Adam Neumann shows how the entrepreneurs use the same tactics as cult leaders

When WeWork filed its S-1 in August, the company was burnt fried, starting with the other side.

"We dedicate this to our energy – greater than any of us, but within each of us."

A few pages down under the "Our History" section continue to the maximum. "We are a social company committed to maximum global impact," it reads. "Our mission is to raise awareness of the world."

Since that filing six weeks ago, WeWork has been the biggest story in business news, with a constant cascade of drama, reaching a crescendo on Tuesday when Adam Neumann, the charismatic, controversial, visionary founder and CEO was defeated by the board and put in place a couple of bosses with decades of experience in technology between them.

At that time, the reporting of Business Insider, and many other publications, revealed several idiosyncrasies with Neumann and the company he founded. A former vice president said working there was one of the weird years of his life, including many spiritual discussions with higher ups, strange internal optics from Neumann and a mandatory "camp" where he and thousands of other employees slept in tents. In a newsworthy event, back in 201[ads1]6, Neumann announced cost-cutting layoffs, and then tequila shots were distributed to employees. And when employees were treated to a performance by a member of the legendary rap group Run-DMC. Rebekah Neumann, his wife and now WeWork & # 39; s former executive, reportedly asked to be fired because she didn't like the "energy."

Richard Markel, the Vice President, told Business Insider that there was a massive link between WeWork's stated goals of harmony and friendliness on earth and the day-to-day running of the business – which, when he was released, he came at work to find the calendar empty, after being removed from all meetings. "The way I was treated was so professionally disgusting, so unprofessional, so it was almost like & # 39; Hey, WeWork, is all you say bulls —? & # 39;" He said.

Neumann is perhaps the highest profile – or certainly, at least the last – case of the visionary startup manager who gets in trouble when the company scales, becomes public or otherwise matures. There is a whole Mount Rushmore of these characters, who are today famous or notorious examples of leadership. Steve Jobs. Elizabeth Holmes. Elon Musk. Leaders pushing boundaries, disrupting norms, may act strange and find themselves in some way: taken out by the boss of his company, revealed to be scams or unable to deliver on his big visions.

This is often seen as business stories.

But really these are stories of social psychology.

And startups are, in many meaningful senses, cults.

From S-1: "We dedicate this to our energy"
We Company S1

Lorne Dawson is a sociologist of religion at the University of Waterloo. He has spent decades studying "new religious movements" – they are academic for "cults" – and his recent work has tapped into terrorism and the process of radicalization. For Dawson, all these different social situations exist along a continuum. It is the normal situation, then the startup of business contexts, and then further afield, religious movements, or even sectarian / extremist. Startup and cult have very strong parallels, and address some of the same problems, he said – leadership, small group dynamics and institutionalization. Both the startup entrepreneur and the cult leader face the innovator's dilemma.

He knows the dynamics personally. A family member of his worked for a small startup, run by a serial entrepreneur who met national success. After selling the first company, he started another on a new set of ideas, and went again for a big sale. When he heard about office dynamics, he was struck by how much the owner and leader reflected the elements of what draws people into small religious organizations.

"The very fact that you have a strong focus on the inspirational, dynamic basic figure – that person will almost always be considered a charismatic leader," he told Business Insider. "The popular belief is that people have inherent skills or talents, but sociology and business administration realize that it's much more about positioning."

The dynamic central figure leads followers to attribute certain powers to them.

"The leader is the one who has the money, the contacts, the strength to carry the case forward, and everyone wants in on that action," he added. "In religious movement, it is the special knowledge that will make your life perfect or save you. Or for business, you join the action. Not only that gets paid, but given a percentage of the company."

for its part, create a dynamic where the leader is glorified to the point of redundancy. And that again has a psychological effect: if the leader already had a strong personality with egomaniacal elements, these qualities can be exaggerated. (When humans have power, dozens of psychology studies have shown, they become even more confident.) And with that comes risk.

Unpredictable behavior that will never be accepted in a normal organization is accepted in a small startup, just as what happens in a cult would not be allowed in a mature religious organization. That lack of norms comes with potential business benefits: it allows a company to be very flexible and adaptable, ready to swing at instant notice, and it can feel like an exciting place to be. But it can also be destabilizing or alienating employees, or even surreal.

And then, says Dawson, the dynamics of small groups can begin to take over. Employees compete for career favor with the manager, and closeness becomes important. In these contexts, even when the leader does unpredictable things, you defend it. And in the case of unit management – where literally or metaphorically, the leader controls all voting shares – there may be a desire for excessive social cohesion. ("You don't want a family to do everything their dad always does," Dawson says – disagreeing with an authority figure is a sign of health in a group.)

With all this comes vulnerability: "Because you haven't rules or regulations, which make the group very flexible, but it creates a demand for loyalty, social cohesion, and finally makes it crazy, so the situation can break in a crisis, "he says.

Steve Jobs was known for his "reality distortion field."
Jeff Chiu / AP

People work for more than paychecks. They also have psychological needs to be met. And consciously or not, visionary startup founders tend to be good at doing it.

Jay Van Bavel, who runs the Social Perception and Evaluation Lab at New York University, is part of a group of researchers studying "identity management" – that's when leaders act in such a way and cultivate a culture in that way , that the group becomes part of who you are. The logo is not only emblazoned on a mug or T-shirt, but the heart. "It's about when executives, executives, CEOs or visionaries cultivate a sense of group identity," he tells Business Insider. "We're & # 39; us & # 39; in it together, this set of values ​​is virtue, shares a vision that is virtuous, and we have a set of norms or actions to achieve it."

When a leader creates that culture, you get engaged following. People feel a sense of identity, they understand the actions and norms to be taken – what one in management speakers would call culture. There is a lot exhibited in sports teams: it's Patriot Way or Packer Way. Politicians hire it: those who use "we" or "us" tend to be elected. And supporters are acting to fulfill what they perceive the leader's desire to be – as when the White House asked the Navy to make USS John S. McCain "out of sight" for President Donald Trump's visit to Memorial Day.

In startups, it makes people feel like they are all on the vision together. They will work long hours, be late, recruit their friends, use whatever social capital they have to build the organization. In a small or early company, especially if you have yet to hit big on financing, you may not have as much to compensate people with in terms of funds, creating incentives that other companies cannot offer. The feeling of belonging, prestige, the feeling that you are doing something of high status. (Tech is not alone in this: Everyone who has been paid in prestige in fields such as fashion, publishing or media can probably relate.) Again, the same thing with sports teams: If you are a Yankees fan, you get something of the glow of being associated with a massive, historically successful organization when you open your eyes to the pinstripes.

"You have weird feelings about people like Elon Musk," said Van Bavel, "where you see overlap between both employees and consumers or fans." Even if you've never sat in a Ferrari, you can wear the hat.

Starting up, especially Silicon Valley, can also give you a sense of morality, that you are pursuing some kind of meaningful social goal by stumbling into the office every day. Facebook's mission is "to empower people to build community and bring the world closer together." Google's mission has been to organize the world's information and make it accessible and useful to the public.

You're not just a job; you are part of something bigger.

Elite groups give a light of prestige. Ask Yankee slugger Aaron Judge.
Mike Stobe / Getty Images

One of the biggest challenges for a startup is scaling, the sought-after growth of hockey sticks where users and revenue are accelerating rapidly, and team size along with it. These are the things the headlines are made of: 2x, 10x, 100x. A new religious movement also wants greater attention, platform and membership, otherwise it does not survive. Recruitment (or evangelism) is the key to success for both. But when both organizations expand, problems with the structure can arise.

"When a group succeeds, attracts followers, or grows and hires, you must begin to get delegation of authority," says religious scientist Dawson. For its part, the charismatic leader must give authority away, and this is again the breaking point. "Most new religious movements die from being successful, ironically. They fall apart and squabble as they try to institutionalize," he says.

The inspirational leader can often be resilient. "They want the success, but not give up the authority, the power, the freedom to do what they want," he says. And if the leader resists the delegation, the religion begins to fail in some way – higher-level subordinates will break off, start a competing group, gain followers or attract new ones. And it will happen in startup companies as well.

Of course there are exceptions. Dawson says that the Unification Church, popularly known as "Moonies" because of its pastor Sun Myung Moon, is one such example, since the group created a middle management team.

The other, perhaps more central, issue is the "power of revelation," Dawson says. The Messianic religious leader must come up with new visions and messages from the divine. The entrepreneur constantly needs new projects or innovations. In either case, the leader is a medium in accordance with some greater force in the universe – God's higher power or disruption.

"Musk has hit the limit, people are beginning to think he has lost touch. As a religious leader, he has fallen out of favor, no longer in line with the hidden powers of the world."

"When they stop seeming to have the power to do special things, you start noticing their mistakes, and they are turned down in their status," Dawson says, adding that Elon Musk has become something of a recent case study. It was PayPal, so Tesla, SpaceX, renewable energy and the car going into the tunnel.

"The inspirational leader comes up with new ideas, they often create additional prophecies that fail and pose nothing, but that is not noticed because everyone looks at their successes," Dawson says. "Musk has hit the brink of this, people are beginning to think he has lost touch. As a religious leader, he has fallen out of favor, no longer in line with the hidden powers of the world."

In Neumann's resignation note, he noted that "investigation directed" at him had become a distraction for the company, as all these reports of tequila shots and private aircraft (later sold) came out.

The charismatic leader always pushed for not only larger scale, regardless of loss, but new investments or innovations, putting money into wave pool and superfood, launched the WeLive Samba area, the "micro school" WeGrow, the boutique fitness offering Rise by We.

On Tuesday, in the midst of the turmoil and his downfall, Neumann sent a company name email to show WeWork's mission. "The spotlight on us has never been greater than at this moment, and with this visibility we have an opportunity to expand our global business to more people than ever before," he said.

That's a nice note for the founder's end period: identity management, driven by vi.

Sherin Shibu contributed to this story.

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