Adam Neumann always had wild ambitions. By 2017, he had found an even wilder investor who wanted to fund those ambitions: SoftBank CEO Masayoshi Son. Adam spent his billions from SoftBank on competitive tactics, seemingly random investments, and even an elementary school. In this episode, reporter Ellen Huet explores why this free-wheeling spending was so odd: Adam knew this was a bad idea. In exclusive recordings from internal meetings in 2016, he warned his employees that they had to cut back on WeWork's "spending culture." But once the money poured in, it appeared like he forgot his own advice.
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07/16/20 • 35 min
3 Listeners
Foundering - WeWork Part 5: The Universe Does Not Allow Waste
Transcript Summary
In this episode titled "WeWork Part 5: The Universe Does Not Allow Waste," the captivating story of WeWork's rise and fall continues. The CEO, Adam Neumann, spared no effort in his relentless pursuit of growth, even resorting to aggressive tactics to take down competitors and investing in unconventional ventures like a wave pool company. Despite consistently losing money, WeWork raised significant funds from investors, leading to a transformative investment from Masa Yoshi's son, a renowned investor and founder of SoftBank. This investment not only changed the company's trajectory but also shifted the investment landscape in Silicon Valley. However, WeWork's expansion into various businesses, including co-working, fitness boutiques, and even an elementary school, coupled with Adam Neumann's personal extravagance, painted a picture of excess and mismanagement. As the company struggled to turn a profit, it became a cautionary tale of high valuation companies wasting money, ultimately proving Adam Neumann's own words prophetic. This episode offers a fascinating insight into the captivating and tumultuous journey of WeWork, making it a must-listen for anyone intrigued by the rise and fall of startups and the lessons to be learned from their failures.
Transcript
We're gonna start this episode with a threat. The threat comes from Adam Newman, the CEO of We Work, and he was talking to Jamie Hodari, a guy who runs a smaller rival coworking space called Industrious. The two CEOs were considering doing a deal together. This was in and to talk it out, Adam invited Jamie to spend the day with him. They were going to fly to Atlanta to tour each other's offices, and Adam wanted to fly Jamie out on a private jet.
WeWork Part 5: The Universe Does Not Allow Waste Top Questions Answered
What did Adam Newman, the CEO of WeWork, threaten during a meeting?
Adam Newman threatened a smaller rival coworking space called Industrious.
Who were some of the investors in WeWork?
WeWork raised money from investors such as large mutual funds, investment banks, venture capitalists, and Masa Yoshi Son.
What was WeWork's business model focused on?
WeWork's business model focused on rapid expansion and growth, even at the cost of losing money.
What were some of the different businesses that WeWork ventured into?
WeWork ventured into different businesses, including communal apartments (WeLive) and investing in a wave pool company (Wave Garden).
What kind of events did WeWork organize to promote their offices?
WeWork organized Creator Awards marketing events worldwide to promote their offices.
How did Adam Neumann mislead employees about WeWork's financial profitability?
Adam Neumann misled employees about WeWork's financial profitability.
Where did WeWork raise a significant amount of investment from?
WeWork raised $4.4 billion from SoftBank and Masa Yoshi's son.
Who is Masa Yoshi's son known for investing in?
Masa Yoshi's son is known for making big bets on entrepreneurs with strong leadership and the ability to attract followers.
What was the significance of SoftBank's investment fund?
SoftBank's investment fund of $100 billion changed the investment landscape in Silicon Valley.
Why did WeWork create the WeGrow elementary school?
The WeGrow elementary school was created because the co-founder Rebecca Neumann couldn't find a suitable school for her child.
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