WeWork and Venture Capital: Don’t Blindly Buy a Grand Narrative

Verification notes (2026-10-30): 1. Source: The post is tagged #BillionDollarLoser and #得到聽書, identifying it as a Dedao audio-book summary of Reeves Wiedeman's Billion Dollar Loser. Figures below come from the book summary or speaker. 2. The post says, “In 2016, excessive spending caused WeWork to lose US$90 million in a single year.” The consolidated statement of operations in WeWork's 2019 S-1 filing with the SEC reports net losses of US$429,690 thousand in 2016 (approximately US$430 million), US$933,494 thousand in 2017, and US$1,927,419 thousand in 2018. The post's US$90 million differs: it does not appear in the S-1 statement's net-loss row, and the post does not explain the basis for that figure. This site retains the original text without determining which basis it uses. Sources: https://www.sec.gov/Archives/edgar/data/1533523/000119312519220499/d781982ds1.htm https://www.businessinsider.com/wework-s-1-prospectus-ipo-revenue-cash-flow-2019-8 ---- Robin: “Founders must be good at narrative: tell a complete story and, when necessary, reframe the opportunity to tell a bigger one.” Robin: “VC peers must learn to listen to stories and imagine their possibilities, but above all assess their credibility. Many founders concoct stories to obtain higher valuations without being very sure of them themselves. Don't blindly buy a grand narrative.” --- #BillionDollarLoser Why did venture capital favor WeWork so much? First, Neumann's story matched investors' preferences perfectly. The author says the goal of venture capital is not to find an industry's ceiling, but an “alternative approach” that can disrupt it. If WeWork were merely the leader in coworking, it would only represent that industry's ceiling. Neumann instead made office buildings his competitors. He said, “We aren't competing with other coworking spaces; we're competing with office buildings—a US$15 trillion asset class in the United States. ” Globally, real estate is a market of nearly US$200 trillion. That was the market WeWork wanted to disrupt through technology. If WeWork could build a globally recognized brand in such a vast market and reshape how people work, that would be the “alternative approach” venture investors wanted. Moving from the small pond of coworking into the vast ocean of real estate made WeWork seem to have unlimited potential. Second, venture investors' willingness to bet heavily on WeWork also reflected their own concerns. A new term, FOMO, means fear of missing out. Over the preceding decades, the success of technology giants such as Google, Facebook, and Netflix had generated enormous returns for many venture investors. One major success could offset several failed investments. Firms that had not participated looked on enviously. They were “tired of missing out,” opened their purses, and prepared to shower money on the next technology giant. Betting heavily on companies like WeWork did not necessarily mean they firmly believed it would succeed. More likely, they feared missing the next giant. With venture backing, WeWork's valuation soared. But capital is not free: investors expect something in return. What did Neumann offer? Breakneck expansion. For a time, WeWork opened a new location every eighteen days. Neumann's goal was to grow the company as quickly as possible. Breakneck expansion was somewhat at odds with Adam's original aim of “building a community.” Running a community well takes substantial time and energy. Such an approach struggles to scale and become profitable quickly. Many competitors had abandoned the field because its margins were too low. Neumann had no such concerns; he thought only of growth. He had an expansion strategy too: sign low-priced, long-term leases, often for twenty years. Each began with a rent-free period, during which WeWork could “gobble up” as much as possible, worrying about rent only when that period ended. During rapid expansion, Neumann would even pay a 25% premium to wrest a space from a competitor. These tactics focused on the present rather than the future, and growth rather than profit. They sound unreasonable now, but fit the way people operated during the startup boom. Silicon Valley investor Reid Hoffman proposed “blitzscaling”: startups should acquire customers by any means necessary, then figure out how to make money. Hoffman also stressed scaling “responsibly,” however, and Neumann's tactics were clearly irresponsible. The ambitious Neumann also reached into other fields, launching a bewildering array of projects: education, bicycle maintenance, food delivery, a fitness brand, even perfume. This jumble distracted the team. Yet disorganization was a minor issue compared with the spending that expansion brought. In 2016, excessive spending caused WeWork to lose US$90 million in a single year. Neumann responded by tightening the budget, slowing some projects and calling on everyone to save. Many saw this frugality as hypocrisy: while the company was losing heavily, Neumann was buying luxury homes and taking helicopters on vacation. Also in 2016, the venture capital wave began receding. Many prominent investors warned about startups' high valuations and spending. Investors became wary of companies like WeWork. This was bad news for a company burning cash so fast that it could not keep expanding without fresh investment. At this critical moment, someone arrived who not only gave Neumann the lifesaving medicine of money, but urged Adam to keep pressing the accelerator—hard. It was SoftBank founder Masayoshi Son, known for bold bets and described by entrepreneurs as “the ruler of the internet world.” With Son's arrival, WeWork's era of penny-pinching quickly ended. It roared ahead again. --- The story of Neumann and WeWork is a useful reminder for everyone on the entrepreneurial path: the faster you charge ahead, the more alert you need to remain. #得到聽書