Jeffrey Sonnenfeld

Jeffrey Sonnenfeld
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Jeffrey Sonnenfeld is senior associate dean, leadership studies, Lester Crown professor of leadership practice, Yale School of Management, as well as president of the Yale Chief Executive Leadership Institute and author of The Hero’s Farewell and Firing Back. You can follow him at Twitter @JeffSonnenfeld.

Do Your PR Mavens Really Have Your Back?

Do your PR mavens have your back? Or are they shielding you from more good than bad? Jeff Sonnenfeld weighs in.

WeWork: What, We Worry?

[caption id="attachment_69329" align="alignnone" width="696"]WeWork's Adam Neumann WeWork's Adam Neumann Credit:WeWork.com[/caption] Next month the iconic satirical MAD Magazine prints its last new issue. The infamous motto of its fictitious mascot is the grinning Alfred E. Neuman was “What me worry?” When it comes to WeWork founder Adam Neumann, perhaps a distant cousin, the question should be “What WE worry?” And there is more and more to worry about, starting with the news this week that Neumann has sold more than $700 million of his ownership pre-IPO, indicating a lack of faith in his own company while he prepares to hawk it to new investors. Surely founders, like other people, have expenses related to family vacations, home upkeep, kids, cars, and college loans. But those minimal lifestyle maintenance costs don’t seem to be the motive here. TechCrunch reported that Neumann has comfortably spent $80 million on his six homes including his 13,000-square-foot San Francisco crash pad, complete with a guitar-shaped room. This nine-year-old co-working startup has a pumped up valuation, somehow, of $47 billion. The Wall Street Journal questioned this lush valuation as Neumann tried to distance himself from Uber’s IPO collapse this spring. Eyebrows were raised earlier this year when The Journal questioned a potential conflict of interest with Neumann earning of millions of dollars as landlord and serving as an owner of many of the buildings that WeWorks leased. This was not fully disclosed to equity investors, The Journal reported. Research by Noam Wasserman in his book The Founder's Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup, has shown that founder-led companies outperform matched non-founder led enterprises given their dedication to an insurgent mission and their owner mindset. This is why legendary founders such as Bernard Marcus of The Home Depot, Michael Dell of Dell Technologies, Bill Gates of Microsoft, and others retained their ownership, especially pre-IPO. Contrast that with the founders of the Groupon and Zinga, who massively sold out pre-IPO. So, what could Neumann know that has him worried about his own investment in WeWork? Well, for one thing, they’re losing more than $2 billion a year—that’s $120,000 of losses every hour of every day.  WeWork is in 36 countries and is the largest landlord in New York, San Francisco, and Washington DC. But are those high cost leases a good thing in a downturn? Its competitor, IWG, formally Regus. was forced into bankruptcy in the 2003 market downturn with a similar model. (Andrew Ross Sorkin of The New York Times has questioned whether WeWork is too big to fail.) Meanwhile, speaking of similar models—what is unique here? Neumann is hardly Mark Zuckerberg or Elon Musk, who, despite their own larger-than-life personas, do at least have unique, disruptive technologies. Strip away the barn-wood interiors, bean bags and espresso bars, and Neumann’s empire looks a lot like…a lot of other real estate companies. New, fast-growing entrants like New York’s Knowtel, Serve Corp of Australia, and Mindspace—not to mention the far more global IWG—are genuine competitive threats. IWG, for example, is in 70 more countries than WeWork, and twice as many cities (250 to WeWork’s 124). Oh, and IWG actually makes money—while also providing a wider array of offerings like serviced offices, virtual offices meeting rooms. Yes, Neumann is certainly charismatic, regaling students recently at a college commencement with tales of playboy years “hitting on every girl in the city.” But as he cashes out ahead of his own IPO, many should worry whether WeWorks really works—for anyone beyond its founder.

Lee Iacocca’s Leadership Legacy To An Industry And Our Nation

Lee Iacocca was a car making titan who led a massive transformation of the industry at Ford and Chrysler. He was a hugely competitive executive—driven by commercial success and patriotic pride. Jeffrey Sonnenfeld looks back at his life.

Bernie Marcus’ Model: Community Progress Without Progressive Fingerpointing

Former Home Depot CEO Bernie Marcus is proof that doing good is not antithetical to doing well, just as free enterprise is not antithetical to community progress.

With FCA-Renault-Nissan Drama, Who Needs Game of Thrones?

While analysts debate this week’s news over the impending merger of Fiat/Chrysler and Renault in strategic market, financial, and technological terms, those rational deliberations miss the real story.

Who Needs Tim Sloan Anyway? (We Did)

Bipartisan political grandstanding has created a dangerous haze confusing the good guys with the bad guys, which could have the unhappy effect of discouraging future heroic insiders like Tim Sloan from stepping up to the plate.

Tesla’s Turbulence Musk Be Explained

Elon Musk shows us that while you can’t build a positive legacy on dreams you can actually damage a reputation by trying to sell unrealized forecasts. 

Dennis Muilenburg’s Moment

Forty years of studying CEOs in crisis—from Burke to Zuckerberg—yield some key lessons for the current moment. Here's Jeff Sonnenfeld on Dennis Muilenburg.

Rule Of Law Or Law Of Rulers?

Is the business community really ready for the ethical and legal complexities that come with globalization? Jeffrey Sonnenfeld weighs in.

Ghosn Abuse Gets to Heart of Japan Inc.

No episode in recent memory has highlighted the reality of business in Japan as much as the ongoing abuse of Carlos Ghosn, reminding us that the micro politics of planned economies can be as misguided as the macro policies that built China’s ghost cities.
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