In June of 2015, a little NYC startup called WeWork was everywhere in the news crowing that it had become the city's first native $10 billion tech unicorn. It was a narrative fueled by a hot commercial real estate market, Silicon Alley marketing magic, a charismatic founder and too much buzz than was necessary or even healthy.
Some were skeptical of WeWork's whole schtick, mostly because of how it was spending sooooo much more than it made. But back in those days, the company's growing omnipresence, both physically and online, made it easier to imagine that there might be some profit down the road. That misperception was helped along by the company's unsubtly messianic CEO and founder Adam Neumann, who spoke in the ludicrous Millennial word jumbo of woke capitalism indigenous to male tech founders in their mid-30s, spent his days pulling down billions in private equity investment, jetting around growing his brand and taking NYC society by storm with his wife and business partner who we know from personal experience was fond of reminding people that she was Gwyneth Paltrow's cousin.
In June of 2015, WeWork was a totemic symbol of the potent new economy and Adam Neumann was the next Steve Jobs.
Today, the same people that gave Neumann more than $10 billion to build his version of the future are upping their total investment to more than $15 billion in order to assume control of the flailing company at a valuation that sits reportedly just south of $8 billion, and some of that money is being paid directly to Neumann as part of a deal to just get him as far away from what's left of his company as humanly possible. Per the WSJ:
As part of the deal, SoftBank, which already owns about a third of the company, is to buy nearly $1 billion of stock in WeWork’s parent from Mr. Neumann, who was forced out as chief executive after pushback from prospective investors scuttled the IPO. The Japanese conglomerate will also extend him roughly $500 million in credit to help repay a loan facility of the same amount led by JPMorgan, and also pay Mr. Neumann a $185 million consulting fee, the people said.
This is a pretty amazing paragraph.
Adam Neumann has spent the better part of a decade ideating himself to the forefront of this American business world. An immigrant who built a global megabrand by alchemizing the Millennial professional zeitgeist with a private equity environment that eschews logic for possibilities. But then he opened his books a little and really introduced himself to the world as someone who wanted your actual money to buy stock in his vision. WeWork's valuation preceded to fall by about $40 billion in a matter of weeks. He's been stripped of his CEO title, his personal debts are suddenly a huge matter of concern, he's hiding from the press and he's being paid almost $2 billion to just leave WeWork alone.
It's October of 2019 and "The Next Steve Jobs" is now "The New Dick Fuld."
The amount of money that we're talking about here is objectively ludicrous in the context which we're discussing it [ie: a sea captain rowing away from his smoldering ship with a bag of money in the hull of his rowboat] but it's also smart to never think objectively or logically when it comes to Adam Neumann, WeWork, Softbank and money.
WeWork is a very good idea that was executed pretty well, marketed with almost transcendent perfection, and funded with a level of private equity excitement that we can only analogize to an eight-ball spiked with Xanax and Ketamine. In the past three years, Neumann has been outed as his own landlord on a bunch of WeWork properties, cashed out some his own shares before the IPO, acquired a bunch of startups that also don't make profits, given interviews that verge on self-parody and opened an actual private school business under the WeWork umbrella. He also spent a lot of time flying around on the corporate jet smoking pot, surfing with famous surfer friends, using WeWork money to invest in his surfer friends businesses, and then coming back to the office to drink tequila and say crazy shit.
But in fairness to Adam Neumann, his punishment for all this behavior up until about 8 weeks ago was to be given billions of dollars and an unquantifiable amount of praise. At no point was he ever really asked to provide details on when WeWork might be profitable, how he was going to monetize his nickel store capitalist mysticism, chided for his use of company planes and/or pot, and no one stopped him from opening a fucking nursery school when he was already losing almost one billion dollars a year, net. Adam Neumann had no incentive to make WeWork actually work when he was getting paid to have fun doing the literal opposite.
Softbank made Adam Neumann a famous business genius by handing him billions of dollars and asking him almost nothing in return. This final payout is definitely Neumann using his last vestiges of leverage on an investor that let him create a batshit management structure at a company it paid him to create and abuse, but it's also SoftBank's exit round. Masa Son is paying a penalty on his own mistake and doing whatever it takes at this point to get the thing that made WeWork special away from a WeWork that still exists, but is suddenly not very special at all.
We cannot ignore the rotten reality that a lot of people who thought they were going to be rich a few weeks ago are now going to be out of work instead. Neumann gliding away on a platinum parachute while a few hundred professional lives are left in his wake is very dark indeed, but even accidental grifts have real-life consequences. In this case, a man left clinging desperately to his status as a billionaire is now in the dangerous purgatory of life's second acts, but instead of a clean start, Adam Neumann is facing a world chock-full of people who would prefer he just stop "elevating their consciousness" and merely go away forever.