Post he was great at getting rooms on their feet — but also “a complete phony.”

At the other end of the spectrum are senior executives who fret that lofty visions might similarly overwhelm their businesses. “Wanna know the best way to build a product with zero emissions?” a client once told me. “Design one no one wants to buy.”

Therein lie two golden features that every vision and mission requires: clarity and authenticity. The purpose of a purpose statement is to drive focus, not blur it, as much about saying “no” to certain opportunities as well as “yes” to others. Even Amazon has limits. Articulating missions should be an exercise in plain speaking, not competitive bombast. At the end of the day the greatest, most positive impact a company can have is not to change the planet, a fool’s errand for all but a minority of global giants. Nor is it to seek to create mini-utopias, like Olivetti’s mythical “company town” that contributed to its demise as an independent company, with little bearing on its core business. The true goal of any business, as Peter Drucker underlined in his 1973 call for managers to take purpose seriously, is simply to deliver great products and services at prices that deliver sustainable value to customers and shareholders alike.

As 90% of entrepreneurs discover each year, this is much easier said than done. After years of painful layoffs, closings and write-downs, it’s also a lesson today’s humbler WeWork has learned in spades. Investors are now watching in earnest to see what kind of real transformation the company may make with its more earthbound vision “to create environments where people and companies come together and do their best work”.

Which may be all the crazy WeWork needs.

Stephen Butler is a partner at Framework, a growth consultancy. The fact that WeWork has created a font of the same name is purely incidental.

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Entrepreneur, Advisor, Recovering Philosopher.

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Stephen Butler

Stephen Butler

Entrepreneur, Advisor, Recovering Philosopher.

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