Robert Reich
The Coffee Klatch with Robert Reich
The 6 secrets to becoming a fabulously rich con artist

The 6 secrets to becoming a fabulously rich con artist

Adam Neumann and Donald Trump have led the way

As the saying goes, in America everyone is entitled to a second chance — especially con artists. Herewith the 6 rules for getting a second (or third or fourth) chance to sell a giant con:

1. Market a mundane idea as “disruptive.” Adam Neumann, the founder of WeWork, hyped his office-sharing startup as the first “physical social network.” In reality it was nothing more than what you’d find in any coffee shop with customers at their laptops, but Neumann made it sound so revolutionary — “disruptive,” to use the high falutin con word — that JPMorgan, SoftBank, and other investors sank hundreds of millions into his company. At its height it was valued at some $47 billion.

2. Pocket the money. Neumann used some of his investors’ money to buy buildings that he then leased back to WeWork. He also borrowed against his own stake in the company. And he was going to charge WeWork almost $6 million to use his trademark of the word “We” after the company rebranded itself the “We Company.” He lived like a mogul, with his own jet and penthouse apartments.

WeWork never made a nickel of profit. The prospectus for its initial public offering was widely ridiculed as incoherent. After Neumann was forced to disclose his personal conflicts of interest, the IPO fell apart and the company’s estimated value plummeted from $47 billion to about $4 billion (after being rescued by SoftBank).

3. Make sure your investors have their own investors, so they’ll want to salvage whatever they can and won’t sue you. Neumann wasn’t convicted of criminal fraud. His early investors didn’t want to sue him because they wanted to salvage whatever of their investment they could, and didn’t want to admit to their own investors that they’d been conned. In fact, they paid Neumann over $1 billion to exit the board and give up his voting rights. Neumann collected another $185 million in consulting fees from WeWork. Meanwhile, other WeWork employees were left holding near-worthless stock options and thousands were laid off.

4. Do the same thing again. Neumann has just launched a new company called Flow, which he says will “transform” the residential rental real estate market with reliable services and “community” features (he used the term “community” a lot with WeWork, too).

What about Neumann’s previous con? It’s been forgotten. “Flow” has already attracted $350 million of financing from the venture capital firm Andreesen Horowitz — the largest check it’s ever written in a round of funding a company. Andreesen values Flow at more than $1 billion before Neumann has even opened its doors.

Last week, Marc Andreesen explained in a blog post on his firm’s website that the rental real estate market is “ripe for disruption,” especially now that so many people are working from home and “will experience much less, if any, of the in-office social bonding and friendships that local workers enjoy.” If this sounds a lot like the language Neumann employed to hype WeWork, that’s no accident. It worked once, so why not again? As Andreesen wrote, “we love seeing repeat-founders build on past successes by growing from lessons learned,” and that for Neumann “the successes and lessons are plenty.”

5. Never admit fault or defeat. Adam Neumann’s con is small change compared to Donald Trump’s — who has also managed to fail upward but far more spectacularly. The master con artist has defrauded customers, renters, students, hoteliers, contractors, and, finally, American voters. He never admits defeat. Trump has leveraged every fraud into an even bigger fraud. As he infamously claimed, he could shoot someone in the center of Fifth Avenue and get away with it.

Trump “disrupted” American democracy with his Big Lie and attempted coup. Now, it seems, he’s about to seek a second chance at the presidency.

6. Don’t be poor or Black or brown. Not everyone in America gets a second chance. This is especially true of people who are poor or of color, particularly those convicted of crimes without jury trials through plea-bargains with prosecutors (who threaten worse penalties if they won’t plead guilty).

An estimated 5.2 million Americans couldn’t vote in the last presidential election because of felony “convictions,” including one in every 13 Black adults, according to the Sentencing Project. Last Thursday, Florida Governor Ron DeSantis touted the arrests of 20 people on charges of “voter fraud,” who had voted in 2020 but had been convicted of crimes for which Florida made them ineligible to vote. (Many said they would not have voted had they known they were ineligible.)

Many millions more can’t get jobs because employers don’t want to consider people who have broken the law. (Unlike Marc Andreesen, most employers don’t “love seeing people grow from lessons learned.”) Although some states and localities now prohibit employers and landlords from considering conviction or arrest records in their initial screening of applicants, it’s still the case that one big mistake on the part of someone who’s poor or of color can end their careers and perhaps their freedom.

But if you’re not poor or a person of color, you can get away with the giant cons Adam Neumann and Donald Trump have gotten away with. Just follow the steps enumerated above. Hell, you might even become President.