The Cult of We: WeWork, Adam Neumann, and the Great Startup Delusion  - Eliot Brown

The Cult of We: WeWork, Adam Neumann, and the Great Startup Delusion - Eliot Brown

Play this article



Here is a summary of the book The Cult of We: WeWork, Adam Neumann, and the Great Startup Delusion by Eliot Brown and Maureen Farrell:

  • The book chronicles the rapid rise and fall of WeWork, a company that leased office space and sublet it to businesses and freelancers. Led by Adam Neumann, an eccentric and charismatic Israeli entrepreneur, WeWork grew from a single office space in New York City to a global company valued at $47 billion in under a decade.

  • Neumann promoted an idealistic vision of community building and “elevating the world’s consciousness” that attracted major investments from SoftBank and venture capital firms. However, the company was deeply unprofitable, losing over $1.6 billion in 2019. Its business model and governance were questionable.

  • The book details how investors and bankers were willing to ignore these flaws and pour money into the company due to a desire to find the next big tech company and their faith in Neumann's cult of personality. The company was propped up by people wanting to believe in its vision and the profits it seemed poised to generate.

  • In 2019, WeWork's attempted IPO collapsed and Neumann was ousted as CEO. The company's valuation plunged from $47 billion to $8 billion. The story exposes the hubris, fuzzy math, and lack of oversight that allowed the company to rise so high before crashing down. It serves as a cautionary tale of how the quest to find the next big thing and belief in charismatic founders can blind even sophisticated investors.

  • The book draws on interviews with over 300 people including former WeWork executives and employees, investors, bankers, and Neumann's friends and family. It provides a comprehensive look at how the company was built and eventually crumbled under the weight of its own hype and flaws. Overall, it's a story of how capitalism and startup culture can go wrong when unrestrained.

  • Adam Neumann, the CEO of WeWork, threw extravagant parties to celebrate the company. The company's Los Angeles party cost $10 million and featured celebrities, concerts, and rented-out amusement parks.

  • Despite losing over $3,000 per minute, WeWork continued to spend lavishly. Rapid growth and excess were the norms for Silicon Valley startups at the time. Investors were willing to fund the losses in hopes of huge profits down the line.

  • WeWork had raised over $10 billion from major investors who believed in Neumann's vision. The company was valued at $47 billion, making it the second most valuable private company. Neumann's own net worth reached $10 billion.

  • At a company summit, Neumann announced the new $1 billion investment and the name change to The We Company. He laid out an expansive vision for the company that went far beyond office space. He wanted to "elevate the world's consciousness."

  • WeWork was losing money rapidly due to its growth. It needed constant infusions of new funding to keep going. Investors were betting future funders would continue investing in the hopes of huge profits, passing on the risk.

  • Neumann believed he was destined for great things. He hustled from an early age, overcoming a difficult childhood to build WeWork. But his extreme self-confidence and unwillingness to hear criticism worried some. His leadership style was described as "chaotic" and "eccentric."

The summary highlights the excessive spending and growth at WeWork, despite major losses. It shows Neumann's ambitious vision and self-confidence in the company's potential. But it also notes the company's dependence on continued investment to fund its growth and hints at concerns over Neumann's leadership style.

Here's a summary:

Adam Neumann was born in Israel in 1979. He had a difficult childhood, with divorced parents and financial struggles. His family moved around a lot, and for a few years they lived on a kibbutz, an Israeli commune. Neumann didn't fit in well there. He told friends he wanted to get rich and leave.

Neumann did compulsory military service in the Israeli navy, where he was part of an elite program. But he found the rigid hierarchy and rules frustrating. Once, he even abandoned his assigned post on a missile boat to attend a party. He ended up leaving the military early, claiming a medical issue.

In his mid-twenties, Neumann moved to New York City, where his sister was working as a model. He launched a company called Krawlers that made baby clothes with built-in knee pads. Despite knowing little about babies, Neumann proved to be a talented salesman. He wooed customers and investors with his charisma and energy. Krawlers started generating thousands of dollars in sales.

Though the business struggled at times, Neumann was enjoying being an entrepreneur in New York. His early years there, while not always stable financially, gave him opportunities to learn how to make deals and network. He dreamed of building Krawlers into a huge company and becoming very wealthy.

Here's a summary:

Adam Neumann was frustrated with his experience in the Israeli military and eager to leave Israel. In 2001, he appeared on an Israeli talk show with his sister and announced plans to move to New York.

In New York, Neumann struggled to build his baby clothes company, Krawlers, into the business empire he envisioned. Reading and using computers were difficult for him due to dyslexia. The company was losing money and relying on funding from his sister and others. By 2006, Krawlers had lost $45,000 in the past year.

Neumann met Miguel McKelvey, an architect, in 2005. Though very different in personality, they shared unusual upbringings. McKelvey grew up poor in a commune of single mothers in Oregon. He had also dabbled in entrepreneurship before becoming an architect.

Neumann and McKelvey began brainstorming business ideas together, walking around their Dumbo neighborhood. One idea was a co-working space, inspired by a classmate's successful office space company. They pitched the idea to their landlord, Josh Guttman, who agreed to provide space in one of his buildings.

McKelvey created plans and a business proposal for "Green Desk," an eco-friendly co-working space. Guttman invested, giving them space and money for renovations. Neumann, McKelvey, and a friend would run the space. Though the work largely fell to McKelvey, they were confident they could attract tenants to the charming space.

Here's a summary:

  • Adam Neumann met Rebekah Paltrow in 2008 through a mutual friend, Andy Finkelstein. Despite their initial contentious meeting, Paltrow felt that Neumann was destined to "save the world."

  • Paltrow came from an affluent family. Her grandfather co-founded a major lingerie company, and her father worked in direct mail marketing. She grew up comfortably in Great Neck, NY, and attended private schools.

  • Paltrow's family was devastated when her older brother died of cancer when she was 11. They moved to Bedford, NY, where Paltrow threw lavish parties as a teen, sometimes attended by her famous cousin Gwyneth Paltrow.

  • Paltrow attended Cornell University, where her family's staff helped furnish her dorm room. She vacationed frequently with her family and wealthy friends. Many found her sanctimonious and privileged.

  • After college, Paltrow moved to Los Angeles to pursue an acting career. She then returned to New York, where she met Neumann.

  • Adam Neumann and Miguel McKelvey wanted to create an office space company that fostered community and social interaction. They believed millennial workers craved this.

  • They had trouble coming up with a name but eventually landed on “WeWork.” They envisioned creating a “physical social network” and “physical Facebook.”

  • They were inspired by tech companies that provided amenities and entertainment for employees. They also drew inspiration from the Kabbalah Centre, where Neumann participated. The ideals of community and helping others were central.

  • Neumann and McKelvey aimed to create a $500 million or even $1 billion company. They realized it would be better to lease space themselves rather than partnering with landlords.

  • They had trouble finding landlords to lease to them until they met Abraham Talassazan, who owned an office building at 154 Grand Street. Due to the recession, Talassazan was struggling to find tenants and make loan payments. He was open to Neumann and McKelvey’s pitch.

Here's a summary:

  • Lisa Skye was WeWork's first community manager, hired in February 2010 to help get WeWork's first space at 154 Grand Street open within 3 weeks.

  • She recruited WeWork's first members through Craigslist ads and by pitching to people working at a nearby Starbucks.

  • The space was rough, with an old slow elevator, uneven stairs, and limited amenities. But people signed up quickly, attracted to the hip design and community.

  • Early members included lawyers, designers, startups, and freelancers wanting an alternative to coffee shops. They felt part of something new and different in the wake of the financial crisis and backlash against corporate culture.

  • Abe Safdie, a lawyer, joined WeWork on a whim after seeing a sign while walking with his girlfriend. He started off doing his own legal work there but soon found himself advising startups in the space. WeWork's community and culture led him to dive in deep, moving to new WeWork buildings and eventually joining WeWork as general counsel.

  • Adam Neumann and Miguel McKelvey had divided responsibilities, with McKelvey focused on design and build-out and Neumann focused on sales, recruiting, and networking. But they shared a vision for creating community and connection in the workspace.

The key points are:

  1. WeWork attracted members seeking an alternative workspace community.

  2. The hip, collaborative design and culture were appealing, especially after the financial crisis.

  3. Early members felt part of something new and socially conscious.

  4. For some, what began as a convenient workspace turned into new business opportunities and personal connections.

  5. Neumann and McKelvey had complementary skills and a shared vision for building community.

  • Adam Neumann and Miguel McKelvey founded WeWork in 2010. Neumann focused on finding new locations and investors while McKelvey handled operations.

  • WeWork's expansion was rapid and costly, leading to cash shortages early on. They got new investors like Samuel Ben-Avraham and Marc Schimmel to provide funding.

  • To keep costs down, WeWork bought used equipment and furnishings from Ikea. Neumann pushed for speedy openings of new locations, requiring staff to work long hours.

  • By 2011, WeWork was generating $7.4 million in revenue and lost only $50,000. The company looked poised to become profitable in 2012. Neumann planned to expand to new cities.

  • Rebekah Neumann worked on branding for WeWork and on launching her acting career. Her acting projects were not successful. She came up with WeWork's slogans like "Do What You Love."

  • Rebekah introduced Adam to people like Hunter Richards and Sean Parker. Adam became friends with Richards, and they would go out drinking expensive tequila together.

  • Neumann admired how Mark Zuckerberg and Sean Parker built Facebook in the movie The Social Network. He seemed focused on their determination and vision.

Here's a summary:

  • Adam Neumann, the cofounder of WeWork, called Michael Eisenberg, a venture capitalist at Benchmark, in 2011 seeking advice.

  • Eisenberg was impressed with Neumann and told him not to take funding from anyone else. They agreed to meet in person.

  • Venture capital funds provide early funding for risky tech startups in exchange for ownership stakes. They look for entrepreneurs with big ideas and invest in hopes that a small number of huge successes will offset many failures.

  • Benchmark was a top VC firm founded in 1995. One of its first investments, $6.7 million in eBay, turned into $5 billion, cementing its status.

  • By 2001, though, the dot-com bubble had burst, damaging the tech industry and VC sector. Benchmark survived while many firms collapsed.

  • Eisenberg joined Benchmark in 2005. He was drawn to Neumann's charisma and vision for WeWork. Benchmark invested $17 million in WeWork in 2012, the first VC funding for the company.

  • The "cult of the founder" had developed in Silicon Valley, emphasizing founders' passion and vision. Neumann embodied this ideal. His eccentric style and ambitious goals resonated with VCs seeking the next visionary leader.

The key points are:

  1. Adam Neumann sought advice and funding from a top VC, Michael Eisenberg at Benchmark.

  2. Benchmark had a history of very successful investments, especially in eBay, that allowed it to become a leader in VC.

  3. The dot-com crash of 2001 hurt the VC industry but Benchmark survived.

  4. Eisenberg and Benchmark were impressed by Neumann's charisma and vision, investing $17 million in WeWork in 2012.

  5. The "cult of the founder" celebrated visionary entrepreneurial leaders like Neumann. His style and ambition appealed to VCs.

  • The dot-com bust of the early 2000s caused many tech companies to fold and led to a prolonged drought in startup funding.

  • By 2010, the tech industry had recovered. Companies like Facebook, Groupon, and Twitter were thriving. Investors flooded venture capital firms with money to invest in startups.

  • Venture capital firms began emphasizing funding founder-led startups rather than replacing founders with outside CEOs. Charismatic, visionary founders like Mark Zuckerberg of Facebook came to be seen as key to startup success.

  • Adam Neumann, the founder of WeWork, fit this model. When Benchmark Capital's Michael Eisenberg met Neumann in 2011, he was impressed by Neumann's charisma and vision. Eisenberg convinced his Benchmark colleagues to invest in WeWork.

  • Bruce Dunlevie, a Benchmark partner, flew to New York to meet Neumann. Although initially skeptical, Dunlevie was won over by WeWork's rapid growth, strong financials, and devoted members. He compared WeWork's energetic community to the early dorm-room culture of Facebook.

  • Benchmark invited Neumann and his co-founder to California and decided to invest in WeWork. They were impressed by Neumann's confidence and storytelling ability. WeWork also tapped into Benchmark's interest in urban renewal and software-like business models.

Here's a summary:

  • After receiving $15 million from Benchmark in 2012, WeWork gained confidence and expanded aggressively.

  • Adam Neumann gave WeWork employees stock options, implying the company was destined for huge success and they would all become wealthy.

  • WeWork expanded to new cities like Chicago, Portland and London and moved into bigger, nicer offices with modern furnishings.

  • Neumann hired engineers to build an app for WeWork members to connect and made health insurance available to members.

  • By 2013, WeWork had grown to 10 locations across New York, LA, and San Francisco. Neumann courted major landlords and investors to fund more expansion.

  • Neumann obsessed over creating the perfect impression during tours for potential partners and investors. He had employees come in early and move desks around to make the space seem full. He orchestrated impromptu parties and events to make the space seem fun and lively.

  • During tours, Neumann highlighted the amenities, gave tequila shots in his office, and introduced visitors to his family to cultivate a casual, fun image. His enthusiasm and charisma won over many older, more traditional landlords and investors.

  • Neumann's goal was to convey that WeWork was an exciting, fast-growing tech company, not just a real estate business. His showmanship and rhetoric were turning into reality.

In summary, with funding and success, WeWork became more ambitious and projected an energized tech startup image. Neumann's charismatic salesmanship and curated tours helped overcome skepticism about the business model and win over partners to enable rapid expansion.

Adam Neumann, the CEO and cofounder of WeWork, liked to talk about the company’s ethos of “we over me,” suggesting an egalitarian spirit of collective effort and sacrifice. However, Neumann quietly benefited himself in several ways:

  • After WeWork’s Series B funding round raised $40 million for expansion, Neumann had the company lend $9 million to We Holdings LLC, the entity he and cofounder McKelvey used to hold their WeWork shares. The loan allowed Neumann to cash out some of his shares without diluting his ownership stake.

  • Neumann also had WeWork pay him a $5.9 million “consulting fee” after the funding round closed. The fee was unreasonable given Neumann’s full-time role as CEO.

  • WeWork leased four commercial properties that Neumann co-owned, paying above-market rents. This meant Neumann personally profited from WeWork’s growth.

  • Neumann made millions selling the rights to the word “We” to WeWork. He had originally registered “We Holdings LLC” and “WeWork LLC,” so he was able to sell the trademark and domain name to the company.

  • These self-dealing practices were enabled by WeWork’s governance issues. Neumann and his allies controlled the board, and minority investors had little say. While not illegal, the deals lacked transparency and fairness.

In summary, while promoting a message of collective purpose, Neumann structured several deals to personally benefit from WeWork’s success. His self-interested practices took advantage of governance issues and a lack of oversight.

Here's a summary:

  • In February 2014, WeWork opened new locations in Boston, Washington DC, and Seattle. The company now had offices in 6 cities.

  • WeWork raised $150 million from JPMorgan Chase at a $1.5 billion valuation. This made WeWork a "unicorn" - a startup valued over $1 billion.

  • The investment from JPMorgan was more than twice what WeWork had raised in its entire history up to that point.

  • Larry Unrein, a private equity executive at JPMorgan, had been trying to get JPMorgan to invest in WeWork. The company's growth convinced JPMorgan to lead the $150 million investment.

  • The new funding and "unicorn" status gave Adam Neumann another reason to be happy with WeWork's success.

Here's a summary:

  • Employees at WeWork were getting rich thanks to the company's ability to raise money at higher and higher valuations. WeWork's valuation had ballooned to $10 billion in just 16 months.

  • Mutual fund managers like Gavin Baker at Fidelity and Henry Ellenbogen at T. Rowe Price were frustrated at missing out on hot startups. Ellenbogen had just invested in WeWork at a $5 billion valuation, portraying it as a "tech company." Baker wanted Fidelity to invest in similar companies.

  • Historically, mutual fund managers focused on publicly traded stocks. But as the number of public companies declined and index funds gained popularity, mutual fund managers looked to private companies for higher returns. Ellenbogen's investment in Twitter, which returned 10x, attracted others.

  • Facebook's huge $104 billion IPO in 2012 showed how much larger private tech companies had become, limiting opportunity for public market investors. Mutual funds wanted in earlier.

  • Though only investing a small portion of their funds in private companies, mutual funds poured $8 billion into venture-backed startups by 2015, up hugely from $16 million in 1995. This influx of money drove private company valuations even higher.

  • Mutual fund managers were used to analyzing public companies with transparent financials. Private companies had looser disclosure rules and could paint a rosy picture of growth while obscuring costs and losses. With no liquid market, valuations were guesswork.

  • Certain startup founders, like Adam Neumann, excelled at selling a vision to these mutual fund managers and raising money at higher valuations with little transparency into their companies' finances. Revenue growth and a good story could attract investment even without profits.

  • There were few startups for mutual funds to invest in, fueling bidding wars and overvaluation of the available companies.

  • Giant mutual funds like Fidelity wanted to invest billions in tech startups that could absorb large amounts of capital at once. Getting into hot startups early was important for their success.

  • In 2015, Fidelity fund managers Bill Danoff and Mark Baker got a chance to invest in WeWork. After initial skepticism, they were won over by Adam Neumann's vision and enthusiasm.

  • Though some within Fidelity were concerned about WeWork's high valuation and business model, Danoff and Baker's views prevailed. Fidelity invested $200 million, valuing WeWork at $10 billion.

  • As a condition of the deals, Neumann was able to sell some of his own shares at the new valuation, netting him tens of millions of dollars. This was unusual, as most startup founders didn't sell shares so early. Neumann said it was for charity and to fund his lifestyle.

  • The Fidelity deal also allowed Neumann to gain even more control over WeWork. He instituted a share structure where his votes counted 10 times more than others. Though some investors and board members objected, Neumann pushed it through.

  • The deals enhanced both WeWork's status as a highly valued startup and Neumann's power over the company. Despite risks, investors were willing to back Neumann's vision.

  • Mark Dixon is the CEO of Regus, the world’s largest provider of serviced office space. Regus leases office space from landlords and subleases smaller offices to businesses.

  • Regus has been in business since 1989 and has a footprint of 40 million square feet across 104 countries. Regus is profitable and growing, with a market value of over $2.5 billion.

  • WeWork, a much smaller company, had a valuation four times that of Regus, perplexing Dixon. WeWork provided simple office space, coffee, and beer, yet was valued much higher. Dixon wondered what he was missing.

  • Dixon grew up working class in Britain and dropped out of school at 16. He started various food businesses before turning to office space. He saw the potential to lease space cheaply, renovate it, and sublease it at a premium.

  • The serviced office space industry has seen boom and bust cycles. Paul Fegen built up a large network in the 1970s but went bankrupt in the 1980s real estate bust. Dixon built up Regus in the 1990s dot-com boom but nearly went under in the dot-com bust of 2001.

  • Regus went public in 2000 at a $2 billion valuation, but its valuation plunged 98% as its startup tenants vanished in the dot-com bust. Dixon restructured and rebuilt Regus, growing more cautiously. Regus weathered the 2008 recession much better.

  • Dixon believes serviced office space is the future, though his ambition and optimism have led Regus into trouble. He sees the potential to “change the world.”

Regus, the dominant executive suite company, struggled to understand WeWork’s high valuation and hype given that the two had nearly identical business models. Regus made profits by charging for amenities and keeping costs low, while WeWork bled money to fund rapid expansion and perks.

WeWork’s popularity was driven more by effective marketing and tapping into millennial culture than any real difference in its model. While WeWork created an energetic vibe and packed in more desks, it didn’t actually make more money per desk. Its app failed to create any network effect, and individual locations had similar profit margins to Regus’s. WeWork’s growth and valuation were circular—dependent on raising more money at higher valuations.

Bubbles are a human phenomenon where hype and fear of missing out drive asset prices far above intrinsic value. Even intelligent people get caught up in the mania and groupthink. By 2015, much of the startup world exhibited signs of a bubble, with money losing companies attracting huge investments and trickling through everyday life in San Francisco. The bubble created a kind of terrarium where money-losing startups served the needs of employees at other money-losing startups.

Regus’s CEO concluded WeWork was fundamentally the same as his company, just marketed differently to millennials. To compete, Regus launched Spaces, a WeWork-like brand targeting the same demographic. The CEO acknowledged WeWork’s PR success but noted the underlying business model was identical.

In summary, WeWork’s popularity and valuation were more the results of effective marketing and a startup bubble than any truly differentiated or sustainable business model. Regus operated the same model profitably but struggled to overcome hype and fear of missing out. By launching Spaces, Regus aimed to compete for the same demographic with a similar offering.

Here's a summary:

  • There was too much money chasing too few good ideas in Silicon Valley. Investors were desperate to find the next Uber and poured money into lots of startups with unrealistic business models and valuations.

  • The media and tech press acted more like cheerleaders than watchdogs. They amplified optimistic narratives about startups disrupting industries and rarely voiced skepticism.

  • Some startups that weren't really tech companies adopted the lingo and branding of tech startups to attract investor interest and higher valuations. Examples include Beyond Meat, The Melt, Harry's, and Casper.

  • WeWork was an example of the unrealistic valuations and investment frenzy. Investors saw huge potential for growth and ignored the risks and differences between WeWork's business and companies like Uber or Airbnb.

  • Brandon Shorenstein, an executive at the real estate firm Shorenstein Properties, was skeptical of WeWork from early on. He thought it was clearly just a real estate company, not a tech company, and was suspicious of Adam Neumann's actions and business practices. But other real estate firms and investors embraced WeWork, to Shorenstein's confusion.

The key points are that there was too much undiscriminating money flowing into Silicon Valley, the media failed to provide adequate skepticism and oversight, some companies adopted a tech veneer to take advantage of the investment mania, WeWork was a prime example of the unrealistic hype and valuations, but a few observers like Brandon Shorenstein were highly skeptical of what was really going on.

Here's a summary:

  • Adam Neumann needed more professional executives and staff to help WeWork's rapid expansion. He hired executives from Uber and Time Warner Cable.

  • Dave Fano was an architect and one of the co-founders of Case Design, an architecture firm that worked with WeWork. Neumann courted Fano to join WeWork and run real estate and design. Although Fano was initially reluctant, Neumann captivated him with WeWork's ambitious vision during a private jet trip. Fano's firm Case Design was acquired by WeWork.

  • By 2015, WeWork had grown into a company with hundreds of young, idealistic employees aiming to change the world through office space. The culture was fun and social, with frequent parties and events. Neumann embodied the cool, fun, successful image. The company and staff promoted an inspirational culture on social media.

  • Carl Pierre was a 25-year-old hired to run WeWork's Washington D.C. operation. He was attracted to WeWork's lofty mission to improve how people work. The pay was low but the promise of equity and career growth was appealing.

  • WeWork felt like the center of the universe for many young employees. However, the long hours, low pay, and frequent changes in direction led to burnout for some. The promise of career growth and equity kept many staying on.

  • WeWork's culture and social media presence attracted many millennials who wanted a fun, purposeful job. This helped fuel WeWork's rapid growth with new members and employees. However, the culture hid the lack of business fundamentals and planning.

Here's a summary:

  • Pierre, an early WeWork employee, was drawn to the company's mission and culture, which catered to millennials' desire for purpose and community. The offices were Instagram-worthy, and employees were expected to blur the lines between work and life.

  • Adam Neumann, WeWork's CEO, promoted a hard-working culture and would keep staff late into the night. The demanding schedule was difficult for older employees and parents. Some employees were wary of the rhetoric about "drinking the Kool-Aid."

  • Many tech startups adopted lofty missions and values to attract top talent. WeWork's mission was to help people "make a life, not just a living." Neumann envisioned expanding into many areas of life, including hotels, fitness, and airlines.

  • WeLive was one of Neumann's ideas that came to fruition. It provided furnished dorm-like housing for young renters and aimed to foster community. However, WeLive was not economically viable and never expanded beyond two locations.

  • There was a contradiction between WeWork's mission-driven rhetoric and Neumann's lifestyle. He had a lavish office at headquarters and used it for kickboxing, smoking marijuana, and other indulgences that contrasted with the company's values.

In summary, WeWork cultivated an idealistic culture and mission to attract employees and investors. But there were signs that its lofty values were more superficial than substantive. Neumann's behavior and leadership raised questions about the authenticity of the company's purpose and spirit.

  • Adam Neumann, the CEO of WeWork, became increasingly removed from employees as the company grew rapidly. He had a separate exit installed so he could avoid interacting with staff. Though he showed interest in charitable causes, his lavish spending and desire for wealth overshadowed this. He bought multiple homes and inserted himself into real estate deals that were conflicts of interest. He lied to a reporter about selling over $100 million of his WeWork shares. He allowed long-serving employees to sell shares at a 75% discount compared to what he received, claiming it was for tax reasons.

  • Jamie Dimon, the CEO of JPMorgan Chase, wanted his bank to become more involved with tech companies in Silicon Valley. Tech companies were attracting huge investments, and some like Apple and Google were becoming the most valuable companies. JPMorgan's rivals Goldman Sachs and Morgan Stanley had dominated the IPOs of major tech companies. By 2015, major private tech companies like Uber, Airbnb, and Snapchat were worth tens of billions of dollars.

  • Banks rushed to court these private tech companies in hopes of winning their future IPO business. They provided free consulting work, loans, mortgages, and even bought goods and services from the startups. Though JPMorgan participated, they lagged behind rivals. Dimon spent more time in Silicon Valley, meeting with entrepreneurs, hosting dinners, and dispensing advice.

  • To further court Silicon Valley, JPMorgan paid to have the naming rights for the new $1.4 billion arena for the Golden State Warriors basketball team. They also led a $100 million investment in data management startup MariaDB. These were costly gestures to raise JPMorgan's profile.

  • JPMorgan Chase bought the naming rights to the Warriors’ new arena in San Francisco for $15 million per year. The deal was meant to raise the bank’s profile in tech-centric Silicon Valley.

  • Noah Wintroub was JPMorgan’s vice chairman and primary contact for tech entrepreneurs. He was well-liked, but the bank lacked influence compared to rivals like Goldman Sachs.

  • Wintroub met Adam Neumann, WeWork’s CEO, in 2012 and arranged for Neumann to meet Jimmy Lee, JPMorgan’s top dealmaker. Lee was impressed by Neumann and helped arrange a $500 million credit line for WeWork.

  • Lee and Neumann developed a close relationship, but Lee died suddenly in 2015. Neumann’s interest in JPMorgan faded without Lee.

  • Goldman Sachs also wanted WeWork’s business. The bank had invested in WeWork and offered optimistic valuations to woo Neumann.

  • By 2015, Neumann wanted to raise more money. JPMorgan was skeptical, but Goldman was bullish. Goldman’s pitch helped convince WeWork’s board to aim for a $10 billion valuation.

  • Neumann turned to Goldman Sachs to lead a new fundraising round, attracted to their connections in Asia and bullish stance. JPMorgan lost influence without Jimmy Lee.

Here is a summary of the trip to Asia:

  • Adam Neumann and WeWork were looking to expand into China, the world’s second largest economy.

  • Neumann wanted to raise more money from Chinese investors at a higher valuation, between $15 billion to $20 billion. This was despite WeWork just raising money at a $10 billion valuation.

  • Many of WeWork’s existing investors were not happy with Neumann’s fundraising plans and wanted WeWork to focus on improving its existing operations. Some wanted WeWork to go public.

  • However, Neumann controlled WeWork and the board typically went along with his plans.

  • There were signs the startup funding bubble was slowing, with companies going public at lower valuations and some investors warning of a “risk bubble.” But Neumann felt the boom helped WeWork.

  • WeWork’s losses were growing, even as revenue rose. But investors didn’t seem overly troubled, focused more on WeWork’s growth. Some had concerns over Neumann’s control and public comments.

  • Neumann and Michael Gross, WeWork’s vice chairman, went on two trips to China to pitch potential investors and landlords, arranged by Goldman Sachs. Gross helped Neumann in fundraising.

Here's a summary:

  • Adam Neumann and executives from WeWork traveled to India in January 2016 to attend Prime Minister Narendra Modi's Startup India conference.

  • They had arranged meetings with potential investors before the conference, but Neumann overslept and missed the first meeting after a night of heavy drinking.

-By early 2016, WeWork had 65 locations, mostly in the U.S. but some in Europe, Israel, and soon China. Neumann saw India as an opportunity for expansion.

  • Neumann insisted on getting a one-on-one meeting with Modi as a condition of attending the conference. Neumann was adept at using such high-level meetings to build connections and spur more opportunities.

  • On one of the last days of the trip, Neumann finally got his meeting with Modi. Modi praised WeWork's mission to help entrepreneurs. Neumann invited Modi to visit WeWork's New York headquarters.

  • Neumann considered the trip a success that boosted WeWork's profile in India. His meeting with Modi helped establish WeWork as a major company and opened more doors.

  • The anecdote shows how Neumann was skilled at making strategic connections but also hints at his hard-partying lifestyle and its occasional interference with work.

• Adam Neumann, the CEO of WeWork, met with Narendra Modi, the pro-business prime minister of India, in 2016. During the meeting, Neumann pledged that WeWork would help solve India’s housing crisis.

• The next day, Neumann spoke at a conference in New Delhi. He touted WeWork’s rapid growth across the world and said India could become WeWork’s biggest market. Neumann said raising money was not an issue for WeWork.

• Masayoshi Son, the CEO of SoftBank, was in the audience. Son was a famous tech investor who had made billions investing in Alibaba and other companies. Like Neumann, Son was ambitious and optimistic.

• Son grew up in Japan as part of the Korean-Japanese minority. His family started from poverty but became wealthy from his father’s various businesses. Son went to high school and college in the U.S., where he started several businesses, including importing arcade games and creating an electronic translator.

• Son returned to Japan in 1980 to help his sick father. He founded SoftBank to distribute software. SoftBank then expanded into tech journalism to raise its profile. Son was obsessed with Bill Gates and put him on the cover of a magazine.

• Son and Neumann shared traits like extreme ambition, optimism, and a ability to win over powerful people. Despite their age and appearance differences, those who knew them predicted they would instantly connect.

  • Masayoshi Son, the founder and CEO of SoftBank, aimed to make SoftBank a top technology company and gain respect from leaders like Bill Gates.

  • In the 1990s, Son began expanding aggressively by acquiring companies like Ziff Davis and Kingston Technology. He invested heavily in dot-com companies, but lost a lot of money when the dot-com bubble burst in 2000. However, SoftBank's investment in Yahoo and Alibaba were very successful.

  • After the dot-com crash, Son focused on building a high-speed internet network in Japan. SoftBank then entered the mobile industry in 2006 by acquiring Vodafone's business in Japan. Son secured exclusive rights to distribute the iPhone in Japan, helping SoftBank become a top mobile carrier.

  • In 2012, Son aimed to return as a major player in the U.S. tech industry. He acquired 70% of Sprint for $21.6 billion. However, his plan to also acquire T-Mobile was blocked by regulators.

  • Son frequently spoke of a 300-year plan for SoftBank to become the world's biggest tech company, involved in advanced technologies like human-robot symbiosis. However, Son's goal of making Sprint America's top mobile carrier failed, as he was unable to acquire T-Mobile.

In summary, Son had ambitious plans for SoftBank to be a leader in technology on a global scale. While SoftBank achieved major successes with investments in companies like Yahoo and Alibaba as well as becoming a top mobile carrier in Japan, Son's attempts to replicate this success in the U.S. were less successful.

Here's a summary:

  • Adam Neumann, CEO of WeWork, loved surfing and traveled to northern Spain to check out a company called Wavegarden that built surf pools.

  • Neumann invested $13.8 million to buy a 42% stake in Wavegarden. The deal puzzled outsiders but was embraced internally at WeWork.

  • Despite rapid revenue growth, WeWork was losing a lot of money. It spent $2 for every $1 in revenue and lost $191 million in the first half of 2016.

  • Neumann was able to raise more private funding by persuading investors that WeWork was like a fast-growing tech company that would eventually become very profitable.

  • Many startups were staying private longer, avoiding scrutiny. This allowed problems to fester, as was the case with Uber and Lyft.

Here's a summary:

SoftBank CEO Masayoshi Son wanted to raise an unprecedented $100 billion tech investment fund. He needed backing from very wealthy sovereign wealth funds, specifically in the Middle East. He initially pitched Qatar but they were noncommittal.

Son then turned his attention to Saudi Arabia. Saudi Arabia's new king, Salman bin Abdulaziz Al Saud, handed immense power to his young son, Crown Prince Mohammed bin Salman, age 31. Prince Mohammed sought to modernize Saudi Arabia's economy and open it up to foreign investment.

Son wanted a meeting with Prince Mohammed. After a few months, he got one. At the meeting, Son pitched his vision of a $100 billion Vision Fund to invest in tech companies. Prince Mohammed agreed to commit $45 billion from Saudi Arabia's sovereign wealth fund to the Vision Fund.

The Vision Fund launched in 2017 with $93 billion, making it the world's largest private investment fund. The fund aimed to spend big and fast, investing billions in startups like WeWork, DoorDash, Brightstar, NVIDIA and GM Cruise. The goal was to anoint winners in key industries.

  • Prince Mohammed bin Salman, known as MBS, was the young, charismatic heir to the Saudi throne. He lacked the experience of other royals but had proven himself in business.

  • As Prince Mohammed gained power, he sought to assert Saudi Arabia as the dominant power in the Middle East. He accelerated proxy wars with Iran and bombed Yemen. He strained relations with the Obama administration.

  • Prince Mohammed also wanted to diversify Saudi Arabia's oil-dependent economy. He announced Vision 2030, a plan to transform the economy. To fund it, he planned to sell shares of the state oil company Aramco, possibly on the New York Stock Exchange. This could raise $100 billion for Saudi's wealth fund to invest globally.

  • Prince Mohammed was intrigued by technology and Silicon Valley. In 2016, Saudi's wealth fund invested $3.5 billion in Uber, its largest foreign investment. The fund prepared to invest in other tech companies. Some worried the fund lacked sophistication.

  • In September 2016, Prince Mohammed met SoftBank's Masayoshi Son in Japan. Son pitched him on investing $100 billion in startups through SoftBank's new Vision Fund. Prince Mohammed agreed to invest $45 billion, the largest commitment ever to a VC fund.

  • The $45 billion gave Son enormous influence. After meeting Prince Mohammed again, Son flew to India to meet startup CEOs SoftBank had invested in. Son told them about the new Vision Fund and $100 billion to invest. He said if they could become number one in their industry, they could access the money.

  • Masayoshi Son, the CEO of SoftBank, was meeting with president-elect Donald Trump. Before the meeting, Son stopped by WeWork’s office for a 12-minute tour with Adam Neumann.

  • Impressed by what he saw, Son offered Neumann $4.4 billion in funding for WeWork. This was an enormous amount and far more than WeWork had raised so far. The deal was hastily sketched out on a scrap of paper in Son’s car.

  • The SoftBank investment would allow WeWork to expand globally and become a major real estate company. However, some SoftBank executives warned Neumann that Son’s enthusiasm could fade quickly.

  • The night before going to Tokyo to finalize the first part of the SoftBank deal, Neumann panicked because he didn’t have a gift for Son. At the last minute, he decided to give Son a giant collage from his office wall that spelled out “WeWork” in letters.

  • Neumann saw the collage as a bold and meaningful gift that represented WeWork’s creative spirit. His staff rushed to get the collage taken down from the wall and transported to Tokyo as Neumann’s gift to Son.

The key events are:

  1. Son offers Neumann $4.4 billion in funding for WeWork after a short tour of the company’s office. They sketch out the deal on a scrap of paper.

  2. SoftBank’s investment will fuel WeWork’s global expansion into a major real estate company, though some worry Son’s enthusiasm may fade.

  3. Neumann panics when he realizes he has no gift for Son and decides at the last minute to give him a giant collage from the WeWork office wall.

  4. Neumann sees the collage as a meaningful, creative gift to represent WeWork’s spirit. Staff rush to get it to Tokyo as Neumann’s gift.

Here's a summary:

Adam Neumann, CEO of WeWork, traveled to Tokyo in March 2017 to finalize a $4.4 billion investment from SoftBank and its Vision Fund. The deal would value WeWork at $20 billion and provide much-needed capital for the company to expand globally.

While SoftBank and its CEO Masayoshi Son were eager to invest in WeWork, others within SoftBank had concerns about WeWork's financials, valuation, and Neumann's behavior. However, once Son decided to move forward with a deal, his team had to execute it.

The $4.4 billion investment was divided into $3.1 billion in new funding for WeWork and $1.3 billion that SoftBank spent buying shares from existing investors and employees. The share purchase allowed early investors and employees, including Neumann, to sell some of their stock for millions of dollars before WeWork went public. Neumann sold $361 million worth of shares, one of the largest stock sales by a startup CEO before an IPO.

When the initial $300 million payment from SoftBank was ready to be finalized, Neumann insisted that WeWork's chief legal officer Jen Berrent be present to sign the deal because she had negotiated much of it. Berrent was devoted to Neumann and WeWork, sometimes responding to emails within minutes day or night. Her role in fundraising and expanding Neumann's control of voting rights made her instrumental to the company's success.

After signing the deal, Son brought Didi Chuxing's CEO Cheng Wei to meet Neumann. Son praised Wei for beating Uber in China, saying Wei won because he was crazier than Uber's Travis Kalanick. Son told Neumann that he needed to be crazier to win big. Neumann's aides found this advice foreboding since Neumann was already quite eccentric.

Here's a summary:

  • SoftBank invested $4.4 billion in WeWork after Neumann gave them a 12-minute tour. This emboldened Neumann to pursue even more aggressive expansion.

  • The investment was the second largest ever in a U.S. startup. It gave WeWork far more money than it had ever had before to spend on growth.

  • Neumann struggled to clearly define WeWork's business model and identity. He variously described it as a community company, a real estate disruptor, or a tech company. Its revenue still primarily came from office rentals, like a real estate company.

  • WeWork's high valuation relative to its revenue (its "multiple") was important to continue attracting investment. Investors were funding its rapid growth, but if it was seen as just a real estate company, its $20 billion valuation wouldn't make sense. Some observers noted this paradox.

  • Neumann acknowledged that WeWork's story and vision, not its financials, were the main reasons for its high valuation. He knew future funding and growth depended on maintaining that story.

  • With SoftBank's money, Neumann pursued tangential initiatives not clearly related to WeWork's core business. Costs began to spin out of control as Neumann spent heavily to build out his vision, even though that vision wasn't well-defined.

Here's a summary:

Adam Neumann began using SoftBank's money to try to prove WeWork's story was real. Internally, WeWork's revenue and expenses showed it was a real estate company, though leaders denied this. To prepare for an IPO, Neumann wanted to show WeWork made money from more than just office space.

Neumann looked to tech companies to help portray WeWork as a tech company, though he barely understood technology himself. He saw potential in Meetup, an old event planning website, and acquired it for $156 million. He also bought Flatiron School, a coding bootcamp, for $28 million to fill desks and expand. The acquisitions puzzled observers.

Neumann explored many new ideas, like a gym, designing offices for Expedia and a surf pool for Barry Diller, and an elementary school proposed by his wife Rebekah to raise "conscious global citizens." The softbank-influenced board approved the deals, valuing Neumann's "vision." Such spending could signal a visionary CEO, though many large, money-losing startups cited "vision" to justify barging into unproven areas.

WeWork also spent heavily on its own offices, agreeing to buy Lord & Taylor's Fifth Avenue flagship to convert to a headquarters, and obsessed over space in Salesforce Tower, spending over $500 per square foot to renovate. By mid-2017, WeWork had over 120,000 members in six million square feet, equal to two Empire State Buildings. Keeping up growth was hard as rent and costs rose, but Neumann demanded the real estate team sign more leases.

In a drunken meeting, Neumann increased the annual leasing goal by over 20% to 275,000 desks. More desks meant needing more members, found first through ads and events, then bonuses, ads, brokers, and poaching Regus tenants. Neumann initially bragged WeWork spent nothing on marketing, though it increasingly relied on paid acquisition.

Here's a summary:

  • Artie Minson joined WeWork as president and COO in 2015 to provide adult supervision. But within two years, Adam Neumann had demoted him to CFO in a humiliating move.

  • Minson came from a middle-class background and attended top high schools and college. He worked his way up the corporate ladder at places like Ernst & Young, AOL, and Time Warner Cable. When WeWork recruited him, his boss called him "the finest CFO in America."

  • Minson provided a contrast to the tequila-shooting Neumann. Minson was serious, wore business attire, and was dubbed "Dad" by some employees.

  • After being demoted, Minson worked to get back in Neumann's good graces, including helping him get an unusual $100 million personal loan tied to his WeWork stock. The complexity confused even JPMorgan bankers.

  • At a 2017 company event, Neumann's co-founder Miguel McKelvey complained onstage about Minson and the finance team making expenses difficult. But Minson's own finance team later complained about McKelvey's comments.

  • There were signs that WeWork's rhetoric about strong community bonds was more hype than reality. Internal studies found most members didn't have friends there or even know many others' names. But it was hard for staff to accept, given the pervasive belief in the company's community.

  • Artie Minson, WeWork’s CFO, wanted to raise money through the bond market in 2018 to pave the way for an IPO.

  • WeWork was losing a lot of money, so Minson created a new financial metric called “community-adjusted EBITDA” to make WeWork’s finances look better to investors.

  • Community-adjusted EBITDA ignored many of WeWork’s real costs and exploited accounting rules around rent to make WeWork appear profitable when it really wasn’t.

  • Minson and other WeWork executives told investors and the media that WeWork was profitable or hovering around breakeven, even though the company was losing hundreds of millions per year.

  • Community-adjusted EBITDA was mocked when WeWork’s bond offering document became public, with many seeing it as a sign WeWork’s business model didn’t actually work.

The key points are:

  1. WeWork created an misleading financial metric to raise money from investors.

  2. WeWork executives frequently overstated the company’s profitability and financial health.

  3. WeWork’s finances were revealed to be much worse than portrayed when it tried to sell bonds.

  4. WeWork was losing an unsustainable amount of money due to its flawed business model.

  • In early 2018, after raising $702 million in debt, WeWork's bonds dropped significantly in price, indicating investors didn't have confidence in the company.

  • Neumann saw this as a PR problem and had WeWork buy back $32 million of the bonds to boost the price, an unusual move.

  • Neumann wanted WeWork to become a trillion-dollar company. To do this, he believed WeWork needed to own real estate, not just lease it.

  • In 2016, Neumann and a board member started a fund called WeWork Property Investors (WPI) to buy buildings WeWork leased. However, this led to conflicts of interest with WeWork negotiating leases with itself.

  • WPI struggled to raise money, so Neumann came up with an even bigger idea: to create the largest real estate firm and raise $100 billion, calling it "ARK."

  • The plan was to get $100 billion from Saudi Arabia, an unrealistic number, showing Neumann's enormous and unrealistic ambitions.

  • Masayoshi Son, the CEO of SoftBank, started a $100 billion investment fund called the Vision Fund to invest in technology startups, especially “unicorns” valued at over $1 billion.

  • Son wanted to personally approve every investment and relied more on instinct and “feeling the force” than data. He targeted ambitious founders with bold visions.

  • In meetings, Son would persuade founders to take much larger investments than they requested, often threatening to fund competitors if they didn’t accept. The Vision Fund invested billions in startups like Plenty, DoorDash, Opendoor, and Compass.

  • Son envisioned the startups collaborating and becoming profitable by dominating their industries, though many were not focused on AI like he said. Critics said the approach was reckless.

  • The Vision Fund’s huge investments caused startup valuations to rise. Early investors could profit even if the startups ultimately struggled. Vision became more important than viability.

  • Adam Neumann stood out even among the other ambitious CEOs Son invested in. Neumann had an innate sense of ambition and fearlessness verging on recklessness, like Son.

  • Neumann’s relationship with Son was a source of angst. Son’s money enabled Neumann’s vision but also gave Son control over him. Son told Neumann he’d be the “Henry Ford of real estate.”

  • Adam Neumann, the CEO of WeWork, met frequently with Masayoshi Son, the CEO of SoftBank, which was an early investor in WeWork.

  • Son goaded Neumann to grow WeWork faster by comparing him to the CEO of OYO Hotels, one of SoftBank's other investments.

  • Neumann came up with a plan to make WeWork into a $1 trillion company in three areas: office space, real estate investing, and real estate services.

  • Neumann asked Son for $70 billion to execute this plan. Although this was an enormous amount, Son was very interested and wanted to provide even more funding.

  • Neumann and Son worked together on "Project Fortitude" to figure out how much money WeWork would need. Neumann showed Son very ambitious growth projections, including 14 million members and $358 billion in revenue by 2023.

  • Son pushed Neumann to grow even faster, suggesting 10,000 buildings, salespeople, and real estate employees. Son made an analogy that WeWork needed to "build the chicken first" and demand would follow.

  • Son projected that WeWork's main business alone could reach 100 million members and $500 billion in revenue by 2028, giving the entire company a $10 trillion valuation.

  • Neumann and Son fed off each other's excitement and encouraged each other to dream bigger and bigger. Son was fully on board with investing huge amounts to help Neumann's vision for WeWork.

In summary, Neumann and Son had a very close working relationship where they developed an increasingly ambitious plan for WeWork's growth, supported by SoftBank's huge investments. However, their huge growth projections and demands for funding seemed to far outstrip WeWork's actual business and finances.

Here's a summary:

  • In August 2018, WeWork held its annual Summer Camp festival for its employees in the English countryside.

  • About 6,000 WeWork staff from around the world attended the multi-day festival, sleeping in tents and attending various activities and events.

  • The festival opened with a bizarre speech by the spiritual guru Deepak Chopra that confused and disturbed many attendees. The staff were also not fed dinner for over an hour after arriving.

  • The festival featured many recreational activities, constant access to alcohol, and late-night concerts with major pop acts and DJs. Harder drugs were also present and available.

  • The festival had grown increasingly lavish and expensive over the years, with WeWork paying nearly $500,000 for Lin-Manuel Miranda to perform in 2017.

  • The festival promoted a cult-like worship of Adam and Rebekah Neumann. Their luxury compound and demands stood in stark contrast with the basic conditions for most staff.

  • Attendance at the multi-day festival was mandatory for all staff. Many older employees resented the festival and culture.

  • Shortly before the 2018 festival, Adam Neumann surprised staff by announcing the festival would be completely meat-free, angering many employees.

  • The festival reflected the Neumanns’ view of WeWork as their personal domain and the staff as subjects in their kingdom. The excessive costs also reflected the company's loose spending practices.

  • In summer 2018, Joshua Shanklin and other WeGrow administrators and teachers were required to attend sessions with a spiritual guru named Hunter Cressman.

  • During these sessions, Cressman would whisper a mantra in each person’s ear and have them reflect on it. Shanklin found this off-putting.

  • Rebekah Neumann conceived of WeGrow because she was unsatisfied with the school options for her own children in New York City. She wanted a progressive school that taught Hebrew, Judaism, and had healthy food.

  • Rebekah had struggled to find her own role at WeWork and wanted more recognition, especially given her husband Adam’s prominence. She complained about Adam’s growing ego.

  • In 2017, Rebekah decided WeWork would launch its own private school, WeGrow, to serve their children and others. The goal was to “fix” education.

  • WeGrow cost up to $42,000 per year but offered financial assistance to promote socioeconomic diversity. It was based on the Montessori method but incorporated aspects of the Neumanns’ lives like entrepreneurship, farming, and veganism.

  • Joshua Shanklin, a Montessori teacher, was hired as WeGrow’s lead teacher. He thought Rebekah’s experimental Tribeca school was “a mess” but she shared her vision for building schools around the world that gave children more control and experience.

Here's a summary:

  • Rebekah Neumann, co-founder of WeWork, recruited Scott Shanklin to lead WeGrow, WeWork's for-profit elementary school.

  • Shanklin was hesitant to leave his job and family in Ohio, but Adam Neumann persuaded him with the opportunity to shape the future of education and the promise of valuable WeWork stock.

  • WeGrow launched in September 2018 with 45 students ages 3 to 9 and lavish, whimsical facilities. However, behind the scenes there were many problems.

  • Rebekah Neumann was prone to emotional outbursts, screaming at staff over small issues like problems with an elevator. Teachers had to walk on eggshells to avoid setting her off.

  • Rebekah was constantly changing her mind about the design and curriculum. She went through many failed attempts to find the perfect white rugs and had trouble hiring teachers who met her criteria.

  • Although students and parents loved WeGrow's innovative model, the school was really run according to the Neumanns' whims. They would host events there on weekends, leaving the space a mess for teachers on Monday mornings.

  • Rebekah clashed with staff over HR issues like raises, displaying ignorance over costs of living in New York and accusing teachers of trying to take advantage of WeWork. She eventually allowed the raises but continued to intervene in school operations.

In summary, despite its promising vision, WeGrow was plagued by mismanagement and dysfunction due to Rebekah Neumann's volatile leadership and the Neumanns' tendency to treat the school like their personal project rather than a serious educational institution.

Here's a summary:

  • Adam Neumann bought a $63 million Gulfstream G650ER private jet for WeWork in 2018 despite the company losing nearly $900 million the prior year.

  • The purchase was unanimously approved by WeWork's board, though some staff thought it was an irresponsible use of funds and worried how it would look to the public.

  • Neumann justified the jet by saying WeWork executives were constantly traveling, though in reality only he used it. He even referred to it as "my jet."

  • Neumann and his friends frequently partied on the private jets, drinking heavily, doing marijuana, and damaging the interiors which forced the charter companies to take the jets out of service for cleaning and repairs.

  • The maiden flight of the new Gulfstream was to take WeWork executives to Summer Camp. But they couldn't leave early to return to New York because Neumann was observing the Sabbath and said the jet had to as well, even if he wasn't onboard.

  • Neumann's accommodations were also being upgraded with WeWork renovating the entire sixth floor of headquarters for him and other executives.

  • Adam Neumann, the CEO of WeWork, had an extravagant personal office with expensive furnishings like a giant sauna, ice plunge, and pink couches for his wife Rebekah.

  • Neumann became obsessed with the ice plunge, a metal tub filled with cold water and ice that people stand in. He even showed staff pictures of him and other executives in it.

  • Rebekah Neumann, Adam's wife and co-founder, was very particular about the design of her office but still complained it felt cramped compared to Adam's.

  • WeWork was spending lavishly in 2018, fueled by investment from SoftBank. Neumann frequently compared WeWork to Amazon, but WeWork's vision remained very vague.

  • WeWork went on an acquisition spree, buying companies that had little synergy with their core business. Neumann made deals based primarily on personal relationships and the promise of increasing WeWork's valuation.

  • WeWork considered ambitious deals to buy much larger companies like IWG, Cushman & Wakefield, and CBRE. They also considered investing in or buying Lyft and MoviePass.

  • WeWork started robotics and autonomous vehicle divisions with little staffing or planning. They built a small robot prototype to greet guests and deliver packages.

  • WeWork's ambitions grew to include plans for a large corporate retreat with team-building activities like surfing. They tried to get subsidies for a center on Long Island.

  • Neumann's ego and ambition grew along with WeWork. He mused about becoming president of the world and a trillionaire. He met with politicians and spoke about WeWork radically transforming society.

  • Politicians and mayors eagerly met with Neumann as WeWork's fame rose. Neumann dazzled them with promises of creating thousands of jobs and providing housing, education, and more.

  • Neumann met with Senate Minority Leader Chuck Schumer, whose brother was Neumann's personal accountant. Schumer was impressed with Neumann's vision and promised to help however he could.

  • Adam Neumann, the CEO of WeWork, had an increasingly grandiose sense of himself and his company. He envisioned WeWork as a company that would last for centuries or even a millennium. He even aspired to live forever through investments in life-extension technology. His wife and co-founder, Rebekah Neumann, shared his inflated ambitions and encouraged his outlook.

  • Those around Neumann did not adequately challenge his messianic ambitions. Some saw it as typical of Silicon Valley “founder megalomania.” Others were seduced by the opportunities and wealth that came with working for WeWork. The environment did not encourage dissent.

  • Neumann’s sense of self was epitomized in his perception of his role in the Middle East. Despite initial misgivings about Saudi money, Neumann came to see WeWork as able to transcend regional tensions. He met with Saudi Crown Prince Mohammed bin Salman and spoke boldly of teaming up with him and Jared Kushner to “remake the region.”

  • Neumann frequently spoke in grand terms about WeWork's global ambitions and future influence. He imagined Middle East peace deals being signed in WeWork spaces. WeWork even provided minor support to Jared Kushner’s Middle East peace efforts.

  • In summary, Adam Neumann’s enormous ego and vision of world-changing destiny was matched and amplified by those around him, allowing his sense of self to escape from reality. His overreach and overconfidence eventually led to his downfall.

Here's a summary:

Adam Neumann resisted delegating power and trusting executives to help run WeWork. He wanted to be involved in nearly all major decisions, despite the company growing to over 8,000 employees. Neumann went through a long list of potential second-in-commands, telling them they would eventually take over as CEO while he became chairman. But none sustained his approval for long.

Without a strong deputy, Neumann's chaotic management style was dysfunctional for a company of WeWork's size. Executives constantly shifted roles and responsibilities. Lower-level employees often found they reported to someone new without warning. While Neumann's hands-on approach helped fuel WeWork's early growth, it couldn't scale.

Neumann also practiced rampant nepotism, filling important roles with friends and family. This included his wife's relatives as well as relatives of WeWork directors and executives. While some were qualified, the overall level of nepotism caused problems. Employees were afraid to question those with connections to the Neumanns.

Beyond nepotism, Neumann's management approach raised many concerns. He arbitrarily decreed WeWork should fire 20% of employees each year. Executives had to work to modify this goal to include voluntary departures. Neumann also caused scenes when challenged, instilling fear in executives and leaving few willing to speak up about problems.

Overall, Neumann's chaotic and nepotistic management style, combined with his unwillingness to delegate power, made WeWork's leadership structure deeply dysfunctional. This contributed to later issues around the company's failed IPO and Neumann's ouster as CEO.

Here's a summary:

  • Adam Neumann, WeWork's CEO, blew up at his executives for spending $2 million on an espresso machine without consulting him. No one took responsibility out of fear of angering him.

  • Neumann fostered a culture of fear, paranoia, and discouragement of dissent at WeWork. Executives were afraid to challenge him or say no. He demanded extreme loyalty and pushed out those who criticized him.

  • Neumann preached inclusivity and empowering women but the reality was very different. Female executives found it hard to advance. Multiple women complained that Adam Kimmel, WeWork's chief creative officer, avoided meeting with women alone. HR found Kimmel should be fired but Neumann protected him. One complainant was pushed out and later given a settlement.

  • WeWork fired Ruby Anaya, who worked in culture, in 2018. She sued, alleging she had been groped at company events. Neumann wanted to publicly attack her but the head of communications refused. However, WeWork's co-founder Miguel McKelvey sent a company-wide email attacking Anaya's character. Many staff saw this as hypocritical and it damaged morale.

  • WeWork made some changes to address concerns about its culture, including revamping HR and investigating more complaints. But large pay gaps and lack of women in leadership persisted. Neumann had a history of inappropriate behavior toward women, like asking about their pregnancy plans.

  • By late 2018, Neumann was focused on WeWork's rapid global expansion and upcoming deal with SoftBank. He believed WeWork was poised to change the world, as he had long promised.

Adam Neumann, CEO of WeWork, gave a speech at a Wall Street charity dinner in December 2018. He spoke about changing the world and gave life advice to the audience of top executives and investors. Neumann was in high spirits because WeWork was nearing a deal with SoftBank, led by Masayoshi Son, that would value WeWork at $47 billion.

The deal would have SoftBank invest $10 billion in WeWork by buying out other investors. It would make Neumann’s stake worth $10 billion and give him an enormous compensation package if WeWork hit certain growth targets. To get the full bonus, WeWork would have to reach $50 billion in revenue in 5 years, requiring extraordinarily fast growth.

Neumann wanted to stay private and avoid going public. He disliked oversight from the WeWork board and was often absent from board meetings. The board members, though, were eager to approve the SoftBank deal because it would provide them a huge payout. Although board member Mark Schwartz warned WeWork executives that Son’s word could not be trusted, the deal appeared on track to close.

WeWork’s leadership, especially Artie Minson and Jen Berrent, were focused on finalizing the SoftBank investment. Although Berrent was usually an avid supporter of Neumann, even she began to notice concerning signs as the deal dragged on for months. Neumann seemed focused on negotiating the best personal deal for himself rather than what was best for WeWork. He wanted guarantees that he would maintain full control of WeWork even after SoftBank owned over half the company.

In summary, Neumann’s speech and enthusiasm masked worrying developments around the SoftBank deal, especially his focus on his own power and compensation rather than WeWork’s interests. The deal was taking far longer than expected to close as Neumann endlessly renegotiated for his benefit.

  • SoftBank agreed to buy WeWork for $20 billion but struggled to get final approval from its investors.

  • SoftBank's Vision Fund declined to fund the deal. SoftBank planned to use money from an IPO of its telecom unit instead.

  • But SoftBank's telecom IPO struggled, and its shares fell sharply. SoftBank's CFO warned that proceeding with the WeWork deal could further hurt shares and anger investors.

  • SoftBank CEO Masayoshi Son called off the WeWork deal on Christmas Eve, informing Adam Neumann that SoftBank no longer had the money.

  • Neumann flew to meet Son in Hawaii and tried to convince him to reconsider, arguing that WeWork's business was still strong despite market turmoil.

  • Son agreed to invest an additional $2 billion in WeWork - $1 billion in new funding and $1 billion to buy out existing investors. But this was far less than the original $20 billion deal.

  • Without SoftBank's money, WeWork would need to find other investors or go public to raise billions in funding. WeWork executives realized they likely had to pursue an IPO.

  • Adam Neumann appeared disheveled and tired in a CNBC interview as he tried to promote a new $1 billion investment from SoftBank. He claimed WeWork had enough cash to fund itself for 4-5 years, but that wasn’t true.

  • By early 2019, WeWork had achieved huge scale, adding more than 20 million square feet of office space that year. However, its spending had ballooned to $3.5 billion in 2018 while revenue was only $1.8 billion. WeWork was losing over $3,000 per minute.

  • There were many examples of waste at WeWork due to lack of cost controls and accountability. For instance, WeWork would frequently discard barely used furniture that had been specially ordered from China in order to meet the changing design whims of Adam Neumann and his creative director Adam Kimmel.

  • There was also a lot of duplication of effort across WeWork’s various teams and departments. Multiple teams would work on the same types of products or initiatives without coordinating. Executives frequently fought over resources and accountability.

  • Neumann would demand budget cuts at times but often failed to follow through when departments pushed back, arguing that reducing their budgets would hurt growth. The tech team was an example of uncontrolled spending, as WeWork had over 1,500 tech employees but little to show for it.

  • In summary, the new SoftBank investment helped turn attention away from the collapse of the larger $20 billion deal. However, WeWork’s underlying problems with excessive spending, lack of cost controls, and duplication of effort persisted. Neumann’s focus on growth over efficiency and profits was still the dominant ethos.

  • After SoftBank’s investment in WeWork fell through and the Global Summit, Adam and Rebekah Neumann moved into a $21 million mansion they bought in Corte Madera, California for a few months.

  • The 13,000-square-foot home had views of San Francisco and was near WeWork’s West Coast headquarters. It had various amenities like a racquetball court, pool, and a guitar-shaped recording studio.

  • The Neumanns intended to immerse themselves in Silicon Valley culture during their time there. However, their lavish lifestyle and ambitions concerned WeWork staff and board members who felt the company needed to slow down its rapid growth and spending.

  • WeWork was quickly burning through the billions of dollars invested by SoftBank but was no closer to becoming profitable. The company halted some new ventures like WeGrow but its core business continued expanding rapidly while losing money.

  • Many had hoped an IPO could provide funding to sustain WeWork’s excessive growth and spending. However, the company would have to convince public market investors of its potential, which was looking increasingly dubious.

  • In summary, the Neumanns’ extravagant California trip illustrated their detachment from WeWork’s precarious financial situation and inability to change course. The company’s future was relying on continued investment to fund Adam Neumann’s ambitious vision rather than a sustainable business model.

Here's a summary:

  • After the failed SoftBank deal, Adam Neumann seemed withdrawn and rudderless. He tried to make inroads with major tech companies like Google and Apple but nothing came of it.

  • Neumann showed flashes of anger over the failed SoftBank deal and Son not letting him participate in a share purchase. His ego grew and he became more erratic. He made staff fly out to meet him only to make them wait for hours or leave the country. He ate meals in front of staff during meetings.

  • Neumann continued to flaunt his wealth, with nannies for his kids, a fleet of luxury cars, and lavish homes. They renovated homes in NY and California, buying and combining multiple units. They had WeWork staff sit on the board of their NY building.

  • Rebekah Neumann was concerned about electromagnetism and health issues. She wanted a cell phone antenna near their NY home removed over fears of 5G technology. WeWork staff spent time trying to get the phone companies to move the antenna.

  • The Neumanns had WeGrow staff from NY teach their kids and others in California at the Guitar House.

  • Adam Neumann was turning 40 and wanted to celebrate with an elaborate trip. He planned a 3-week trip to the Dominican Republic, Mediterranean, and Maldives.

  • The Maldives trip was focused on surfing. Neumann brought many friends, family, employees, nannies, etc. His surf instructor Dom Del Rosario brought many surfers. They stayed at luxury resorts.

  • Neumann rented a massive $500,000/week yacht for the group. The yacht got stuck on a sand reef at one point, and Neumann tried to direct the crew on freeing it. Neumann loved discussing his time in the navy.

  • The timing of the trip was odd since WeWork was preparing for its IPO. The company's president, Artie Minson, was anxious about the IPO.

  • A month before the trip, Lyft had a successful IPO, raising hopes for WeWork's IPO. However, some analysts were skeptical WeWork could replicate Lyft's success. WeWork was losing a lot of money, while Lyft's losses were smaller.

  • WeWork's valuation and business model were controversial. Many questioned if WeWork deserved its $47 billion valuation and if its business model was sustainable.

  • Minson knew the IPO process would be challenging. There were many risks, and the company would face a lot of scrutiny. The IPO could be a "plunge" for the company.

In summary, the extravagant Maldives trip seemed out of touch given the important and risky IPO process WeWork was about to embark on. The timing highlighted how Neumann seemed more focused on his lavish lifestyle than the company's challenges. The IPO would be a pivotal moment that could make or break WeWork, and Minson knew it would be very difficult.

  • WeWork's CEO Adam Neumann wanted to take the company public in 2019 to raise billions in funding. The CFO and executives started preparing for an IPO.

  • An IPO is a long process where a company has to sell itself to public market investors. Companies hire investment banks to help guide them through the IPO process. The lead bank, listed first on regulatory filings, gets the most prestige and largest fees. Several banks wanted to be WeWork's lead bank.

  • WeWork held a "bake-off" where JPMorgan, Goldman Sachs, and Morgan Stanley pitched to be the lead bank.

  • Morgan Stanley's banker Michael Grimes was very experienced but cautioned that investors were wary of unprofitable companies after Lyft and Uber's stocks dropped. Morgan Stanley suggested a $25 billion to $65 billion valuation range. Neumann thought there were fewer skeptics than Grimes said.

  • Goldman Sachs had close ties to Neumann. Their pitch focused on images over text to appeal to Neumann's dyslexia and liking for inspirational quotes. They projected a $61 billion to $96 billion valuation range and compared WeWork to fast-growing tech companies, though those were profitable unlike WeWork. Neumann loved their pitch.

  • JPMorgan thought they were the favorites to win based on their history with Neumann. But their pitch and valuation range are not described.

In summary, Morgan Stanley and Goldman Sachs appealed to Neumann but had different views on WeWork's valuation and challenges. Goldman Sachs ended up with the most bullish projections that aligned with what Neumann wanted to hear.

The CEO of WeWork, Adam Neumann, had to choose either Goldman Sachs or JPMorgan to lead WeWork's IPO and provide billions in debt financing. Initially, Neumann favored Goldman Sachs after they pitched a $10 billion debt deal and promised it would get done. However, Goldman later backed out and said they could only provide $3.65 billion. Neumann felt betrayed.

JPMorgan then offered $6 billion in debt if WeWork could raise $3 billion in an IPO. Neumann told them they were the new favorites. Goldman Sachs still wanted the deal and sent two executives, Srujan Linga and Ram Sundaram, to meet Neumann at his house. While in Neumann's sauna, they tried to convince him their modified deal was best. To prove his toughness, Linga then sat in Neumann's ice bath for over 5 minutes.

Despite Linga's efforts, Neumann ultimately chose JPMorgan's deal. Jamie Dimon, JPMorgan's CEO, had personally promised Neumann $6 billion in debt. WeWork was now set to go public.

As WeWork prepared to file for its IPO, the company struggled to define its story and business model in the required IPO prospectus. WeWork had always had trouble clarifying what type of company it was beyond being fast-growing and aspiring to do good. Early investors didn't care and later investors were too eager to invest in the next big thing. However, public investors would require a persuasive story and financials. The prospectus is meant to provide this but was proving difficult for WeWork.

Here's a summary:

  • There was no consensus on how to describe WeWork. It wasn't just a real estate company, but it was unclear what else it was. Public investors would want to know WeWork's business model.

  • Adam Neumann had described WeWork as a tech company, but its tech acquisitions and efforts were struggling. His vision of WeWork taking over all parts of the property world hadn't materialized.

  • To address this, Neumann suggested describing WeWork as a "global physical platform," implying it had few assets. Artie Minson wanted to focus on WeWork's rapid growth and strong core office business. Neumann didn't like this conservative approach.

  • While the IPO team worked, the Neumanns spent the summer at their Hamptons homes. WeWork staff frequently traveled out to meet with them, some using expensive means like helicopters and seaplanes. Neumann continued going on tropical vacations, showing he wasn't focused on WeWork's issues.

  • Neumann had trouble making decisions and would come up with new ideas instead of resolving questions. Rebekah Neumann was heavily involved, seeing the IPO as a chance to raise her own profile. She obsessed over details like the photos and wording in the prospectus.

  • The prospectus struggled to present WeWork's numbers clearly. Neumann went back and forth on how much to disclose. WeWork didn't include metrics like mature location economics that would show its core business's profitability. The bankers from JPMorgan and Goldman deferred too much to Neumann instead of giving tough advice.

  • The banks competed to be seen as most favored by Neumann. Despite promising them the same fees, their egos were at stake in who was considered the "lead" bank. More banks were needed for an IPO this size, so WeWork tried to get them to meet certain values like sustainability.

  • Miguel McKelvey's role had become unclear. His relationship with Rebekah was tense. He'd stayed loyal to Neumann but was sidelined from decision making.

  • Adam Neumann wanted more control and benefits as WeWork prepared for its IPO.

  • He pushed to give his shares 20 times the voting power of normal shares, which would cement his control even if he sold stock.

  • JPMorgan CEO Jamie Dimon advised Neumann against it, saying it was unfair to shareholders and not good corporate governance. But Neumann didn’t listen.

  • Neumann had already gotten negative attention for his self-interested deals at WeWork, like leasing his own buildings to the company and investing in his side interests. But he pushed for more.

  • Neumann reorganized WeWork to generate huge tax savings for himself and other executives.

  • Neumann took out $380 million in personal loans from banks hoping to do business with WeWork. The loans were tied to his WeWork shares, giving him incentive to prop up the share price.

  • Neumann and a holding company he controlled had already sold nearly $500 million of WeWork shares, mostly to SoftBank. Neumann likely pocketed most of the proceeds.

  • Neumann wanted the benefits and control of an autocratic CEO, even as WeWork prepared to become a public company with outside shareholders. His actions were eroding good governance and fair treatment of shareholders.

So in summary, Adam Neumann was aggressively maneuvering to maximize his own power, money, and control at WeWork -- often in ways that disadvantaged shareholders and good corporate governance. His push for supervoting shares and huge personal loans tied to WeWork stock were major warning signs. But Neumann seemed unconcerned about shareholder interests or even advice from experienced executives like Jamie Dimon. He appeared bent on turning WeWork into a vehicle for his own personal benefit and control.

Here's a summary:

  • Adam Neumann, WeWork's CEO, sold nearly $1 billion of his WeWork stock before the company's IPO. Though it was only a small percentage of his total shares, it was an unusually large amount for a startup CEO to sell pre-IPO.

  • WeWork's IPO filing (S-1) disclosed many concerning business practices, related-party transactions, and governance issues, like Neumann leasing property to WeWork and having family members employed there.

  • As the IPO approached, tensions grew between Neumann and WeWork's general counsel, Jen Berrent. She tried unsuccessfully to convince Neumann to improve WeWork's corporate governance.

  • Neumann sought even more power and control as the IPO approached. He wanted 20 votes per share (instead of 10), the ability to sell lots of stock while maintaining control, and a plan to have his wife and children take over WeWork if he died.

  • JPMorgan and its CEO Jamie Dimon warned Neumann that his demands would hurt WeWork's valuation, but Neumann dismissed their concerns. The banks didn't fully grasp how negatively investors would view WeWork's huge losses and poor governance.

  • WeWork's board approved most of Neumann's demands for more power, though they slightly reduced the control that would pass to Rebekah Neumann if Adam Neumann died. The board had long known of problems but hoped the IPO would force changes.

  • The SEC wasn't comfortable approving WeWork's IPO filing, in part because of WeWork's use of "community-adjusted EBITDA," a misleading metric WeWork created. Neumann insisted on keeping it.

  • In summary, Neumann's quest for power and personal wealth ultimately damaged WeWork's IPO prospects. His lack of self-awareness prevented him from understanding how unreasonable his demands seemed to others.

  • WeWork released its IPO prospectus on August 14, 2019. Initially, the response was relatively muted, focusing on the company’s large losses.

  • However, criticism soon mounted, focused on Adam Neumann’s greed and self-dealing. Commentators criticized Neumann’s 20-to-1 voting control, his $500 million personal line of credit, and the $5.9 million WeWork paid him for the rights to the word “We.”

  • The backlash intensified on social media, with many seeing the IPO as a way for Neumann to enrich himself. The prospectus was mocked for being self-aggrandizing while revealing Neumann’s conflicts of interest.

  • Neumann was angry that the $5.9 million trademark payment was included in the prospectus. Executives said they had reviewed the prospectus with him multiple times.

  • Journalists and analysts heaped scathing criticism on the IPO and WeWork. Matt Levine called the trademark payment “the news item that caused me to absolutely lose my mind.” Scott Galloway’s article “WeWTF” called the IPO “sh*t” and said any analyst valuing WeWork over $10 billion was “lying, stupid, or both.”

  • WeWork’s PR team was dejected by the uniformly negative response. Typically, even controversial companies get some defenders, but WeWork had almost none. The prospectus revealed governance issues that caught employees by surprise.

  • In summary, WeWork’s IPO prospectus was met with an onslaught of criticism focused on Neumann’s self-dealing and the poor governance and finances it revealed. The backlash from journalists, analysts, investors, and the public intensified rapidly, leaving WeWork’s PR team shocked and demoralized.

Here's a summary:

  • SoftBank's Masayoshi Son wanted to meet with Adam Neumann urgently. Son was worried about WeWork's struggling IPO and how it might impact his fundraising efforts for SoftBank's second Vision Fund.

  • Son had committed $108 billion for the second Vision Fund but was struggling to get investors to contribute the full amount. WeWork's governance issues and losses were concerning potential backers.

  • Son asked Neumann to come to Tokyo for a meeting. Neumann agreed, hoping Son might invest more in WeWork or help turn public opinion. Neumann brought some top executives with him.

  • When they arrived, they were surprised to find a top Goldman Sachs banker already meeting with Son. This made Neumann suspicious there were secret talks between Goldman and SoftBank.

  • The meeting was intended to be short, just a few hours before returning to New York. But it ended up pivotal for WeWork's trajectory.

  • After a tense meeting with SoftBank, Adam Neumann travels to meet with potential IPO investors.

  • Neumann meets with Fidelity, an important investor, but fails to convince them to invest due to their growing concerns over his leadership and conflicts of interest.

  • In meetings with other investors, Neumann seems off his game and fails to instill confidence. Investors are skeptical due to WeWork's huge losses and Neumann's controversies.

  • For 9 years, Neumann succeeded in one-on-one meetings using his charisma to convince investors WeWork was a tech company. But now, his "magic" has worn off.

  • Investors indicate they may invest at a lower price or not at all. Neumann's erratic behavior and neediness further hurt investor confidence.

  • Neumann is told not to call investors after meetings but does so anyway, threatening the IPO. Dimon tells him to stop.

  • In desperation, Neumann tries to get Salesforce's Marc Benioff and Saudi investors to commit but is unsuccessful.

Overall, Neumann is struggling to generate interest in WeWork's IPO after years of easily winning over investors. His behavior and leadership issues have severely damaged confidence in him and WeWork.

  • WeWork's bankers and lawyers told Adam Neumann he needed to make major changes to the company's governance for the IPO to succeed.

  • Specifically, Neumann had to give up some control, like reducing his voting power and removing his wife from choosing his successor.

  • Neumann was very reluctant to make these changes but eventually agreed after a long, contentious meeting.

  • However, interest in the IPO remained low, and WeWork's expected valuation kept falling, down to $15 billion, much lower than the $47 billion valuation from January.

  • Neumann wanted to proceed with the IPO roadshow anyway because WeWork needed the funding. The company relied on raising $9 billion total, including $3 billion from the IPO and $6 billion in debt.

  • The Wall Street Journal was publishing a damaging profile of Neumann, detailing his erratic leadership and questionable behavior. WeWork's team tried to get the bankers to convince the Journal to soften the story but were unsuccessful.

  • Neumann still had not recorded his part for WeWork's IPO video, despite the roadshow starting in a couple days. His team set up multiple shoots that Neumann cancelled at the last minute.

In summary, WeWork was barreling toward an IPO that looked increasingly troubled and unlikely to succeed, due to governance issues, a poor valuation, and increasing scrutiny on Neumann's leadership. However, Neumann insisted on moving forward quickly because WeWork desperately needed the funding.

Here's a summary:

  • Jen Berrent and Artie Minson, two senior WeWork executives, met at JPMorgan's headquarters on Monday morning. They agreed that Adam Neumann's erratic behavior and the negative press around WeWork meant the IPO was unlikely to succeed.

  • When they told Mary Erdoes and Noah Wintroub, executives at JPMorgan, Erdoes suggested Neumann step down as CEO. Minson and Berrent agreed.

  • When Neumann arrived, he denied rumors he had smoked marijuana during the video shoot the night before. However, everyone agreed the video made him seem "manic, unhinged and slightly incoherent."

  • Erdoes, Minson and Wintroub told Neumann the IPO should be delayed by a month or two. Neumann reluctantly agreed but insisted on remaining CEO. He promised to "fix it all."

  • The news that the IPO was delayed shocked WeWork's employees and the banks involved. WeWork went "dark" for much of the day before announcing a company webcast for the next morning.

  • In London, Masayoshi Son's deputies Rajeev Misra and Munish Varma attended a dinner where investors suggested Son should remove Neumann as CEO.

Here's a summary:

  • Adam Neumann, CEO of WeWork, held an all-hands meeting to address employees after postponing the IPO. He seemed unaware of why public investors rejected the IPO and said WeWork was still learning the "rules of the game."

  • The next day, SoftBank held a summit for Vision Fund companies where the troubles at WeWork were a topic of discussion. Many advised Masayoshi Son, head of SoftBank, that Neumann needed to go. The failed IPO and news reports on Neumann's behavior were embarrassing for Son.

  • For years, investors backed Neumann despite his irresponsible leadership and WeWork's huge losses. But with the failed IPO, Neumann's "magic was gone." His power and the company's paper valuation plunged.

  • The WeWork board, long supportive of Neumann, began turning against him. SoftBank representatives and early investors like Benchmark wanted Neumann out. Benchmark's Bruce Dunlevie had believed in Neumann but lost trust in him to lead the company or be transparent.

  • Neumann felt a "coup coming" and tried to figure out how to avoid losing WeWork. He huddled with aides to understand his legal rights and options to fight the board. His lawyer and head of personal investments were researching details of his shares and wealth tied up in WeWork.

  • Adam Neumann stepped down as WeWork’s CEO on Tuesday, September 24, 2019 after losing the support of the board of directors.

  • In the days leading up to this, Neumann had been calling friends, investors, and allies to try and shore up support. However, it became clear he had lost key allies like Bruce Dunlevie and Michael Eisenberg.

  • Jamie Dimon, the CEO of JPMorgan, told Neumann directly that investors would not support an IPO with him as CEO and that he needed to step down to save the company. Dimon said Neumann had not listened to the bank's advice.

  • On Monday, Neumann met with Dunlevie, Eisenberg, and Steven Langman, who also told him he needed to step down. Neumann seemed to realize he had no choice if he wanted to preserve his fortune.

  • The board voted unanimously for Neumann to step down on Tuesday morning. Neumann voted along with the board for his own removal.

  • Artie Minson and Sebastian Gunningham were named co-CEOs to replace Neumann. They addressed staff and acknowledged it had been a difficult time but said they believed in a comeback for the company.

  • Maintenance workers began removing the frosted glass and artwork from Neumann's office shortly after the announcement, symbolizing the removal of Neumann's influence, or "DeNeumannization," from the company.

  • After Adam Neumann resigned as CEO, WeWork began removing traces of him. His office was converted into a lounge and conference room. His jet and extra staff were gotten rid of. The new CEOs, Artie Minson and Sebastian Gunningham, took control and began making changes.

  • Minson and Gunningham developed a plan to refocus WeWork on its core business of office space subleasing. They halted growth, prepared to lay off thousands of employees, and planned to sell off recent acquisitions.

  • Employees realized WeWork was not actually a tech company and their stock options were worthless. They felt misled by Neumann's rhetoric and the company's $47 billion valuation.

  • WeWork's downfall shook Silicon Valley and the startup world. It showed that public investors wanted real businesses, not just growth and vision. The valuations of major startups like Uber, Juul, and others dropped billions of dollars. Investors pushed startups to show a path to profitability.

  • SoftBank, which funded WeWork and many other startups, had to change its strategy. It told companies to focus on profits and even consider layoffs, contradicting its previous push for fast growth over profits. Many of the startups SoftBank funded started struggling under more scrutiny. SoftBank's $100 billion Vision Fund had few successes and was trying to raise an even larger new fund.

  • In summary, WeWork's collapse led to a major shift in Silicon Valley away from growth at all costs to a focus on real business models and profits. It caused billions in losses for investors and startups, especially SoftBank's Vision Fund.

  • WeWork was running out of cash quickly after Neumann was ousted and the IPO was canceled. It only had enough money to operate for a couple more months.

  • The board realized the dire situation and formed a committee to raise emergency funding. They hired the investment bank Perella Weinberg to help.

  • The company's only options for raising billions in funding were SoftBank and JPMorgan. Many WeWork executives disliked SoftBank, but JPMorgan's offer would saddle WeWork with very high interest rates that could bankrupt the company.

  • SoftBank had leverage because it had already committed $1.5 billion to WeWork in May 2020. It told WeWork's advisers it would withhold that funding if JPMorgan led the new financing round. This essentially forced WeWork to go with SoftBank.

  • Marcelo Claure, a SoftBank executive, was leading SoftBank's effort to provide funding and fix WeWork. At 6 feet 6 inches, he brought a lot of energy to the role.

  • The funding negotiations showed how dire WeWork's financial situation had become. Mature location profit margins were only around 20%, not the 30-40% that Neumann and Minson had claimed. WeWork's business model was not very different from competitor IWG's, but IWG was actually profitable.

  • WeWork had committed to expanding by another 580,000 desks, meaning it would have to double in size. But it was already struggling to fill existing desks and buildings. Rents and occupancy were dropping in many locations.

Marcelo Claure, the COO of SoftBank and chairman of Sprint, took over negotiations with Adam Neumann and WeWork’s board to bail out the struggling company. SoftBank offered $5 billion in new funding and $3 billion to buy out existing investors in exchange for a valuation of $8 billion, a massive drop from $47 billion just months before.

The sticking point was Neumann, who wanted a large payout and forgiveness of his personal debts to leave the company. SoftBank agreed to give Neumann $185 million, forgive $1.7 million in expenses, and give him a $500 million loan. The deal was announced on October 22, 2019.

WeWork employees were outraged at the low valuation, which made most of their stock options worthless, and Neumann’s large payout. On October 23, Marcelo Claure held a town hall where Miguel McKelvey, WeWork’s remaining co-founder, expressed gratitude for SoftBank’s investment.

In the following days, WeWork’s retail store began selling out of T-shirts that said “Made by We,” the same shirt Neumann wore at the Global Summit. The shirt had become popular, possibly as something to ridicule.

  • After WeWork’s failed IPO and SoftBank bailout, WeWork laid off thousands of employees in November 2019. The layoffs were expected and came with generous severance packages. But they showed how WeWork was shifting from a tech company focused on growth to a real estate company focused on profits.

  • Adam Neumann became a pariah overnight. Many of his friends and aides turned against him, angry at his greed and irresponsibility. Neumann tried to escape the backlash by going surfing and visiting his home in California. But media scrutiny and lawsuits followed him.

  • By December 2019, Adam and Rebekah Neumann decided to move back to Israel to escape the fray. They were spotted flying commercial out of San Francisco, a far cry from their earlier private jet travel.

  • In November 2019, Masayoshi Son admitted in a press conference that his investment in WeWork was a mistake. He said he overestimated Adam Neumann and should have known better. Son enabled Neumann by giving him over $10 billion in funding and encouraging his risky behavior.

  • The WeWork fiasco and other failed investments kicked off a tough time for SoftBank and its Vision Fund. The fund was full of unprofitable companies spending heavily on growth, just like WeWork. Several investments struggled or failed, and the sequel Vision Fund stalled as investors lacked confidence in Son's strategy.

  • But Son's troubles weren't over. The activist investor Elliott Management took a stake in SoftBank and began pressuring Son to make changes to improve shareholder value. Son's strategy of lavishing billions on unproven startups was under greater scrutiny.

  • SoftBank came under pressure to sell assets and cut spending after its investment in WeWork soured and COVID-19 hit.

  • SoftBank shelved plans for a second Vision Fund and admitted the first fund's performance was poor.

  • However, SoftBank's stock recovered as Alibaba, its biggest holding, did well. SoftBank began investing in big tech companies like Amazon and Tesla.

  • Goldman Sachs and JPMorgan, two of WeWork's biggest backers, gave promotions to bankers involved in the deal. The banks continued to work with WeWork and SoftBank.

  • WeWork struggled under new management. It sold off many of the companies it had acquired and laid off thousands of employees.

  • WeWork faced many government investigations into its business practices, though none resulted in penalties.

  • WeWork shifted focus to its core business of subleasing office space, aiming to become profitable. But COVID-19 hit, leading tenants to cancel and creating more financial troubles.

  • WeWork broke many office leases, costing millions in fees. Its headcount fell by over 8,000. SoftBank's funding provided support, but WeWork's value plunged.

  • WeWork's rise and fall showed how its eccentric founder and optimistic pitch met a financial system eager to invest in such visionary stories. Without that eagerness for growth over fundamentals, WeWork might have remained small.

The key events are:

  1. SoftBank's struggles with WeWork and the pandemic

  2. WeWork's new management selling assets, cutting costs and refocusing on profits

  3. The impact of COVID-19 on WeWork's business model

  4. Investigations into WeWork that yielded little

  5. How market forces propelled WeWork's unsustainable growth

Investors and the public are easily swayed by charismatic founders with ambitious visions. They have a hard time resisting optimistic leaders who promise lucrative futures just over the horizon. Society wants messiahs for profits.

The startup world underwent a period of improved oversight and governance for decades, but this regressed in Silicon Valley in the 2010s amid a boom of founder control. Poor oversight and governance made disasters like WeWork inevitable.

After WeWork collapsed, it seemed like investors learned their lesson. But then Tesla and Nikola soared in value, showing little had changed. Their eccentric founders excited investors, who saw infinite potential. Nikola’s founder sold stock and bought luxuries before the company even made trucks. His empire quickly collapsed.

By late 2020, a bigger shift was happening in markets. Interest rates fell, the Fed printed money, and bored millennials traded stocks. The economy struggled but stocks soared. Startups and money-losing brands were popular again. The WeWork chill was forgotten.

DoorDash and Airbnb had very successful IPOs, with valuations that stunned even their investors. SoftBank made huge returns on DoorDash. Airbnb’s founders got more voting control. Other founders got even more. Public investors were left holding the bag.

The startup market got more cautious, but public markets wanted vision and hype. Loss-making companies were welcome, and some without revenue got multibillion-dollar valuations by promising a bright future. WeWork considered going public through a SPAC, a faster process with less scrutiny. Its valuation was a fraction of its peak but the stars were aligning.

Neumann went to Israel, embraced by locals. He and his wife rented a villa and kept private. They had money from his WeWork stock sales and exit package. SoftBank was going to pay Neumann nearly $1 billion more but reneged, citing provisions in the deal and WeWork’s dire finances. Early WeWork staff and investors who counted on the stock sale were furious.

  • Adam Neumann founded WeWork in 2010 with his partner Miguel McKelvey. Neumann was an ambitious and charismatic Israeli immigrant who dreamed of building a big company.

  • WeWork grew rapidly by offering co-working spaces with a hip vibe that appealed to startups and freelancers. SoftBank's Masayoshi Son invested billions in WeWork and encouraged Neumann to expand aggressively.

  • Neumann lived an extravagant lifestyle, buying expensive homes and a private jet. He made hundreds of millions by selling WeWork stock. His wife Rebekah was deeply involved in the company, leading its education initiative called WeGrow.

  • WeWork aimed to raise money through an IPO in 2019. JPMorgan and Goldman Sachs vied to lead the offering. But the IPO prospectus revealed huge losses and governance issues, leading investors to sour on the company.

  • The IPO collapsed, and Neumann was ousted as CEO. SoftBank had to bail out WeWork, giving it an $8 billion valuation, far below its peak. SoftBank had to buy back much of Neumann's stock to settle legal claims.

  • Neumann and his wife moved to the Hamptons during the pandemic. Neumann wants to start a new residential real estate company, saying he sees opportunity in the sector. Some former aides have joined his new investments.

  • Despite WeWork's failures, Neumann remains restless and eager to launch another ambitious venture. His charisma and energy continue to attract interest and support.

The summary covers the key events in the rise and fall of WeWork, focusing on Adam Neumann's role as the driving force behind the company and its visionary but flawed leader. It touches on his personal background, lifestyle, and relationships as well as the company's growth struggles, failed IPO, and bailout. The summary ends by noting that Neumann remains determined to start another bold new venture.

The authors are grateful to The Wall Street Journal, where they both work as journalists, for providing the foundation for this book. Their experience covering WeWork’s rise and fall was instrumental. Many editors and reporters at the Journal worked diligently to uncover details about the company. In particular, Liz Hoffman, Dave Benoit, Jason Dean, Scott Austin, and Liz Wollman were crucial in recognizing WeWork as an important story and pushing it forward.

The authors also thank other journalists and writers who covered WeWork, including Mike Isaac, Reeves Wiedeman, Ellen Huet, and Moe Tkacik. Friends and family who read drafts and provided feedback were also greatly appreciated. Eric Lupfer at Fletcher & Co. helped guide and edit the book. The team at Crown Publishing, including Paul Whitlatch and Katie Berry, helped refine the prose and improve the overall book. Sean Lavery spent many hours fact-checking the book.

Eliot thanks friends and family who supported him, especially while he was quarantined in Brooklyn during the early stages of the COVID-19 pandemic. He is grateful for his time living in San Francisco, where he learned a lot about journalism and startups.

Maureen thanks her large family for their friendship and support. She is grateful to her in-laws for allowing her and her family to stay at their Cape Cod home during the pandemic so she could focus on writing the book. Most of all, she thanks her husband, Jason, for taking on more parenting duties so she could write, and her daughters for bringing her joy during this time.

Miguel McKelvey cofounded WeWork with Adam Neumann in 2010. McKelvey focused on design and experience while Neumann was the dealmaker.

WeWork aimed to “activate the space” and make workplaces social hubs. Neumann claimed up to 40% of the workforce would be freelance by 2020.

WeWork’s growth attracted venture capital. Investor Michael Eisenberg compared Neumann to great tech founders and ignored warnings about Neumann’s erratic behavior.

WeWork expanded rapidly, raising money from investors like Fidelity fund manager Ellenbogen. Ellenbogen invested in tech startups, and WeWork promised huge returns. By 2017, WeWork was valued at $20 billion, though it was unprofitable.

Competitor IWG, formerly Regus, pioneered coworking. CEO Mark Dixon built IWG into a major company over 30 years. WeWork’s valuation worried Dixon, who thought it might indicate a commercial real estate bubble.

There were signs of a startup bubble, with over 90 startups valued over $1 billion. Startups like Warby Parker and Birchbox got big valuations with hype about “innovation” and “disruption.” The grilled cheese chain The Melt was valued at $100 million.

Here's a summary:

  • Casper, a mattress startup, was more focused on marketing than profits as it prepared for an IPO, according to a 2020 Wall Street Journal article.

  • Brandon Shorenstein, an investor, said he was impressed by Casper's culture and vibe. Neumann said he wouldn't invest more in Casper.

  • Adam Neumann's office culture at WeWork was different, centered around pursuing utopian ideals. Facebook also preached societal good.

  • Neumann would sometimes act strangely, like walking around sweaty. In a 2016 meeting with the Wall Street Journal, Neumann made some untrue claims.

  • WeWork's board approved $1 million payouts for Neumann and others in 2015.

  • Investors valued Snapchat at $16 billion and Uber at $51 billion in 2015.

  • WeWork paid at least $15 million per year to JPMorgan Chase for naming rights to the Warriors' new arena.

  • Noah Wintroub, a JPMorgan Chase executive, came from privilege and emulated Jimmy Lee, a charismatic dealmaker at the bank who died in 2015.

  • JPMorgan Chase, founded in 1799, gave WeWork more than $500 million in debt financing.

  • Miguel McKelvey said in 2015 that Neumann was good at raising money. WeWork was valued above Spotify that year.

  • WeWork aimed for profitability in 2019 but faced skepticism after other hyped startups struggled. Late-stage investors feared missing out.

  • Chris Kelly, an investor, said he felt like Neumann's "fluffer." Neumann gave himself the title "head DJ" at a 2019 staff summit.

  • Investors enabled Neumann despite his behavior and WeWork's issues.

  • Neumann met Indian Prime Minister Narendra Modi in 2016 to launch Startup India. Modi wore a vest popularized by Neumann.

  • SoftBank's Masayoshi Son invested in WeWork. Son became the richest man in Japan in 2000 but lost much of his wealth, though he remained influential.

  • Son had a difficult childhood as an ethnic Korean in Japan. He went to UC Berkeley but dropped out, then founded SoftBank and invested in Yahoo, Alibaba and others.

  • Son bought Comdex, a tech conference, for $800 million in 1995 but it went bankrupt. He was known for ambitious bets, some of which failed. Son negotiated with Steve Jobs to carry the iPhone in Japan, helping Apple's success.

Here is a summary of the key details:

•In late 2012, Masayoshi Son, the founder and CEO of SoftBank, acquired a 70% stake in Sprint for $21.6 billion. Son is known for his bold investments and 300-year vision for SoftBank.

•In 2016, Son's net worth was estimated to be $17 billion. That same year, his fortune increased by $8 billion, more than any other tech billionaire.

•The Saudi Public Investment Fund agreed to invest $45 billion in SoftBank's Vision Fund in 45 minutes. The deal gave SoftBank a lot more money to invest in tech startups.

•Son first met Adam Neumann, the cofounder and CEO of WeWork, in early 2017. Son was impressed by Neumann's energy and vision. After their first meeting, Son invested $3 billion in WeWork.

•Artie Minson joined WeWork as co-president and CFO in 2015. Minson had trouble getting a clear understanding of WeWork's finances. The company used unusual metrics like "community-adjusted EBITDA."

•In 2018, WeWork issued $702 million in bonds to investors. The company's revenue was growing quickly but its losses were also piling up. Critics argued WeWork's business model didn't make sense.

•Neumann and his wife, Rebekah, had unconventional ideas they wanted to implement at WeWork, like opening an elementary school and a wave pool. The company also bought a 60,000-square-foot residential building in Manhattan.

•WeWork's business model depended on raising billions of dollars from venture capital and other investors at higher and higher valuations. The company spent money lavishly on new office spaces, marketing, and employee perks.

•WeWork filed to go public in August 2019. Its IPO documents revealed the company was losing over $900 million a quarter. Investors and analysts were stunned by the company's huge losses and questionable governance.

•The failed IPO and pushback from investors caused Son and WeWork to oust Neumann as CEO in September 2019. WeWork's valuation plunged from a high of $47 billion to less than $8 billion.

  • WeWork, the flexible workspace company, raised billions of dollars from investors to fund its rapid growth.

  • The company’s CEO and cofounder Adam Neumann had an ambitious vision to build a global platform and community. He raised money by pitching exponential growth plans that depended on securing large investments, especially from SoftBank.

  • SoftBank invested $10 billion in WeWork in 2019, valuing the company at $47 billion. SoftBank’s CEO Masayoshi Son was intrigued by Neumann’s grandiose vision. But WeWork’s business model and governance were problematic.

  • Neumann exercised a lot of control over WeWork and made many unconventional decisions. He acquired expensive assets like a private jet, spent lavishly on company events, and installed family members in executive roles. WeWork’s corporate governance was weak, with little oversight of Neumann.

  • WeWork pursued ambitious growth targets, expanding into many new cities and business lines like education. But its losses mounted quickly. As WeWork was preparing for an IPO in 2019, its governance and business model problems were exposed. The IPO was delayed and SoftBank took control, ousting Neumann.

  • WeWork faced many issues around lack of diversity and unfair treatment of employees under Neumann’s leadership. Several female executives and employees filed lawsuits alleging discrimination, harassment, and unfair pay.

  • Neumann was able to raise so much money from investors because of his salesmanship and vision, even though WeWork’s business fundamentals were problematic. Investors and board members failed to rein in Neumann’s excesses and demand more oversight, governance changes, and a sustainable business model.

  • The story of WeWork illustrates how startup founders can accumulate power, the challenges of valuing high-growth companies, and the need for private companies to establish strong governance before going public. Oversight and leadership changes came too late for WeWork, leading to its near collapse in 2019 before SoftBank’s rescue.

Here is a summary of the article:

  • WeWork, a coworking startup founded in 2010, planned to go public in 2019 through an IPO. The company was losing billions of dollars but had a valuation of $47 billion through private funding rounds.

  • Adam Neumann, WeWork's CEO and cofounder, pursued an aggressive growth strategy funded by SoftBank, a large Japanese tech investor. SoftBank's CEO compared WeWork to Alibaba, a very successful investment, even though WeWork was deeply unprofitable.

  • WeWork aimed to become a technology company and platform for flexible office space, though its main business was renting office space on long-term leases and then subleasing it. Its strategy relied on economies of scale, though costs were rising quickly.

  • Neumann made several controversial moves, like investing WeWork money in side projects and companies he had a personal stake in. He took out hundreds of millions of dollars in loans secured by his WeWork shares.

  • WeWork's IPO prospectus revealed that Neumann had supervoting shares, owning just over 50% of voting power. The company was losing over $1 billion annually, and the prospectus revealed other worrying details. The IPO was delayed.

  • Investment banks valued WeWork as highly as $96 billion for the IPO, seeking large fees. But public market investors pushed back on the valuation and corporate governance issues. The IPO was eventually canceled.

  • WeWork's failed IPO was a sign that public investors had become more skeptical of fast-growing but unprofitable startups following other troubled IPOs in 2019. Neumann was ultimately forced out as CEO. WeWork underwent restructuring to try and stabilize itself.

In summary, WeWork aimed for a highly ambitious IPO but revealed major issues around its business model, governance, and leadership in the process. The failed IPO was a spectacle that highlighted how private tech valuations had become detached from business fundamentals.

Here's a summary:

• SoftBank launched a $108 billion Vision Fund 2 in 2019 despite lukewarm performance of its first fund and skepticism of its investments. • Many of SoftBank's investments like Wag, a dog-walking startup, and Brandless, an online grocery, struggled and laid off staff. • WeWork's planned IPO was postponed in September 2019 after weak investor interest. CEO Adam Neumann was forced out after pushback over his leadership and self-dealing. • SoftBank took control of WeWork, valuing it at $8 billion, a drop of over $40 billion from earlier this year. Neumann received $1.7 billion to exit. • WeWork laid off 2,400 employees, about 19% of staff, as it tried to cut costs. Stock options were worthless for most employees. • Investigations were opened into WeWork by the New York Attorney General and SEC over its failed IPO and Neumann's spending. • SoftBank's other investments like Oyo also struggled with layoffs and value drops. Founder Masayoshi Son admitted mistakes in judgment. • Goldman Sachs and JPMorgan Chase still made millions in fees despite WeWork's dropped IPO. Executives were promoted at Goldman. • WeWork's valuation dropped to $2.9 billion in May 2020. But it aims for profits and positive cash flow in 2021 under new chairman. • Neumann moved to Israel but plans a new real estate startup. His mother says Israelis still embrace him despite WeWork's problems.

  • In October 2020, the Delaware Court of Chancery ruled on a motion to compel WeWork and its co-founder Adam Neumann to produce documents that were improperly withheld on grounds of privilege.

  • According to an April 2020 Bloomberg article, Adam Neumann was dropped from the billionaire ranks due to a reversal by SoftBank, a major WeWork investor.

  • The article was co-authored by Eliot Brown, a journalist covering startups for The Wall Street Journal, and Maureen Farrell, a reporter at The Wall Street Journal since 2013.



Did you find this article valuable?

Support Literary Insights by becoming a sponsor. Any amount is appreciated!