Let me introduce you to a guy named Carl Pierre. Carl was twenty five years old when he became an employee at the we Work office in d C. He was just a few years out of college. He was excited about joining this fast growing startup, and he was surprised by how much of his job involved working with beer, tapping a beer keg, getting licenses to serve beer. And one morning he got a call there had been a
beer disaster. This one dude, who turns out was like a guest of a member or something, was so like gung ho trying to get beer out. He broke the tap, beer started pouring out, and he's walked away. So I get a call the next day, the very next day, from the shoe store underneath our Chinatown location saying, dude, everything all of our inventories covered in gross, sticky beer, Like what the hell is going on? And I looked through the security recordings and I'm like I wanted to
scream and like break everything. I was like this guy, this dude just uh. It was like, you know, a keg holds what nine nine beers, So imagine nine nine beers pouring down and pooling and yeah, of course it leaked through. To take out my iPhone and take photos from the insurance company. Oh, it was this whole thing. Beer was a central part of we worked brand, and here it was leaking through the floor and it was just like pools of beer. The entire place smells like
a brewery. So not only did our space smell like awfulness, like it smelled like a yeast factory because it just kind of like percolated over the night too. When we wants all the beer poured out, they just stayed that way and then you know, the guy's floor to you just smelled like the entire block it smell like beer because when you open the doors, like a full keg, is so much booze. There's so much liquid and imagine pouring all the onto the floor and Lennon just walking
away for hours. Hours you're listening to Foundering. I'm your host, Ellen Hewitt. In the previous episode, we visited Adam Newman's childhood Kibbutz. We wanted to understand how it inspired we work and Adam's ideas about community and today in episode two of our season on we were we're going to tell you about what it was like inside we Work during its early chaotic years of growth as the company
burst onto the business scene. We'll start around for a few years after the financial crash and the business world is getting back on its feet. There's a huge rise and remote work, a huge rise and distributed work. That's Teddy Kramer and early we Work employee. There are companies that don't even have office space that empower their employees to work from wherever they are. But we're still human. We're still you know, creatures that want to be around
other people, and people need places. Facebook had just gone public, linked in too, and there was this buzz in the air, especially around startups two thousand twelve, two thirteen, when it was very early, when it was exciting, when that kind of startup dream was at its peak. I remember Instagram had just been bought by Facebook for a billion dollars, So that idea that anyone could just sit there, a couple of people, build an app and get rich. Ron John Roy was an early customer at we Work. He
just quit his job to become an entrepreneur. And in fact it was Teddy who sold Ron john his we Work membership. This is great because I get to go back to all my cheesy sales lines that I used to give their perspective members. My favorite line I used to use was that it's a fortune experience when you're not yet a fortune five company. Teddy's customers were mostly small businesses, freelancers, and entrepreneurs. For them, getting office space
was a challenge. Most polices required a commitment of several years. We Work offered something different. You could easily rent a desk or small office month by month. I think in those early days it worked. I loved the idea of the facility. I need a conference from great, I can walk in and book it. I you know, need a desk that's inexpensive and uh is non committal in the traditional you know, commercial real estate sense. Um. And also
I want to be around like minded people. I want to be around people who are going through the same struggles and going through the same challenges, but also who want to celebrate my success. Ron John, who was working out of a we Work office in New York, was happy to be alongside other startup founders, but more importantly, he felt we Worked with selling him something else. It was selling him a sense of legitimacy. They delivered a
great product. The actual space itself. It validated you, especially when you're kind of an early stage start up flailing around. The space was nice enough that you know, you have a meeting, people come in, they think you are doing something correct. My parents, who as Indian parents, were very nervous about me doing something startup in my thirties. They came and they saw and this is when we were at the We Work at Broadway, which was on the twenty floor, this kind of like gleaming view of the
financial district. And again they thought we must be doing something right, and at the time we weren't. Ron John's desk at as We Work office was next to something particularly important, the fruit water. It's a big jog of drinking water that has fruit cut up into it, kind of fancy. So one thing I definitely remember from the time was the fruit water. Somehow this kind of became a central sales point for the we Work employees and
even Adam Newman. Anytime their investors in there, or even if he was bringing around people to show off the space, you could bring them straight to the fruit water, talk about it loudly and proclaim, you know, we're in the midst of the future of work. And offer the fruit water. Okay, so let's back up for a minute. Yes, we are actually talking about water that has chopped up fruit floating
in it. Throughout the course of this story, there's gonna be a lot of silly things that are actually important. Fruit water is one of those things. It sounds small, but it became a symbol of the we Work brand in all their offices around the world, and people got really into it. The other day, I was looking it up on Twitter and I found a picture where the fruit water had cantaloupe in it, cut into the shape
of dolphins. Cantaloup dolphins. Yeah. Actually, one time, I can say I looked up and I was sitting on some kind of ball, looked to my left and Elliot Spitzer was standing right there, kind of looking over looking across the entire entire floor with a smile on his face. Elliot Spitzer, for those of you who don't know, is the former somewhat disgraced governor of New York and he was getting Adam's pitch to investors. Look at this excitement and energy. Adam was using We Works paying customers to
attract more money. It was almost like we were animals. In a zoo or rats in a lab, like people would just kind of stand on the periphery and watch everyone sitting there. So if you are an older investor who has no idea what's happening, and suddenly you just see young kids and shorts with laptops and uh, and your your entire construction of work in your mind forever has been suits and offices and cubicles, it would definitely
feel like maybe the secret is here. And it did feel like there was something more here than just the desks that was intentional on We Works part. From Robjohn's point of view, we Work was doing the same thing as a lot of other rapidly growing companies in the tents. They weren't just selling a product. They were selling something
much bigger than that. The desks were good, I mean, the product was a very good one, but it had to be about so much more and it couldn't just be stopped at We're going to sell you a good desk in a fun environment like it had to be about transforming humanity. You're selling the weed generation and transformational future of work and life and the way we interact. Uber called itself ride sharing, even though it's just kind of a modernized taxi fleet, but they had that community
word embedded into it. And yeah, Adam was constantly evoking community when talking about work. It's that community. Being surrounded by a group of like minded individuals, being part of something bigger than yourself inspires people to work harder, spend more time at work, and just have fun doing it. We Work wasn't the only coworking space I was active at the time, so it had rivals paying attention to how it ran its business. One of those rivals was Industrious.
It's CEO, Jamie Hodari, noticed a few things about We Work. Jamie was confused by we Work because Adam spent more time talking about community than he did fast internet or clean office space. Jamie had done customer research and found that the idea of we wasn't that important to people who just wanted to rent a desk. But We Work was also expanding so rapidly it had gone from zero to a billion dollar valuation in less than four years. It left Jamie wondering was we Work onto something that
he wasn't able to see. One of many ways in which I think, as a WE Work competitor, you're stuck saying like, do they not really get at it. Is it that they are out of touch with what the actual nature of rising demand is or the actual reasons are that adoption rates are rising of their product, or
is it that they're on another level. They're seeing around the next corner, you know, they're seeing everything we're seeing, and then the stuff that comes after that, or the stuff that people care about but can't actually articulate or put into words. So Jamie was questioning whether people really wanted to pay for community for the aspirational, scrappy culture that we work was selling. The slogans on its walls saying better together, do what you love, always exploring cheers.
Jamie didn't get why Adam never talked directly about real estate or business plans. Instead, he talked about humanity and enlightenment. I think that was maybe the first sniff for the first moment of saying, this company has a kind of oblique, indirect way of approaching things that it wasn't a company given to straight talk basically um and that ended up becoming a predictor of a lot of things to come.
Adam wanted to do loftier things. He wanted to transform humanity, and in his mind, the first step to that was transforming work. He wanted to do it by making work fun. It sounds simple, but it was a pretty novel idea and he put it into action At We Work. It sells fun, I mean it sells excitement. You don't even have to go out to a bar club. We will bring that all to your office space where you sit and do work. It's a pretty good deal. The bar is now at your desk. We give free beer in
all of our buildings. We gave nine glasses of beer last month, which is a number we're proud of. People are staying late at the office. The parties take place at the office itself. It's that co mingling of life and work and kind of like lack of division between your office and party. You're going out to a bar. To create that environment, community managers like Teddy had to learn how to do a lot of random manual tasks like tapping the beer keg or grabbing a bunch of
members to film a viral video meme. And for those who love to google, if you can find the We Work Labs Harlem Shake video, I highly recommend you look it up. It's actually pretty fun. Um. I'm the mermaid in the bottom right corner, so you can find me. I'm right there. But but to me, that was that was amazing. That was so much fun. Right. Oh that is Oh that's you in the mermaidaid. That's quite a look. So I'm wearing a purple shell brod and those are
real shells. Uh that I had to get custom tailored to stay up. Um. I had a custom mermaid skirt um, and I am front and center dancing as a mermaid while making sure that my shells stay up. Um. You asked how I felt. I loved it. I thought it was so much fun. We worked at something different. It was work, but it was fun, which may have come from Adam himself. He has this reputation publicly of being out of control, aggressive, a partier, a dealmaker, but he
was also just entertaining. Here's Jamie again. The impression you get when you spend a bit of time with them is not just of this kind of tall, brash force of nature, but also of someone who seems like he's having fun. You know, when you hear these landlords saying, we did a WorldWind tour of this city and we
drink tequila and whatever. You know, maybe the unspoken magnetism of it is in part that business isn't often that fun, you know, it's it's dry, and so spending the day with someone who seems like they're on this rocket ship and loving every minute of it, that's the most magnetic thing of all. This magnetism also pulled in prospective employees. When Carl, the community manager in d C, walked into a we Work office for his first interview, he had
never seen anything like it. That was blown away by the aesthetics and the the electricity of the room of where these people were working. It was just entirely, entirely different and very very young, very my generation vibe the entire place Carl joined we Work in and he felt like he had tumbled into a millennial wonderland. The mid century modern everything um. The fact that they had like cold brew on tap and all the brands I loved,
all under one roof. It was just it was overload almost um, and it really sold me on the concept. We work with a company that celebrated bringing people together, and they put that into practice with their own employees. Every week, every Monday night, we Work held in all hands meeting and it lasted for hours, and it was called thank God It's Monday. T g i AM for short. Here's Cody Quinn, an early employee. So t g i ams were they write that. So they had these company
what meetings called thank God It's Monday. Um, I literally get goose bumps thinking about it, because Mondays were rough. Thank God It's Monday was meant to be something fresh and different, a celebration about loving your work, but many employees seem to hate it and meant staying late at work after a long day, often without overtime pay. There's a lot of posturing with a lot of like egos. People just kind of like peacocking on stage like thank God It's Monday. Like they just wanted to be cool
and like flex their position. And sometimes these meetings turned into celebrations for the growing business m seed by Adam. Here's Cody again, you know, like after him talking about himself for like a half hour, like he's like, all right, we're having a party, and then all of a sudden, these trays of tequila shots come out and and like it's a big party, and like even to the extent that there they were encouraging people to get drunk enough
that they would pay for Uber's home. We Work asn't the only company partying like this in the twenty tens. If you worked at a art up any time in the last decade, maybe some of this sounds familiar to you, staying late in the office for mandatory parties, free booze, the blurring of life and work. What makes We Work special is that they took startup culture to the next level. They were actually selling this culture to their customers, and We Work found that there was a huge appetite for it.
The office party that never ends. We'll be right back. So before the break, we talked about we Works. Thank God it's Monday meetings. These all hands meetings are a really important aspect of we Works company culture. It's how we Work rallied the troops and shared the inside take on what was going on at this rapidly growing company. Here's Miguel McKelvey warming up the crowd for Adam at one of these meetings. Um, it's just as excited as I am. And I'm happy to introduce Adam our CEO,
and I'm gonna play for you. Recordings of several of these meetings from twenty fifteen and right in the middle of we Works rise. These tapes were never meant to be heard outside of the company ever, and they captured this very intriguing and revealing aspect of we Work, this internal raw ra. You'll be hearing snippets throughout the season. Hey hey, hey, I know you just to set the scene. In these meetings, Adam is usually speaking in front of
a podium. We Work employees are crowded around him, sitting on the floor because it's so packed. In one of the videos, he's wearing a black t shirt that says creator on it. He's standing in front of a gone with we Work engraved on it. There's a lot of room. Let's sit a little bit in the back. That's great. You can sat next to the gone. There's more seats over there. This is a different atom from the yearning
kids struggling to fit in at the Kibbutz. He's different also from the guy trying and failing to innovate high heels and baby clothing. He had just been featured in Forbes in a splashy spread titled inside the Phenomenal Rise of We Work, and now he's on stage surrounded by his employees and telecasting two hundreds more. I can't get over how he keeps introducing himself. I'm Adam, nice to meet you. As if they don't know who he is,
they work for him. Okay, can everybody hear me? Part of what made working at We Worked so intense during these years was the company's rapid expansion. Look at some numbers. Now, these numbers are are actual numbers, so it is what it is. Adam used these growth numbers to get his employees excited about what they were accomplishing. Think you look one building, four buildings, that means you added three still had it on we were sleeping. I'm not sure what
we were doing. We had it only two buildings, were going backwards. And then twenty fourteen, which is when in which a lot of you came, We went from nine buildings to twenty three. Were now at thirty four buildings, which means we've already added four new markets with Berkeley, Amsterdam, Chicago, and Austin, Texas. The numbers were doubling or tripling year by year. Adam told them that what they were doing was completely unprecedented. Our physical growth in yrse teen, assuming
we're just similar to what we're planning or more. It is going to be the fastest physical growth in the history of the world, at least as far as I can tell, at least for the past. I'm not sure about Roman times, and some of those times there might have been some very high growth companies there. Okay, so here's my read on what he's saying. I think Adam
is only half kidding here. He's obviously joking about there being startups during Roman times, but he's not joking when he says that we Work is growing like no one else. They were opening up buildings all over the world, even though they've only been around for a few years. So this video was taped in mid right before I started covering we Work. At the time, they were seen as this hot, rising startup. The company was valued at ten
billion dollars. Most of the media coverage marveled at how fast they were growing, how much money they'd raised, and they asked a few questions about whether it was really all it was hyped up to be, but there wasn't
much criticism out there. When I started watching these videos of all hands meetings, it was the first time that I got to hear what Adam was like inside the office, what he told his employees, and not what he told reporters or the public, And it was really different from the shiny, polished narrative that we were put out there. In the tape, you hear Adam say things that are pretty revealing. Here he is addressing new hires gathered at the meeting. You guys are about to find out. We're
really nice to give him the first thirty days. The second thirty days were made by day six. You on, you'll know our truth. You'll know our truth. What strikes me here is how Adam is saying something weirdly ominous to his employees. It's kind of joking, but it's also clearly not a joke. I feel like I should take a moment here and tell you how I got these tapes.
They were given to me by an employee. She was upset about how we Work was operating, and after she shared the recordings, we Work turned around and sued her. It's an interesting story. You'll hear it all in full later in the series. One of the most fun things is when you see a new employee and you know two things. One they have no clue what they got themselves into. That's a fact. Whatever they think they know, whatever their friends told them, whatever you told them, they
don't know. And don't matter how much you're gonna tell them. They won't know. They won't know until they did the first all night, or they won't know until they did the first summit. They won't know until they did the first summer camp. But until you get to experience all of that, you don't know. I started talking to a lot of current and former we Work employees. I wanted to understand the company better, and many of them told me about that withline that Adam was just describing, Their
first few months on the job were a shock. Things were much more frantic than it seemed from the outside. This incredible growth, growth that Adam compared to Roman times, meant that internally it was chaos. Here's Teddy again. We opened up a building in New York down in Soho. Um. We didn't have a functioning bathroom on the first day.
Um so I had to go down the block to a local coffee shop and buy out all of their pastries and told them that if someone came in with a wee Work keycard that they would be able to use the bathroom. There's the saying you you know you've got three options fast, cheap, and right, but you only get to pick two. What are you gonna pick? You know, when we work, it was always fast and cheap. I know it sounds crazy to open an office with no bathroom,
but there were so many more stories like this. When we opened up our first building in DC, we didn't have coffee machines. So on Super Bowl Sunday we were opening up the day after Super Bowl Sunday, I had to go to Costco and bought four Mr Coffee, you know, personal coffee machines, and we were on and four at a time, blowing the breaker all morning, having to reset the electricity for it towards it um, but that's what
you had to do. Then there was a time when we work was about to open a building in Berkeley. There was one wrinkle. They had installed a front door that wasn't accessible to people with disabilities. So, uh, we evaluated and looked at it, and we determined that it was better to have no door than to have a
non compliant door. So for about three days after we opened up that location in Berkeley in January of two thousand and fifteen we had a literally no door on the building with cold East Bay air blowing through, and I had to hire seven security until we could get the door fixed. These screw ups made we were customers unhappy, but Teddy said that the way to fix it was to offer them free brunch, a nice happy hour, or a discount on rent. Another community manager, Carl, had to
deal with this too. You heard from him earlier. Building launches were the most stressful because paint was still drying when people moved in, and it was that under shut. In Miami Beach, one of the offices failed inspection on the morning it was supposed to open, leaving members ready to move in stranded. And you have people who paid money showing up with boxes of things to move into their new office that were told they cannot go into
that building. So we work, over the course of forty eight hours, had to build a makeshift office across the street at this empty like commercial building. Paint it, make it look cool, give it a we worked vibe, get internet set up, get all these things set up, and they pulled it off. It blows my mind like they totally pulled it off. In d C where Carl worked, we Worke didn't have a liquor license for the free beer it was giving out. Carl tried to fix it. I had no idea what license to apply for. Am
I a tavern? The hell's a tavern. Keep in mind, Carl is twenty six trying to figure out permits to satisfy some arcane municipal law and he doesn't quite nail it. Carl is convinced that someone tipped off the cops. So I remember we actually had a rate happened at all of our offices where it was almost like swat style where all these cops are pouring in, like where's the alcohol? Where is the alcohol? And like that keg over there.
It's like in this beautiful marble center thing that's right over there, and they were like where's the other And it was you know, I had my community managers calling me freaking out, like dude, cops are here to Carl, like what's going on. Carl was a city level manager for we Works Community Team, a department name that sounds kind of vague, but that's also pretty common at big startups. Community workers are on the front lines. They manage WE
Worked buildings. They're the ones who dealt with disasters. They were the first people you saw when you walked into a We were some sat at the front desk. They gave tours and sold new memberships, tapped the kegs, fixed the printer, handled anything that came up. Really. They also hosted events in the buildings that often meant really long hours. They were usually the first ones into the building and the last ones out, so then you'd have to host a party or host an event, host the lecture, host
something in the space. So you know, before you know it, you got up at seven am, got to worked by eight, and then you're leaving work at ten just to start it all her again. And you would do that. We would do that for weeks, weeks, months, um. More often than not. We were just dealing with problems and members coming up to us and complaining. Carl said the job was tough, especially for his younger employees who got blamed for the work frustrations of their customers, like it is
somehow your problem, you did something wrong. The temperature in this office is why they'd enclose that deal. You know, it's it's hard to tell a twenty three or four year old that this guy who's spitting in your face, so angry about a bad print job, and it is not your problem and not your fault. We said. The community employees were young, but so were a lot of the customers, or at least they acted like it. Carl
really learned a lot about humanity on this job. Yeah, oh man, you know the crazy parts that have these office birthdays and just leave the cake out for like days, just like cake, an open air cake. So yeah, mice everywhere. It was like it was the thing. It was like, I've gotten to the point where I can tell you the perfect bait to use to get mice. I can tell you the right traps to use. I can tell you the right corners to use, what time of night
they usually like, move around. Um, it's crazy. Keep in mind a lot of these employees are recent college grounds, some of whom are in their first jobs, and they've been hired by this very exciting startup and they're learning how to trap mice. The first go around, we use glue traps. Horrific. Don't ever use those. They're all these screaming mice. So we're trying to get off the trap.
You couldn't take them off that ripping their skin off in every every woman in the building, They're all like screw, Like I had to do something because that's to put them out their miseries. I basically it was either I killed them myself right threw them in the trash can. But it was like sticky pads of mice screaming, which is horrifying. Members also brought in their dogs. Part of the beauty of we work was you can bring your
dog to work, so adorable and so amazing. But one of our buildings, that Wonderbread, Uh, they let too many of the dogs off leash and they became like their own pack of roving roving like wool. They just ran around and it was like one dog was like the alpha and all the dogs just like follow. It was
just so crazy, and we got so many complaints. Everyone's like, what the hell is going on the hallways because you all you heard was like one dog would start sprinting in like a whole pack of dogs that would follow. Sometimes their job included dealing with party leftovers. We had so many parties where you know, I think in the entire time, three times I found like a condom rapper or econom in a gross place, like one in the
phone booth, you know, one in the meditation room. So that's the reason the meditation was at a door, just gotta I can't trust people behind closed doors. So yeah, disgusting people are awful, awful, awful. So what did Carl do the first time he saw a used condom? The first time? I gagged? Well, and then I took a photo and I sected it to my team and like with the words WTF. And then it turns his whole chat like, oh my god, what did you find out?
And then it's just a guessing game and then of who it was, and then me going through recordings from I figure out who was to have a super awkward chat with a member. Sadly, Carl couldn't figure out the condom culprit and he didn't want to leave his staff to deal with it, so he did what he thought a leader should do. So I put on a glove, looked away, picked it up, through it in trash. Disgusting, gross gross gross gross. And it wasn't just condoms. There
was one other unfortunate party favor Oh yeah, parties. Yeah, people vomited and with the weirdest places. Um, some guys just can't women got women and women can't hold their booze and the you know, the good thing at a phone booth and they turned dark when you close the door, so you open it, you vomit, You close it, and nobody will find it until they open it again. So so yes, if your CEO is bragging about serving ninety beers a month, you might witness some of the side
effects of heavy drinking. But that's what's funny about Carl. Even though he had to deal with the disgusting aftermath, he still thinks that beer is part of what made we work special and attractive. I mean, obviously a lot of these things wouldn't have happened about the parties, but the parties kind of kept the momentum of the space going. I see a lot of new coworking spaces now they're like, this is coworking space for adults and blah blah blah,
but they're just not as fun. Say what you will about with a drinking culture, which definitely got out of hand many times. Um, it was the only place doing it, and it was wild and it was fun and it kept people talking. So Carl defended a lot of aspects of the job, even though it sometimes made him miserable. Everybody at we work, I don't care what position they were, had a moment where they felt like crying. So many of Carl's employees cried at work that he developed a
standard line of advice for them. So rather than lose employees or have them completely freak out in front of a member, I always tell employees, hey, listen, like, if you ever have that moment, grab somebody who will cover the desk for you, and just go take as long of a walk as you need. And he had advice on where to cry too, Well, if you're building was sold out, you can find an empty office, it's pretty good. Usually supply is were okay. Where wherever you can. Just
don't do it for the members. And if you need talk to someone, talk to somebody in your team, or talk to me. That was the rule. And during this whole period, actually I remember a lot of former employees talking to me about this feeling of chaos. How we work seemed from the outside like this rocket ship destined for the moon, but on the inside it was growing so quickly that you couldn't keep up. It was basically
just smile through the tears. Actually, this was one of my first big breakthroughs in reporting on We Work again. At the time, almost all the press coverage of we Work was so positive, but I kept finding employees who were burnt out and frustrated and also feeling betrayed. They've been told so many positive things by their employer about doing what you love, only to find that working there
was a disheartening experience. As I talked to them, I kept learning more and more about how they felt wronged and mistreated by We Work. It was one of the first hints to me that there was something off. I kept thinking that it can't be this successful of a company if its employees are so unhappy. Right, that's next time on Foundering. Foundering is hosted by me Ellen Hewitt. Sean When is our executive producer. My Aquava is our
associate producer. Raimondo mixed the show today. Magnus Hendrickson helped us with recordings. Mark Million and Vandermay and Alistair Barr are our story editors. Francesco Levi is the head of Bloomberg Podcasts. Be sure to subscribe and if you like our show, leave a review. Most importantly, tell your friends see you next time.