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WeWork’s Adam Neumann Says He’s ‘Humbled.’ That’s an Important–and Hard–Lesson for Any Leader

WeWork’s Adam Neumann Says He’s ‘Humbled.’ That’s an Important–and Hard–Lesson for Any Leader

Heading into a public offering for WeWork, already having accumulated significant wealth, and seeing his company as an extension of his philosophica

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Heading into a public offering for WeWork, already having accumulated significant wealth, and seeing his company as an extension of his philosophical view of the world, CEO Adam Neumann was flying high. But, given his perceived missteps, it was a case of an Icarus IPO.

Everything came crashing down this week as the company postponed the event until the end of the year, according to The New York Times. A humbling experience, as Neumann told employees. A good dose of humility is important for a leader. The question is whether that will be enough for Neumann and WeWork.

An IPO postponement is always serious. In this case, brutally so. Investors wanted little to no part of the offering. According to a Financial Times report, institutions and major individual investors worried about the increasing losses, unusual corporate governance provisions, and a corporate structure that handed complete control to Neumann.

WeWork’s parent We needed a big valuation to gain the $3 billion in cash it needed to secure an additional $6 billion in bank financing. Because We needs money now.

The company’s SEC IPO paperwork shows the situation’s direness. In the first half of 2019, there was $1.5 billion in revenue but $1.4 billion in operational losses. In the same period, net cash flow increased to $844.7 million only due to financing of $3.4 billion. In other words, they would have lost about $2.5 billion, which was just over the $2.5 billion in cash and cash equivalents the company had on hand. WeWork could have turned into We’reGone.

From reports, this badly shook Neumann–as well it should have. In a webcast to employees, he said that he thought he knew how to be a CEO but learned, from what others told him, where he was off from what the head of a public company must do, and that he was “humbled.”

As many entrepreneurs have found over the years, the character traits and inclinations that can help push a company into fruition can also come with downsides. A Wall Street Journal article on Neumann is telling. Whether being willing to endanger a private jet’s crew and owner by bring a stash of pot onto the plane traveling internationally or firing 7 percent of the staff in 2016 and then passing tequila shots to those who were left followed by a set from Darryl McDaniels of Run-DMC, the stories are outsized. And, for a CEO, outrageous.

WeWork would never have gotten to where it is without the risk-taking Neumann was willing to do. But had he tempered his demands and interests and tastes, recognized that he was risking people around him, realized that others might know more about one thing or another, and embraced a sense of humility earlier on, the IPO would quite possibly have gone through. Now it’s a toss-up. New plans don’t suddenly reverse the increase of losses, even if they begin to rectify governance.

This is a balance that all entrepreneurs ultimately need to make. You’re responsible for the direction and must make decisions to move the company forward. That’s heady stuff, like surgeons who have to trust their knowledge and skills. Absolutely necessary.

However, too much trust in those characteristics blinds you. Even the best surgeons have to learn from others and recognize that second opinions will sometimes catch something that they missed.

Humility also helps you keep balance and avoid having your entire life wrapped up in the business. Then you gain space to learn and experience things that will help with the creativity and innovation you’ll need.

Perhaps Neumann has learned a lesson. The big questions remain, however. Was it enough? Will he remember it? And will backers continue to support him, or will the IPO land with someone different at the helm, as happened with Uber as Travis Kalanick was forced out in 2017? He theoretically had absolute control as well.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.

This article is from Inc.com

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