WECRASHED: WHY WEWORK FOUNDER ADAM NEUMANN IS A PURPOSE-DRIVEN STRADIVARIUS WHO DESERVES A REHABILITATION

HOW WESTERN ECONOMIES ARE TRANSFORMING FROM HENRY FORD TO STRADIVARIUS        

I just finished the Apple TV+ series WeCrashed which is based on the rise of the American company WeWork and its founder and former CEO Adam Neumann. It's an extremely fascinating series about the dynamics between visionary entrepreneurs and their financiers, being venture capitalists and banks. But on a deeper level, it's actually about a historical movement in Western capitalism that I describe and explain in detail in my three books. And when I think about it, all of my own companies were once started from that thought. A thought of which I was at first completely unaware and which later, through my extensive research into leadership, I have come to consciously recognize and apply. I call that the transformation from the Henry Ford mindset and Henry Ford thinking and working to the Stradivarius mindset and Stradivarius thinking and working. Steve Jobs was the first entrepreneur in the 20th century to start a company - Apple - from the Stradivarius mindset. Since then, you see more and more young companies being created from that same Stradivarius mindset.

After watching the series WeCrashed, there is also no doubt in my mind that Adam Neumann started WeWork from the Stradivarius mindset and the Stradivarius way of thinking and working. Only to be confronted with the Henry Ford mindset of his financiers in the run-up to WeWork's IPO. It's really disconcerting to see that.

Albert Einstein

The Henry Ford mindset is the typical industrial mindset. That was a great mindset for the industrial age, which was dominated by process and extrinsic motivation. But in today's growing Stradivarius era, this mindset and this way of thinking and working is becoming increasingly counter-productive. This is reflected in my research over the past 17 years, in which I have extensively interviewed 500 leaders. At the same time, I find that most leaders, brands and companies and certainly their financiers are totally unaware of this. I am always reminded of a quote by Albert Einstein: "If you do what you have always done, you will get what you have always gotten." By that he means to say that if you really want to get something else you've always gotten, you have to do something else. And if you want to do something different, you need to change your thinking and your beliefs. At the same time, Albert Einstein's statement is only true if the context, or circumstances, remain the same. If the circumstances change structurally, the quote should actually read, "If you do what you have always done, you will get less and less of what you got." In other words, your way of working has certain results in a certain context, but if that context changes radically, that way of working no longer works. And that's exactly what's going on right now in the Western world and in Western economies. Let's explore that.

Extrinsic versus intrinsic motivation

Extrinsic motivation is the motivation of the Henry Ford mindset that is focused on sales, profits and market share. Intrinsic motivation is the motivation of the Stradivarius mindset that is focused on providing unique value to the world. People and companies that operate from an intrinsic motivation view revenue, profit, and market share as the logical consequence of providing unique value to the world. People and companies operating from an extrinsic motivation see value to the world in the form of products and/or services as merely a means of obtaining revenue, profit and market share. A crucial difference. Intrinsic motivation is what "purpose" really is. A concept that is used all too often these days, but almost always from the Henry Ford perspective. And then it is not about the value that you as an enterprise provide to the world through your products and services, but some social goal such as CO2 reduction or better working conditions in the supply chain. Not that this is unimportant, but it can never be your purpose as a company. I will come back to this in detail in a future article or podcast.

I call the Henry Ford mindset the Henry Ford mindset because Henry Ford was the first to introduce the assembly line on a large scale. A famous quote from him reads, "We can deliver the T-Ford in any color as long as it is black." Why? Because the color black dried the fastest. And so you could produce the most cars within a given time frame and thus earn the most. This was not unimportant, especially at the beginning of the industrial age, because demand was greater than supply.?

This Henry Ford mindset is the mindset we all grew up with in the West and through which we have all been conditioned. We are not aware of it, but it is there. In my research I have demonstrated this conclusively. The problem, however, is that from the end of the 20th century, the Western world began to tilt from the Henry Ford mindset to the Stradivarius mindset. Let's explore this further.

Georg Hegel and Abraham Maslow

In my first book "HUMAN - the secret of being" I argue, based on the dialectic of the German philosopher Georg Hegel, that human history is driven by this dialectical process. A dialectical process is the process thesis > antithesis > synthesis. In other words, first there is a thesis, it evokes an antithesis, and then a higher synthesis emerges that unites thesis and antithesis into a higher value. For example, feudal capitalism > communism > social capitalism. So human history moves in a clear line and has a clear direction. According to Georg Hegel, that dialectical process ends in liberal democracy. I have combined that with the ideas of the American psychologist Dr Abraham Maslow. Maslow argues that there is a hierarchical order to our human needs. When you have nothing, your primary need is food and drink (Maslow 1). All other human needs are less important at that time. If you have that structurally in place, your primary need becomes the need for security (Maslow 2). If you have structurally managed that, your primary need becomes the need for social connection (Maslow 3). Once you have structurally achieved this, your primary need becomes the need for status and self-worth (Maslow 4). Finally, this process cumulates into the last primary need: self-actualization (Maslow 5). The first four primary needs are so-called utility needs. They are all focused on survival in a raw and later more subtle way. Within them, you subordinate the realization of your own talents in the world to that need satisfaction. In other words, you subordinate your intrinsic self to your utility needs. It is only in the self-actualization phase that being truly human is about actualizing your natural talents in the creation of value for the world.

From Maslow 1-4 to Maslow 5: a historical revolution

I argue in my first book that the Western world is at the tipping point between Maslow 1 to 4 and Maslow 5. This brings about a fundamental change in the motivations of people. All the major social and political changes and frictions of the last 25 years in particular can be explained from this. To my surprise, I don't come across a single philosopher or politician who understands this. Also in the media I do not read anything about this.?

Also economically we are slowly moving in the Western world from the Henry Ford mindset and the Henry Ford thinking and working to the Stradivarius mindset and the Stradivarius thinking and working. And so from a Henry Ford economy to a Stradivarius economy. We are literally in the middle of that process.

The Stradivarius mindset refers to the genius violin maker Antoni Stradivarius. Stradivarius was completely intrinsically driven. From his natural talents and drives, which he had fully actualized in the world, he created the very best violins ever made. He was an artisan. A genius artisan. He was not driven by money, he was not driven by market share, nor was he driven by creating as much value as possible for his shareholders. Those were all effects for Stradivarius. But never the goal. Never his purpose. He just wanted to build the very best violins so that the compositions of the composers could be interpreted as beautifully as possible. That sort of thing wouldn't interest Henry Ford at all. And if they're honest, no industrial company does. They want to create shareholder value. And to achieve that, you need products or services. Banks and venture capitalist are just like that. By definition. It's all about shareholder value by definition, not customer value. That is only a means.

The Becoming Framework I helped develop helps people, brands and companies to make the transformation from the Henry Ford mindset and the Henry Ford thinking and working to the Stradivarius mindset and the Stradivarius thinking and working. We are achieving spectacular results with this. So it works. Demonstrably. It's proof that the core thesis in my books is true. But that doesn't surprise me, because that's just a matter of logic. From that logic, it is also possible to indicate exactly how our political system would have to change in order to work better than it does now. Something I will come back to in a next article or podcast.

The clash between Henry Ford and Stradivarius

The conflict between Adam Neumann and his non-executive Supervisory Board is literally the clash between the Henry Ford mindset and the Henry Ford thinking and working and the Stradivarius mindset and the Stradivarius thinking and working. Apple founder Steve Jobs had exactly the same thing happen to him in his day. He too was worked out of the company at the time by the Supervisory Board in which the financiers were strongly represented. As a result, the company began to lose more and more value until it was 90 days from bankruptcy. Then Jobs came back and the rest is history. Apple is now the highest-valued company worldwide.

Financial institutions, whether banks, venture capitalists or any other financier, will be the last to leave Henry Ford Island. By definition. After all, they are literally the concrete foundation of the industrial age. They live by the Henry Ford mindset and the Henry Ford thinking and working like leeches living off the blood of their donor. Indeed, they are by definition not primarily focused on helping to deliver value to the world, but focused on accelerated financial returns in the shortest possible time. They are all about money and the value that should lead to the money is at best a means, but never the end. Classic Henry Ford.

WeWork and MagicMinds

The story of Adam Neumann and his WeWork is literally an archetypal example of the dynamic I describe above. A dynamic I experienced myself with my then famous Dutch company MagicMinds during the rise of the Internet age at the turn of the century. Adam Neumann single-handedly manages to build a multi-billion dollar company from nothing. You can say all sorts of things about this man, but not that he is not a uniquely good entrepreneur. You have to have very exceptional qualities to make this happen. After all, if that wasn't the case, everyone would be doing it. And as we know, not everyone does it. Even far from it.

At the time, we rapidly built up our company MagicMinds from a startup with six employees to a flourishing enterprise with 150 employees, large enthusiastic multinational customers and exceptionally high customer and employee satisfaction. To enable this growth, we attracted venture capital by entering into an agreement with the Dutch venture capitalist Nesbic. Just like Adam Neumann, I was constantly pushed by Nesbic to grow faster and not to focus on making a profit. Then two airplanes flew into towers in New York, economic sentiment began to shift from growth to profit and visionary Internet entrepreneurs were overnight blamed by their financiers for making losses. For they saw, due to the tilting economic sentiment, suddenly their accelerated return on investment threatened. Pure short term financial opportunism without any respect for the value delivered by the company and without any visionary perspective. And I can still respect that if you come clean and work with the entrepreneur to find a solution that is workable for both parties. But what actually happened is that Nesbic, through the media, started to paint a picture of me as an unhinged projectile who only partied and for whom profit was totally unimportant. After all, they obviously had to go to their supporters, private investors and banks, to wipe their own streets clean. And what could be easier than to portray the visionary entrepreneur as the guilty party. Of course you're not going to admit that it was you as an investor who pushed the entrepreneur to grow as fast as possible without worrying about profits.?

Throwing the company on the bus

This is exactly what you see happening with Adam Neumann. Neumann is scandalously thrown in front of the bus by his financiers and his reputation is irreparably damaged. And the media have participated in this extensively. The picture that ends up being painted of him in the media is that of a tequila-sipping, weed-smoking charlatan. It baffles me that everyone takes this image for granted. Because it is so easy to disprove logically, that you have to be chained up in Plato's cave to accept that image as true. Someone who is a tequila-sipping, weed-smoking charlatan can't possibly build a billion-dollar company from nothing, with branches in more than 100 countries. That is like thinking that a 50-year-old obese man will win the Olympic title in the 100m sprint tomorrow. Impossible, in other words.?

Did Adam Neumann make mistakes? Of course Adam Neumann made mistakes. Every person and every leader makes mistakes all the time. And the best of us learn from them. But to portray an entrepreneur as a tequila-sipping, weed-smoking charlatan, while he has created a billion-dollar corporation in a few years is absurd, no matter how you look at it. I experienced exactly the same thing with my company MagicMinds. On a much smaller scale, but the principle was exactly the same. Suddenly everyone has an opinion about you, which they glean from unsubtle media stories that are always based on barely verified statements from anonymous sources. Through that experience, it became clear to me that people do not see what is, but who they themselves are. Our perception is not a mere bit of personal perception, it is a gigantic irrational personal perception. We all walk around with fixed templates in our heads, which we are not aware of. And then when information comes in, that information falls neatly into the existing templates et voilà: an opinion that is taken as truth. That, I know from my own experience, is not something you can compete with. The only thing you can do is withdraw from the publicity. And that's exactly what I did at the time and what Adam Neumann did after the misery at WeWork.

In the end, after being literally blackmailed from all sides by his financiers and also smeared in the media, Adam Neumann has no choice but to agree to leave as CEO of WeWork. The WeCrashed series even suggests that the financiers had Adam Neumann followed by photographers to take compromising photos of him. It would not surprise me at all. Also, the series reveals that the main financier, SoftBank of founder and CEO Masayoshi Son, makes a verbal deal with Adam Neumann under which financial terms he will leave. Neumann leaves only to be told by Masayoshi Son that he will not abide by deal. Such immoral behavior by venture capitalists I know myself.

MagicMinds

After the two planes flew into the towers in New York and the economic entiment began to tip, Nesbic suddenly began to exhibit very different behavior.?Initially they had invested € 5,000,000 in our company and another € 5,000,000 would follow a year later. We had increased our turnover eightfold in that year. The next investment round was approaching. However, I was not worried because we had shown incredible sales growth and had almost reached a break even point.?

I can still clearly remember the discussions with Nesbic, in the presence of our then lawyer Mic van Bremen. The valuation of the company had been based on figures from Forrester Research. When the initial investment took place it was 16 times revenue. But now that had changed radically. According to those calculations, we were no longer worth 40 million, as we were a year earlier, but suddenly only 10 million. Despite an eightfold increase in our turnover. Then it turned out that there was something in the small print of the contract: if the second 5 million was invested, it would be as if the first 5 million a year earlier was invested now, at the current value.?And that was 10 million. So Nesbic would get 100% of the shares and that was against their own policy. So there could be no more investment. This was only logical for a company of 150 people with booming customers and rapidly increasing sales. And of course I mean that sarcastically. Then the final discussion took place at the office of law firm Loyens Loeff in Amsterdam, where Mic was a lawyer. We made a deal that Nesbic would invest 2 million and that we would therefore drastically reorganize the company, which we had already started. Everything was in place. That was on a Friday. On Monday, we didn't hear from Nesbic. I called Mic and told him to call Nesbic. When Mic called me back, the bomb dropped: the investment was off. Rejected by Nesbic's shareholders.?"Mic, we had a rock-solid deal, didn't we?! "True Eric, but what do you want to do without money?" He was right. The company went bankrupt. Then their publicity machine started spinning and I was the bitten dog.?

Responsibility

At its core, my story is an exact copy of Adam Neumann's story, but on a much smaller scale. That's why I don't believe the stories told about Adam Neumann. Then no doubt you will think: that is your projection Eric. And I understand that too. But it's not. Just use your common sense for a moment. Again, is it possible that a tequila-sipping, pot-smoking charlatan can, in a few years, build a company with branches all over the world worth many trillions? If you believe that is possible, that is up to you. But my common sense tells me that such a thing is literally impossible. Adam Neumann is a pure Stradivarius entrepreneur who got caught up in the pure opportunistic Henry Ford behavior of WeWork's financiers. Can he blame himself for that? Yes, he may blame himself for that. Just as I blame myself for being naive at the time and not recognizing that this is how banks and venture capitalists work. Ultimately, you are always responsible as a human being for your own circumstances. Many will see that as a radical position, but that is literally my existential position in life. But to then be portrayed by those same financiers and the media as a tequila-sipping, pot-smoking charlatan is outrageous because it simply isn't true. Adam Neumann was and is a brilliant, highly innovative, Stradivarius entrepreneur who was ahead of his time and deserves our utmost respect. Or do you think you can do the same? Well prove it then, I would say.

Therefore, my advice to young, visionary entrepreneurs is: either find financiers who are entrepreneurs themselves or don't work with banks and venture capitalists or do work with banks and venture capitalists, but then immediately adopt the Henry Ford mindset and the Henry Ford way of thinking and working. Then adapt to the existing Henry Ford mores of the existing institutions in this capitalist world. There is no in-between for now.?

Good luck!

Eric HJ Bartels, Langbroek, April 23, 2022