Leadership — Investing — Then Do Better

Leadership at WeWork

-A reflection on WeWork

-On what it means to lead

-The problems of charismatic leaders

-The value of the S-1

[Update, ofc, the CEO has resigned now]

Much is being written on WeWork and the debate around its valuation as it has tried to list on Public markets. Scrutiny of the business, governance and the like. A friend mentioned in passing the other day how the regulation behind the S-1 filing document was one of the most-value adding pieces of financial regulation law of history. This episode seems to back this up, as the transparency that the S-1 filing has brought has cast a scrutiny that may have been lacking before.

The law is the 1933 Securities Act - “An act to provide full and fair disclosure of the character of securities sold in interstate and foreign commerce and through the mails, and to prevent frauds in the sale thereof, and for other purposes.”

There’s plenty of analysis of the business model and valuation. I’m interested in an assessment of the CEO as a person from what we can tell.

There has been analysis about its CEO and his “self-dealing” taking his trademark on “We” and selling it back to the company. Plus the side ventures WeWork has invested in, which closely align with the CEO’s personal interests, but seem further away from WeWork’s core business.

Namely a private school, a surfing/wave pool business, a natural food and an energy drink business. Plus WeWork has bought a private jet at $60m.

As a fundamental investor looking at company fundamentals and management - what it means to be a leader is an important question for me - although I know not for everyone.

When I’ve asked people, especially employees, what they look for - they tell me they look to their leaders to reach out beyond themselves and beyond their own self-interest to a “wider purpose” to some purpose higher than themselves.

I sense this “purpose” led work - attractive to the younger generations - is becoming ever more important.

It’s one of the problems in the sense of “fairness” for executive pay.

When we see a CEO whose actions seem to have such self-interest to go along with the typical self-belief - typically needed - I don’t think people especially employees are inspired by that.

To me, that goes to the heart of the challenge with WeWork (and previously with the former Uber CEO) - it’s a challenge of leadership.

I know a multi-millionaire biotech CEOs who still travel economy as this means there is more money left to pursue the mission - save people’s lives.

So When Wework says this of its mission:

“When we started WeWork in 2010, we wanted to build more than beautiful, shared office spaces. We wanted to build a community. A place you join as an individual, 'me', but where you become part of a greater 'we'. A place where we’re redefining success measured by personal fulfillment, not just the bottom line. Community is our catalyst.”

And

“Create a world where people work to make a life, not just a living.”

I’m unsurprised that some have found jarring the CEO’s interconnection with what many view as his personal interests.

I am surprised neither the board nor a good friend/adviser has taken him aside and offered him other advice (or in the case of the investments sanctioned them).

This twitter story by an early WeWork employee (number 17) is also telling about how she wasn’t given options/stock. https://twitter.com/tristajaye/status/1162471350851817472?lang=en

Update: WeWork CEO has now gone. He’s still a billionaire though.

Self awareness is helpful. Self awareness without charge is unhelpful. Socrates wrote "Know Thyself" (noted from a temple)* and 2000+ years later a leadership-management-self-help industry has spawned.

Allison Vaillancourt writes in the Chronicle of Higher Education: "It is rare to have a conversation lately about workplace dynamics in academia that does not include discussions about the notion of emotional intelligence and the critical need for self-awareness among those who want to effectively lead or interact with others. Understanding our strengths, weaknesses, and blind spots is increasingly considered essential to good management."

She cites 3 lines of evidence:

(1) Insight, a new book by Tasha Eurich, an organizational psychologist. According to Eurich, 85 percent of us have a faulty understanding of how we appear to others or how we affect them.

(2) The Daniel Goleman work on Emotional Intelligence - you can see a short discussion here on his site.

(3) Erich C. Dierdorff and Robert S. Rubin ( DePaul University) , wrote about self-awareness in an essay for the Harvard Business Review. High levels of self-awareness, they argued, increase team performance, decision making, and conflict management. They noted, however, that most of us are remarkably clueless about how others perceive us

But, she writes

"I am noticing a surprising trend: I see more and more leaders who seem to be embracing negative feedback and almost bragging about their perceived deficits, while continuing to engage in the very behaviors that colleagues have asked them to stop or tone down."

She notes:

"I know people think I have too much to say" shared one person who tends to go on and on — while, of course, going on and on and on.
Another leader recently stated, "Apparently, people consider me dismissive; that’s their opinion," as she proceeded to reject the perspectives of everyone around the table who disagreed with her.
One leader who is known for overcommitting and underdelivering commented, "I know I tend to overcommit, but that’s just who I am. I think most people understand that when I say ‘yes,’ my intentions are good."

It is good to be self-aware. But demonstrating self-awareness, while at the same time showing a lack of discipline to fix issues of concern, is worse than being clueless about our shortcomings.

The most effective people I know sometimes whimper for a bit after receiving constructive criticism, but they quickly put a plan in place to modify the annoying or offending behaviors. By doing so, they demonstrate respect and appreciation for those brave enough to share difficult truths that are offered with the very best intentions. "

We need our colleagues to help us be better, but they can’t help if we’re not listening.

*The Ancient Greek aphorism "know thyself is one of the Delphic maxims and was inscribed in the pronaos (forecourt) of the Temple of Apollo at Delphi.

If you'd like to feel inspired by commencement addresses and life lessons try: Ursula K Le Guin on literature as an operating manual for life; Neil Gaiman on making wonderful, fabulous, brilliant mistakes; or Nassim Taleb's commencement address; or JK Rowling on the benefits of failure. Or Charlie Munger on always inverting.

Cross fertilise. On investing try a thought on stock valuations. Or Ray Dalio on populism and risk. You can also click on the Carbon tag below.

A lesson from autism here. And a post on the seductive story of Bitcoin