If I could count on WeWork

An American dream

WeCrashed tells the story of Adam Neumann's start-up WeWork, founded in 2010 as a real estate services company based on the subleasing of office space. At the time, this was a novelty in this market: welcoming spaces were aimed at a new generation of employees who didn't want to experience the functional, soulless office of their parents - the swings, cafeteria, table soccer, animal sculptures, everything had to evoke an atmosphere of relaxation, of celebrating with friends. Thank God it's Monday', one of the company's slogans, replaced the resignation of the beginning of the week, which the French employees summed up with this expression, which is intended to be ironic - and indeed it is - but which also carries an immense element of sadness and resignation: 'comme un lundi' ('like a Monday'). This response to the traditional post-weekend 'how are you?' is the idea that we all agree that work, the 5-day week, the office and everything associated with it makes us sweat, that we go there because we have no choice, and that we're therefore bound to feel pretty lousy on a Monday.

WeWork saw itself as much more than an office company: a 'way of life', a 'spirit', an 'intention'. Why WeWork? "To elevate the world's consciousness'. Adam Neumann could pass for a madman, and the WeCrashed series shows him as such, embroiled in his madness, caught up in a headlong rush that leads him to think of himself as an emperor, a king, Christ. Convinced that he had a revolutionary idea, his persuasiveness drew the whole world around him: employees and financiers in the foreground. WeWork was valued at $45 million when the company barely existed, owned no building and had signed no lease - $45 million for an idea, a promise for the future.

That's nothing, of course, compared with a valuation of nearly $50 billion in 2019, with an IPO on the horizon to raise even more money. At this point, the balloon deflates: the billions advanced by the bankers have only served to commit to pharaonic new investments, without the company being profitable, and to justify the need to inject even more cash to avoid going bankrupt straight away. The WeCrashed series could be seen as an apology for the capitalism of the good father, with the figure of the new CEO, Cameron Lautner, ringing the bell after years of recklessness, and promising to restructure the company according to a fundamental principle: "bring value to shareholders". Adam Neumann didn't keep this promise: it was the one that kept his employees shareholders in the company, accepting very low remuneration in the hope of becoming millionaires the day their start-up went public.

The WeCrashed series thus reveals a tension: WeWork is a pure product of the American market economy and the theory of "fair value": a company is worth what it is said to be worth. This quasi-messianic ontology of value is interesting in that it is then presented from the angle of perfect rationality, with neo-classical economists appearing as scientists whose discourse is based on a set of mathematical formulas that are unintelligible to the general public, yet de facto authoritative. On the other hand, Adam Neumann's character is annoying because he also shows that it's all just convention, and that he's not just rewriting the codes of office life, but also those of Wall Street: for example, he and his wife have decided to modify the S1 prospectus, which is considered 'lifeless' (the figures are replaced by speeches of intent and photos recounting the company's history), and he wants to do away with the EBITDA indicator (earnings before interest, taxes, depreciation and amortization, i.e. the operating profit of a business), whose only interest for investors is to be able to compare the profitability of very different companies from a purely financial angle.

Redefining codes

Beyond the easy criticism of a guy who thought he was something he wasn't, WeCrashed tells the story of this very interesting ambition to redefine the codes of an economic system. Adam has this creative power, and it is in this that we can see him as a Messiah: he understands that the beginning is the Word, not the number, and that the Word can decide on the number through the power of representation and organization of the world that language makes possible.

Adam Neumann's character would certainly have appreciated the C.A.R.E. accounting model for this same desire to restructure the way economic reality is presented to us. C.A.R.E is in line with traditional accounting where activities are taken into account in relation to the debts they have generated and the actual income they have brought in. This vision of historical costs, a traditional approach to accounting since the Renaissance, differs from fair value accounting in that it rejects the ability to project: "what is, is; what has been, is; but what may be, is not". Whereas traditional historical cost accounting looks to the past, fair value accounting looks to the future, running towards its future, and anticipating scenarios that may never materialize.

Adam Neumann might have been less pleased to learn that, if his project had been put through the C.A.R.E. mill, it would probably not have raised millions, then billions of dollars. C.A.R.E extends the historical cost accounting model, which defines financial capital (often contributed by company founders or early investors) as an entity to be preserved, to other types of natural and human capital.

Employees are no longer treated in accounting as expenses or productive assets, but as capital in the traditional sense: entities essential to the company's operations, whose existence is independent of the organization (in the same way that the money used for financial capital pre-existed the creation of the business), and which must be preserved. This preservation of human capital is reflected in the definition of a living wage: paying this wage to an employee means repaying a debt to the human capital he or she represents. It's only after this first level that we can really talk about remuneration. Adam Neumann justified the very low salaries he paid his employees by giving them shares in the company in return, and many start-ups still operate on this basis: not only does this enable them to spend less for years on their employees' jobs, it also motivates them: it's in their interest to give their all for their work, since this, they are told, is what will enable them to sell at a good price, and then recoup the fruits of their sacrifices. While this promise has sometimes been fulfilled, most employees who have accepted this type of arrangement have found out the hard way that it was a fool's bargain. Here, the C.A.R.E model highlights the unsustainable nature of these practices, illustrating the debt a company owes to its human capital.

And finally, to answer the question posed at the beginning of the article: watermelon water has everything to do with C.A.R.E accounting and could be included in the company's financial statements: either as a preservation expense, if we consider that it avoids 'degrading human capital' in a preventive way, for example if the employee quenches his thirst before a meeting and this allows him to be less affected by it than he would have been without drinking, or as a catering expense, if we consider that the employee is drinking this scented water to compensate for a frustration, a posteriori - and what could be better than a taste of watermelon to get over the dismay of not having become a millionaire?