The fascinating, hilarious, and infuriating documentary WeWork: The Rise and Fall of a $47 Billion Unicorn is now on Hulu, and a couple weeks ago I got the chance to talk to its director Jed Rothstein. For those unfamiliar with the film, it chronicles the rapid ascent and even quick descent of WeWork, a company with the sound real estate idea of leasing office space but wanted to behave with the disruptive nature of a tech company. At the film’s center is the charismatic and hubristic co-founder Adam Neumann who was able to sell a vision of a company that wasn’t really there.
During our conversation, we discussed what drew him to this story, what he was surprised to learn during the making of the film, if he feels like Neumann is a unique figure or a product of our culture, if Neumann is bound to return after his incredibly public disgrace, how the market keeps creating these speculative bubbles, the effect on the average employee, and more.
Check out the interview below, which has been lightly edited for clarity.
What drew you to this story?
JED ROTHSTEIN: Well, it’s a New York story and I’m always interested in trying to find great New York stories because I’m here and I don’t often get the chance to do them. And it also struck me as something that had both a strong narrative sign, almost like a modern fable, almost like a modern Icarus fable of this company and this guy who started out, basically, from the ground level and soared up to incredible heights of the global finance world, at $47 billion, and then very quickly the wings melted and crashed, and he crashed.
So that story, in and of itself, is very dramatic. But what was even more compelling was that I came to understand that there was a lot more to it and that along that ride were thousands of other people, and their stories really help us understand… really sort of give heart to the narrative and help us understand a lot about how we live and work today. So I thought it was sort of both dramatic and rich in emotional question and emotional arcs to untangle.
What would you say would be the most surprising thing you learned while making this film?
ROTHSTEIN: Well, I guess I learned that the effort to marry the communalistic ideals of sharing and trying to make the world a better place for each other can be very tricky to marry to the capitalist ideals of self-interest and greed.
Something that sort of jumped out to me about this film and I was curious to get your thoughts on is, do you feel that Adam Neumann is a sort of singular figure or do you see him more as a product of our current culture?
ROTHSTEIN: I think Adam is the product very much of our culture. I think we look for these salvific figures who are going to swoop in and perform superhuman feats and lead us all into some new promised land. And we seem to keep looking for these figures and finding them and almost helping create them. And oftentimes we find ourselves disappointed. I don’t know if there are these types of would-be heroes in other cultures. I don’t know if they’re as prevalent in other cultures. But I think there’s something about the American story that we seek them and we nurture them and we build them up. And in Adam’s case, we’re also strangely gleeful or full of schadenfreude when they fall.
It’s fascinating because it feels like part of what fueled his rise and the rise of WeWork is sort of this Silicon Valley ethos, that we’ve seen these stories now of what feels like overnight success, because we see it in the headlines, but really you have these VCs sort of chasing these whales.
Do you think WeWork, as a business, if it had just remained, “We lease office space,” do you think it would’ve succeeded had it not embraced a Silicon Valley ethos of rapid growth?
ROTHSTEIN: Yeah, I think that the basic business is probably a good business. Ironically, it will probably be a better business as we emerge from COVID, for all sorts of reasons having to do with big companies wanting more flexibility and lighter office footprints. And I think it probably is a good business at some single-digit number of billions of dollars. It was not a good business at 47 billion. And I think the combination of pressure from the venture capital world, greed, and hubris drove the value up to these completely unsustainable and unrealistic heights, and that’s what caused their crash. But if WeWork had been… Now, if it had been valued as a real estate company, not a tech company, it probably wouldn’t have gotten all this investment and so it wouldn’t have grown as fast as it did, so you wouldn’t have had this story.
As a viewer, it’s sort of curious to me because you see the Silicon Valley ethos and the mindset is, “If we can disrupt everything fast enough, we will overtake the market.” But with WeWork, it’s a little confusing because is the end game here, “We will take over every office in America”? It was almost a little hazy about what the final product was, beyond disruption.
ROTHSTEIN: Right. The idea of achieving market dominance is certainly part of Masayoshi’s thinking in terms of his futuristic or his forward-looking idea that there’s going to be this singularity, and artificial intelligence will dominant world, and certain companies that are positioned to dominate their markets will basically control the economy.
I think the flaw in the thinking in terms of WeWork and the flaw in terms of Adam’s pitch to the markets, was that WeWork ultimately was not a tech company, it was a real estate company. The magic multiple of earnings that tech companies achieve has a lot to do with the fact that once they achieve a certain scale, the marginal cost to making one more widget is almost nothing or it’s very, very low.
The problem for a real estate company is that the marginal cost to adding each customer and to expanding is not low. You still have to rent more space, physical space. You have to pay the master leases. You have to build it out. You have to staff it, to some extent. And that [inaudible] good with the efficiencies of scale and technologies that they deployed was never really going to go away. And so when that fundamental contradiction became impossible to sustain, which was at the point they went public, I think it led to the rapid, rapid collapse of their value.
Could you talk a little bit about the 20-something millennials that you spoke with and their perception of being in WeWork and seeing it not as a place to work or even to we live, in the case of some, but as almost a new kind of lifestyle?
ROTHSTEIN: I think that was very much part of the whole package that Adam was selling; it was, “If you work here, you’re working for something that’s bigger than yourself, and that has meaning and that’s going to make the world a better place.” And I think that’s very attractive to a lot of people.
It’s certainly attractive to a lot of the younger people who worked there, who were faced with a work world that had changed, where you don’t have these normal bonds of community or company that used to be prevalent in our society. You’re moving around more, and we’re moving around companies more. There’s more of an isolation than [inaudible]. And I think Adam and WeWork were selling this idea of creating a community, being part of a movement and that that was a strategy that they had and it was reinforced by these company events that they did that really… I mean, a lot of companies do events, but I think it was a centerpiece of what they did. And it cultivated this almost cult-like feeling that people were participating in… they were participating in an enterprise that meant more than it did.
I think a lot of the people who were attracted to that were attracted to it for good reasons and for positive reasons; their desire to be part of something bigger than themselves, their desire to be part of an enterprise that was helping the world. Those are good desires and they’re desires that I think we should encourage. But I think Adam, ultimately, betrayed that at the end.
Do you think we’ve heard the last from Adam Neumann?
ROTHSTEIN: I’m sure we haven’t. Right? Americans love a second act. He certainly walked away with enough money to restart, or to start something else. And he’s young and he’s dynamic and he is charismatic and I am sure… Or I’m not sure, but I would bet that he will be back with something else.
It’s interesting because you sort of see sort of peer figures that he has sort of like Elizabeth Holmes with Theranos and sort of…
And then you wonder, will these figures re-emerge or are they cautionary tales?
ROTHSTEIN: I think both things are true. The thing about the WeWork story which is often… Sorry. The WeWork story is in some ways analogous to the Elizabeth Holmes story, but in some ways it’s very different. She, at the end of the day, was playing with people’s lives in a life-and-death manner. I don’t know if she’s in jail or not, but she certainly has got into a mess legally. I think that people like that have a much harder time coming back from it.
Adam… One of the people in the film puts it very well. Alex Conrad says, “The thing about Adam that makes him so interesting and that also makes the story kind of hurt, is that he was close. He was close to building something that was great, and then he failed. And the fact that he was so close makes us ask questions about ourselves and the system that we live in and why we sort of keep building up and encouraging figures like this.”
So I think… I don’t know. Will Adam find a way to do it differently and better next time? I guess that’s what we’ll have to see. Maybe he’ll just stay quiet, run off with his money, and stay out of the limelight. But my hunch is that somebody like Adam will be back. My hunch is that somebody like Elizabeth Holmes would want to be back, but I don’t know if she can be.
And despite the collapse of WeWork, do you think that these kinds of unicorns are constantly going to be coming around the corner, that the next 47 billion valuation isn’t really that far away?
ROTHSTEIN: Yeah. One of the titles we thought about was “The Last Unicorn”, but I don’t think it is the last unicorn. I don’t think it’s the last bubble. I don’t think it’s the last hyped-up company that reaches an insane valuation that’s completely disconnected from its underlying financials. And I think it’s part of capitalism and it’s part of American capitalism. In some ways it’s healthy; you want people to dream. I guess my question would be, can WeWork’s story and this film hopefully makes us reflect on how we can engineer or steer the system in a way that it isn’t always privatizing the gains and socializing the losses? And so that it’s fine to dream big, but when things don’t go well it’s not all left on the shoulders of the little people. I don’t think we’ve seen the last of these.
It definitely feels like that the system sort of goes in such a way as to promote these sort of unicorns where the valuation can be chased and then, ultimately, it’s employees left holding the bag while the Adam Neumanns sort of get their golden parachute.
ROTHSTEIN: The venture capital firms and the investors would have been happy if he could have pulled it off, if the large valuation would have been sold to the public markets and you and I and everybody else shoulder the burden of it. And you see this sometimes with companies that have IPOs and then the price drops. All that is is this story that they just played it a little better than Adam did. Adam kind of misplayed it at the end, in my opinion.
But it’s not like the speculative value or the idea that we’re imparting these enormous valuations to companies that lose enormous amounts of money is going to go away. I think it’s probably here to stay. Maybe this story can help us think about how we can channel that energy and that enthusiasm in a fairer way that benefits society more.
And one thing I really did like about the film is that, yes, Neumann is sort of this charismatic central figure, but it’s not solely a case of schadenfreude where we are watching a downfall, but rather it says something about the current marketplace. And I think that there’s lessons to be drawn from that.
ROTHSTEIN: Well, good, I’m glad you saw that. Thank you. Yeah, I think it should. I hope it does. It’s not just about… Because the people who went on the ride with him, it had real meaning to them. The fact that he promised them that this company was going to change the way things were done was a real promise for a lot of the people who worked there and the people who participated in the WeWork ride. And I think that’s what gives this story such heart at the end is that when he betrays that at the end, it’s really a betrayal of those dreams, because those dreams are real.
Those people weren’t participating in something they thought was a scam. They were participating in something that they thought was really producing change. Positive change. And so, at the end of the day, when the chips were down, the founder took all the money. I think that that just revealed that the story he was selling wasn’t really what it seemed to be and I think that that’s really the true heartbreak of it for me.
WeWork: or The Making and Breaking of a $47 Billion Unicorn is now available to stream on Hulu.
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