Adam Neumann’s return to the spotlight reignites the debate on employee equity
Scrolling through Twitter one day in 2019 I came across one of those threads that makes you stop and reflect. It concerned a passionate interest of mine: tech enterprise, and, in particular, the extraordinary story of WeWork that was then unfolding in front of our eyes.
What made me reflect was the sadness of it. How rough business can be for the human beings involved, and what can happen when staff members who once felt deeply valued by a company find out they’re no longer needed.
It’s the sad antithesis of everything I stand for as a champion of fairness, mutuality, and the empowerment of people.
The thread was posted by a former WeWork executive – an alumnus recruited in the early days of the company that transformed our idea of the traditional workplace. It described how the exciting and challenging early days of being involved in a startup that had revolutionised the workspace dynamic soon turned into a venture that would be talked about for all the wrong reasons.
The man at the centre of that story – its co-founder Adam Neumann – is now back in business with a new real estate industry startup, amid a flurry of intense publicity, but, I suppose when there’s been a major Netflix series starring Jared Leto and Anne Hathaway all about you and the back story of WeWork, the chances are you may never be able to leave your past behind you.
How to get it right
There’s so much to be said about what went wrong, why, and what happens next – and as Neumann returns to the spotlight with his new venture, Flow, there is speculation as to how much the WeWork experience will hamper the company’s ability to attract the best talent abounds.
For me the whole story highlights the wealth of benefits that come from getting an employee share and equity scheme right. The benefits of doing things differently so that nobody’s left wondering about what would have happened, or what they might have missed out on.
Because when it is done right, the benefits for everybody are too numerous to count.
Many are financial: the rewards that each person makes when the company does well; the cash flow issues an options scheme can solve. Others – like the immensely positive effect aligning everyone’s interests with the success of the enterprise can have on morale, motivation, and the long-term prospects for a company – are intangible.
The WeWork example is something of an anomaly. But it does raise some big questions about how to properly implement a share scheme, and, more broadly, your values as an entrepreneur.
Send a message of ‘togetherness’
Growing up in Yorkshire, in a close migrant family, I was inculcated very early with the values of trust, support, and mutual destiny. Throughout my working life I have kept my sense of fairness and mutuality and the importance of bringing people along with you – for everybody’s benefit.
This is the essence of the employee share deal. And the core of what we’re all about.
When we set out in business in 2014 our aim was to establish a platform to support startups and entrepreneurs.
We recognised that one of the toughest realities entrepreneurs face –- put bluntly, a lack of startup cash –- is also, paradoxically, one of their best opportunities.
Because one solution to constrained cash flow - which is often a hindrance to recruitment - is to tempt the talent with an offer: join the team, get some skin in the game, contribute to the success of the business, and then reap the financial rewards that will hopefully come down the line.
Equity helps to create a bond of mutual benefit between team members, assuming everybody has a stake, regardless of the size. It is the perfect solution to long-range team alignment, which is particularly essential in the remote and hybrid world of work.
Founders and HR directors can send a clear signal to team members: We’re in this together.
Do things the right way and you can offset all of the costs and tax liabilities, and recipients can monitor the value of their stake at any time of the day.
Add value to your workforce
When WeWork slumped in value after years of seemingly unstoppable growth and domination and Neumann was ousted, the some 1,500 current and former employees who had been given share options on the promise of riding on WeWork’s wave of success found themselves feeling shortchanged.
But, the success of a business should never hinge on one person’s efforts; it comes from many people all pulling their weight, adding their creative insights, solving problems. If you have found and recruited talented people who share your bold vision, and want to see it realised, why not incentivise them to the fullest extent and bring them all along?
That might mean your non-executive directors, or consultants. It might mean team members who have moved on but were there at the beginning, adding value in your business’s nascent days.
They are all part of the story. Why not reward them with a slice of the action, in line with what they bring to the party?
