Some time back I wrote a series about failed startups and the lessons that can be learned from each case. It was and is instructive to look back on those instances post-mortem, but it isn’t just after the doors have shut and the dust has settled that we can examine companies that have gone astray and see the missteps to avoid ourselves.
Take the recent example of WeWork. It’s by no means a failed company, despite its current struggles, and indeed might overcome and continue on to bigger and better things. But the recent spate of bad press that emerged ahead of a potential IPO cast the company in a negative light and threw a once-bright future into doubt, leading to the eventual ouster of the founder and CEO, Adam Neumann. Neumann’s is a cautionary tale for any CEO, particularly given that he took his company to heights most could only dream of before being undone by his own hubris. In examining what went wrong, here are a few of the key takeaways for founders looking to avoid his fate.
NEW YORK, NY – NOVEMBER 21: WeWork offices located at 349 5th Ave on November 21, 2019 in New York … [+]
Ambition beyond reason. Every successful company has at some point had to make a big bet on themselves, and by virtue of that success we hear about the big chance taken and internalize that lesson for our own use. We similarly take on board the tales of those entrepreneurs who had dreams that seemed impossible until these great individuals were able to make them a reality. They’re a particular mythology for the business set, to be interpreted or emulated, depending on who hears them. In modern cultural parlance, most see Superman as a fantasy tale, with obvious lessons about doing good in their own earth-bound lives; others might instead see the potential in themselves to be Superman.
Neumann and WeWork’s grasp seemed to far exceed its reach, as reports have the company committed to $47.2 billion in lease obligations, many of them for longer periods than would typically be undertaken. It’s a particularly risky proposition, given that one of WeWork’s main selling points to its own tenants is flexibility for companies that don’t want to or can’t make long commitments to a workspace. As a bet, it makes sense if you have an absolute belief in the long-term viability of your business model, but such a risk requires others to buy into that same belief, and the hestiance surrounding WeWork’s considered IPO suggest that investors might not be true believers.
The cult of the leader. Musk, Bezos, Cook: much of the success of the biggest or most profiled companies is attributed to a singular figure at the head of the company — perhaps too much. While it’s certainly true that many of these companies owe much of what they are to the vision and drive of a sole individual, there’s a danger inherent in business as cult of personality, a model that seems to have a certain hold within the startup world. Silicon Valley is as guilty a any other industry of learning the wrong lessons, and the deification of Steve Jobs despite his many flaws can lead to people like Elizabeth Holmes, who revered the Apple co-founder and seemingly sought to replicate his reality-bending force of will, if not his success.
Neumann wasn’t Holmes; whatever its issues, WeWork did and does offer what it promises to its prospective tenants. But the many elegies offered upon his removal all note that the company was built and grown through his personal charisma and belief, perhaps more than the actual fundamentals of the underlying business model. The entrepreneurs that most succeed in that mode are the ones that cultivate a belief in themselves as much as the company they run, and with that comes the possibility that a great number of people have made a bet on someone who isn’t what they say they are, or isn’t able to bend the world to their will as they believed.
Questionable culture and practices. Part and parcel of that unshakeable faith in your own vision seems to be a willingness to run your company irrespective of best practices or even the basic tenets of ethical behavior. It can be unclear if those who engage in that sort of behavior know what they’re doing is wrong, or at least exists in an iffy grey area, or if they have become so taken with their own self-created mythos that they become divorced from notions of absolute right and wrong altogether. Most likely it’s our own human nature, given to greed and selfishness if left unchecked, matched with a series of compromises and self-justifications that slowly push us further from the moral center we were once moored to.
In the case of Neumann, there are seemingly plenty of examples of behaviors that range from indulgent and ill-advised to questionable at best. There were reports of a wild and boozy corporate culture, as well as stories about hiring family members and conflicts of interest and a $5.9 million payment for a trademark. In the typical fashion, these revelations seem to take months, if not years, to make it to the light, only to come pouring forth in quick succession once the dam bursts. The raft of stories about mismanagement were enough to make Wall Street and investors jittery, and that was enough for the board to topple Neumann, lest he bring the company he built down with him.
There is a way in which is and other stories like it are too outsized to be given due consideration by people who would do well to take heed; the missteps are so egregious and the money and valuation and players all so big that it seems more like fiction than anything approaching our own realities. But Neumann and others like him all started small, and though they may seem larger-than-life at the time of their respective downfalls, they were simply normal people subjected to an increasingly abnormal set of circumstances, people who made a series of decisions that led them to a place where they felt they could make any decision and have it be the right one. We’d all be better served keeping this and other examples of misguided ambition in mind as we go about our own business.#onwards.