Review: ‘Billion Dollar Loser,’ by Reeves Wiedeman

Neumann spun an origin myth about growing up on a kibbutz in Israel, where he appreciated the community but bristled at how everyone was rewarded the same regardless of how much work they put in. He envisioned WeWork, he said, as a “capitalist kibbutz”—a “community,” but the kind where “you eat what you kill.”

Wiedeman (with whom I overlapped while working at The New Yorker) presents a more nuanced portrait of the founder as a young man. Neumann was born in 1979 in Beersheba, Israel, to physician parents who shuttled Neumann and his sister around desert towns before moving to the suburbs of Tel Aviv. When he was in the second grade, his grandmother realized that he couldn’t read the menu at a restaurant; he was dyslexic. “He had become skilled at fooling his teachers and coaxing others to do what he needed,” Wiedeman writes. After his parents divorced when he was 9, his mother moved, with him and his sister, to Indianapolis, where he struggled emotionally at first. Only later did the family live on a kibbutz, after they’d returned to Israel. Neumann went on to serve in the Israeli navy, and then moved to New York, where he enrolled at Baruch College, before launching a series of businesses—making collapsible high heels, then baby clothes with kneepads—and dropping out. In 2010, he and a friend, Miguel McKelvey, unveiled WeWork.

At the time, co-working spaces were already common. The business model was straightforward: Entrepreneurs “leased space, cut it up, and rented out each slice with an upcharge for hip design, flexibility, and regular happy hours,” Wiedeman writes. But those in charge typically ran no more than a few locations apiece, in part because operating multiple spaces required spending a lot of money, up front, on leases. What distinguished Neumann, along with his ambition, was “his connection to capital,” Wiedeman writes. Neumann had married Rebekah Paltrow, a wealthy cousin of Gwyneth Paltrow and a kabbalah devotee. She invested part of a $1 million nest egg in WeWork and introduced her husband to Manhattan’s Kabbalah Centre, where he met other well-off backers. By January 2012, he had raised almost $7 million.

Neumann’s approach to fundraising seems rooted in a simple tenet: Find out what investors want—then say whatever is needed to convince them that their desires are yours. Heavily reliant on support from the kabbalists, Neumann told a real-estate publication that WeWork had in fact been inspired by kabbalah: “I noticed that in the Kabbalah community, people were really helping each other. I wanted to translate that to business.” His chameleonic tendencies as a child and young man, it turned out, had been good training.

Later, as he began courting Silicon Valley’s venture-capital firms—which tend to invest in fast-growing tech companies—Neumann described WeWork as a “physical social network,” and promptly raised $16.5 million from Benchmark. Investors surely also liked his message about his company’s position in the Silicon Valley ecosystem: Work had come to feel alienating; WeWork would make it social again, while at the same time empowering independent-minded entrepreneurs to fulfill their individual dreams. As venture-capital funding poured in—seven more rounds followed—Neumann hired engineers to work on techie-sounding projects, such as building an exclusive social-networking platform for WeWork members. More significant, with investors encouraging fast growth, he leased hundreds of new spaces around the world, splurging on perks such as free beer and a bacchanalian retreat called Summer Camp, so as to fill them. At the same time, in the name of efficiency—which Silicon Valley investors appreciate almost as much as growth—he kept certain costs down. Neumann used nonunion laborers for construction, and many of WeWork’s employees put in long, poorly compensated hours. “I can hire a bunch of young people and pay them nothing,” he once said. Attendance at a “Thank God It’s Monday” pep rally, held after hours, was required.

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