Tesla vs WeWork. A Decade of Leadership Difference
It takes 10 years to make an overnight success or in this case, failure.
In May 2019, Tesla and WeWork were both valued in the vicinity of $50 billion and now, Tesla is worth $800 billion with a 1500% stock surge and WeWork is valued at $2.9 billion possibly not because of its assets, but its brand power.
What happened? Tesla disrupted the automotive industry from its roots and WeWork disrupted the office space industry.
How could Tesla end up being 250 times more valuable than the office space giant in only 18 months?
My Own Experience
I still can’t forget the first time I saw Tesla on the news. It was love at first sight and the rest is history. I had no clue about their almost 10-year suffering, the almost fatal crisis in 2008, or how the NASA contract for SpaceX contract saved the company.
Then, I read the biography of Elon Musk twice, consumed 10 minutes of content a day just out of pure curiosity as a Tesla dose for 8 years, and rented different types of Teslas wherever I travel. My peak moment was when I rented a Model S and slept in the car at the top of Haleakala volcano in Maui, Hawaii. It was fun to sleep in a Tesla for 3 nights.
And when it comes to WeWork, my experience as a customer and business enthusiast was equally deep. I moved to New York in 2014 and within the first month, I clicked on WeWork’s Facebook ad and I was a WeWork labs member the next day paying only $500 a month working from their Soho building. Then, I continued to be a member for 5 years.
These rather close experiences as a customer with an engineering and business background made me observe and then, analyze what really happened in a decade.
The First Decade
Tesla’s mission was clear from its inception; to accelerate the world’s transition to sustainable energy. The first ten years until the launch of Model S could be seen as the decade of creating the best product and the second decade can be viewed as the decade of transition to mass production which proved 100 times harder according to Elon Musk.
Elon Musk is the engineer-in-chief and he works like a superhuman. If anyone was unable to perform the job well, he used to do it himself showing that it was possible. He was in the front lines working more than anyone putting forward the most challenging deadlines for each objective.
As an outlier with a field of distortion just as Steve Jobs had, Elon Musk was able to make people believe. Nelson Mandela once said: “It is impossible until it’s done” and interestingly, they are both South African.
Elon Musk has a dream to change the world and because he is a great engineer and manager, he was able to constantly build Tesla towards his goal to accelerate the energy revolution teaming up with the best people in the world to achieve that goal.
WeWork could have experienced the same faith since they had a great service that people loved. The shared office space wasn’t a new idea, but if Regus was Yahoo, WeWork was Google of office spaces. It was easy to move, convenient, beautifully decorated with amenities and networking events.
WeWork was founded in Soho, New York City by Adam Neumann and Miguel McKelvey in 2010. Adam Neumann became the CEO and they rapidly grew firstly in the US and then, around the world.
As an entrepreneur living in New York, I became a member as soon as I moved to New York back in 2014 one day after I clicked on their Facebook ad. Then, I was a member in New York City for 5 years and I loved the experience. It was the best value service.
There was one thing missing: innovation through social intelligence of the WeWork members. At its peak, WeWork had 610,000 members whose profiles are extremely educated and open-minded, energetic people, young people in general. Yet, WeWork never asked the opinions of its members for the next innovation.
I once had to work with UPS for a logistics solution for my fashion company at the time and as the UPS representative came, it appeared to me that it could be great if UPS and other companies could offer advantages for the members. Then, I introduced the UPS rep to one of the managers and then, I was out. Two months later, they announced partnerships with the companies for the members. I shared my ideas a few other times because so many things could be improved, but then, I felt that they aren’t appreciative.
As a member working in their Chelsea office, I was only 2 floors underneath the CEO. I was in the epicenter of where things were happening and as an entrepreneur myself, I was questioning why they weren’t using the available and most valuable asset they have: human capital.
I took action and prepared a draft of what they could do to revise their business strategy and sent them via email. After a few days, I received the email thanking my very thoughtful work for the improvement of WeWork as a business.
It was basically painful to watch. In 2019, WeWork was already a huge company with 828 buildings in 120 cities around the world and over 600,000 members, and yet, it was managed solely by Adam Neumann and according to him, WeWork was not a real estate company, it was a technology company. The truth was right in front of everyone, but the business was based on one man’s illusion.
WeWork could have used its human capital as its biggest power and revolutionize how people work just like how Google transformed its business from search to so many other internet technology businesses.
All its members could have become partners and they could have added immense value to the culture and business. Instead, WeWork just kept growing globally sponsored by Masayoshi Son of SoftBank without proving its business model locally while Adam Neumann was buying an artificial wave company and spending $700 million for Lord & Taylor flagship building.
Founders Creating the Culture
In Elon Musk’s world, if you don’t innovate, you can leave. He openly says that he doesn’t care about anyone’s school, but what the person has done and how he has overcome extraordinary challenges at work. He led the culture to create the brightest problem-solving company.
Elon Musk is not just an exceptional engineer and designer, but it’s well known that he learned rocket science by reading the books when he couldn’t buy rockets from the Russian space agency. He takes the exceptional initiative to get things done and he can get lost among books until he learns the subject.
It’s not a secret that he used to work over 100 hours a week and sleep on the floor in his office to make sure he is there if a problem arises. This incredible work ethic and taking full responsibility as the commander-in-chief of Tesla is clearly an example to look up to.
In the humility department, until recently, Elon Musk was considering Tesla as a small company and he literally tweeted that the stock value of Tesla was too high. He has always been honest about his humble beginnings such as he and his brother living in the office, taking shower in YMCA, and taking shifts coding because there was only one computer when they were building Zip2.
Adam Neumann is a completely different character. Embracing the “new” office space idea, he led the company to incredible heights simply by the financial sponsorship of SoftBank and he kept growing the company without any financial calculation finally renaming the company as WeCompany.
As a member, I visited their first WeLive building, which was supposed to become the first co-living space and I realized that they had no connection with reality. A studio was $3,000. Even for New York standards, that was ultra-expensive.
Yes, it was a company with incredible service and there was no clear alternative other than local copy-cats, but a business needs to innovate to generate revenue if the current business loses $2 billion a year and that never happened.
Adam Neumann also clearly had a reality distortion field (in a very different way) and thanks to his supposedly incredible presentation skills, WeWork had $20.6 billion in its lifetime, mostly through SoftBank.
There are two main things I never understand in business transactions: why Mark Zuckerberg paid $19 billion for Whatsapp, a company that has no business model or revenue, in theory, and why Masayoshi Son, SoftBank founder, invested $18.5 billion for WeWork that loses billions a year.
WeWork could have used its huge number of brilliant and educated 6,000 employees and over 600,000 members to diversify its business.
As the September 2019 IPO never happened, Adam Neumann was out in less than a month and he was promised to be paid $1.7 billion without sharing any with his employees when many were laid off.
As I read the news, I remembered another news I read about him which mentioned him opening a $200 tequila bottle in a private jet celebrating non-stop.
The leader can make the whole difference.
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