Back in things were looking pretty rosy for We Work. The company had just doubled its valuation and raised more than four million dollars from investors, and it was using some of that cash to buy up smaller companies. When We Work bought a company, those employees became We Work employees, and they would start coming to the all hands meetings. We go to do the Monday night meeting and we walk in and the way that it's set up is that, you know, there's a stage and it's filled with people.
That's Joanna Strange. She's going to be our focus for the first half of this episode. Up until the moment she's describing, Joanna had been working for an architecture company called Case. Case made software that helped architects design buildings faster. We Worked bought Case, and she became an operations manager and she found herself with this job at a company she never applied to. Joanna remembers the first all hands meeting that she attended, you know, the ones called thank
God it's Monday. Everyone was too white eyed and too eager, and they we chanted, we work, we chanted, we work, we work, And then we hit a gong. Oh yeah, and I would yell we, and we would say work, and then he would say we, and then we would say work. And then at some point someone hit a gong. I don't know why the gong was there. I don't know why it was there. It was there was gong
hitting We worked. Customs left her feeling bewildered, and I go to sit next to the stage and I'm sitting with a couple of colleagues and Adam comes out to talk and about ten minutes in, my colleague turns to me and says, I think this is a fucking cult. And I said, possibly, you're listening to Foundering. I'm your host, Ellen Hewitt. Last week we talked about WE Worked sparkly
outward facing image. The company had fast growth, a big valuation, a quirky CEO, and a cool looking product and that all added up to an exciting public brand that was attracting investors, employees, and customers alike. But by some cracks and We Works facade were beginning to show. And that was because some employees were starting to speak out publicly
about what they saw as problems inside the company. So in this episode, we want to look at lawsuits as we got bigger it got into more and more legal conflicts with its employees. As a business reporter, I've always paid attention to lawsuits because they show you the less public side of the company. Not everything that's in a lawsuit is true. Sometimes people exaggerate claims or present only half the truth, but there's often something there. A lawsuit
can suggest. What does this company really prioritize? How does it treat its employees? There are often gaps between what companies say they value and how they really act. This episode will look at the stories of two very different employees. Both of them felt wronged by We Work. Both of them decided to speak out about it, and in return, they say they got punished by the company. We've heard in previous episodes how fun and chaotic it was to
work at We Work under normal circumstances. These stories are a little different. They come from employees who say the company showed a meaner side when things got ugly, when there were conflicts. These are early examples of employees trying to tell the public that they believed something was not right at WE Work. They wanted to interrupt the public image that We Work was presenting the world. A startup with a booming business that was transforming the workplace by
the way. We asked We Work and a representative for Adam Newman if they wanted to comment on the stuff we describe in this episode. They largely declined to comment. We Work only at one statement. We Work has zero tolerance for discrimination or harassment of any kind, and we are committed to moving the company forward and building an organization and culture that our employees can be proud of. Many employees I spoke to were frustrated by what they
saw as we Worked lack of transparency. They felt that we Work should be transparent because the company said that it valued authenticity they have on their site. We are always honest and as transparent as we can be. We are in this together. We always look out for one another, and their employees believed them. A few months into her time at We Work, Johanna found herself in a situation that she felt was a little shady. At the time, like at any company, there was some bureaucratic backlog of
tasks that needed doing. One of the tasks was approving other employees self evaluations so they could receive their annual bonuses. But the executive who was supposed to prove them. Didn't have time to do it, so he came up with an alternative plan. My I'm manager's manager had given me his log into all of his stuff. So yeah, this story begins with Joanna having an executive's password, but she says she didn't steal it. It was given to her
to do specific work related tasks. But this executive, maybe like some of us, reuss a password from time to time, It was a password for all of his stuff. Every single thing that he had was was, it was encapsulated under this one password, and he gave it to me. Not so I could do my job, but so I could do a job that he either felt too busy or too lazy to do. I don't know which one it was. So Joanna says she was told to take
care of these evaluations. So he wrote his password down on a post it note and handed it to me, which I stuck on my monitor. So the password was a log into everything. It was a log into email, it was a log into docks, it was a log into the work day, it was a log into I mean, it was a log into absolutely everything. Joanna used this password often over the next few months to get stuff done for her boss and for her coworkers. It wasn't the most above board way of doing business or the
most secure. And one day Joanna said she was checking email and she mixed up whose account she was logged into. I was in his system. Forgetting that I was in his system, I was, and I thought it was in mind. And the first thing I saw is an email that I had sent to my manager asking to be considered for a different position. And I saw the first part of his responses, which was something like that would be
a fucking disaster. But then I noticed in the response was something like, but you know, we're not gonna she's not gonna be around much longer anyway. So when Joanna was logged into this executive's email, she found out she was going to lose her job. Obviously, she was hurt, and she kept scrolling. So then frankly, I just looked, because I had his log in, i'd you know, I was in his email now, And that was when I discovered that there was a call for a seven percent
headcount reduction. That's a big freaking reduction. Joanna read in this executive's email that not only was she going to lose her job, but a lot of her coworkers were going to get cut as well, and this raised a red flag for Joanna. She was already feeling resentful about how we were spent money. She saw we work buying expensive furniture that it didn't always use and flying employees
around the world. She felt like the company was careless with cash, and now, in her eyes, her coworkers who were about to be laid off and didn't know it, we're bearing the brunt of we works freewheeling spending. You realize you've been burning money, you've been throwing money away, You've been managing it really poorly. Then she started to see the job cuts actually happen. She asked her manager if they were planning to say anything about out it,
and then people were disappearing. They did in phases, and then people were disappearing, and I said, hey, you guys are going to announce this right like that's a fairly significant headcount. You can't just not announce it. And he goes, I mean there was no plans to, And I said, well, maybe you should plan to, because you're creating a lot
of fear and a lot of anks. So people were just being fired from teams escorted out the building and nobody knew what was happening, and people were looking for coworkers. In Joanna's mind, we Work was also being careless about how they dismissed their employees. There was one incident with one of her colleagues that really infuriated her. One of the women on our team was getting let go, but she got invited to a meeting by the woman who was doing the terminations and the room had been renamed
something like termination conference room. Yeah, that was real. It was termination conference room. Termination conference room is a pretty careless thing to put on a calendar invitation, and Joanna is someone who takes that kind of slip up personally, Joanna said. When her coworkers saw the invite, she called Joanna in a panic, and then Joanna got protective. I call my supervisor and am livid and I'm like, this is this is so egregious. How careless do you have
to be to do that? And if you're that careless, then how much do you really care about your employees? Like having a place for people to do yoga once a day does not count. She felt especially infuriated that we Work had said one thing and was doing another given how the company presented itself, we should tell people the truth because we say we're a different kind of company. We talk about I mean, in our mission same we talk about authenticity, right, are we going to be authentic?
Part of that is truth telling. So the answer was no, we're not gonna be authentic, and that's one Frankly, I just went digging. So remember, she's already looked in this executive's email, but this is going further. Digging meant using that executive's access to look for more information. I have to imagine this was not what the executive had in mind when he wrote that password on the post it note.
But again, I had been given somebody's access to everything that they had, So I'd like to point out that that's not actually a criminal offense. I looked through a bunch of documents and downloaded a bunch of documents because I just I knew that there was something horribly fishy going on, and I knew that something was going wrong.
Joanna found some intriguing stuff. She found documents that said we Work was cutting way back on its profit projections by almost That meant that we Work had been way too optimistic about its future and now had to face reality. Joanna thought it was wrong that we Work wasn't telling its employees that its projections had been too rosy. They were having to constantly revise internal figures down because they weren't making as much money as they said they were,
and employees did not know that. And bear in mind, employees technically are shareholders in the organization because they're all given equity. Let me make a quick as sign here. Yes, the employees are shareholders since they were given stock when they joined we Work. Generally, if you're a shareholder in a private company, you can get some information about its finances, more than is available to the public, but it's not
a requirement that the company share it with you. All of this, the secrecy around the job cuts, the wasteful spending, the wildly optimistic profit numbers. This brought Johanna to a breaking point, and she felt she needed to make this public. And I thought, fuck this, I'm telling somebody, and I'm telling somebody because after everything I've seen, after all the ways in which I've seen people break their backs to be here, and so I thought, what's the worst that
can happen? And obviously, the worst that can happen is it can get far fucking worse than you ever magic that can happen. But anyway, I say, what's the worst that can happen? And so I screenshot it, and I talked to a reporter, and that reporter was me, So now I have to pause again. Joanna shared internal recordings and documents with me in the summer. Of those tapes of we Works internal meetings that you hear throughout the series,
those were given to me by Joanna. A couple of months after I met Joanna, I published a story about we Work slashing its profit forecast by almost eight He was one of the earliest stories to say that WE Work sometimes projected that it would make tons and tons of money, but that the reality was a lot more dismal. The story was widely read and picked up by several other outlets, and normally, because Joanna was a confidential source,
I would never be naming her on my own. But some time has passed and Joanna said she wanted to share her whole story, identity and all. She felt that what she saw at WE Work and how they responded to what she did, tells a lot about what kind of company they are. Here's the thing. Joanna is kind of a polarizing figure. Many people think that what she did, accessing internal information and sharing it with a reporter is
really wrong and hurtful to a company. Others might see her as a whistleblower who wanted to get the truth out about WE Work. I told people in two sixteen they were doing funny things with their numbers. I told people that, but I thought people would hold them accountable because they were big, that a lot of money invested. But it's not clear that people were ready to listen.
And regardless of whether you think what she did was right or wrong, the things that happened to her next no reporter wants to see happen to a source WE Work came after her. Joanna is the first to admit that when she was downloading those internal documents, she wasn't the most careful about hiding her digital footprints. I all most never remembered to try to use a VPN to
mask where I was. I don't think and ladies and gentlemen, if you ever decide you need to leak documents, I did not think about what the consequences would look like for me. We Work was able to trace the leak back to Joanna. Based on these clues, they knew she had the executive's password, and when they looked at the IP address that downloaded a lot of material, they could see that it was in her neighborhood within New York City.
Joanna thought that speaking up would lead to more immediate consequences. It did have an effect, a big one, but not for we Work, for her. It didn't occur to me that everybody would brush it under the rug and then put my face everywhere and call me a criminal and a thief and a horrible person and someone who was out for for revenge. When my story came out, We Work sued Joanna the very same day. In the lawsuit, we Work alleged that Joanna stole the documents. They called
it corporate theft. Being sued was terrifying. I cried a lot. I didn't sleep well. I felt like my world was collapsing. The lawsuit felt like such a punch to the chest, and the lawsuit was just the beginning. Joanna spent the next few years dealing with the fallout while the case went on. Because other news outlets picked up the story, so the first thing was is you couldn't google my name.
I was unemployed and I was looking for employment, and you can't look for employment when if you google your name, the first thing that pops up is that Real Deal article with your face on it. So it was hard for me to get a job. Just to clarify, the Real Deal is a real estate news site which published a story with the headline we worked. Sues ex employee for allegedly leaking financial docs to Bloomberg. So yikes, And
then she says the FBI got involved. On Monday, January seventeen, the FBI showed up at my door at eight p m. And I talked to them until and I talked to them until midnight. And my civil lawyer shit a brick when I told him that I talked to them, but I didn't have anything to hide. This was about six months after she was sued. They looked exactly like they came straight out of Central Casting, Like if you call the Hollywood and you were like, we need two guys
who look like FBI agents. They showed right up. I was in the middle of washing my face and my husband was like, the Feds are at the door, and I was like, ha, He's like no, seriously, the Feds are at the door, and I was like what Joanna said? They were pretty polite and asked her a lot of questions about WE Work, she said. They asked her over and over again how she got the password, and then nothing came of it. In my experience reporting on these sorts of cases, that's kind of how it goes with
FBI inquiries. They visit people's houses, they asked questions, and they never say exactly what for, and in the end the case might be filed or it might just disappear by the way. The FBI declined to comment on this. As for joanna civil case, it ended in an unexpected and quiet way as well. Joanna knew that WE Work had the resources to draw out a lawsuit which could bankrupt her. When she was trying to figure out what to do, a lawyer friend gave her a piece of advice,
just don't show up. You don't have to pay a lawyer, and the judge will probably award WE Work a default judgment, which is kind of a standard amount of money she might owe the company based on some details of the case. And that was exactly what happened. But they in their lawsuit were demanding like untold sums of money and what they got was like with the default judgment, Joanna only had to pay back her severance, which was just one
paycheck and some fees. It added up to a little over three thousand dollars, and oddly enough, We Work never collected the money and the window to do so closed in so Joanna paid them nothing and when the case was finally finished, she was hugely relieved. And I remember looking at it online and I'm We're looking at my husband and going, that has got to be the most anti climactic thing that's ever happened in my life when it started out as something that seemed like it was
going to destroy my life. So that's the story of Joanna, the employee who in wanted to tell the world that we Work was struggling to hit its financial goals. What's interesting is that when my story came out, we were confirmed that the documents Joanna shared were real, but at the same time they dismissed what was in the documents. A spokesperson told reporters, our business is performing incredibly well
and is stronger than ever. The stolen document was prepared months ago and does not reflect our robust operating momentum. By speaking out, Joanna wanted to tell the world that We Work was falling short of its own projections and was aware of it. The information that she put out there was a peek into we work shaky finances years before the rest of the world understood the full extent.
Joanna thought that her actions would make a difference in how people saw the company, but they actually didn't, at least not right away. In hindsight, We Work shouldn't have been too worried. As far as I can tell, those stories about making less money than they expected didn't slow the company down. We Work continued to shoot upward with this almost unstoppable momentum. We'll be right back. The majority of we Work employees I've interviewed didn't come to the
company skeptical. Many of them joined We Work thrilled about the new opportunity in front of them. And I was really excited. I mean, everything I had seen in the news was like hot and flashy and very exciting, and everyone I met at the offices was really cool, um, really good people. So I had just like a very excited feeling I was in the right place at the right time, and I think a lot of us felt that way. That's Tara Zoomer. She was thirty years old
when she started at we Work. She was hired as an associate community manager. Her last job was working at an insurance company. Compared to that, we Work seemed like a thrilling opportunity. Tara also joined we Work in around the same time as Joanna. Her job was to help run a we work office building in Berkeley, California, and she felt lucky to get the job. She had heard story after story about early tech startup employees would become millionaires.
When Tara joined we Work, it was only five years old. It was valued at five billion dollars at the time, and within just a few more months she watched as its valuation doubled to ten. It wasn't hard to imagine that this company was going to keep skyrocketing and carry her with it. It's like the Willy Wonka's Golden ticket. You know, you feel like you're you won already, and at some day you would be able to cash out
and retire. You could pay off your student loans, you could buy a house, maybe you could relocate, you could go on more vacations. People were just excited, like really felt like they were going to dedicate as many years as it was going to take to see this through, to see what the possibilities were. Tara didn't know very much about equity, but she had heard stories of how it could transform people's lives. I mean, you hear the stories of people who missed out on like early Google,
early Facebook. They're like tragic tales. So in our culture too, we already have those those stories and narratives, and it was a really easy thing for people to feel like they were in that place. Everything was pointing to you're in the right place at the right time. She started work and immediately her new job was hecnic. I could be doing something from like helping someone with the printer jam,
I'm taking someone on a tour for sales. Then I'm setting up for an event, I'm shutting down an event, um someone's birthday. We're ordering them special stuff, like really anything that a building might need is what we would run around all day doing. Tara was an associate community manager. That's the title we work chose to describe the people who do everything to keep buildings running with clean conference rooms, fresh coffee and working internet. These positions had long hours.
Tara was working evenings and she wasn't being paid overtime. Tara said that's because she was categorized as a manager, and managers are often exempt from overtime pay. But she says she wasn't managing any employees were making major business decisions. I was called a manager, and I don't think I was managing very much except like day to day simple operations. But the number of hours I was working started to be the real concerning point um because we're required to
be at events. I'm leaving the office at nine, ten, eleven o'clock at night and just kind of getting that burnout pretty pretty early on. That lack of overtime pay was wearing on her. She was having a hard time living in the Bay Area on her salary, even with a job. She was going broke. Yes, seventy eight hours a week. That means you don't have time for any other income except for the one that you have. And for forty two thousand a year, I mean you take a chunk out for taxes, you take a chunk out
for your insurance. For your rent in the Bay Area is really expensive and commuting back and forth to the city. What's left over is really not much. Um. All I knew is that I was exhausted working, I was going broke working, and that when I googled what like, I was on salary, and i just was curious about overtime because I'm like, I was calculating it out in some weeks. I mean, I'm making if you know, if I worked an eighty hour week at forty two thou a year,
that's like it's like twelve bucks an hour. Like it really was starting to feel I feel really crazy. You might be wondering what about Tara's equity and we Work, what happened to that Willy Wonka's Golden ticket. Well, there are many degrees of separation between the equity that Tara got an actual money when she joined We Work. She wasn't given any equity outright. Instead, she was given something
called stock options. Basically, this means that she had the chance to buy some shares in the future, but only if she stayed at We Work for at least a year, and even then she'd have to buy these share with her own money. This is pretty standard in the tech industry. So even though there's that glimmer of hope that this equity could be worth a lot someday. It's definitely not
cash in the bank. It's more of a dream. After just a few months on the job, Tara was starting to think that she wasn't a manager, and neither were the other community managers and WE work buildings all over the world that could be hundreds of employees, and she questioned whether they were all owed overtime paying. I was questioning our classification as salary exempt workers and finding legal counsel.
And my hope actually was that UM, I wouldn't just be able to help myself, but that I would actually be able to help all community managers everywhere. Around that time, community workers made up more than half of WE Works employees. A lot of Silicon Valley companies choose titles that are vague or new fangled, like calling human resource people operations, but in Tara's case, the fact that we Work said she was a manager was stopping her from getting paid
for extra work. She started talking to her coworkers about what she was looking into UM and shortly after that, I had a manager confront me in a meeting, and in that meeting she told me I should stop talking to people about their rights because their path is their path, and I should let everyone discover it on their own. Um. And she told me that my talks were negative to the work environment, like me bringing up these labor issues
is really negative to the work environment. Um. And then she asked if I wanted to resign yeah, which I said no. She was told that just asking these questions was really negative to the work environment. It just strikes me as something pretty hostile to say to someone who's asking about their rights. It makes it sound bad and shameful. And soon after that, Tara was fired. It was because she didn't want to sign a new employee agreement that
we Work introduced in all their offices. She was put off by a clause that she noticed, saying that any claim she wanted to bring against the company would have to go through a private dispute process called arbitration instead of going through the court system. I refused to sign this document, and then I was terminated. And how did you feel? Just shocked. I didn't know that a company had the ability to make me choose between my job or my rights. In the midst of all of this,
she sent an email to hundreds of her coworkers. The subject line was your rights at WE Work. I asked her to read the letters. She wrote, Highway work as a part of a community of people I love. It feels strange to be addressing you all at once, but this is important here in California and across the company. We received new employee paperwork to sign. I have refused to sign these documents. I am in the process of filing a wage dispute with WE Work and will not
give up my rights to a jury. If you would like to understand more about what you were signing, review them with a lawyer. It is important that you know your rights best Tara. So then Tara sued WE Work for wrongful termination and unpaid wages. It was the first we Work employee lawsuit that I wrote about. Tara hadn't been at WE Work for a year, so she didn't get any equity. This was in we Work has since
made a few changes about how they pay employees. They gave a small pay bump for community workers and offered some employees limited overtime, but it's unclear if community managers are included in that group, and the company has never admitted to misclassifying Tara or her colleagues. I want to be clear that Tara wasn't an exception. She represents this big group of we Work employees, the community staff, who were the ones on the front lines of this growing company.
They were putting in the labor day after day to run we Work offices all over the world. In many cases, the community staff were the only we Work employees that customers ever interacted with. Despite all of this, community workers often got the short end of the stick at we Work. A former executive even told me that they sometimes felt bad for the community team. The executive brought up incidents of customers getting aggressive at the community staff and refusing
to pay their bills. The exact also said that one community worker even found a gun in the bathroom and have to figure out what to do with it. These jobs were essential to the company, but also difficult and unpredictable with low pay. Tara is also an important person in the history of we Work. She was one of the first people to speak out publicly against the company, which remember was one of the most well funded startups
in Silicon Valley. I remember reading about her case just as I was starting to cover the company it was fascinating to me. We Work proclaimed to be about having each other's backs and being better together, but here this employee saying that many of its staff felt overworked, underpaid, and exploited. These lawsuits are far from the only ones we Work has dealt with over the years. The company
has been hit with other serious allegations. One ex employee said that she had been groped and sexually assaulted at we Works Big Parties, Summer Camp, and Summit by two separate colleagues. We Worked disputed this. In fact, we were Co founder Miguel McKelvey wrote an email to all we Work staff, calling this employees allegations merit lists and saying that she was a poor performer. Another ex employee claimed that we Work systematically paid men more than women for
similar work. A third alleged racial discrimination. Still another person said he was pushed out of his job for being too old. All of the cases are either pending or settled. We Work said these claims are without merit. It's worth taking a moment to consider Tara and Joanna's stories side by side. They both took big risk because they wanted to change the narrative around We Work, but back in
neither could really change we Works trajectory. The company's momentum at the time was just too strong, and as you'll hear in the next episode, We Work didn't slow down at all. In fact, things just got more over the top. Adam was handed billions of dollars and told you have to be crazier, make it ten times bigger, and he took it to heart. 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. Ray Mondo
mixed the show today. Mark Million and Vander May 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. At the bar of the part