The one word Adam Neumann needed to listen to
Super-voting shares allowed him to ignore everyone
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The Adam Neumann-era WeWork is winding down. SoftBank is rescuing its own investment with a bailout package that enriches Neumann and leaves pretty much everyone else rich-less. Early venture investors will get less than they hoped for. Later stage venture investors will lose money. And all but early employees are likely left with nothing except a severance check.
How did this happen? Either no one told Neumann “no” or he didn’t listen.
Countless entrepreneurs attempt to model themselves on the greatest entrepreneur of our time, Steve Jobs. Elizabeth Holmes adopted his black turtlenecks and copied his language from the Think Different campaign about the crazy ones changing the world. Others like Travis Kalanick thought it was ok to be a jerk to employees because of stories of Steve’s temper. And Adam Neumann thought being a great entrepreneur was making all of the decisions—however he wanted to.
Each of these groups misunderstand what made Steve great. Elizabeth missed that Steve’s image, language and showmanship didn’t make him great—they were expressions of his greatness. Travis and others missed that Steve’s temper was overwhelmed by his care. And Adam missed that Steve made many detailed decisions but he also delegated significant parts of the business to people he trusted.
Apple was struggling financially while I was there. At one point in 2002, the only profitable line of business in the company was the software applications group—creating a high pressure on our business. After one of my briefings to the executive team about an upcoming product launch, Steve continued on with new ideas about how we could make a bigger splash, requiring a bigger budget. Fred Anderson, Apple’s CFO, quietly said, “No, Steve, we can’t afford that this quarter.”
Steve simply responded, “Ok,” and moved on.
Steve trusted Fred and when he said “no,” Steve listened. I also watched him listen to no’s from Tim, Avie, Sina and others. Steve was a demanding leader, an uncompromising critic and a micromanager. But he was a team leader who assembled a great team and then listened to them.
Perhaps the worst among Adam Neumann’s many failings is that he didn’t hire people who would tell him “no” or he didn’t listen to them. Someone should have told him “no” before he put a spa in his office, before he leased buildings to his own company, before he took weed across international borders—before any of the other absurd excesses, self-dealings and abuses that have been uncovered in the past few weeks.
How did all of this happen? I think the culprit is the super-voting share structure that gave Neumann control of his company. There is a high correlation between founder control and bad actions: WeWork, Uber, Theranos and, of course, the ultimate super-voting company, Facebook. At all of these companies, the founders ran amok while they had voting protection from being removed from office. The first three removed their CEOs after near bankruptcy, harassment accusations and fraud. Facebook’s CEO, Mark Zuckerberg, is both untouchable and completely out-of-touch with the problems he’s creating. He, too, doesn’t have someone who tells him “no” or he doesn’t listen—because he doesn’t have to. He cannot lose his job, ever.
Super-voting shares and founder control are a terrible idea for companies, investors, employees and founders. All great leaders need people they listen to and who hold them accountable.
If you’re going to build a company, earn the right to make decisions. And earn that right again and again, from your investors, your customers and your employees. If you don’t, you deserve to be removed.
Also this week:
WeWork: My favorite WeWork piece this week is from the Onion: WeWork HR Invites Employees To Sign Goodbye Checks For Departing CEO. “The email from WeWork HR also requested employees to chip in to give Neumann a little parting gift of a $50-million Starbucks gift card.”
Humor aside, the thousands of employees at WeWork deserve better. And Neumann’s $185 million consulting package is so insulting it’s impossible to describe accurately. While the company struggles to pay severance, he demands a $185 million package in addition to his $900 million in stock sales?
Direct Listings: Postmates is apparently considering a direct listing. This comes following a mention in their Series G filing that mentions that the round could covert to either an IPO or a direct listing. Reported by Dan Primack at Axios via a tip from Prime Unicorn Index.
Thanks for your time. If you think a friend might enjoy this newsletter, please forward it along. You can follow me on Twitter at @dedwards93 or email me at dave@xfoundry.io.